<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1994
Commission file number 1-8591
FIGGIE INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
Delaware 52-1297376
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4420 Sