-----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, FJwAtx0WfvemHl9v/u5InDgfy+byXnq99MDy7qq4tLQVkyCilLVITF3bHhlolVUx eREPcku1O06+wUhPyXs/ig== 0000950144-96-001261.txt : 19960329 0000950144-96-001261.hdr.sgml : 19960329 ACCESSION NUMBER: 0000950144-96-001261 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960328 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEIST C H CORP CENTRAL INDEX KEY: 0000046653 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700] IRS NUMBER: 160803301 STATE OF INCORPORATION: NY FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-10893 FILM NUMBER: 96539986 BUSINESS ADDRESS: STREET 1: 810 NORTH BELCHER ROAD CITY: CLEARWATER STATE: FL ZIP: 34625 BUSINESS PHONE: 8134615656 MAIL ADDRESS: STREET 1: 45 ANDERSON ROAD CITY: BUFFALO STATE: NY ZIP: 14225 10-K405 1 C.H. HEIST CORP. FORM 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 DECEMBER 31, 1995. OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED). COMMISSION FILE NUMBER: 0-7907 C. H. HEIST CORP. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 16-0803301 - --------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 810 North Belcher Road Clearwater, Florida 34625 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (813) 461-5656 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Common Stock, $.05 par value - ------------------------------------------------------------------------------- (Title of Class) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 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 the 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). 2 The aggregate market value of the Registrant's common shares held by non-affiliates at January 31, 1996 was approximately $7,450,000. For purposes of computing such market value, the Registrant has assumed that affiliates include only its executive officers, its directors, and those who have filed a Schedule 13D with respect to beneficial ownership of the Registrant's common shares. This determination of affiliate status has been made solely for the purposes of this report, and the Registrant reserves the right to disclaim that any such individual is an affiliate of the Registrant for any other purposes. The number of common shares of the Registrant outstanding at March 16, 1996 was 2,872,773. DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents are incorporated by reference in the following parts of this report: Part I and II -- the Registrant's Annual Report to Shareholders for the year ended December 31, 1995, which appears as Exhibit 13 to this Form 10-K; Part III -- the Registrant's definitive proxy statement to be filed with the Securities and Exchange Commission and used in connection with the solicitation of proxies for the Registrant's annual meeting of shareholders to be held on May 10, 1996. 3 - 2 - PART I ITEM 1. BUSINESS General. C.H. Heist Corp. and its subsidiaries (the "Company") are engaged in two industry segments; industrial maintenance and temporary staffing. The Company operates in both segments in the United States and indusrial maintenance in Canada. Other than the opening or closing of certain service facilities and temporary staffing offices in the normal course of business, the Company expects to continue its operations as presently conducted. Industrial Maintenance Services The Company performs high-pressure water maintenance cleaning services, primarily by the use of mobile high-pressure water pumping units, on industrial and chemical equipment and facilities. The Company's services also include sandblasting, industrial painting, and the vacuuming of wet and dry industrial wastes. The Company installs, maintains and sells insulation for commercial applications. The Company also engages in the business of exchanger extraction and insertion, shell side cleaning, tube cleaning and field service repairs of heat exchangers for the same client base as the Company. The services are performed through the use of specialized automated mechanical equipment which is generally regarded as state of the art. business. The Company's principal customers include oil refineries, petrochemical, chemical, ferrous and non-ferrous metal plants, mining installations, governmental authorities, nuclear and fossil fuel electric generating plants and pulp and paper mills. Sales of industrial maintenance services to one customer, E. I. Dupont De Nemours and Company, accounted for approximately 12.9% of the Company's sales during its fiscal year ended December 31, 1995. The total amount of services purchased by this customer is an aggregate of services provided at a number of separate plants. Plant managers at the respective plants generally make the decisions as to whether or not to use the Company's services, and no single plant accounts for 10% or more of the Company's sales. If the contracts with this customer were not renewed, it would have a substantial impact on the Company's operations. Many of the Company's industrial maintenance services are performed outdoors, but the Company does not consider its business to be seasonal. However, due in part to weather factors, the first quarter of the Company's fiscal year has historically produced the lowest levels of revenue and profitability. 4 - 3 - The Company from time to time investigates and develops new equipment components, tools and methods for use in the conduct of its operations. Most of the components in its equipment are designed to the Company's specification. The amounts expended for such activities, all of which were performed at a Company facility, during the fiscal years ended December 31, 1995, December 25, 1994 and December 26, 1993 amounted to $182,542, $154,417 and $235,065 respectively. During the fiscal year ended December 31, 1995, these services were performed primarily by seven individuals who were employed by the Company on a full-time basis. The Company competes with numerous other companies engaged in high-pressure water maintenance cleaning services, industrial painting, maintenance-cleaning of heavy industrial equipment through the use of mechanical, chemical and other methods, the vacuum removal of dry and wet industrial waste, and the installation and maintenance of insulation. The Company does not believe that any single competitor is dominant in any of these services. The Company is not aware of any material changes in the competitive condition in this industry segment which occurred during the 1995 fiscal year. Competition is primarily based upon quality of services and price. The Company is subject to various statutes and regulations respecting control of noise, air, water and land pollution. In addition, its customers may be subject to other environmental protection statues and regulations relating to some of the industrial maintenance services rendered by the Company. From time to time modifications or improvements have been required in the Company's equipment in order to comply with government regulations, including those relating to safety and noise reductions. Such modifications or improvements have not resulted in any material capital expenditures nor are any anticipated for such purpose in the foreseeable future. Temporary Help Services The Company also supplies temporary employees in the U.S. through Ablest Service Corp. ("Ablest"), a wholly owned subsidiary of the Company. Ablest is a temporary staffing organization with 25 offices located in the Eastern United States with the capability to supply temporary employees for the clerical, industrial and technical needs of their customers. Ablest does not have any principal customers, nor does it service any specific industry or field. Instead, its services are provided to a broad based customer list. The temporary staffing business is highly competitive. There are numerous local, regional and national firms principally engaged in offering such services. The primary competitive factors in the temporary staffing field are reliability, personnel and price. 5 - 4 - Industry Segments and Service Activities. The following table is a summary of information relating to the Company's operations in its two industry segments for each of the Company's last three fiscal years:
Fiscal Year Ended ------------------------------------- In Dec.31, Dec.25, Dec.26, Thousands 1995 1994 1993 --------- ---------- ------- ----------- Sales to Unaffiliated Customers: Industrial Maintenance $57,974 $58,469 $46,383 Temporary Staffing 44,685* 44,103* 36,093* Operating Income (loss): Industrial Maintenance 488 (1,930) (900) Temporary Staffing 2,922 3,401 2,359 Identifiable Assets: Industrial Maintenance 30,468 29,948 27,427 Temporary Staffing 7,588 5,704 5,002
* These sales figures do not include intersegment sales of approximately $134,000, $152,000 and $141,000 in 1995, 1994 and 1993, respectively. The following table sets forth the approximate amounts of total sales and revenues by service activity within the Company's dominant industry segment (industrial maintenance) for each of the Company's last three fiscal years:
Fiscal Year Ended Industrial ----------------------------- Maintenance Dec.31 Dec.25 Dec.26 Sales and Revenues 1995 1994 1993 - -------------------- ----- ------ ------- Hydro/Mechanical 72% 74% 66% Sandblasting and 17% 15% 21% Painting Other 11% 11% 13%
6 - 5 - Working Capital. By virtue of the nature of the Company's business segments and the size and financial status of its customers, the attainment and maintenance of high levels of working capital is not required, other than to meet debt requirements as disclosed in Note 4 to the Consolidated Financial Statements on page 15 of the Company's Annual Report to Shareholders which is incorporated herein by reference. Backlog. In view of the fact that the Company's services are primarily furnished pursuant to purchase orders or on a call basis, backlog is not material. Employees. On December 31, 1995, the Company employed approximately 3,600 persons of whom 251 persons were employed on a full-time basis and the remainder were part-time and temporary employees. Some of the Company's industrial maintenance employees are represented by unions. The Company considers its employee relations to be good. Canadian Operations. The following table sets forth the relative contributions in U.S. dollars to sales, operating income and identifiable assets attributable to the Company's Canadian operations for the last three fiscal years: In Thousands 1995 1994 1993 - ------------ ------ ------- ------- Sales to Unaffiliated Customers 14,483 $12,673 $12,643 Operating Income 1,118 $ 549 $ (542) (Loss) Identifiable Assets 10,093 $ 9,451 $ 8,479
There were no export sales during any period. Reference is made to the "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Part II Item 7 hereof, for a discussion of the decline in operating income for 1993. The operating loss was due to a loss on a contract painting job. 7 - 6 - Executive Officers of Registrant (a) Identification. The Company's executive officers are:
Served as Position and Executive Office with Officer Name Age Registrant Since - ---- --- ------------ ---------- Charles H. Heist 45 Chairman of the 1978 Board of Directors and President John L. Rowley 52 Vice President - 1979 Finance and a Director Isadore Snitzer 74 Secretary 1956 W. David Foster 61 President - Chief 1976 Operating Officer Ablest Service Corp. Frank C. Trotter 61 Vice President - 1985 Chief Operating Officer, C. H. Heist Corp. Duane F. Worthington 44 Vice President - 1989 U.S. Operations, C. H. Heist Corp. Andrew R. Crowe, Jr. 44 Vice President - 1990 Chief Operating Officer, C. H. Heist, Ltd. John D. Biehl 52 Vice President - 1990 Inpro Industries Division Kurt R. Moore 37 Vice President - 1991 Ablest Service Corp. Thomas B. Boisture 44 Vice President - 1993 Engineering and Development, C. H. Heist Corp.
8 - 7 - (b) Family Relationships. None of the officers has any family relationship with any other officer of the Company. (c) Arrangements and Understandings. There are no arrangements or understandings pursuant to which the above officers were elected. (d) Business Experience. Messrs. Charles H. Heist, John L. Rowley, W. David Foster, Frank C. Trotter, Duane F. Worthington, Andrew R. Crowe, Jr. and John D. Biehl have been employees of the Company for more than five years. Mr. Snitzer is a partner in the Buffalo, New York, law firm of Borins, Setel, Snitzer & Brownstein, and its predecessors, which firm has served as general counsel to the Company, for more than five years. Kurt R. Moore joined Ablest Service Corp. in June of 1991. From May 1989 through May 1991, Mr. Moore was an area Vice President of Talent Tree, a temporary help company in Houston, Texas, and for the seven years prior thereto, he was a District Manager for Norrell Corp., a temporary help company in Atlanta, Georgia. Thomas Boisture joined the Company on June 28, 1993 when OMSI was acquired. Mr. Boisture from 1987 to joining Ohmstede Mechanical Services, Inc., in 1989 was a manager for a mechanical contracting company in Houston, Texas. For thirteen years prior to that Mr. Boisture served in management at Exxon, a major U.S. oil refining company, in mechanical, operational, environmental and technical positions. (e) Involvement in Certain Legal Proceedings. None. ITEM 2. PROPERTIES The Company's Ablest Service Corp. subsidiary owns the executive office facilities for C.H. Heist Corp. and Ablest Service Corp. in Clearwater, Florida. The Company owns and leases properties in Buffalo, New York which house its administrative offices, warehouse and Methods and Development facilities. The leased facilities in Buffalo are leased from persons who are affiliates of certain officers and directors. See Part III, Item 13 "Certain Relationships and Related Transactions", below, the response to which is incorporated by reference. The daily operations of the Company are currently operated out of 24 service facilities and 25 temporary help offices as well as six Regional Centers. The Regional Centers are covered by short term leases. Eighteen service facilities and 25 temporary help offices are located in the continental United States and six service facilities are located within Canada. With respect to the service facilities, 12 are owned by the Company, and twelve service areas and all of the temporary help offices are subject to leases with various expiration dates. The Company considers its service facilities, temporary help offices and Regional Centers suitable and adequate for servicing its customers. Two additional owned service facilities are vacant and for sale. 9 - 8 - In meeting the requirements of its industrial maintenance customers, the Company relies on its extensive, specially designed and equipped (to Company's specifications) mobile equipment, which must be kept in good repair and replaced from time to time. The Company considers this equipment adequate for current operations. Each of the Company's active service facilities has mobile equipment permanently assigned to it by the Company. Certain of the properties owned by the Company are subject to mortgages. Reference is made to Note 4 to the Consolidated Financial Statements on page 15 in the Company's Annual Report to Shareholders, which is incorporated herein by reference. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders of the Company during the fourth quarter of fiscal 1995. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information in response to this item is hereby incorporated by reference to the information presented on page 20 and 21 of the Company's 1995 Annual Report to Shareholders which appears as Exhibit 13 to this Form 10-K. ITEM 6. SELECTED FINANCIAL DATA The information in response to this item is hereby incorporated by reference to the information presented at page 8 in the Company's 1995 Annual Report to Shareholders which appears as Exhibit 13 to this Form 10-K. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information in response to this item is hereby incorporated by reference to the information presented at pages 9 through 10 in the Company's 1995 Annual Report to Shareholders which appears as Exhibit 13 to this Form 10-K. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information and independent auditors report required in response to this item is hereby incorporated by reference to pages 10 through 20 in the Company's 1995 Annual Report to Shareholders which appears as Exhibit 13 to this Form 10-K. 10 - 9 - ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information in response to this item is hereby incorporated by reference to the information under the caption "Nominees for Directors" presented in the Company's definitive proxy statement to be filed with the Securities and Exchange Commission and used in connection with the solicitation of proxies for the Company's annual meeting of shareholders to be held on May 10, 1996, except insofar as information with respect to executive officers is presented in Part I hereof. ITEM 11. EXECUTIVE COMPENSATION The information in response to this item is hereby incorporated by reference to the information under the caption "Compensation of Executive Officers" presented in the Company's definitive proxy statement to be filed with the Securities and Exchange Commission and used in conjunction with the solicitation of proxies for the Company's annual meeting of shareholders to be held on May 10, 1996; provided, however, that information appearing under the headings "Report on Executive Compensation by the Compensation Committee and Board of Directors" and "Common Stock Performance" is not incorporated herein and should not be deemed to be included in this document for any purposes. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information in response to this item is hereby incorporated by reference to the information under the caption "Security Ownership of Certain Beneficial Owners and Management" presented in the Company's definitive proxy statement to be filed with the Securities and Exchange Commission and used in connection with the solicitation of proxies for the Company's annual meeting of shareholders to be held on May 10, 1996. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information in response to this item is hereby incorporated by reference to the information under the caption "Certain Transactions" presented in the Company's definitive proxy statement to be filed with the Securities and Exchange Commission and used in connection with the solicitation of proxies for the Company's annual meeting of shareholders to be held on May 10, 1996. 11 - 10 - PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Report: (1) Financial Statements and Schedules See Index to Financial Statements and Schedules at page 13. (2) Exhibits Exhibits identified below are filed herewith or incorporated herein by reference to the documents indicated in parentheses. Exhibit Number Description 3.1 Restated Certificate of Incorporation of Registrant dated January 19, 1983. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989). 3.2 Certificate of Amendment of Certificate of Incorporation of the Company (Appendix A to the Company's definitive Proxy Statement in connection with its Annual Meeting held on May 11, 1992). 3.3 Amended By-laws of the Registrant adopted August 27, 1990 (Exhibit to the Company's Form 10-K Report for the year ended June 24, 1990). 10.1 Lease Agreement dated December 1, 1974, and related Amendment of Lease, dated March 1, 1985, between the Company and the Trust under the Will of Helen J. Heist relating to property located at Cheektowaga, New York. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989). 10.2 Lease, dated November 15, 1983, and related Extension Agreement dated February 18, 1987, between the Company and certain Officers, Directors and Security holders of the Company relating to property located at Marietta, Ohio. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989). 10.3 Lease, dated December 1, 1970, and related Extension Agreement, dated December 18, 1985, between certain Officers, Directors and Security holders of the Company and the Company relating to property located at Oregon, Ohio. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989). 10.4 Business Loan Agreement with Manufacturers and Traders Trust Company dated April 2, 1979, together with related extensions and renewals. (Exhibit to the Company's Form 10-K Report for the year ended June 1989). 12 - 11 - 10.5 Letter Agreement with Manufacturers and Traders Trust Company dated December 22, 1987 (Exhibit to the Company's Form 10-K for the year ended June 26, 1988). 10.6 Consulting Agreement, dated November 15, 1988, between the Company and Willard F. Foster. (Exhibit to the Company's Form 10-K Report for the year ended June 25, 1989). 10.7 Purchase Agreement, dated as of May 19, 1989, with Pipe & Boiler Insulation, Inc. (Exhibit to the Company's Form 8-K Report dated July 31, 1989). 10.8 Letter Agreement, dated October 22, 1990, with Manufacturers and Traders Trust Company. (Exhibit to the Company's Form 10-K Report for the Transition Period ended December 30, 1990). 10.9 Letter Agreement, dated April 24, 1992, with Manufacturers and Traders Trust Company. (Exhibit to the Company's Form 10-K Report for the year ended December 27, 1992.) 10.10 Management Incentive Plan of the Company dated August 17, 1992. (Exhibit to the Company's Form 10-K Report for the year ended December 27, 1992.) 10.11 Amendment to Business Loan Agreement dated October 29, 1993. (Exhibit to the Company's Form 10-K Report for the year ended December 28, 1993) 10.12 Business loan agreement with Manufacturers and Traders Trust Company dated December 28, 1993. (Exhibit to the Company's Form 10-K Report for the year ended December 28, 1993.) 10.13 Purchase agreement, dated June 28, 1993, with Ohmstede Mechanical Services, Inc. (Exhibit to the Company's Form 8-K Report dated June 28, 1993.) 10.14 Business Loan Agreement with Manufacturers and Traders Trust Company dated December 22, 1994. 10.15 * Corporate Revolving Term Loan Agreement with Manufactures and Traders Trust Company dated August 21, 1995. 13 * 1995 Annual Report to Shareholders. 21 Subsidiaries of the Registrant. (Exhibit to the Company's Form 10-K Report for the Transition Period ended December 30, 1990). 23 * Consent of KPMG Peat Marwick LLP to incorporation of reports into Form S-8 No. 33-48497. 27.1 * Financial Data Schedule (for SEC use only) - -------------------- * Filed herewith. 13 - 12 - (b) No reports on Form 8-K were filed by the Company during the quarter ended December 31, 1995. The Company will furnish, without charge to a security holder upon request, a copy of the documents portions of which are incorporated by reference (1995 Annual Report to Security Holders) and will furnish any other exhibit at cost. 14 - 13 - C.H. HEIST CORP. AND SUBSIDIARIES Index to Financial Statements and Schedules Form 10-K Items 8, 14(a)(1) and (2)
Page reference ---------------- Annual Form Report 10-K ------- ------- The financial statements of the registrant and its subsidiaries required to be included in Item 8 are listed below: Independent Auditors' Report 10 Financial Statements: Consolidated Balance Sheets as of December 31, 1995 and December 25, 1994 11 Consolidated Statements of Earnings for the years ended December 31, 1995, December 25, 1994 and December 26, 1993 12 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1995, December 25, 1994 and December 26, 1993 12 Consolidated Statements of Cash Flows for the years ended December 31, 1995, December 25, 1994 and December 26, 1993 13 Notes to Consolidated Financial Statements 15 - 19 The following consolidated financial statement schedules of the registrant and its subsidiaries are included in Item 14(a)(1): Independent Auditors' Report 14 Schedule: VII - Valuation Account 15
Schedules other than those listed above are omitted because the conditions requiring their filing do not exist or because the required information is provided in the consolidated financial statements, including the notes thereto. 15 - 14 - Independent Auditors' Report The Board of Directors C.H. Heist Corp.: Under date of February 16, 1996, we reported on the consolidated financial statements of C.H. Heist Corp. and subsidiaries as listed in the accompanying index. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1995. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG Peat Marwick LLP Buffalo, New York February 16, 1996 16 -15- Schedule II C.H. HEIST CORP. AND SUBSIDIARIES Valuation Account
Additions Balance at charged to Accounts Balance beginning costs and receivable at end Allowance for doubtful accounts: of period expenses written off of period --------- -------- ----------- --------- Year ended December 26, 1993 $ 288,424 360,268 (291,991) 356,701 ========= ======= ======== ======= Year ended December 25, 1994 $ 356,701 174,441 (168,599) 362,543 ========= ======= ======== ======= Year ended December 31, 1995 $ 362,543 114,979 (51,288) 426,234 ========= ======= ======== =======
17 SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 4, 1996 C. H. HEIST CORP. By: /s/ John L. Rowley ------------------------ John L. Rowley Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and as of the date indicated: C. H. HEIST CORP. By: /s/ Charles H. Heist By: /s/ John L. Rowley --------------------- --------------------------------- Charles H. Heist John L. Rowley, Director and Vice Chairman of the Board President-Finance-Chief Financial and President Officer-Asst. Secretary By: /s/ Willard F. Foster By: /s/ Chauncey D. Leake, Jr. --------------------- --------------------------------- Willard F. Foster Chauncey D. Leake, Jr. Director Director By: /s/ Richard J. O'Neil By: /s/ Charles E. Scharlau --------------------- --------------------------------- Richard J. O'Neil Charles E. Scharlau Director Director March 4, 1996 18 EXHIBIT INDEX
Exhibit Page or Number Description Reference - ------ ----------- --------- 3.1 Restated Certificate of Incorporation (1) of Registrant dated January 19, 1983 3.2 Certificate of Amendment of Certificate (2) of Incorporation of the Registrant 3.4 Amended By-laws of the Registrant adopted on August 27, 1990 10.1 Lease Agreement dated December 1, 1974, and (1) related Amendment of Lease, dated March 1, 1985, between the Company and the Trust under the Will of Helen J. Heist relating to property located at Cheektowaga, New York 10.2 Lease, dated November 15, 1983, and related (1) Extension Agreement dated February 18, 1987, between the Company and certain Officers, Directors and Security holders of the Company relating to property located at Marietta, Ohio 10.3 Lease, dated December 1, 1970, and related (1) Extension Agreement, dated December 18, 1985, between certain Officers, Directors and Security holders of the Company and the Company relating to property located at Oregon, Ohio 10.4 Business Loan Agreement with Manufacturers and (1) Traders Trust Company dated April 2, 1979, together with related extensions and renewals 10.5 Letter Agreement with Manufacturers and Traders (3) Trust Company, dated December 22, 1987 10.6 Consulting Agreement, dated November 15, 1988, (1) between the Company and Willard F. Foster 10.7 Purchase Agreement, dated as of May 17, 1989, (3) with Pipe & Boiler Insulation, Inc. 10.8 Letter Agreement, dated October 22, 1990, (4) with Manufacturers and Traders Trust Company 10.9 Letter Agreement, dated April 24, 1992, with (5) Manufacturers and Traders Trust Company 10.10 Management Incentive Plan of the Company dated (5) August 18, 1992 10.11 Amendment to Business Loan Agreement dated (7) October 29, 1993 10.12 Business Loan Agreement with Manufacturers and (7) Traders Trust Co. dated October 29, 1993
19 10.13 Purchase agreement dated June 28, 1993 with (6) Ohmstede Mechanical Services, Inc. 10.14 Business Loan Agreement with Manufacturers and (8) Trades Trust Company dated December 22, 1994. 10.15 Corporate Revolving Term Loan Agreement with (9) Manufactuers and Traders Trust Company dated August 21, 1995. 13 1995 Annual Report to Shareholders (9) 21 Subsidiaries of the Registrant (4) 23 Consent of KPMG Peat Marwick LLP to incorporation of reports into Form S-8 No. 33-48497 (9) 27 Financial Data Schedule (for SEC use only) - ---------------------- (1) Filed as an Exhibit to the Registrant's Form 10-K Report for the year ended June 25, 1989 and incorporated herein by reference. (2) Filed as Appendix A to the Registrant's definitive Proxy Statement in connection with its Annual Meeting of Shareholders held on May 11, 1992. (3) Filed as an Exhibit to the Registrant's Form 10-K Report for the year ended June 26, 1988 and incorporated herein by reference. (4) Filed as an Exhibit to the Registrant's Form 10-K Report for the Transition Period ended December 30, 1990 and incorporated herein by reference. (5) Filed as an Exhibit to the Registrant's Form 10-K Report for the period ended December 27, 1992 and incorporated herein by reference. (6) Filed as an Exhibit to the Registrant's Form 8-K Report dated June 28, 1993 and incorporated herein by reference. (7) Filed as an Exhibit to the Registrant's Form 10-K Report for the period ended December 26, 1993 and incorporated herein by reference. (8) Filed as an exhibit to the registrant form 10-K report for the period ended December 25, 1994 and incorporated herein by reference. (9) Filed as an Exhibit to this report. EX-10.15 2 C. H. HEIST - AMEND. TO BUSINESS LOAN AGREEMENT 1 EXHIBIT 10.15 Amendment to Business Loan Agreement dated August 21, 1995 2 CORPORATE REVOLVING AND TERM LOAN AGREEMENT This Agreement is made this 21st day of August, 1995, between Manufacturers and Traders Trust Company, a New York banking corporation having its chief executive office at One M&T Plaza, Buffalo, New York 14203-2399 (the "Bank") and Ablest Service Corp., a Delaware business corporation having its chief executive office at 810 North Belcher Road, Clearwater, Florida 34625 (the "Borrower"). The Bank and the Borrower agree as follows: 1. REFERENCE TO DEFINITIONS. Each of the capitalized terms used in this Agreement has the meaning given it in Section 11. 2. REVOLVING LOANS. a. Making and Obtaining Revolving Loans. Upon and subject to each term and condition of this Agreement, at any time and from time to time during the period beginning on the date of this Agreement and ending on the day before the Revolving Loan Repayment Date, the Borrower may obtain Revolving Loans from the Bank. The principal amount of each Revolving Loan shall be an integral multiple of $50,000, and the total of the outstanding principal amounts of all Revolving Loans shall not at any time exceed $3,000,000. The Bank may make any Revolving Loan in reliance upon any oral (including, but not limited to, telephonic), written (including, but not limited to, telegraphic or telexed) or other request for such Revolving Loan that the Bank believes in good faith to be valid and to have been made by any officer of the Borrower, and the Bank shall not incur any liability to the Borrower or to any other Person as a direct or indirect result of making such Revolving Loan. Each request for a Revolving Loan shall state the principal amount of such Revolving Loan and the date upon which such Revolving Loan is requested to be made. b. Revolving Loan Note. The Bank shall set forth on the schedule attached to and made a part of the Revolving Loan Note referred to in clause (i) of Section 4d of this Agreement, on any separate similar schedule, on any continuation of such attached schedule or of any such separate similar schedule or on any similar schedule maintained on computer software annotations evidencing the date and principal amount of each Revolving Loan and the date and amount of each payment to be applied to the outstanding principal amount of such Revolving Loan Note. The outstanding principal amount set forth on such attached schedule, on any such separate similar schedule, on any such continuation or on any such similar schedule maintained on computer software shall be presumptive evidence of the outstanding principal amount of such Revolving Loan Note and of the total of the outstanding principal amounts of all Revolving Loans. No failure of the Bank to make, and no error by the Bank in making, any annotation on such attached schedule, on any such separate similar schedule, on any such continuation or on any such similar schedule maintained on computer 3 software shall affect the obligation of the Borrower to repay the principal amount of each Revolving Loan, the obligation of the Borrower to pay interest on the outstanding principal amount of each Revolving Loan or any other obligation of the Borrower to the Bank pursuant to this Agreement. c. Repayment. The Borrower shall repay the principal amounts of all Revolving Loans to the Bank on the Revolving Loan Repayment Date, when the Borrower shall pay to the Bank all interest owing pursuant to this Agreement in connection with any Revolving Loan and remaining unpaid and all other amounts owing by the Borrower to the Bank pursuant to this Agreement in connection with any Revolving Loan and remaining unpaid. d. Extension of Revolving Loan Repayment Date. At least 30 days but not more than 90 days before the Revolving Loan Repayment Date, the Borrower may request that the Revolving Loan Repayment Date be extended for one year by executing and delivering to the Bank an extension request in the form of Exhibit B attached to and made a part of this Agreement. If prior to the Revolving Loan Repayment Date, the Bank executes such extension request, the Revolving Loan Repayment Date shall automatically be extended to the date specified in such extension request. If the Bank does not so execute such extension request, the Revolving Loan Repayment Date shall remain the same. e. Optional Repayment in Advance. The Borrower shall have the option of repaying the principal amount of any Revolving Loan to the Bank in advance in full or in part at any time and from time to time without any premium or penalty. f. Interest. From and including the date the first Revolving Loan is made to but not including the date the outstanding principal amount of each Revolving Loan is repaid in full, the Borrower shall pay to the Bank interest, calculated on the basis of a 360-day year for the actual number of days of each year (365 or 366, as applicable), on such outstanding principal amount at a rate per year that shall (i) on each day beginning before the maturity, whether by acceleration or otherwise, of such outstanding principal amount be the Revolving Loan Applicable Variable Rate in effect such day and (ii) on each day subsequent to the last day described in clause (i) of this sentence be 5% above the rate in effect such subsequent day as the Bank's Prime Rate; provided, however, that (A) in no event shall such interest be payable at a rate in excess of the maximum rate permitted by applicable law and (B) solely to the extent necessary to result in such interest not being payable at a rate in excess of such maximum rate, any amount that would be treated as part of such interest under a final judicial interpretation of applicable law shall be deemed to have been a mistake and automatically canceled, and, if received by the Bank, shall be refunded to the Borrower, it being the intention of the Bank and of the Borrower that such interest not be payable at a rate in excess of such maximum rate. Except as otherwise provided in Section 2c of this Agreement, payments of such interest shall become due on the same day of each calendar 2 4 month, beginning on the tenth day of the first calendar month following the calendar month in which the first Revolving Loan is made. g. Determination of Revolving Loan Applicable Variable Rate. The Borrower shall have the option of electing to have the Bank's Prime Rate or the Secondary Market CD Rate used in determining the Revolving Loan Applicable Variable Rate for any Interest Period. Upon requesting the first Revolving Loan, the Borrower shall notify the Bank, in the same manner in which such Revolving Loan is requested, whether the Borrower elects initially to have the Bank's Prime Rate or the Secondary Market CD Rate used in determining the Revolving Loan Applicable Variable Rate for the Interest Period in which the date such Revolving Loan is made falls. Such election for any subsequent Interest Period need not be honored by the Bank unless, whether it is made orally (including, but not limited to, telephonically), in writing (including, but not limited to, telegraphically or by telex) or in any other manner that the Bank believes in good faith to be valid and to have been made by any officer of the Borrower, it is received by the Bank no later than 2:00 P.M. on the last business day of the Bank immediately preceding the first day of such Interest Period at the office of the Bank determined in accordance with the first sentence of Section 2j of this Agreement. If such election for any Interest Period other than the Interest Period in which the date the first Revolving Loan is made falls is not made by the Borrower or is not honored by the Bank because not received in accordance with the preceding sentence, the Revolving Loan Applicable Variable Rate for such Interest Period shall be determined using whichever of the Bank's Prime Rate and the Secondary Market CD Rate was used in determining the Revolving Loan Applicable Variable Rate for the immediately preceding Interest Period. h. Non-Usage Fee. For each period (i) beginning on the date of this Agreement and ending on the last day of the calendar quarter containing such date, (ii) consisting of a calendar quarter beginning after the calendar quarter containing the date of this Agreement and ending before the calendar quarter containing the day before the Revolving Loan Repayment Date or (iii) beginning on the first day of the calendar quarter containing the day before the Revolving Loan Repayment Date and ending on such day, the Borrower shall pay to the Bank a non-usage fee equal to the product obtained by multiplying (i) the difference between $3,000,000 and the daily average during such period of the outstanding principal amounts of all Revolving Loans first by (ii) 1/4% and then by (iii) the fraction obtained by dividing the number of days in such period by 360; provided however, that (A) in no event shall there be payable any such non-usage fee that would result in interest being payable on any such outstanding principal amount at a rate in excess of the maximum rate permitted by applicable law and (B) solely to the extent necessary to result in such interest not being payable at a rate in excess of such maximum rate, any amount that would be treated as part of such interest under a final judicial interpretation of applicable law shall be deemed to have been a mistake and automatically canceled, and, if received by the Bank, shall be refunded to the Borrower, it being the intention of the Bank and the Borrower that such interest not be payable at a rate in excess of such maximum rate. Except as otherwise provided in Section 3 5 2c of this Agreement, the Borrower shall pay each such nonusage fee within thirty days after billing therefor by the Bank. i. Late Charge. If the outstanding principal amounts of all Revolving Loans are not repaid, or any interest owing pursuant to this Agreement in connection with any Revolving Loan is not paid, within five days after the date it becomes due, whether by acceleration or otherwise, the Borrower shall pay to the Bank a late charge of the greater of (a) 5% thereof or (b) $50. j. General Provisions as to Repayment and Payment. Repayment of the principal amount of each Revolving Loan, payment of all interest owing pursuant to this Agreement in connection with any Revolving Loan and payment of all other amounts owing by the Borrower to the Bank pursuant to this Agreement in connection with any Revolving Loan shall be made in lawful money of the United States and immediately available funds at the banking office of the Bank located at One M&T Plaza, Buffalo, New York, the banking office of the Bank located at 304 Thruway Mall, Cheektowaga, New York, or at such other office of the Bank as may at any time and from time to time be specified in any notice delivered, given or sent to the Borrower by the Bank. No such repayment or payment shall be deemed to have been received by the Bank until received by the Bank at the office of the Bank determined in accordance with the preceding sentence, and any such repayment or payment received by the Bank at such office after 2:00 P.M. on any day shall be deemed to have been received by the Bank at the time such office opens for business on the next business day of the Bank. If the time by which any of the principal amount of any Revolving Loan is to be repaid is extended by operation of law or otherwise, the Borrower shall pay interest on the outstanding portion thereof during such period of extension as provided in Section 2f of this Agreement. 3. TERM LOAN. a. Making and Obtaining Loan. Upon and subject to each term and condition of this Agreement, on the Revolving Loan Repayment Date the Bank shall make the Term Loan to the Borrower, and the Borrower shall obtain the Term Loan from the Bank. The principal amount of the Term Loan shall be equal to the lesser of (i) the total of the outstanding principal amounts of all Revolving Loans or (ii) $3,000,000, and shall be applied by the Bank on behalf of the Borrower solely to repay such outstanding principal amounts. b. Repayment. The Borrower shall repay the principal amount of the Term Loan to the Bank in 20 installments, with the first of such installments to become due on the date that is three months after the Revolving Loan Repayment Date, and one of such installments to become due on the same day of each succeeding calendar quarter through the date that is five years after the Revolving Loan Repayment Date, when the Borrower shall repay the outstanding principal amount of the Term Loan to the Bank and pay to the Bank all interest owing pursuant to this Agreement and remaining unpaid and all other amounts owing 4 6 by the Borrower to the Bank pursuant to this Agreement and remaining unpaid. Such installments shall be either equal in amount or consist of 19 installments equal in amount followed by one installment as nearly equal in amount to the others as possible. c. Optional Repayment in Advance. The Borrower shall have the option of repaying the principal amount of the Term Loan to the Bank in advance in full or in part at any time and from time to time without any premium or penalty; provided, however, that (i) the amount of any such repayment in part shall be an integral multiple of $100,000 and (ii) upon making any such repayment in full the Borrower shall pay to the Bank all interest owing pursuant to this Agreement and remaining unpaid and all other amounts owing by the Borrower to the Bank pursuant to this Agreement and remaining unpaid. Each such repayment in part shall be applied to the installments of the principal amount of the Term Loan in the inverse order of such installments becoming due. d. Interest. From and including the date the Term Loan is made to but not including the day the outstanding principal amount of the Term Loan is repaid in full, the Borrower shall pay to the Bank interest, calculated on the basis of a 360-day year for the actual number of days of each year (365 or 366, as applicable), on such outstanding principal amount at a rate per year that shall (i) on each day beginning before the maturity, whether by acceleration or otherwise, of such outstanding principal amount be the Term Loan Applicable Variable Rate in effect such day and (ii) on each day subsequent to the last day described in clause (i) of this sentence be 5% above the rate in effect such subsequent day as the Bank's Prime Rate; provided, however, that (A) in no event shall such interest be payable at a rate in excess of the maximum rate permitted by applicable law and (B) solely to the extent necessary to result in such interest not being payable at a rate in excess of such maximum rate, any amount that would be treated as part of such interest under a final judicial interpretation of applicable law shall be deemed to have been a mistake and automatically canceled, and, if received by the Bank, shall be refunded to the Borrower, it being the intention of the Bank and of the Borrower that such interest not be payable at a rate in excess of such maximum rate. Except as otherwise provided in Section 3b of this Agreement, payments of such interest shall become due on the same day of each calendar month, beginning on the date that is one month after the Revolving Loan Repayment Date. e. Determination of Term Loan Applicable Variable Rate. The Borrower shall have the option of electing to have the Bank's Prime Rate or the Secondary Market CD Rate used in determining the Term Loan Applicable Variable Rate for any Interest Period. Upon executing the Term Note referred to in clause (i) of Section 4f of this Agreement, the Borrower shall notify the Bank whether the Borrower elects initially to have the Bank's Prime Rate or the Secondary Market CD Rate used in determining the Term Loan Applicable Variable Rate for the Interest Period in which the date the Term Loan is made falls. Such election for any subsequent Interest Period need not be honored by the Bank unless it is made in a writing received by the Bank no later than 2:00 P.M. on the last business day of the Bank immediately preceding the first day of such Interest Period at the 5 7 office of the Bank determined in accordance with the first sentence of Section 3g of this Agreement. If such election for any Interest Period other than the Interest Period in which the date the Term Loan is made falls is not made by the Borrower or is not honored by the Bank because not received in accordance with the preceding sentence, the Term Loan Applicable Variable Rate for such Interest Period shall be determined using whichever of the Bank's Prime Rate and the Secondary Market CD Rate was used in determining the Term Loan Applicable Variable Rate for the immediately preceding Interest Period. f. Late Charge. If any of the principal amount of the Term Loan is not repaid, or any interest owing pursuant to this Agreement in connection with the Term Loan is not paid, within five days after it becomes due, whether by acceleration or otherwise, the Borrower shall pay to the Bank a late charge of the greater of (a) 5% thereof or (b) $50. g. General Provisions as to Repayment and Payment. Repayment of the principal amount of the Term Loan, payment of all interest owing pursuant to this Agreement in connection with the Term Loan and payment of all other amounts owing by the Borrower to the Bank pursuant to this Agreement in connection with the Term Loan shall be made in lawful money of the United States and in immediately available funds at the banking office of the Bank located at One M&T Plaza, Buffalo, New York, the banking office of the Bank located at 304 Thruway Mall, Cheektowaga, New York, or at such other office of the Bank as may at any time and from time to time be specified in any notice delivered, given or sent to the Borrower by the Bank. No such repayment or payment shall be deemed to have been received by the Bank until received by the Bank at the office of the Bank determined in accordance with the preceding sentence, and any such repayment or payment received by the Bank at such office after 2:00 P.M. on any day shall be deemed to have been received by the Bank at the time such office opens for business on the next business day of the Bank. If the time by which any of the principal amount of the Term Loan is to be repaid is extended by operation of law or otherwise, the Borrower shall pay interest on the outstanding portion thereof during such period of extension as provided in Section 3d of this Agreement. 4. PREREQUISITES TO LOAN. The obligation of the Bank to make any Loan shall be conditioned upon the following: a. No Default. (i) There not having occurred or existed at any time during the period beginning on the date of this Agreement and ending at the time such Loan is to be made, and there not existing at the time such Loan is to be made, any Event of Default or Potential Event of Default and (ii) the Bank not believing in good faith that any Event of Default or Potential Event of Default has so occurred or existed or so exists; b. Representations and Warranties. (i) Each representation and warranty made in this Agreement being true and correct as of all times during the period beginning on the date of this Agreement and ending at the time such Loan is to be made and as of the time such Loan is to be made, (ii) each other representation and warranty made to 6 8 the Bank by or on behalf of the Borrower or the Guarantor or any Other Obligor before the time such Loan is to be made being true and correct as of the date thereof, except to the extent updated in a certificate executed by the President or a Vice President of the Borrower and by the chief financial officer of the Borrower and received by the Bank before the time such Loan is to be made, (iii) each financial statement provided to the Bank by or on behalf of the Borrower or the Guarantor or any Other Obligor before the time such Loan is to be made being true and correct as of the date thereof and (iv) the Bank not believing in good faith that (A) any such representation or warranty, except as so updated, was or is other than true and correct as of any such time, or as of such date, of determination of the truth and correctness thereof or (B) any such financial statement was other than true and correct as of the date thereof; c. Proceedings. The Bank being satisfied as to each corporate or other proceeding in connection with any transaction contemplated by this Agreement; d. Receipt by Bank Prior to Making of First Revolving Loan. The receipt by the Bank at or before the time the first Revolving Loan is to be made of the following, in form and substance satisfactory to the Bank: i) A Revolving Loan Note, appropriately completed and duly executed by the Borrower; ii) A Continuing Guaranty (Corporation or Partnership) appropriately completed and duly executed by C. H. Heist Corp., unlimited as to amount; iii) An opinion of Borins, Setel, Snitzer & Brownstein, counsel to the Borrower; iv) A certificate executed by the President or a Vice President of the Borrower and by the chief financial officer of the Borrower and stating that (A) there did not occur or exist at any time during the period beginning on the date of this Agreement and ending at the time such Loan is to be made, and there does not exist at the time such Loan is to be made, any Event of Default or Potential Event of Default and (B) each representation and warranty made in this Agreement was true and correct as of all times during the period beginning on the date of this Agreement and ending at the time such Loan is to be made and is true and correct as of the time such Loan is to be made except to the extent updated in a certificate executed by the President or a Vice President of the Borrower and by the chief financial officer of the Borrower and received by the Bank before the time such Loan is to be made; v) Evidence that each of the Borrower and the Guarantor is at the time such Loan is to be made (A) in good standing under the law of the jurisdiction in 7 9 which it is incorporated and (B) duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction in which such qualification is necessary; vi) A copy of the certificate or articles of incorporation or other charter document of each of the Borrower and the Guarantor certified by its Secretary to be complete and accurate at the time such Loan is to be made; vii) A copy of the by-laws or other organizational document of each of the Borrower and the Guarantor certified by its Secretary to be complete and accurate at the time such Loan is to be made; viii) Evidence of the taking, and of the continuation in full force and effect at the time such Loan is to be made, of each corporate or other action of the Borrower or of any other Person necessary to authorize the obtaining of such Loan by the Borrower and the execution, delivery to the Bank and performance of each Loan Document and the imposition or creation of each security interest, mortgage and other lien and encumbrance imposed or created pursuant to any Loan Document; ix) Evidence that each requirement contained in any Loan Document with respect to insurance is being met at the time such Loan is to be made; x) Each additional writing required by any Loan Document or deemed necessary or desirable by the Bank at the sole option of the Bank; and xi) Payment of all costs and expenses payable pursuant to the first sentence of Section 9 of this Agreement at or before the time such Loan is to be made; e. Receipt by Bank Prior to Making of Additional Revolving Loan. If such Loan is a Revolving Loan other than the first Revolving Loan, to the extent requested by the Bank, the receipt by the Bank at or before the time such loan is to be made of the items described in Section 4d of this Agreement, in form and substance satisfactory to the Bank; and f. Receipt by Bank Prior to Making of Term Loan. If such Loan is the Term Loan, the receipt by the Bank at or before the time such Loan is to be made of the following, in form and substance satisfactory to the Bank; i) A Term Loan Note, appropriately completed and duly executed by the Borrower; and ii) To the extent requested by the Bank, the items described in clauses (ii) through (xi) of Section 4d of this Agreement. 8 10 5. REPRESENTATIONS AND WARRANTIES. Except as fully and accurately described in Exhibit A attached to and made a part of this Agreement, the Borrower represents and warrants to the Bank as follows: a. Use of Proceeds. The proceeds of each Revolving Loan will be used only for working capital of the Borrower or general corporate needs of the Borrower. The proceeds of the Term Loan will be used only to repay the outstanding principal amounts of Revolving Loans. b. Good Standing; Qualification; Authority. Each of the Borrower and the Guarantor (i) is a corporation duly incorporated and organized, validly existing and in good standing under the law of the jurisdiction in which it is incorporated, (ii) is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction in which such qualification is necessary, and (iii) has the power and authority to own each of its assets, to use each of its assets as now and as anticipated that such asset will hereafter be used and to conduct its business and operations as now and as anticipated that its business and operations will hereafter be conducted. c. Control. There is no Person other than the Borrower and the Guarantor who or that, insofar as the Borrower or the Guarantor has knowledge or reason to know, has (i) Control over the Borrower or the Guarantor or (ii) the right pursuant to any agreement with any Person having such Control to acquire such Control. d. Compliance. The present and anticipated conduct of the business and operations of the Borrower and the Guarantor, and the present and anticipated ownership and use of each asset of the Borrower and the Guarantor, and the present and anticipated use of each asset leased by the Borrower and the Guarantor as a lessee are in compliance in each material respect with each applicable Law. Each authorization, approval, permit, consent, franchise and license from, each registration and filing with, each declaration, report and notice to, and each other act by or relating to, any Person necessary for the present or anticipated conduct of the business or operations of the Borrower or the Guarantor, for the present or anticipated ownership or use of any asset of the Borrower or the Guarantor, or for the present or anticipated use of any asset leased by the Borrower or the Guarantor as a lessee has been duly obtained, made, given or done, and is in full force and effect. Each of the Borrower and the Guarantor is in compliance in each material respect with each such authorization, approval, permit, consent, franchise and license with respect to it, with its certificate or articles of incorporation or other charter document, with its by-laws or other organizational document and with each agreement and instrument to which it is a party or by which it or any of its assets is bound. e. Legality. The obtaining of each Loan by the Borrower (i) is and will be in furtherance of the purposes of the Borrower and within the power and authority of the Borrower, (ii) does not and will not (A) violate, or result in any violation of, any Law or 9 11 any judgment, order or award of any court, agency or other governmental authority or of any arbitrator or (B) violate, result in any violation of, constitute (whether immediately or after notice, after lapse of time or both notice and lapse of time) any default under, or result in or require the imposition or creation of any security interest in, or of any mortgage or other lien or encumbrance upon, any asset of the Borrower pursuant to, (I) the certificate or articles of incorporation or other charter document of the Borrower, (II) the by-laws or other organizational document of the Borrower, (III) any shareholder agreement, voting trust or similar arrangement applicable to any of the outstanding shares of any class of stock of the Borrower, (IV) any resolution or other action of record of the shareholders or board of directors of the Borrower or (V) any agreement or instrument to which the Borrower is a party or by which the Borrower or any asset of the Borrower is bound, and (iii) have been duly authorized by each necessary action of the shareholders or board of directors of the Borrower. The execution, delivery to the Bank and performance of each Loan Document by each Person other than the Bank who or that is contemplated by such Loan Document as a party thereto, and the imposition or creation of each security interest, mortgage and other lien and encumbrance imposed or created pursuant thereto, (i) do not and will not (A) violate, or result in any violation of, any Law or any judgment, order or award of any court, agency or other governmental authority or of any arbitrator or (B) violate, result in any violation of, constitute (whether immediately or after notice, after lapse of time or after both notice and lapse of time) any default under, or, other than pursuant to such Loan Document, result in or require the imposition or creation of any security interest in, or of any mortgage or other lien or encumbrance upon, any asset of such Person pursuant to, any agreement or instrument to which such Person is a party or by which such Person or any asset of such Person is bound, and (ii) if such Person is not an individual, (A) are and will be in furtherance of the purposes of such Person and within the power and authority of such Person, (B) do not and will not violate, result in any violation of, or result in or require the imposition or creation of any security interest in, or of any mortgage or other lien or encumbrance upon, any asset of such Person pursuant to, (I) any certificate or articles of incorporation, by-laws, partnership agreement, articles of association or other charter, organizational or governing document of such Person, (II) any shareholder agreement, voting trust or similar arrangement applicable to any of the outstanding shares of any class of stock of such Person or (III) any resolution or other action of record of any shareholders or members of such Person, of any board of directors or trustees of such Person or of any other Person responsible for governing such Person, and (C) have been duly authorized by each necessary action of any shareholders or members of such Person, of any board of directors or trustees of such Person or of any other Person responsible for governing such Person. Each authorization, approval, permit and consent from, each registration and filing with, each declaration and notice to, and each other act by or relating to, any Person required as a condition of the obtaining of any Loan by the Borrower, of the execution, delivery to the Bank or performance of any Loan Document by any Person other than the Bank or of the imposition or creation of any security interest, mortgage or other lien or encumbrance imposed or created pursuant to any Loan Document has been duly obtained, made, given or done, and is in full force and effect. Each Loan 10 12 Document has been duly executed and delivered to the Bank by each Person other than the Bank who or that is contemplated by such Loan Document as a party thereto. f. Fiscal Year. The fiscal year of the Borrower and the Guarantor is the year ending on the last Sunday in December. g. Material Adverse Effects. Since December 25, 1994, there has not occurred or existed any event or condition that has had or (so far as the Borrower or the Guarantor can foresee) will or might have any Material Adverse Effect. h. Tax Returns and Payments. Each of the Borrower and the Guarantor has duly (i) filed each tax return required to be filed by it and (ii) paid or caused to be paid each tax, assessment, fee, charge, fine and penalty that has been imposed by any government or political subdivision upon it or upon any of its assets, income and franchises and has become due. i. Indebtedness. Neither the Borrower nor the Guarantor has any indebtedness, liability or obligation (i) arising from the borrowing of money or from the deferral of the payment of the purchase price of any asset or (ii) pursuant to any guaranty or other contingent obligation (including, but not limited to, any obligation to (A) maintain the net worth of any other Person, (B) purchase or otherwise acquire, or assume, any indebtedness, liability or obligation or (C) provide funds for or otherwise assure the payment of any indebtedness, liability or obligation, whether by means of any investment, by means of any sale or other disposition, or by means of any purchase or other acquisition, of any asset or service or otherwise), except for indebtedness, liabilities and obligations (I) to the Bank or (II) resulting from the endorsement in the ordinary course of business of any check or other negotiable instrument for deposit or for collection. j. Pension Obligations. No Pension Plan was or is a multiemployer plan, as such term is defined in Section 3(37) of ERISA. The present value of all benefits vested under any Pension Plan does not exceed the value of the assets of such Pension Plan allocable to such vested benefits. Since September 2, 1974, (i) no Prohibited Transaction that could subject any Pension Plan to any tax or penalty imposed pursuant to the Internal Revenue Code or pursuant to ERISA has been engaged in by any Pension Plan, (ii) there has not occurred or existed with respect to any Pension Plan any Reportable Event, Accumulated Funding Deficiency or event or condition that, but for a waiver by the Internal Revenue Service, would constitute an Accumulated Funding Deficiency, that, after notice, after lapse of time or after both notice and lapse of time, will or might constitute a Reportable Event or that constituted or will or might constitute grounds for the institution by the Pension Benefit Guaranty Corporation of any proceeding under ERISA seeking the termination of such Pension Plan or the appointment of a trustee to administer such Pension Plan, (iii) no Pension Plan has been terminated, (iv) no trustee has been appointed by a United States District Court to administer any Pension Plan, (v) no proceeding seeking the termination of any Pension Plan 11 13 or the appointment of a trustee to administer any Pension Plan has been instituted, and (vi) neither the Borrower nor the Guarantor has made any complete or partial withdrawal from any Pension Plan. k. Assets: Liens and Encumbrances. Each of the Borrower and the Guarantor has good and marketable title to each asset it purports to own, and no such asset is subject to any security interest, mortgage or other lien or encumbrance, except for Permitted Liens. 1. Investments. Neither the Borrower nor the Guarantor has any investment (whether by means of any purchase or other acquisition of any security or interest, by means of any capital contribution or otherwise) in any other Person, except for Permitted Investments. m. Loans. Neither the Borrower nor the Guarantor has made any loan, advance or other extension of credit with respect to which any sum is owing to it, except for Permitted Loans. n. Judgments and Litigation. There is no outstanding judgment, order or award of any court, agency or other governmental authority or of any arbitrator, and no pending or threatened claim, audit or investigation, and no pending or threatened action or other legal proceeding, by or before any court, agency or other governmental authority or before any arbitrator, that (i) is against, or otherwise involves, the Borrower, the Guarantor, or any asset of the Borrower or the Guarantor, (ii) has had or (so far as the Borrower or the Guarantor can foresee) will or might have any Material Adverse Effect or (iii) renders invalid, or questions the validity of, any Loan Document or any action taken or to be taken pursuant to any Loan Document. o. Transactions with Affiliates. There exists no agreement, arrangement, transaction or other dealing (including, but not limited to, the purchase, sale, lease, exchange or other acquisition or disposition of any asset and the rendering of any service) between the Borrower and any Affiliate, or between the Guarantor and any Affiliate, except for agreements, arrangements, transactions and other dealings in the ordinary course of business of the Borrower or the Guarantor upon fair and reasonable terms no less favorable to it than would apply in a comparable arm's length agreement, arrangement, transaction or other dealing with a Person who or that is not an Affiliate. p. Default. There does not exist any Event of Default or Potential Event of Default. q. Full Disclosure. Neither any Loan Document nor any certificate, financial statement or other writing heretofore provided to the Bank by or on behalf of the Borrower or the Guarantor or any Other Obligor contains any statement of fact that is 12 14 incorrect or misleading in any material respect or omits to state any fact necessary to make any statement of fact contained therein not incorrect or misleading in any material respect. Neither the Borrower nor the Guarantor has failed to disclose to the Bank any fact that has had or (so far as the Borrower or the Guarantor can foresee) will or might have any Material Adverse Effect. 6. AFFIRMATIVE COVENANTS. During the term of this Agreement, the Borrower shall do the following unless the prior written consent of the Bank to not doing so shall have been obtained by the Borrower: a. Good Standing; Qualification. (i) Maintain its corporate existence in good standing and (ii) remain or become and remain duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction in which such qualification is or becomes necessary; b. Compliance. (i) Conduct its business and operations, own and use each of its assets, and use each asset leased by it as a lessee in compliance in each material respect with each applicable Law, (ii) obtain. make, give or do, and maintain in full force and effect, each authorization, approval, permit, consent, franchise and license from, each registration and filing with, each declaration, report and notice to, and each other act by or relating to, any Person necessary for the conduct of its business or operations, for the ownership or use of any of its assets, or for the use of any asset leased by it as a lessee, and (iii) remain in compliance in each material respect with each such authorization, approval, permit, consent, franchise and license, with its certificate or articles of incorporation or other charter document, with its by-laws or other organizational document and with each agreement and instrument to which it is a party or by which it or any of its assets is bound; c. Working Capital; Current Ratio. Assure that at all times (1) the consolidated net working capital of the Borrower is at least $2,000,000 and (ii) all consolidated current assets of the Borrower other than indebtedness, liabilities and obligations of any Affiliate are not less than 200% of all consolidated current liabilities of the Borrower other than indebtedness, liabilities and obligations of the Borrower that are fully subordinated pursuant to a subordination agreement in form and substance satisfactory to the Bank to all indebtedness, liabilities and obligations of the Borrower to the Bank; d. Net Worth; Liabilities. Assure that at all times (i) the consolidated tangible net worth of the Borrower is at least $3,000,000 and (ii) all consolidated liabilities of the Borrower other than indebtedness, liabilities and obligations of the Borrower that are fully subordinated pursuant to a subordination agreement in form and substance satisfactory to the Bank to all indebtedness, liabilities and obligations of the Borrower to the Bank do not exceed 250% of such consolidated tangible net worth; 13 15 e. Accounting; Reserves; Tax Returns. (i) Maintain a system of accounting established and administered in accordance with generally accepted accounting principles, (ii) establish each reserve it is required by generally accepted accounting principles to establish and (iii) File each tax return it is required to file; f. Financial and Other Information. Provide to the Bank (i) as soon as available, (A) each financial statement, report, notice and proxy statement sent or made available by the Borrower or the Guarantor to holders of its stock generally, (B) each periodic or special report, registration statement, prospectus and other written communication other than a transmittal letter filed by the Borrower or the Guarantor with, and each written communication received by the Borrower or the Guarantor from, any securities exchange or the Securities and Exchange Commission, (C) each annual report relating to any Pension Plan and filed with the Internal Revenue Service, with the Department of Labor or with the Pension Benefit Guaranty Corporation and (D) each press release and other statement made available by the Borrower or the Guarantor to the public generally and relating to the business, operations, assets, affairs or condition (financial or other) of the Borrower or the Guarantor and (ii) promptly upon the request of the Bank, all additional information relating to the Borrower, to the Guarantor, or to the business, operations, assets, affairs or condition (financial or other) of the Borrower or the Guarantor that is so requested; g. Payment of Certain Indebtedness. Pay, before the end of any applicable grace period, each tax, assessment, fee, charge, fine and penalty imposed by any government or political subdivision upon it or upon any of its assets, income and franchises and each claim and demand of any materialman, mechanic, carrier, warehouseman, garageman or landlord against it; provided, however, that no such tax, assessment, fee, charge, fine, penalty, claim or demand shall be required to be so paid so long as (i) the validity thereof is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, (ii) adequate reserves have been appropriately established therefor, (iii) the execution or other enforcement of any lien resulting therefrom is effectively stayed and (iv) the nonpayment thereof does not have any Material Adverse Effect; h. Maintenance of Title and Assets; Insurance. (i) At all times maintain good and marketable title to each asset it purports to own, (ii) at all times maintain each of its tangible assets in good working order and condition, (iii) at any time and from time to time make each replacement of any of its tangible assets necessary or desirable for the conduct of its business or operations, (iv) at all times keep each of its insurable tangible assets insured with financially sound and reputable insurance carriers against fire and other hazards to which extended coverage applies in such manner and to the extent that the amount of insurance carried on such asset shall be adequate, taking into account such factors as the probability of loss of such asset, the value of such asset and the cost to the Borrower of such insurance, and (v) at all times keep adequately insured with financially sound and reputable insurance carriers against business interruption and against liability on account of damage to any Person or asset or pursuant to any applicable workers' compensation law; 14 16 i. Inspections. Upon the request of the Bank, promptly permit each officer, employee, accountant, attorney and other agent of the Bank to (i) visit and inspect each of the premises of the Borrower, (ii) examine, audit, copy and extract each record of the Borrower, and (iii) discuss the business, operations. assets, affairs and condition (financial or other) of the Borrower with each responsible officer of the Borrower and with each independent accountant of the Borrower; j. Pension Obligations. (i) Immediately upon acquiring knowledge or reason to know of the occurrence or existence with respect to any Pension Plan of any Prohibited Transaction, Reportable Event, Accumulated Funding Deficiency or event or condition that, but for a waiver by the Internal Revenue Service, would constitute an Accumulated Funding Deficiency, that, after notice, after lapse of time or after both notice and lapse of time, will or might constitute a Reportable Event or that constitutes or will or might constitute grounds for the initiation by the Pension Benefit Guaranty Corporation of any proceeding under ERISA seeking the termination of such Pension Plan or the appointment of a trustee to administer such Pension Plan, provide to the Bank a certificate executed by the President or a Vice President of the Borrower and by the chief financial officer of the Borrower and specifying the nature of such Prohibited Transaction, Reportable Event, Accumulated Funding Deficiency, event or condition, what action the Borrower has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, by the Department of Labor or by the Pension Benefit Guaranty Corporation with respect thereto and (ii) immediately upon acquiring knowledge or reason to know of (A) the institution by the Pension Benefit Guaranty Corporation or by any other Person of any proceeding under ERISA seeking the termination of any Pension Plan or the appointment of a trustee to administer any Pension Plan or (B) the complete or partial withdrawal or proposed complete or partial withdrawal by the Borrower from any Pension Plan, provide to the Bank a certificate executed by the President or a Vice President of the Borrower and by the chief financial officer of the Borrower and describing such proceeding, withdrawal or proposed withdrawal; k. Changes in Management, Ownership and Control. Immediately upon acquiring knowledge or reason to know of any change in the identity of the Chairman, President or chief executive officer of the Borrower or the Guarantor, in the beneficial ownership of any stock of the Borrower or the Guarantor by any Person having Control of the Borrower or the Guarantor or in Control of the Borrower or the Guarantor, provide to the Bank a certificate executed by the President or a Vice President of the Borrower and specifying such change; 1. Judgments. Immediately upon acquiring knowledge or reason to know of any judgment, order or award of any court, agency or other governmental authority or of any arbitrator that (i) is against, or otherwise involves, the Borrower, the Guarantor, or any asset of the Borrower or the Guarantor, (ii) has or (so far as the Borrower or the Guarantor can foresee) will or might have any Material Adverse Effect or (iii) renders invalid 15 17 any Loan Document or any action taken or to be taken pursuant to any Loan Document, provide to the Bank a certificate executed by the President or a Vice President of the Borrower and specifying the nature of such judgment, order or award and what action the Borrower has taken, is taking or proposes to take with respect thereto; m. Litigation. (i) Immediately upon acquiring knowledge or reason to know of the commencement or threat of any claim, audit or investigation, or of the commencement or threat of any action or other legal proceeding, by or before any court, agency or other governmental authority or before any arbitrator that (A) is against, or otherwise involves, the Borrower, the Guarantor, or any asset of the Borrower or the Guarantor and (I) either involves in excess of an amount equal to 20% of the consolidated tangible net worth of the Borrower at the end of the most recent fiscal year of the Borrower ending before the fiscal year of the Borrower during which such knowledge or reason to know is acquired or results in excess of such amount in the aggregate for the Borrower and the Guarantor being involved in all claims, audits and investigations, and in all actions and other legal proceedings, by or before any court, agency or other governmental authority or before any arbitrator against, or otherwise involving, the Borrower, the Guarantor, or any asset of the Borrower or the Guarantor or (II) seeks injunctive or similar relief, (B) has or (so far as the Borrower or the Guarantor can foresee) will or might have any Material Adverse Effect or (C) questions the validity of any Loan Document or of any action taken or to be taken pursuant to any Loan Document, provide to the Bank a certificate executed by the President or a Vice President of the Borrower and specifying the nature of such claim, audit or investigation or of such action or other legal proceeding and what action the Borrower has taken, is taking or proposes to take with respect thereto and (ii) immediately upon acquiring knowledge or reason to know of any development with respect to any claim, audit, investigation, action or other legal proceeding theretofore disclosed by the Borrower to the Bank that has or (so far as the Borrower or the Guarantor can foresee) will or might have any Material Adverse Effect, provide to the Bank a certificate executed by the President or a Vice President of the Borrower and specifying the nature of such development and what action the Borrower has taken, is taking or proposes to take with respect thereto; n. Liens and Encumbrances. Immediately upon acquiring knowledge or reason to know that any asset of the Borrower or the Guarantor has or may become subject to any security interest, mortgage or other lien or encumbrance other than Permitted Liens, provide to the Bank a certificate executed by the President or a Vice President of the Borrower and specifying the nature of such security interest, mortgage or other lien or encumbrance and what action the Borrower has taken, is taking or proposes to take with respect thereto; o. Defaults and Material Adverse Effects. Immediately upon acquiring knowledge or reason to know of the occurrence or existence of (i) any Event of Default or Potential Event of Default or (ii) any event or condition that has or (so far as the Borrower or the Grantor can foresee) will or might have any Material Adverse Effect, provide to the Bank a certificate executed by the President or a Vice President of the Borrower 16 18 and by the chief financial officer of the Borrower and specifying the nature of such Event of Default, Potential Event of Default, event or condition, the date of occurrence or period of existence thereof and what action the Borrower has taken, is taking or proposes to take with respect thereto; and p. Further Actions. Promptly upon the request of the Bank, execute and deliver, or cause to be executed and delivered, each writing, and take, or cause to be taken, each other action, that the Bank shall deem necessary or desirable at the sole option of the Bank in connection with any transaction contemplated by any Loan Document. 7. NEGATIVE COVENANTS. During the term of this Agreement, the Borrower shall not, without the prior written consent of the Bank, do, attempt to do, or agree or otherwise incur, assume or have any obligation to do, any of the following: a. Fiscal Year. Change its fiscal year; b. Indebtedness. Create, incur, assume or have any indebtedness, liability or obligation (i) arising from the borrowing of money or from the deferral of the payment of the purchase price of any asset or (ii) pursuant to any guaranty or other contingent obligation (including, but not limited to, any obligation to (A) maintain the net worth of any other Person, (B) purchase or otherwise acquire, or assume, any indebtedness, liability or obligation or (C) provide funds for or otherwise assure the payment of any indebtedness, liability or obligation, whether by means of any investment, by means of any sale of other disposition, or by means of any purchase or other acquisition, of any asset or service or otherwise), except for indebtedness, liabilities and obligations (I) to the Bank, (II) resulting from the endorsement in the ordinary course of business of any check or other negotiable instrument for deposit or for collection or (III) fully and accurately described in Exhibit A attached to and made a part of this Agreement; c. Pension Obligations. (i) Engage in any Prohibited Transaction with respect to any Pension Plan, (ii) permit to occur or exist with respect to any Pension Plan any Accumulated Funding Deficiency or evenly or condition that, but for a waiver by the Internal Revenue Service, would constitute an Accumulated Funding Deficiency or that constitutes or will or might constitute grounds for the institution by the Pension Benefit Guaranty Corporation of any proceeding under ERISA seeking the termination of such Pension Plan or the appointment of a trustee to administer such Pension Plan, (iii) make any complete or partial withdrawal from any Pension Plan, (iv) fail to make to any Pension Plan any contribution that it is required to make, whether to meet any minimum funding standard under ERISA or any requirement of such Pension Plan or otherwise, or (v) terminate any Pension Plan in any manner, or otherwise take or omit to take any action with respect to any Pension Plan, that would or might result in the imposition of any lien upon any asset of the Borrower pursuant to ERISA; 17 19 d. Liens. Cause or permit, whether upon the happening of any contingency or otherwise, any of its assets to be subject to any security interest, mortgage or other lien or encumbrance, except for Permitted Liens; e. Investments. Make any investment (whether by means of any purchase or other acquisition of any security or interest, by means of any capital contribution or otherwise) in any Person, except for Permitted Investments; f. Loans. Make any loan, advance or other extension of credit, except for Permitted Loans; g. Transactions with Affiliates. In the ordinary course of its business or otherwise, enter into, assume or permit to exist any agreement, arrangement, transaction or other dealing (including, but not limited to, the purchase, sale, lease, exchange or other acquisition or disposition of any asset and the rendering of any service) between it and any Affiliate or otherwise deal with any Affiliate, except for (i) reasonable compensation for services actually performed, (ii) advances made in the ordinary course of its business to any Affiliate who is one of its officers and employees for out-of-pocket expenses incurred by such Affiliate on its behalf in the conduct of its business or operations and (iii) agreements, arrangements, transactions and other dealings in the ordinary course of its business upon fair and reasonable terms no less favorable to it than would apply in a comparable arm's-length agreement, arrangement, transaction or other dealing with a Person who or that is not an Affiliate; h. Distributions. Declare, pay or make any Distribution, except for (i) cash dividends paid by the Borrower that do not exceed $1,000,000 in the aggregate in any fiscal year of the Borrower, and (ii) dividends payable solely in any of its stock; i. Corporate Changes. (i) Assign, sell or otherwise transfer or Dispose of all or substantially all of its assets, (ii) participate in any merger, consolidation or other absorption, (iii) acquire all or substantially all of the assets of any other Person, (iv) do business under or otherwise use any name other than its true name, (v) make any election, or terminate or permit to be revoked any election made by it, pursuant to Subchapter S of the Internal Revenue Code or (vi) make any change in its corporate or business structure, in any of its business objectives and purposes or in its business or operations that would or might have any Material Adverse Effect; j. Sale of Receivables. Assign, sell or otherwise transfer or dispose of any of its notes receivable, accounts receivable and chattel paper, whether with or without recourse; k. Full Disclosure. Provide to Bank, or permit to be provided to the Bank on its behalf, any certificate, financial statement or other writing that contains any 18 20 statement of fact that is incorrect or misleading in any material respect or omits to state any fact necessary to make any statement of fact contained therein not incorrect or misleading in any material respect. 8. INDEBTEDNESS IMMEDIATELY DUE. Upon or at any time or from time to time after the occurrence or existence of any Event of Default other than an Event of Default described in clause (vii) of Section 11h of this Agreement, the outstanding principal amount of each Loan, all interest owing pursuant to this Agreement and remaining unpaid and all other amounts owing by the Borrower to the Bank pursuant to this Agreement and remaining unpaid shall, at the sole option of the Bank and without any notice, demand, presentment or protest of any kind (each of which is knowingly, voluntarily, intentionally and irrevocably waived by the Borrower), become immediately due. Upon the occurrence or existence of any Event of Default described in such clause (vii), such outstanding principal amount, all such interest and all such other amounts shall, without any notice, demand, presentment or protest of any kind (each of which is knowingly, voluntarily, intentionally and irrevocably waived by the Borrower), automatically become immediately due. 9. EXPENSES; INDEMNIFICATION. The Borrower shall pay to the Bank on demand each cost and expense (including, but not limited to, the reasonable fees and disbursements of counsel to the Bank) incurred by the Bank in connection with (a) the preparation of, entry into or performance of any Loan Document, whether or not any Loan is made, or (b) any modification of, or any release, consent or waiver relating to, any Loan Document, whether or not such modification, release, consent or waiver becomes effective. In addition, the Borrower shall pay to the Bank on demand each cost and expense (including, but not limited to, the reasonable fees and disbursements of counsel to the Bank, whether retained for advice, for litigation or for any other purpose) incurred by the Bank in endeavoring to (a) collect any of the outstanding principal amount of any Loan, any interest owing pursuant to this Agreement and remaining unpaid or any other amount owing by the Borrower to the Bank pursuant to this Agreement and remaining unpaid, (b) preserve or exercise any right or remedy of the Bank relating to, enforce or realize upon any guaranty, endorsement, subordination, collateral or other security or assurance of payment now or hereafter directly or indirectly securing the repayment or payment of, or otherwise now or hereafter directly or indirectly applicable to, any of such outstanding principal amount, any such interest or any such other amount, (c) preserve or exercise any right or remedy of the Bank pursuant to any Loan Document or (d) defend against any claim, regardless of the basis or outcome thereof, asserted against the Bank as a direct or indirect result of the entry into any Loan Document, except for any claim for any tax imposed by any government or political subdivision upon any income of the Bank or for any interest or penalty relating to any such tax. 10. GENERAL. 19 21 a. Term; Survival. The term of this Agreement shall be until the principal amount of each Loan, all interest owing pursuant to this Agreement and all other amounts owing by the Borrower to the Bank pursuant to this Agreement have been fully, finally and irrevocably repaid, paid or otherwise discharged. The obligation of the Borrower to pay liabilities, costs and expenses described in Section 9 of this Agreement shall survive beyond the term of this Agreement. b. Survival; Reliance. Each representation, warranty, covenant and agreement contained in this Agreement shall survive the making of each Loan and the execution and delivery to the Bank of each Loan Document, and shall continue in full force and effect during the term of this Agreement. Each such representation, warranty, covenant and agreement shall be presumed to have been relied upon by the Bank regardless of any investigation made or not made, or any information possessed or not possessed, by the Bank. c. Cumulative Nature, Nonexclusive Exercise and Waivers of Rights and Remedies. All rights and remedies of the Bank pursuant to this Agreement or otherwise shall be cumulative, and no such right or remedy shall be exclusive of any other such right or remedy. For example, all rights and remedies of the Bank pursuant to Section 8 of this Agreement shall be in addition to all other rights and remedies of the Bank, whether pursuant to any Loan Document or pursuant to applicable law. No single or partial exercise by the Bank of any such right or remedy shall preclude any other or further exercise thereof, or any exercise of any other such right or remedy, by the Bank. No course of dealing or other conduct heretofore pursued, accepted or acquiesced in, no course of performance or other conduct hereafter pursued, accepted or acquiesced in, no oral or written agreement or representation heretofore made, and no oral agreement or representation hereafter made, by or on behalf of the Bank, whether or not relied or acted upon, and no usage of trade, whether or not relied or acted upon, shall operate as a waiver of any such right or remedy. No delay by the Bank in exercising any such right or remedy, whether or not relied or acted upon, shall operate as a waiver thereof or of any other such right or remedy. No notice or demand of any kind, and no attempted but unsuccessful notice or demand of any kind, by the Bank prior to exercising any such right or remedy on any one occasion, whether or not relied or acted upon, shall operate as a waiver of any right of the Bank to exercise the same or any other such right or remedy on such or any future occasion without any notice or demand of any kind. No waiver by the Bank of any such right or remedy shall be effective unless made in a writing duly executed by the Bank and specifically referring to such waiver. No waiver by the Bank on any one occasion of any such right or remedy shall operate as a waiver thereof or of any other such right or remedy on any future occasion. d. Entire Agreement. This Agreement contains the entire agreement between the Bank and the Borrower with respect to the subject matter of this Agreement, and supersedes each course of dealing or other conduct heretofore pursued, accepted or acquiesced in, and each oral or written agreement and representation heretofore made, by or on behalf of the Bank with respect thereto, whether or not relied or acted upon. No course of 20 22 performance or other conduct hereafter pursued, accepted or acquiesced in, and no oral agreement or representation hereafter made, by or on behalf of the Bank, whether or not relied or acted upon, and no usage of trade, whether or not relied or acted upon, shall modify or terminate this Agreement or impair or otherwise affect any indebtedness, liability or obligation of the Borrower pursuant to this Agreement or any right or remedy of the Bank pursuant to this Agreement or otherwise. No modification or termination of this Agreement shall be effective unless made in a writing duly executed by the Bank and specifically referring to each provision of this Agreement being modified or to such termination. e. Governing Law. This Agreement shall be governed by and construed, interpreted and enforced in accordance with the internal law of the State of New York, without regard to principles of conflict of laws. f. Notices to Borrower. Each notice to, each demand upon, and each other communication to, the Borrower by the Bank relating to this Agreement may be (i) delivered in person in writing, (ii) delivered in person orally with a subsequent confirmation sent by mail, by facsimile, by telex, by telegram or by mailgram, (iii) given by telephone with a subsequent confirmation sent by mail, by facsimile, by telex, by telegram or by mailgram or (iv) sent by mail, by facsimile, by telex, by telegram or by mailgram. Each such notice, demand and other communication delivered in person orally or given by telephone shall be deemed to have been delivered or given when so communicated. Each such notice, demand, confirmation and other communication sent by mail, by facsimile, by telex, by telegram or by mailgram shall be directed to the Borrower at the address of the only place of business or chief executive office of the Borrower shown at the beginning of this Agreement or at such other address as may at any time and from time to time be specified in any notice delivered or sent to the Bank by the Borrower. Each such notice, demand, confirmation and other communication shall be deemed to have been sent (i) if sent by mail, when deposited in the mail, first class or certified postage prepaid, or when delivered to any post office for sending by registered mail, directed to the Borrower at the address determined in accordance with the preceding senunce or (ii) if sent by facsimile, by telex, by telegram or by mailgram, when delivered to any facsimile or telex operator or telegraph or mailgram office directed to the Borrower at the address determined in accordance with the preceding sentence. g. Notices to Bank. Each notice to, each demand upon, and each other communication to, the Bank by the Borrower relating to this Agreement shall specifically refer to this Agreement, and shall be delivered in person in writing or sent by registered mail directed to the Bank at One Fountain Plaza, Buffalo, New York 14203-1495, Attention: Western New York Commercial Banking Department, or at such other address as may at any time and from time to time be specified in any notice delivered, given or sent to the Borrower by the Bank. Each such notice, demand and other communication shall be deemed to have been delivered or sent only when actually received by an officer of the Bank at the address determined in accordance with the preceding sentence. 21 23 h. Assignments and Participation. This Agreement shall inure to the benefit of, and be enforceable by, the Bank, each successor of the Bank and each assignee of any of the rights and remedies of the Bank pursuant to this Agreement, and shall be binding upon the Borrower, upon each successor of the Borrower and upon each assignee of any of the rights of the Borrower pursuant to this Agreement; provided, however, the Borrower shall not assign or otherwise transfer any of the rights of the Borrower pursuant to this Agreement without the prior written consent of the Bank, and any such assignment or other transfer without such prior written consent shall be void. No consent by the Bank to any such assignment or other transfer shall release the Borrower from any indebtedness, liability or obligation of the Borrower pursuant to this Agreement. The Bank shall have the right to assign or otherwise transfer, or to grant any participation in, any indebtedness, liability or obligation of the Borrower to the Bank pursuant to this Agreement or any of the rights and remedies of the Bank pursuant to this Agreement. i. Requests. Each request of the Bank pursuant to this Agreement may be made (i) at any time and from time to time, (ii) at the sole option of the Bank and (iii) whether or not any Event of Default or Potential Event of Default has occurred or existed. j. Right of Setoff. Upon and at any time and from time to time after the occurrence or existence of any Event of Default, (i) the Bank shall have the right, at the sole option of the Bank and without any notice or demand of any kind (each of which is knowingly, voluntarily, intentionally and irrevocably waived by the Borrower), other than any notice required by applicable law (including, but not limited to, any notice required by Section 9-g of the New York Banking Law), to set off against the outstanding principal amount of each Loan, against all interest owing pursuant to this Agreement and remaining unpaid and against all other amounts owing by the Borrower to the Bank pursuant to this Agreement and remaining unpaid each indebtedness of the Bank in any capacity to the Borrower in any capacity, whether alone or otherwise and whether or not then due, (including, but not limited to, any such indebtedness arising as a direct or indirect result of any deposit account, whether evidenced by a certificate of deposit or otherwise), and (ii) each holder of any participation in any unpaid indebtedness of the Borrower to the Bank pursuant to this Agreement shall have the right, at the sole option of such holder and without any notice or demand of any kind (each of which is knowingly, voluntarily, intentionally and irrevocably waived by Borrower), to set off against such unpaid indebtedness, to the extent of such holder's participation in such unpaid indebtedness, each indebtedness of such holder in any capacity to the Borrower in any capacity, whether alone or otherwise and whether or not then due, (including, but not limited to, any such indebtedness arising as a direct or indirect result of any deposit account, whether evidenced by a certificate of deposit or otherwise). Each exercise of such right by the Bank or by such holder shall be deemed to be immediately effective at the time the Bank or such holder opts therefor even though evidence thereof is not entered on the records of the Bank or of such holder until later. 22 24 k. Invalidity. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law. If, however, any such provision shall be prohibited by or invalid under such law, it shall be deemed modified to conform to the minimum requirements of such law, or, if for any reason it is not deemed so modified, it shall be prohibited or invalid only to the extent of such prohibition or invalidity without the remainder thereof or any other such provision being prohibited or invalid. l. Directly or Indirectly. Any provision of this Agreement that prohibits or has the effect of prohibiting the Borrower or the Guarantor from taking any action shall be construed to prohibit it from taking such action directly or indirectly. m. Accounting Terms and Computations. Each accounting term used in this Agreement shall be construed as of any time in accordance with generally accepted accounting principles as in effect at such time. Each accounting computation that this Agreement requires to be made as of any time shall be made in accordance with such principles as in effect at such time, except where such principles are incompatible with any requirement of this Agreement. n. Reference to Law. Any reference in this Agreement to any Law shall be deemed to be as of any time a reference to such Law as in effect at such time or, if such Law is not in effect at such time, a reference to any similar Law in effect at such time. o. Reference to Governmental Authority. Any reference in this Agreement to any court, agency or other governmental authority shall be deemed to be as of any time after such court, agency or other governmental authority ceases to exist a reference to the successor of such court, agency or other governmental authority at such time. p. Headings. In this Agreement, headings of sections are for convenience of reference only, and are not of substantive effect. 11. DEFINITIONS. For purposes of this Agreement: a. Accumulated Funding Deficiency. "Accumulated Funding Deficiency" has the meaning given to such term in Section 412(a) of the Internal Revenue Code. b. Affiliate. "Affiliate" means, other than the Guarantor, (i) any Person who or that now or hereafter has Control of, or is now or hereafter under common Control with, the Borrower or the Guarantor or over whom or over which the Borrower or the Guarantor now or hereafter has Control, (ii) any Person who is now or hereafter related by blood, by adoption or by marriage to any Person referred to in clause (i) of this sentence or now or hereafter resides in the same home as any such Person, (iii) any Person who is now 23 25 or hereafter a director or officer of the Borrower or the Guarantor, or (iv) any Person who is now or hereafter related by blood, by adoption or by marriage to any Person referred to in clause (iii) of this sentence or now or hereafter resides in the same home as any such Person or over whom or over which any such Person now or hereafter has Control. c. Bankruptcy Law. "Bankruptcy Law" means any bankruptcy or insolvency Law or any other Law relating to the relief of debtors, to the readjustment, composition or extension of indebtedness, to liquidation or to reorganization. d. Bank's Prime Rate. "Bank's Prime Rate" means the rate announced by the Bank as its prime rate of interest. e. Control. "Control" means, with respect to any Person, whether direct or indirect, (i) if such Person is a corporation, the power to vote 5% or more of the outstanding shares of any class of stock of such Person ordinarily having the power to vote for the election of directors of such Person, (ii) the beneficial ownership of 5% or more of the outstanding shares of any class of stock of such Person or of 5% or more of any other ownership interest in such Person or (iii) the power to direct or cause the direction of the management and policies of such Person, whether by ownership of any stock or other ownership interest, by agreement or otherwise. f. Distribution. "Distribution" means, with respect to any corporation, (i) any dividend or other distribution, whether in cash or in the form of any other asset, on account of any of its stock or (ii) any payment on account of the purchase, redemption, retirement or other acquisition of any of its stock. g. ERISA "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. h. Event of Default. An "Event of Default" occurs or exists if (i) the Borrower defaults in the repayment when due of any of the principal amount of any Loan or in the payment when due of any interest owing pursuant to this Agreement or of any other amount owing by the Borrower to the Bank pursuant to this Agreement, (ii) the Borrower, the Guarantor or any Other Obligor defaults in the payment when due, whether by acceleration or otherwise, of any sum, whether payable for principal, for interest or otherwise and whether the obligation to make payment thereof now exists or hereafter arises, that is now or hereafter owing by him, her or it to the Bank not pursuant to this Agreement, the maturity of any such sum is accelerated or there occurs or exists any event or condition that permits, or, after notice, after lapse of time or after both notice and lapse of time, would permit, the acceleration of the maturity of any such sum, (iii) the Borrower, the Guarantor or any Other Obligor defaults in the payment when due, whether by acceleration or otherwise, of any sum, whether payable for principal, for interest or otherwise and whether the obligation to make payment thereof now exists or hereafter arises, that is now or hereafter owing by him, her or 24 26 it to any Person other than the Bank other than that the nonpayment of which is permitted by Section 6g of this Agreement, the maturity of any such sum is accelerated or there occurs or exists any event or condition that permits, or, after notice, after lapse of time or after both notice and lapse of time, would permit, the acceleration of the maturity of any such sum, (iv) the Borrower defaults in the performance when due of any obligation owing by it to the Bank pursuant to this Agreement other than an obligation to pay money, (v) the Borrower, the Guarantor or any Other Obligor defaults in the performance when due of any obligation, whether now existing or hereafter arising, that is now or hereafter owing by him, her or it to the Bank or to any other Person not pursuant to this Agreement other than an obligation to pay money or there occurs or exists any event or condition that constitutes, or, after notice, after lapse of time or after both notice and lapse of time, would constitute, any default with respect to any such obligation, (vi) the Borrower, the Guarantor or any Other Obligor is dissolved, ceases to exist, participates or agrees to participate in any merger, consolidation or other absorption, assigns, sells or otherwise transfers or disposes of all or substantially all of his, her or its assets, makes or permits what might be fraudulent transfer or fraudulent conveyance of any of his, her or its assets, makes any bulk sale, sends any notice of any intended bulk sale, dies, becomes incompetent or insolvent (however such insolvency is evidenced), generally fails to pay his, her or its debts as they become due, fails to pay, withhold or collect any tax as required by any Law, suspends or ceases his, her or its present business, has served or filed against him, her or it or against any of his, her or its assets any attachment, levy, tax, lien, warrant or similar lien other than a Permitted Lien or has entered against him, her or it or against any of his, her or its assets any judgment, order or award of any court, agency or other governmental authority or of any arbitrator, (vii) the Borrower has any receiver, trustee, liquidator, sequestrator or custodian of it or of any of its assets appointed (whether with or without its consent), makes any assignment for the benefit of creditors or commences or has commenced against it any case or other proceeding pursuant to any Bankruptcy Law or any formal or informal proceeding for the dissolution, liquidation or winding up of the affairs of, or for the settlement of claims against it, (viii) the Guarantor or any Other Obligor has any receiver, trustee, liquidator, sequestrator or custodian of him, her or it or of any of his, her or its assets appointed (whether with or without his, her or its consent), makes any assignment for the benefit of creditors or commences or has commenced against him, her or it any case or other proceeding pursuant to any Bankruptcy Law or any formal or informal proceeding for the dissolution, liquidation or winding up of the affairs of, or for the settlement of claims against, him, her or it, (ix) any representation or warranty made in this Agreement proves, as of any time during the period beginning on the date of this Agreement and ending at the time any Loan is made or as of the time any loan is made, to have been incorrect or misleading in any material respect, except to the extent updated in a certificate executed by the President or a Vice President of the Borrower or by the chief financial officer of the Borrower and received by the Bank, (x) any representation or warranty heretofore or hereafter made, or any financial statement heretofore or hereafter provided, to the Bank by or on behalf of the Borrower or by or on behalf of the Guarantor or any Other Obligor proves, as of the date of such representation, warranty or financial statement, to have been incorrect or misleading in any material respect or, if a financial statement, to have omitted any substantial 25 27 contingent or unliquidated liability of, or any substantial claim against, him, her or it or there occurred, and was not disclosed to the Bank, before the delivery to the Bank of this Agreement by the Borrower any material adverse change in any information disclosed in any such representation or warranty theretofore so made or in any such financial statement theretofore so provided, (xi) there occurs or exists with respect to any Pension Plan any Prohibited Transaction, Reportable Event or other event or condition that, in the opinion of the Bank, constitutes or will or might constitute grounds for the institution by the Pension Benefit Guaranty Corporation of any proceeding under ERISA seeking the termination of such Pension Plan or the appointment of a trustee to administer such Pension Plan, the Pension Benefit Guaranty Corporation institutes any proceeding under ERISA seeking the termination of any Pension Plan or the appointment of a trustee to administer any Pension Plan, any Person other than the Pension Benefit Guaranty Corporation institutes any proceeding under ERISA seeking the termination of any Pension Plan or the appointment of a trustee to administer any Pension Plan that is, in the opinion of the Bank, likely to result in the termination of such Pension Plan, any trustee is appointed by a United Stales District Court to administer any Pension Plan, any Pension Plan is terminated or there are vested unfunded liabilities under any Pension Plan that, in the opinion of the Bank, have or will or might have any Material Adverse Effect or (xii) there occurs any change in the identity of the Chairman, President or chief executive officer of the Borrower or the Guarantor, in the beneficial ownership of any stock of the Borrower or the Guarantor by any Person having Control of the Borrower or the Guarantor or in Control of the Borrower or the Guarantor that is, in the opinion of the Bank, materially adverse to its interest and is not corrected to its full satisfaction within thirty days after it delivers, gives or sends to the Borrower a notice that it considers such change materially adverse to its interest. i. Guarantor. "Guarantor" means C.H. Heist Corp., a New York business corporation having its chief executive office at 810 North Belcher Road, Clearwater, Florida 34625. j. Interest Period. "Interest Period" means any seven-day period beginning on Monday and ending on the following Sunday. k. Internal Revenue Code. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. l. Law. "Law" means any statute, ordinance, regulation, rule, interpretation, decision, guideline or other requirement enacted or issued by any court, agency or other governmental authority. m. Loan. "Loan" means any Revolving Loan or the Term Loan. n. Loan Document. "Loan Document" means this Agreement or any other agreement or instrument referred to in Section 4d, 4e or 4f of this Agreement. 26 28 o. Material Adverse Effect. "Material Adverse Effect" means any material adverse effect on (i) the ability of the Borrower to repay when due any of the principal amount of the Loan or to pay when due any interest owing to the Bank pursuant to this Agreement or any other amount owing by the Borrower to the Bank pursuant to this Agreement, (ii) the ability of the Borrower or the Guarantor to perform when due any obligation pursuant to any Loan Document or (iii) the Borrower, the Guarantor, or the business, operations, assets, affairs or condition (financial or other) of the Borrower or the Guarantor. p. Other Obligor. "Other Obligor" means, other than the Borrower, the Guarantor, any Person (i) who or that, whether as a maker, drawer, acceptor, endorser, guarantor, surety or accommodation party or otherwise, is now or hereafter directly or indirectly liable for the payment of any indebtedness, liability or obligation of the Borrower to the Bank, whether now existing or hereafter arising, or (ii) any asset of whom or of which now or hereafter directly or indirectly secures the payment of any such indebtedness, liability or obligation. q. Pension Plan. "Pension Plan" means (i) any pension plan, as such term is defined in Section 3(2) of ERISA, that (A) has heretofore been or is hereafter established or maintained by the Borrower or by any other Person that is, together with the Borrower, a member of a controlled group of corporations for purposes of Section 414(b) of the Internal Revenue Code or is under common control with the Borrower for purposes of Section 414(c) of the Internal Revenue Code, (B) to which contributions have heretofore been or are hereafter made by the Borrower or by any such other Person or (C) to which the Borrower or any such other Person has heretofore agreed or hereafter agrees or otherwise has heretofore incurred or hereafter incurs any obligation to make contributions or (ii) any trust heretofore or hereafter created under any such pension plan. r. Permitted Investment. "Permitted Investment" means any investment by the Borrower or the Guarantor in (i) any readily marketable direct obligation of the United States maturing within one year after the date of its acquisition thereof, (ii) any time deposit maturing within one year after the date of its acquisition thereof and issued by any banking institution that is incorporated under any statute of the United States or of any state of the United States and has a combined capital and surplus of not less than $50,000,000, (iii) any demand or savings deposit with any such banking institution, or (iv) any security fully and accurately described in Exhibit A attached to and made a part of this Agreement. s. Permitted Lien. "Permitted Lien" means (i) any lease of any asset by the Borrower or the Guarantor as a lessor in the ordinary course of its business and without interference with the conduct of its business or operations, (ii) any pledge or deposit made by the Borrower or the Guarantor in the ordinary course of its business (A) in connection with any workers' compensation, unemployment insurance, social security or similar Law or (B) to secure the payment of any indebtedness, liability or obligation in 27 29 connection with any letter of credit, bid, tender, trade or government contract, lease, survey, appeal or performance bond or Law, or of any similar indebtedness, liability or obligation, not incurred in connection with the borrowing of any money or in connection with the deferral of the payment of the purchase price of any asset, (iii) any attachment, levy or similar lien with respect to the Borrower or the Guarantor arising in connection with any action or other legal proceeding so long as (A) the validity of the claim or judgment secured thereby is being contested in good faith by appropriate proceedings promptly undiluted and diligently conducted, (B) adequate reserves have been appropriately established for such claim or judgment, (C) the execution or the enforcement of such attachment, levy or similar lien is effectively stayed and (D) neither such claim or judgment nor such attachment, levy or similar lien has any Material Adverse Effect, (iv) any statutory lien in favor of the United States for any amount paid to the Borrower or the Guarantor as a progress payment pursuant to any government contract, (v) any statutory lien securing e payment of any tax, assessment, fee, charge, me or penalty imposed by any government or political subdivision upon the Borrower or the Guarantor or upon any of the assets income and franchises of the Borrower or the Guarantor but not yet required by Section 6g of this Agreement to be paid, (vi) any statutory lien securing the payment of any claim or demand of any materialman, mechanic, carrier, warehouseman, garageman or landlord against the Borrower or the Guarantor but not yet required by such Section 6g be paid, (vii) any reservation, exception, encroachment, easement, right-of way, covenant, condition, restriction, lease or similar title exception or encumbrance affecting the title to any real property of the Borrower or the Guarantor but not interfering with the conduct of its business or operations, (viii) any securities interest, mortgage or other lien or encumbrance in favor of the Bank or (ix) any security interest, mortgage or other lien or encumbrance existing on the date of this Agreement an fully and accurately described in Exhibit A attached to and made a part of this Agreement. t. Permitted Loan. "Permitted Loan'' means (i) any loan, advance or other extension of credit made by the Guarantor to the Borrower or by the Borrower to the Guarantor, (ii) any deferral of the purchase price of any inventory old by the Borrower or the Guaramor in the ordinary course of its business, (iii) any advance made by the Borrower or the Guarantor in the ordinary course of its business to any of its officers and employees for out-of-pocket expenses incurred by such officer or employee on its behalf in the conduct of its business or operations or (iv) any loan, advance or other extension of credit fully and accurately described n Exhibit A attached to and made a part of this Agreement. u. Person. "Person" means (i) any individual, corporation, partnership, joint venture, trust, unincorporated association, government or political subdivision, (ii) any court, agency or other governmental authority or (iii) any other entity, body, organization or group. v. Potential Event of Default. "Potential Event of Default" means a event or condition that, after notice, and lapse of time or after both notice and lapse of time, would constitute an vent of Default. 28 30 w. Prohibited Transaction. "Prohibited Transaction" (i) has the meaning given to such term in Section 4975(c) of the Internal Revenue Code, and (ii) means any transaction prohibited b Section 406(a) of ERISA. x. Reportable Event. "Reportable Event" has the meaning given to such term in Section 4043(b) of ERISA. y. Revolving Loan. ''Revolving Loan" means any loan by the Bank to the Borrower pursuant to Section 2a of this Agreement. z. Revolving Loan Applicable Variable Rate. "Revolving Loan Applicable Variable Rate" means (i) the rate in effect such day as the Bank's Prime Rate if, pursuant to Section 2g of this Agreement, the Bank's prime Rate is or would be used in determine the rate of interest payable for such day on the outstanding principal amount of EACH Revolving Loan or (ii) 1.125lG above the Secondary Market CD Rate for the Interest Period in which such day falls if, pursuant to such Section 2g, the Secondary Market CD Rate is or would be used in determining such rate of interest. aa. Revolving Loan Repayment Date. "Revolving Loan Repayment Date" means the later of (i) August 1, 1997 or (ii) any date specified in any extension request executed by the Bank in accordance with Section 2d of this Agreement. bb. Secondary Market CD Rate. "Secondary Market CD Rate" means, for any Interest Period, the rate of interest per year (expressed as a percentage and rounded to the next higher 100th of 1%) that is obtained by dividing (i) the AVERAGE (as published by the Board of Governors of the Federal Reserve System based on reports of certificate of deposit dealers or, if such publication does not occur, as determined by the Bank on the basis of quotations for such rates received by the Bank from three certificate of deposit dealers of recognized standing located in the State of New York) of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks for the week ending the last business day before such interest Period by (ii) the difference between 100% and the maximum percentage of reserve requirement (including any supplemental or marginal percentage of reserve requirement) for the first day of the calendar week containing such day, as specified by such Board of Governors for the Bank with respect to liabilities consisting of or including three-month nonpersonal time deposits of at least $100,000 each. cc. Term Loan. "Term Loan" means the loan by the Bank to the Borrower pursuant to Section 3a of this Agreement. dd. Term Loan Applicable Variable Rate. "Term Loan Applicable Variable Rate" means (i) 1/2 % above the rate in effect such day as the Bank's Prime Rate if, pursuant to Section 3e of this Agreement, the Bank's Prime Rate is to or would be used in 29 31 determining the rate of interest payable for such day on the outstanding principal amount of the Term Loan or (ii) 1-1/2% above the Secondary Market CD Rate for the Interest Period in which such day falls if, pursuant to such Section 3e, the Secondary Market CD Rate is or would be used in determining such rate of interest. 12. WAIVER OF TRIAL BY JURY. EACH OF THE BANK AND THE BORROWER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION, WHETHER BASED ON ANY CONTRACT, ON ANY NEGLIGENT OR INTENTIONAL TORT, ON ANY LAW OR OTHERWISE, IN CONNECTION WITH, OR OTHERWISE RELATING TO, (A) ANY LOAN, ANY LOAN DOCUMENT OR ANY GUARANTY, ENDORSEMENT, SUBORDINATION, COLLATERAL OR OTHER SECURITY OR ASSURANCE OF PAYMENT NOW OR HEREAFTER DIRECTLY OR INDIRECTLY SECURING THE PAYMENT OR REPAYMENT OF, OR NOW OR HEREAFTER DIRECTLY OR INDIRECTLY APPLICABLE TO, ANY OF THE PRINCIPAL AMOUNT OF ANY LOAN, ANY INTEREST OWING PURSUANT TO THIS AGREEMENT OR ANY OTHER AMOUNT OWING BY THE BORROWER TO THE BANK PURSUANT TO THIS AGREEMENT, (B) ANY OTHER WRITING HERETOFORE OR HEREAFTER EXECUTED IN CONNECTION WITH, OR OTHERWISE RELATING TO, ANY LOAN, ANY LOAN DOCUMENT OR ANY SUCH GUARANTY, ENDORSEMENT, SUBORDINATION, COLLATERAL OR OTHER SECURITY OR ASSURANCE OF PAYMENT OR (C) ANY COURSE OF DEALING, COURSE OF PERFORMANCE OR OTHER CONDUCT HERETOFORE OR HEREAFTER PURSUED, ANY ACTION HERETOFORE OR HEREAFTER TAKEN OR OMITTED TO BE TAKEN, OR ANY ORAL OR WRITTEN REPRESENTATION HERETOFORE OR HEREAFTER AND, BY OR ON BEHALF OF THE OTHER IN CONNECTION WITH, OR OTHERWISE RELATING TO, ANY LOAN, ANY LOAN DOCUMENT OR ANY SUCH GUARANTY, ENDORSEMENT, SUBORDINATION, COLLATERAL OR OTHER SECURITY OR ASSURANCE OF PAYMENT. THIS SECTION 12 IS A MATERIAL INDUCEMENT FOR EACH OF THE BANK AND THE BORROWER IN CONNECTION WITH ITS ENTRY INTO THIS AGREEMENT. 30 32 The Bank and the Borrower have caused this Agreement to be duly executed on the date shown at the beginning of this agreement. MANUFACTURERS AND TRADERS TRUST COMPANY By: /s/ R. Buford Sears, ---------------------------------------- R. Buford Sears, Vice President ABLEST SERVICE CORP By: /s/ John L. Rowley ---------------------------------------- John L. Rowley, Vice President - Finance 31 33 ACKNOWLEDGMENTS STATE OF NEW YORK ) ) SS.: COUNTY OF ERIE ) On the 1st day of September in the year 1995, before me personally came R. Buford Sears, to me known, who, being by me duly sworn, did depose and say that he resides at 240 Middlesex Road, Buffalo, New York 14216; that he is a Vice President of Manufacturers and Traders Trust Company, the corporation described in and which executed the above instrument; and that he signed his name thereto by order of the board of directors of said corporation. /s/ Timothy C. Cashmore ---------------------------------- Notary Public TIMOHY C. CASHMORE STATE OF NEW YORK ) Notary Public, State of New York ) SS.: Qualified in Erie County COUNTY OF ERIE ) My Commission Expires May 31, 1997 On the 21st of August in the year 1995, before me personalty came John L. Rowley, to me known, who, being by me duly sworn, did depose and say that he resides in Clearwater, Florida; that he is the Vice President - Finance of Ablest Service Corp., he corporation described in and which executed the above instrument; and that he signed his name thereto by order of the board of directors of said corporation. /s/ Isadore Snitzer ---------------------------------- Notary Public ISADORE SNITZER Notary Public State of New York Qualified in Erie County My Commission Expires June 30, 1996 32 34 EXHIBIT A Section 11(s) Permitted Liens. 1) Any purchase money security interest upon personal property of the Borrower or the Guarantor upon which the aggregate unpaid indebtedness of the Borrower and the Guarantor does not exceed $150,000 at any one time. 2) Any purchase money mortgages upon real proper of the Borrower or the Guarantor upon which the aggregate unpaid indebtedness) of the Borrower and the Guarantor does not exceed $1,000,000 at any one time. Section 11(r) Permitted Investments. Securities hereafter acquired by the Borrower or the Guarantor for an aggregate cost not exceeding $4,000,000 at any one time. 33 EX-13 3 C. H. HEIST - 1995 A.R. TO SHAREHOLDERS 1 EXHIBIT 13 1995 ANNUAL REPORT TO SHAREHOLDERS 2 EXHIBIT 13 SUMMARY OF SELECTED FINANCIAL DATA C.H. HEIST CORP. AND SUBSIDIARIES
(In thousands, except per share earnings and percentages) FISCAL YEARS ENDED DECEMBER 1995 1994 1993 (4) 1992 1991 ---- ---- ---- ---- ---- Net sales $102,659 102,572 82,476 71,397 70,082 Cost of sales 86,933 90,098 71,506 60,941 58,742 -------- ------- ------ ------ ------ Gross profit 15,726 12,474 10,970 10,456 11,340 Selling, general and administrative expenses 12,316 11,003 9,511 7,886 7,533 -------- -------- ------- ------ ------ Operating income 3,410 1,471 1,459 2,570 3,807 Interest expense (541) (396) (224) (170) (265) Other income (expense) 42 (23) (149) (31) (35) -------- -------- ------- ------ ------ Earnings before income taxes 2,911 1,052 1,086 2,369 3,507 Income taxes 1,305 734 600 1,099 1,486 -------- -------- ------- ------ ------ Net earnings $ 1,606 318 486 1,270 2,021 ======== ======== ======= ====== ====== Effective tax rate 44.8% 69.8% 55.3% 46.4% 42.4% Net earnings per share (1) $ .56 .11 .17 .44 .70 ======== ======== ======= ====== ====== Canadian operations (2) (U.S. $): Sales $ 14,483 12,673 12,643 10,437 16,322 Operating income (loss) 1,118 549 (153) (361) 624 Total assets $ 10,093 9,451 8,479 10,117 10,956 ======== ======= ======= ====== ====== Other data: Working capital $ 15,738 14,356 12,431 11,856 11,669 Property, plant and equipment, net 17,642 14,964 15,631 12,627 14,442 Capital expenditures 7,091 3,957 7,643 2,458 4,356 Depreciation and amortization 4,530 4,433 4,534 4,200 3,868 Cash flow from operations (3) 6,135 4,751 5,020 5,470 5,889 Total assets 39,548 36,756 33,972 29,895 32,284 Long-term debt 6,980 5,121 3,760 568 2,855 Stockholders' equity $ 26,368 24,513 24,709 24,916 24,500 Return on beginning stockholders' equity 6.6% 1.3% 2.0% 5.2% 9.0% Weighted average number of shares outstanding (1) 2,872 2,872 2,885 2,905 2,905
(1) As restated for the three-for-two stock split issued October 14, 1991. (2) Includes no export sales. (3) Defined as net earnings plus depreciation and amortization. (4) Includes effect of acquisition in 1993. See note 12 to the consolidated financial statements. 8 3 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION For the fiscal years ended December 31, 1995 compared to December 25, 1994 RESULTS OF OPERATIONS Sales for the current year increased by $87,000. More importantly net earnings increased more than five fold to $1,606,000. Sales in the temporary staffing segment, Ablest Service Corp. (Ablest), increased $582,000 or 1.3% with a decrease in the industrial maintenance segment of $495,000 or .8%. Ablest growth was offset by sales reductions when some customers implemented discounted or national contracts and in other situations a decision was made not to provide staffing that was low rate, high refill and required high staff hours to service. The decrease in industrial maintenance sales was due to declines in equipment related services of $481,000 and reduced sales in the Heist Field Services (HFS) division (OMSI until May 1, 1995) of $1,500,000. These reductions were offset by increases in painting and sandblasting of $1,286,000 and insulation sales and application of $200,000. The decline in equipment related and HFS division sales was a result of turnaround and major plant cleanup work done in the prior period that was not duplicated in the current period. The timing of turnaround projects typically varies depending on customer operating cycles. The increase in painting sales was due to the Peace Bridge painting and lead abatement project. Insulation sales increased at our PBI division. During the fourth quarter of 1995 a significant insulation maintenance contract was not renewed. This will result in a decline of sales in 1996 of approximately $3,000,000. However, this was a highly discounted contract which will not result in a material impact on net earnings. Gross profit as a percent of sales increased from 12.2% to 15.3%. Through our safety department, management has been emphasizing training, development of safety programs and increased effort on risk management. This program has reduced the number and severity of the insurance claims and the Company has achieved major cost reductions in its insurance expense. The savings amounted to $2,000,000 during the current year. The fourth quarter of 1995 included approximately $800,000 of non-recurring reductions in certain accrued expenses. The majority of these adjustments related to the reduction in the insurance accrual to reflect the aforementioned savings once the effect had been confirmed. Improved margins in the HFS division and in our Canadian operation also contributed to the increase in gross profit. Selling, general and administrative expenses increased by $1.3 million or 11.9%. The increases resulted from the upgrade of Information Technology to accommodate planned growth, consulting services to design a management reporting system that follows the Economic Value Added (EVAR) Model, implementing an automated retrieval system in temporary staffing offices and personnel additions to strengthen the service to our customers. Interest income increased due to excess cash invested at higher rates in the Canadian subsidiary. Interest expense increased due to higher interest rates on borrowed funds in the United States and higher average debt levels. Sales of equipment resulted in a net loss on sale of property, plant and equipment. Intangible assets relating to two acquisitions were fully amortized in 1994, resulting in the decrease in amortization expense in 1995. Collectively the above caused the increase in other expense of $80,000 or 19.2%. The effective income tax rate is 44.8% compared to the expected federal tax rate of 34.0%. This difference in rates is explained in footnote 5 to the consolidated financial statements. The reasons for the difference are the effect of state taxes on the Company and its subsidiaries which file separate tax returns and the Canadian subsidiary's income which is taxed at a higher rate than U.S. income. FINANCIAL CONDITION The quick ratio is 3.2 to 1 compared to 2.9 to 1 and the current ratio is 3.7 to 1 compared to 3.1 to 1 at December 31, 1995 and December 25, 1994, respectively. Working capital increased by $1.4 million during 1995. Long term borrowings (refer to Note 4 of the consolidated financial statements) increased $1.9 million leaving open credit commitments at Manufacturers and Traders Trust Company of $3.1 million for C.H. Heist Corp. and $3 million for Ablest Service Corp. The Company also has $366,450 (the U.S. dollar equivalent) available at the Royal Bank of Canada. Cash and cash equivalents increased during the current year by $1.5 million primarily due to earnings (adjusted for amortization, depreciation and a net increase in working capital), proceeds from the sale of property, plant and equipment, proceeds from exercised stock options, positive exchange rate changes and proceeds from long term borrowings, offset by additions to property, plant and equipment and repayment of long term borrowings. Capital expenditures were $7,091,000. Of this amount $4,211,000 was for industrial maintenance equipment, $2,252,000 was for computer equipment and software, $628,000 was for facilities and furniture and fixtures. Commitments as of December 31, 1995 were $435,000. $150,000 was for replacement equipment and $285,000 was for computer equipment. It is anticipated that existing internally available funds, cash flows from operations and available borrowings will be sufficient to cover the working capital and capital expenditure demands of the coming year. 9 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS For the fiscal years ended December 25, 1994 compared to December 26, 1993 RESULTS OF OPERATIONS The Company passed the $100,000,000 milestone for sales, logging $102,572,000 during the 1994 fiscal year, an increase of $20,096,000, or 24.4%. Sales in the industrial maintenance segment increased $12,086,000, 26.1% and of this increase, $7,652,000 was due to the OMSI acquisition. Ablest Service Corp., (Ablest), the temporary staffing affiliate, increased sales by $8,010,000, 22.2%, during 1994. Ablest sales continued to grow at a rate in excess of the temporary staffing industry, which last year had sales growth of 20.7%. Ablest's formula for increasing sales consists of sticking with basics of supplying clerical and industrial temporary personnel, continued commitment to the Company's service excellence program and partnering with their customers through the Company's Point Source program. With its quality sales base (no customer accounts for more than 3% of total sales), and an increasing gross margin, Ablest is positioned for market expansion and continued sales growth. Industrial maintenance sales increased primarily in the equipment related service area, and the OMSI division (acquired in 1993). This was due to the increased demand for major plant maintenance and clean-up services. The record sales and substantial profits achieved in the fourth quarter resulted from a substantial increase in industrial maintenance. This result which converted a cumulative loss to an annual profit, is not expected to continue in 1995 at these levels. Due to a substantial loss incurred on a major maintenance project in the first quarter of 1994, caused by poor job execution, cost of sales increased by $18,592,000, or 26.0%. This percentage increase was greater than the 24.4% sales increase and limited the gross profit increase to $1,504,000, or 13.7%. As a percent of sales, gross profit was 12.2% compared to 13.3% in fiscal 1993. The 12.2% was a striking contrast to the 1.8% gross profit in the first quarter of 1994. Strong performance by Ablest, and the Company's Canadian subsidiary, increased demand in the U.S. market for our services and a major restructuring of the OMSI division caused this improvement after the first quarter of 1994. Selling, general and administrative expenses increased $1,493,000, or 15.7%. This was due to the added cost of the OMSI acquisition, personnel additions in safety, quality, and human resources departments and additional staff in certain Ablest offices to alleviate the heavy order workload. As a percentage of sales, selling, general and administrative expenses decreased from 11.5% in 1993 to 10.7% in 1994. The increase of $46,000, 12.4%, in other expense was due to a combination of factors. Interest expense increased during the year because of higher borrowings at higher interest rates to fund the increase in accounts receivable and additions to property, plant and equipment. Interest income declined since prior years' excess funds were invested in acquisitions. The gain on disposal was due to an insurance settlement on a damaged piece of equipment and the sale of excess real property. Costs relating to two acquisitions became fully amortized in the current year, one in each of the first two quarters, resulting in the decrease of amortization of other assets. The effective income tax rate is 69.8% compared to the expected federal tax rate of 34.0%. The difference in these rates is spelled out in footnote 5 to the consolidated financial statements. One reason for the difference is the Canadian subsidiary, which has income that is taxed at a higher rate than U.S. income. Additionally, the actual rate is increased by the effect of state income taxes on the Company and its subsidiaries which file separate tax returns. INDEPENDENT AUDITORS' REPORT THE BOARD OF DIRECTORS/C.H. HEIST CORP.: We have audited the accompanying consolidated balance sheets of C.H. Heist Corp. and subsidiaries as of December 31, 1995 and December 25, 1994, and the related consolidated statements of earnings, stockholders' equity and cash flows for the years ended December 31, 1995, December 25, 1994 and December 26, 1993. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of C.H. Heist Corp. and subsidiaries as of December 31, 1995 and December 25, 1994, and the results of their operations and their cash flows for the years ended December 31, 1995, December 25, 1994 and December 26, 1993, in conformity with generally accepted accounting principles. Buffalo, New York February 16, 1996 KPMG Peat Marwick LLP 10 5 CONSOLIDATED BALANCE SHEETS C.H. HEIST CORP. AND SUBSIDIARIES
DEC. 31 DEC. 25 ASSETS 1995 1994 -------- -------- Current assets: Cash and cash equivalents $ 3,040,815 1,533,015 Receivables, less allowance for doubtful receivables of $426,234 and $362,543 in 1995 and 1994, respectively 14,283,008 14,915,198 Services in progress 990,729 1,840,429 Parts and supplies 2,170,572 2,058,424 Prepaid expenses 187,647 28,826 Deferred income taxes (note 5) 834,417 795,623 ------------ ---------- Total current assets 21,507,188 21,171,515 ------------ ---------- Property, plant and equipment, at cost (notes 2 and 4) 47,355,312 41,029,349 Less accumulated depreciation 29,712,818 26,065,152 ------------ ---------- Net property, plant and equipment 17,642,494 14,964,197 Deferred income taxes (note 5) 131,922 128,592 Other assets 265,916 491,749 ------------ ---------- $ 39,547,520 36,756,053 ============ ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term debt (note 4) $ 37,667 37,667 Accounts payable 1,306,819 1,675,260 Accrued expenses (note 3) 3,879,265 4,768,279 Income taxes payable 545,675 334,114 ------------ ---------- Total current liabilities 5,769,426 6,815,320 Long-term debt, excluding current installments (note 4) 6,980,057 5,120,863 Deferred income taxes (note 5) 430,286 306,849 ------------ ---------- Total liabilities 13,179,769 12,243,032 ------------ ---------- Stockholders' equity (notes 4, 5, 6 and 7): Common stock of $.05 par value. Authorized 8,000,000 shares; issued 3,165,192 shares and 3,162,692 shares for 1995 and 1994, respectively 158,260 158,135 Additional paid-in capital 4,253,689 4,235,689 Retained earnings 24,293,966 22,688,158 Equity adjustment from foreign currency translation (1,086,261) (1,317,058) ------------ ---------- 27,619,654 25,764,924 Less cost of common stock in treasury - 292,419 shares (1,251,903) (1,251,903) ------------ ---------- Total stockholders' equity 26,367,751 24,513,021 ------------ ---------- Commitments and contingencies (notes 13 and 14) ------------ ---------- $ 39,547,520 36,756,053 ============ ==========
See accompanying notes to consolidated financial statements. 11 6 CONSOLIDATED STATEMENTS OF EARNINGS C.H. HEIST CORP. AND SUBSIDIARIES
Year ended -------------------------------------------- DEC. 31 DEC. 25 DEC. 26 1995 1994 1993 ---- ---- ---- Net sales $102,659,211 102,572,391 82,476,106 Cost of sales 86,933,518 90,098,687 71,506,596 ------------ ----------- ---------- Gross profit 15,725,693 12,473,704 10,969,510 Selling, general and administrative expenses 12,315,628 11,003,144 9,510,580 ------------ ----------- ---------- Operating income 3,410,065 1,470,560 1,458,930 ------------ ----------- ---------- Other income (expense): Interest expense (540,517) (395,960) (224,383) Interest income 139,337 64,146 167,610 Gain (loss) on disposal of property, plant and equipment, net (25,251) 39,049 (9,180) Amortization of other assets (124,029) (194,982) (333,492) Miscellaneous 51,521 69,109 26,889 ------------ ----------- ---------- Other expense, net (498,939) (418,638) (372,556) ------------ ----------- ---------- Earnings before income taxes 2,911,126 1,051,922 1,086,374 Income taxes (note 5) 1,305,318 733,899 600,229 ------------ ----------- ---------- Net earnings $ 1,605,808 318,023 486,145 ============ =========== ========== Net earnings per common share $ .56 .11 .17 ============ =========== ========== Weighted average number of common shares outstanding 2,871,812 2,871,743 2,885,493 ============ =========== ==========
See accompanying notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY C.H. HEIST CORP. AND SUBSIDIARIES
Equity adjustments Additional from foreign Treasury stock Total Common paid-in Retained currency -------------- stockholders stock capital earnings translation Shares Amount equity ----- ------- -------- ----------- ------ ------ ------ Balances at December 27, 1992 $158,135 4,235,689 21,883,990 (412,188) 257,419 (950,028) 24,915,598 Net earnings - - 486,145 - - - 486,145 Foreign currency translation adjustment - - - (429,316) - - (429,316) Purchase of treasury shares - - - - 30,000 (263,750) (263,750) -------- --------- ---------- ---------- ------- ---------- ---------- Balances at December 26, 1993 158,135 4,235,689 22,370,135 (841,504) 287,419 (1,213,778) 24,708,677 Net earnings - - 318,023 - - - 318,023 Foreign currency translation adjustment - - - (475,554) - - (475,554) Purchase of treasury shares - - - - 5,000 (38,125) (38,125) -------- --------- ---------- ---------- ------- ---------- ---------- Balances at December 25, 1994 158,135 4,235,689 22,688,158 (1,317,058) 292,419 (1,251,903) 24,513,021 Net earnings - - 1,605,808 - - - 1,605,808 Exercised options 125 18,000 - - - - 18,125 Foreign currency translation adjustment - - - 230,797 - - 230,797 -------- --------- ---------- ---------- ------- ---------- ---------- Balances at December 31, 1995 $158,260 4,253,689 24,293,966 (1,086,261) 292,419 (1,251,903) 26,367,751 ======== ========= ========== ========== ======= ========== ==========
See accompanying notes to consolidated financial statements. 12 7 CONSOLIDATED STATEMENTS OF CASH FLOWS C.H. HEIST CORP. AND SUBSIDIARIES
Year ended --------------------------------------------------- DEC. 31 DEC. 25 DEC. 26 1995 1994 1993 ---- ---- ---- Cash flows from operating activities: Net earnings $1,605,808 318,023 486,145 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation of plant and equipment 4,405,519 4,237,734 4,200,416 Amortization of other assets 124,029 194,982 333,492 Loss (gain) on disposal of property, plant and equipment, net 25,251 (39,049) 9,180 Deferred income taxes 81,313 (186,848) (228,237) Changes in assets and liabilities (see below) 281,265 (3,056,906) (2,619,800) ---------- ---------- ---------- Net cash provided by operating activities 6,523,185 1,467,936 2,181,196 ---------- ---------- ---------- Cash flows from investing activities: Additions to property, plant and equipment, net (7,090,800) (3,957,032) (2,842,932) Proceeds from disposal of property, plant and equipment 150,262 226,895 77,045 Acquisition (note 12) - - (4,800,000) ---------- ---------- ---------- Net cash used by investing activities (6,940,538) (3,730,137) (7,565,887) ---------- ---------- ---------- Cash flows from financing activities: Proceeds from bank line of credit borrowings 8,200,000 9,206,000 5,600,000 Repayment of bank line of credit borrowings (6,300,000) (7,806,000) (2,300,000) Repayments of other long-term debt (40,806) (112,263) (107,666) Purchase of treasury shares - (38,125) (263,750) Exercised stock options 18,125 - - ---------- ---------- ---------- Net cash provided by financing activities 1,877,319 1,249,612 2,928,584 ---------- ---------- ---------- Effect of exchange rate changes on cash and cash equivalents 47,834 (113,436) (152,903) ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents 1,507,800 (1,126,025) (2,609,010) Cash and cash equivalents at beginning of year 1,533,015 2,659,040 5,268,050 ---------- ---------- ---------- Cash and cash equivalents at end of year $3,040,815 1,533,015 2,659,040 ========== =========== ========== Changes in assets and liabilities providing (using) cash: Receivables $ 705,732 (4,201,372) (2,435,818) Services in progress 863,594 (291,125) (813,759) Parts and supplies (108,077) (312,509) (8,147) Prepaid expenses (158,639) 111,478 (23,502) Accounts payable (442,344) 378,545 416,241 Accrued expenses (895,833) 1,168,486 531,967 Income taxes payable 215,186 162,143 (146,047) Other assets 101,646 (72,552) (140,735) ---------- ---------- ---------- Total $ 281,265 (3,056,906) (2,619,800) ========== ========== ========== Supplemental disclosure of cash flow information: Cash paid during year for: Interest $ 433,534 300,244 124,638 Income taxes $ 938,737 760,243 973,519 ========== ========== ==========
See accompanying notes to consolidated financial statements. 13 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS C.H. HEIST CORP. AND SUBSIDIARIES Years ended December 31, 1995, December 25, 1994 And December 26, 1993 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies followed by the Company are summarized as follows: (a) Fiscal Year The Company's fiscal year ends on the last Sunday of December. The consolidated financial statements include 53 weeks for the year ended December 31, 1995 and 52 weeks for each of the years ended December 25, 1994 and December 26, 1993. (b) Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated in consolidation. (c) Cash Equivalents All highly liquid investments with original maturities of three months or less are considered cash equivalents. (d) Services in Progress Income on services in progress is recorded as the work progresses. Anticipated losses, if any, are provided for in full. (e) Parts and Supplies Parts and supplies are valued at the lower of cost (first-in, first-out) or market. (f) Property, Plant and Equipment Depreciation of plant and equipment is provided over the estimated useful lives of the respective assets, principally on the straight-line method. Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or estimated useful life of the asset. (g) Intangible Assets The values ascribed to acquired intangibles (included in other assets), primarily covenants not-to-compete and customer and employee lists, are being amortized on the straight-line method over periods of five years or less. (h) Income Taxes Income taxes are accounted for by the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and credit carry forwards and differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. (i) Earnings Per Share The weighted average number of common shares outstanding includes the dilutive effect, if any, of stock options. (j) Foreign Currency Translation The Canadian subsidiary utilizes the Canadian dollar as its functional currency. Assets and liabilities are translated using rates of exchange as of the balance sheet date and the statements of earnings are translated at the average rate of exchange during the year. Gains and losses resulting from translation are reported separately in stockholders' equity as "Equity adjustment from foreign currency translation." Foreign currency transaction gains and losses, if any, are reflected in operations. (k) Use of Estimates Management has made a number of estimates and assumptions in preparing these financial statements to conform with generally accepted accounting principles. Actual results could differ from those estimates. (l) Accounting Pronouncements The Company is required to adopt statements of Financial Accounting Standards (FAS) Nos. 121 (Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of) and 123 (Accounting for Stock Based Compensation) in 1996. The Company does not believe that the adoption of either standard will have a material effect on the consolidated financial statements. With respect to FAS 123, the Company expects that it will not adopt the fair value accounting provisions of the standard, in favor of the disclosure alternative. 14 9 (2) PROPERTY, PLANT AND EQUIPMENT A summary of property, plant and equipment, as cost, follows:
DEC. 31 DEC. 25 1995 1994 ---- ---- Land $ 1,446,844 1,424,922 Buildings and improvements 5,147,329 4,753,110 Machinery and equipment 24,227,007 21,685,922 Automotive equipment 11,869,224 11,077,696 Office furniture and equipment 4,287,886 1,819,152 Leasehold improvements 377,022 268,547 ----------- ---------- $47,355,312 41,029,349 =========== ==========
(3) ACCRUED EXPENSES A summary of accrued expenses follows:
DEC. 31 DEC. 25 1995 1994 ---- ---- Payroll and other compensation $ 1,495,414 1,525,477 Taxes, other than income 453,816 522,049 Insurance 1,607,583 2,290,287 Site rehabilitation 318,881 306,117 Other 3,571 124,349 ------------ ---------- $ 3,879,265 4,768,279 ============ ==========
(4) INDEBTEDNESS A summary of long-term debt follows:
DEC. 31 DEC. 25 1995 1994 ---- ---- Notes payable, bank - revolving credit agreement $ 6,900,000 5,000,000 Mortgage notes with interest at 11.2%, payable in principal installments approximating $37,700 annually, secured by land and buildings with a depreciated cost of $1,137,949 at December 31, 1995 117,724 158,530 ------------ ---------- Total long-term debt 7,017,724 5,158,530 Less current installments of long-term debt 37,667 37,667 ------------ ---------- Long-term debt, excluding current installments $ 6,980,057 5,120,863 ============ ==========
The Company has a $10,000,000 unsecured bank line of credit under a revolving credit agreement. The interest rate on borrowings under the line of credit is elected weekly by the Company and is either (i) the bank's prime rate or (ii) the Secondary Market Certificate of Deposit (CD) Rate plus 7/8%. The rate in effect at December 31, 1995 is 6.6%. On July 31, 1997, the Company has the option of converting the then outstanding borrowings to a term loan, payable in twenty equal quarterly installments, bearing interest at either (i) the bank's prime rate plus 1/2% or (ii) the Secondary Market CD Rate plus 1.5%. If converted, the Company continues electing, on a weekly basis, the interest rate to be charged. The revolving credit agreement contains working capital requirements, and limits the amount of liabilities, capital expenditures and payment of cash dividends. Under the most restrictive of these provisions, $1,000,000 of retained earnings is free of dividend restrictions at December 31, 1995. Commitment fees of 1/4% per annum are payable on the average daily unused portion of the line of credit. Compensating balances, may be, but are not required to be, maintained. If compensating balances are not maintained at 5% of borrowings, fees at the bank's prime rate plus 1/2% are charged on the balance not maintained. One of the Company's U.S. subsidiaries has an unsecured line of credit in the amount of $3,000,000. The interest rate on any borrowings is determined in the same manner as the Company's revolving credit notes, (with the Secondary Market CD Rate plus 1 1/8%). Commitment fees of 1/4% per annum are payable on the average daily unused portion of the line of credit. No compensating balances are required and no amounts have been borrowed to date. The Company's Canadian subsidiary has an unsecured line of credit in the U.S. dollar equivalent amount of $366,450 at December 31, 1995. Any borrowings thereunder bear interest at the prime rate of the Royal Bank. Commitment fees of 1/4% per annum are payable on the average daily unused portion of the line of credit. No compensating balances are required. No amounts were outstanding at December 31, 1995 and December 25, 1994. Long-term debt matures as follows, assuming conversion of the amount due under the revolving credit agreement: $37,667 in 1996; $727,667 in 1997; $1,417,667 in 1998; $1,384,723 in 1999; $1,380,000 in 2000; and $2,070,000 thereafter. The fair value of long-term debt approximates its recorded value. 15 10 (5) INCOME TAXES Income tax expense consists of:
Year ended -------------------------------------------------------- DEC. 31 DEC.25 DEC.26 1995 1994 1993 ---- ---- ---- Current expense (benefit): Federal $ 377,936 234,128 619,978 State 246,433 344,506 213,800 Foreign 599,636 342,113 (5,312) ---------- --------- --------- Total current 1,224,005 920,747 828,466 ---------- --------- --------- Deferred expense (benefit): Federal 75,906 (181,089) (159,378) State 5,407 (12,941) (84,385) Foreign - 7,182 15,526 ---------- --------- --------- Total deferred 81,313 (186,848) (228,237) ---------- --------- --------- $1,305,318 733,899 600,229 ========== ========= ========= Pretax earnings consist of: Domestic $1,602,578 353,655 1,437,899 Foreign 1,308,548 698,267 (351,525) ---------- --------- --------- $2,911,126 1,051,922 1,086,374 ========== ========= =========
Actual income taxes differ from the "expected" taxes (computed by applying the U.S. Federal corporate tax rate of 34% to earnings before income taxes) as follows:
Year ended --------------------------------------------------- DEC. 31 DEC. 25 DEC. 26 1995 1994 1993 ---- ---- ---- Computed expected tax expense $ 989,783 $357,653 369,367 Adjustments resulting from: Effect of higher foreign tax rates 154,970 111,884 (4,954) State taxes, net of Federal tax benefit 166,214 218,834 85,414 Change in valuation allowance for foreign deferred tax assets (7,403) 1,756 134,687 Other 1,754 43,772 15,715 ---------- ------- ------- $1,305,318 733,899 600,229 ========== ======= ======= Effective tax rate 44.8% 69.8% 55.3% ========== ======= =======
The tax effects of temporary differences that give rise to the deferred tax assets and liability are as follows:
DEC. 31 DEC.25 1995 1994 ---- ---- Current deferred tax assets: Allowance for doubful receivables $105,332 101,418 Accrued site rehabilitation expense 117,728 117,728 Accrued insurance expense 531,544 576,000 Other 79,813 477 -------- -------- 834,417 795,623 -------- -------- Long-term deferred tax assets: Accumulated depreciation of plant and equipment 261,142 265,215 Valuation allowance (129,220) (136,623) -------- -------- 131,922 128,592 -------- -------- Long-term deferred tax liability, net: Liabilities: Accumulated depreciation of plant and equipment (652,956) (597,892) Other (17,314) (24,239) -------- -------- (670,270) (622,131) Assets: Operating loss and credit carry forwards 334,193 311,001 Accumulated amortization of other assets 189,897 207,531 Valuation allowance (284,106) (203,250) -------- -------- (430,286) (306,849) -------- -------- Net deferred tax assets $536,053 617,366 ======== ========
16 11 (5) INCOME TAXES, continued In assessing the realizability of deferred tax assets, management considers, within each taxing jurisdiction, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the years which the deferred tax assets are deductible, management believes it more likely than not the Company will realize the benefits of these deductible differences, net of existing valuation allowance at December 31, 1995. Undistributed earnings of the Canadian subsidiary, which are intended to be permanently reinvested in the business are approximately $10,466,000 at December 31, 1995. If such earnings were remitted to the domestic parent, taxes based at the then current rates and subject to certain limitations would be payable after reduction for any foreign taxes previously paid on such earnings. (6) TREASURY SHARES The Company has made the following repurchases of treasury shares in 1994 and 1993. These purchases, which were at market value, were from shareholders, each of whom own beneficially greater than 5% of the Company's outstanding common stock.
Shares Purchase price per share Amount ------ ------------------------ ------ Fiscal 1994-April 12, 1994 5,000 $7.63 $ 38,125 ====== ===== ========= Fiscal 1993: June 2, 1993 10,000 $9.38 $ 93,800 April 14, 1993 20,000 $8.50 169,950 ------ ===== --------- Total fiscal 1993 30,000 $ 263,750 ====== =========
(7) STOCK OPTION PLAN The Company has reserved 375,000 common shares for issuance in conjunction with its Stock Option Plan. The plan provides for the granting of incentive stock options and/or nonqualified options to officers and key employees to purchase shares of common stock at a price not less than the fair market value of the stock on the dates options are granted. Such options are excercisable at such time or times as may be determined by the Compensation Committee of the Board of Directors and expire no more than ten years after grant. A summary of stock option activity follows:
Year ended ----------------------------------------- DEC. 31 DEC. 25 DEC. 26 1995 1994 1993 ---- ---- ---- Outstanding, beginning of year 149,153 69,041 71,760 Granted 47,000 80,400 - Canceled or expired (3,953) (288) (2,719) Exercised (2,500) - - ------- ------- ------ Outstanding, end of year 189,700 149,153 69,041 ======= ======= ======
Options are fully exercisable at prices ranging from $6.94 to $11.14. (8) EMPLOYEE BENEFIT PLANS The Company has a qualified noncontributory defined benefit pension plan covering substantially all of its non-bargaining unit personnel in the United States. The benefits are based on years of service and the employee's average compensation during employment. Pension costs are funded as required required by applicable regulations. The following table sets forth the funded status of the plan at the October 1 measurement dates and the components of pension expense:
1995 1994 Funded status: Accumulated benefit obligation: Vested $1,744,222 1,129,943 Nonvested 376,786 226,592 ---------- --------- $2,121,008 1,356,535 ========== ========= Projected benefit obligation $2,762,755 1,782,601 Plan assets (insurance contracts and money market funds), at fair value 2,351,367 1,977,437 ---------- --------- Plan assets in excess of (less than) projected benefit obligation (411,388) 194,836 Unrecognized cumulative experience gain (629,424) (1,102,250) Unrecognized prior service cost 746,923 808,461 Unrecognized net asset at SFAS No.87 adoption date, being amortized over 15 years 17,814 20,521 ---------- --------- Accrued pension liability $ (276,075) (78,432) ========== =========
17 12 (8) EMPLOYEE BENEFIT PLANS, continued
Year ended ----------------------------------------- DEC. 31 DEC. 25 DEC. 26 1995 1994 1993 ---- ---- ---- Pension expense: Service cost-for projected benefits earned during the period $300,416 424,609 364,535 Interest cost on projected benefit obligation 128,884 119,768 98,408 Actual return on plan assets (328,967) 101,275 (170,711) Net amortization and deferral 167,510 (208,202) 117,340 -------- -------- -------- Total pension expense $267,843 437,450 409,572 ======== ======== ======== Principal actuarial assumptions are: Weighted average discount rate 6.25% 7.25% 6.00% Weighted average return on plan assets 7.95% 7.75% 7.75% Rate of compensation increase 4.90% 4.90% 4.90% ===== ===== =====
The Company maintains a deferred profit sharing plan covering all salaried employees of a Canadian subsidiary. Contributions to the plan are based on net earnings, as defined, subject to certain limitations based on the salaries of the participants. Expenses under the plan were $30,000 in 1995, $32,028 in 1994 and nil in 1993. (9) METHODS AND DEVELOPMENT COSTS Methods and development costs amounted to $154,417, $182,542 and $235,065, for the fiscal years 1995, 1994 and 1993, respectively. (10)INDUSTRY SEGMENTS AND MAJOR CUSTOMERS The Company operates in two industry segments, industrial maintenance and temporary help. The industrial maintenance segment furnishes services to heavy industries including high-pressure water cleaning, sandblasting, industrial painting, and the vacuuming of wet and dry industrial wastes. The temporary help segment supplies temporary employees for clerical, industrial and technical needs. Net sales by segment are sales to unaffiliated customers. Segment data as of and for each of the years ended December 31, 1995, December 25, 1994 and December 26, 1993 follows:
1995 1994 1993 ---- ---- ---- (In thousands) Industrial maintenance services: Net sales $ 57,974 58,469 46,383 Operating income (loss) 488 (1,930) (900) Identifiable assets 30,468 29,948 27,427 Capital expenditures 6,706 3,653 7,578 Depreciation 4,085 4,144 4,126 Amortization $ 24 91 180 ========= ======= ====== Temporary help: Net sales $ 44,685 44,103 36,093 Intersegment sales 134 152 141 --------- ------- ------ Total sales $ 44,819 44,255 36,234 ========= ======= ====== Operating income $ 2,922 3,401 2,359 Identifiable assets 7,588 5,704 5,002 Capital expenditures 385 304 65 Depreciation 321 94 74 Amortization $ 100 104 153 ========= ======= ====== Corporate assets $ 1,492 1,104 1,543 ========= ======= ====== Consolidated: Net sales $ 102,659 102,572 82,476 Operating income 3,410 1,471 1,459 Total assets 39,548 36,756 33,972 Capital expenditures, including acquisition in 1993 7,091 3,957 7,643 Depreciation 4,406 4,238 4,200 Amortization $ 124 195 333 ========= ======= ======
18 13 (10) INDUSTRY SEGMENTS AND MAJOR CUSTOMERS, continued The segment data reflects the Company's operational structure. However, certain corporate expenses and assets have been allocated to industry segments. Corporate assets not allocated include certificates of deposit. One customer accounted for approximately 12.9%, 11.2% and 13.1% of the Company's consolidated net sales in 1995, 1994 and 1993, respectively. At December 31, 1995 and December 25, 1994, receivables include approximately $1,016,416 and $1,602,530, respectively, from the same customer. (11) CANADIAN OPERATION A summary of financial data (in U.S. dollars) relating to the Company's Canadian industrial maintenance operations follows:
Year ended ---------------------------------------- DEC. 31 DEC. 25 DEC. 26 1995 1994 1993 ---- ---- ---- (In thousands) Identifiable assets $10,093 9,451 8,479 Liabilities 703 803 819 Net sales 14,483 12,673 12,643 Net earnings (loss) $ 709 349 (362) ======= ====== ======
(12) ACQUISITION OF BUSINESS On June 28, 1993, the Company acquired certain assets, principally property, plant and equipment, of Omstede Mechanical Services, Inc. (OMSI) for $4,800,000 in cash. As of May 1, 1995 the name OMSI was changed to Heist Field Services (HFS). The acquisition was accounted for under the purchase method of accounting. The purchase price was allocated to property, plant and equipment acquired based on its fair value which approximated the purchase price. HFS is engaged in the business of exchanger extraction and insertion, shell side cleaning, tube cleaning and field service repairs of heat exchangers. HFS's results of operations, prior to the date of acquisition, are not included in the consolidated results of the Company. The following unaudited pro forma consolidated results of operations are presented as if the acquisition was consummated on December 27, 1992. The pro forma results of operations reflect the effects of depreciation based on the acquisition price, increased interest costs resulting from borrowing needed for the purchase and certain reductions in non- recurring selling, general and administrative expenses. Such pro forma information does not purport to be indicative of the results which would actually have been reported if the acquisition had been consummated as of the aforementioned date or which may result in the future.
(Unaudited) Year ended Dec. 26 1993 ---- (In thousands except per share earnings) Sales $90,328 Net earnings 482 Net earnings per share $ .17 =======
(13) LEASE COMMITMENTS The Company and its subsidiaries occupy certain facilities under noncancellable operating lease arrangements. Expense under such arrangements amounted to $659,594, $549,907 and $517,437 in 1995, 1994 and 1993, respectively. Of these amounts, $83,400 applied to leases with related persons in 1995, 1994 and 1993. In addition, the Company leases certain automotive and office equipment under noncancellable operating lease arrangements which provide for minimum monthly rentals. Expense under such arrangements amounted to $689,897, $517,863 and $470,232 in 1995, 1994 and 1993, respectively. Management expects that in the normal course of business, leases that expire will be replaced by new leases. Real estate taxes, insurance and maintenance expenses are obligations of the Company. A summary of future minimum rental payments at December 31, 1995 under operating leases follows:
Year Real Property Other Equipment ---- ------------------- --------- 1996 $504,702 598,373 1997 305,468 439,197 1998 84,230 157,785 1999 20,207 6,077 2000 $ 13,930 - ======== =======
(14) CONTINGENCIES The Company is exposed to a number of asserted and unasserted potential claims encountered in the normal course of business. In the opinion of management, the resolution of such matters will not have a material adverse effect on the Company s financial condition. 19 14 QUARTERLY DATA C.H. HEIST CORP. AND SUBSIDIARIES In order to assist our stockholders and other members of the financial community in following our progress, this chart is provided, with the blank spaces provided for the current 1996 fiscal year. (In thousands, except per share data and percentages)
QUARTER ENDED ENDED ENDED ENDED FULL March June September December Year Fiscal 1996: Net sales $ $ $ $ $ Earnings (loss) before % % % % % income taxes Income taxes (benefit) % % % % % Net earnings(loss) % % % % % Earnings (loss) per share $ $ $ $ $ EPS - last 12 months $ $ $ $ $ Stock price range $ $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------- Fiscal 1995: Net sales $24,544 $25,301 $27,179 $25,635 $102,659 Earnings (loss) before income taxes (573) (2.3)% 974 3.8% 1,089 4.0% 1,421 5.5% 2,911 2.8% Income taxes (benefit) (225) (39.3)% 550 56.5% 490 45.0% 490 34.5% 1,305 44.8% Net earnings (loss) (348) (1.4)% 424 1.7% 599 2.2% 931 3.6% 1,606 1.6% Earnings (loss) per share $ (.12) $ .15 $ .21 $ .32 $ .56 EPS - last 12 months $ .61 $ .62 $ .64 $ .56 $ .56 Stock price range $ 10 1/4 - 6 1/4 $ 9 1/2 - 8 $8 1/8-7 1/4 $ 8 5/8-6 3/4 $ 10 3/4-63/4 - ----------------------------------------------------------------------------------------------------------------------- Fiscal 1994: Net sales $23,199 $24,897 $26,964 $27,512 $102,572 Earnings (loss) before income taxes (2,435) (10.5)% 519 2.1% 1,105 4.1% 1,863 6.8% 1,052 1.0% Income taxes (benefit) (659) (27.1)% 114 22.0% 555 50.2% 724 38.9% 734 69.8% Net earnings (loss) (1,776) (7.7)% 405 1.6% 550 2.0% 1,139 4.1% 318 .3% Earnings (loss) per share $ (.62) $ .14 $ .19 $ .40 $ .11 EPS - last 12 months $ (.41) $ (.41) $ (.26) $ .11 $ .11 Stock price range $ 8 - 7 $ 7 5/8-6 1/4 $ 6 7/8-5 5/8 $ 7 1/2-6 1/2 $ 8-5 5/8 - ----------------------------------------------------------------------------------------------------------------------- Fiscal 1993: Net sales $16,526 $20,257 $22,324 $23,369 $ 82,476 Earnings (loss) before income taxes (201) (1.2)% 677 3.3% 196 .9% 414 1.8% 1,086 1.3% Income taxes (benefit) (81) (40.3)% 282 41.7% 84 42.9% 315 76.1% 600 55.3% Net earnings (loss) (120) (.7)% 395 1.9% 112 .5% 99 .4% 486 .6% Earnings (loss) per share $ (.04) $ .14 $ .04 $ .03 $ .17 EPS - last 12 months $ .42 $ .36 $ .26 $ .17 $ .17 Stock price range $ 8 5/8-7 1/8 $ 9 1/2-8 $ 9 5/8-8 $ 8 1/2-7 7/8 $9 5/8-7 1/8 - -----------------------------------------------------------------------------------------------------------------------
The percentages indicate the pre-tax margin (earnings before income taxes/net sales), the effective tax rate (provision for income taxes/earnings before taxes) and after the tax margin (net earnings/net sales). On December 31, 1995, there were 184 registered shareholders. Proxies were mailed to an additional 296 shareholders whose certificates were registered in the name of brokers, banks and nominees on March 29, 1996. 20 EX-23 4 C.H. HEIST - CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23 Consent of KPMG Peat Marwick LLP to incorporation of reports in Form S-8 No. 33-48497 2 Exhibit 23 The Board of Directors C.H. Heist Corp.: We consent to the inclusion and incorporation by reference in the registration statement (No.33-48497) on Form S-8 of C.H. Heist Corp. of our reports dated February 16, 1996, relating to the consolidated balance sheets of C.H. Heist Corp. and subsidiaries as of December 31,1995 and December 25, 1994, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1995, and related schedule, which reports appear in, or are incorporated by reference into, the December 31, 1995 annual report on Form 10-K of C.H. Heist Corp. KPMG Peat Marwick LLP Buffalo, New York March 27, 1996 EX-27 5 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
5 1 U.S. DOLLARS YEAR DEC-31-1995 DEC-26-1995 DEC-31-1995 1 3,040,815 0 14,283,008 0 2,170,572 21,507,188 47,355,312 29,712,818 39,547,520 5,769,426 6,980,057 0 0 158,260 26,209,491 39,547,520 102,659,211 102,659,211 86,933,518 86,933,518 12,315,628 0 540,517 2,911,126 1,305,318 1,605,808 0 0 0 1,605,808 .56 .56
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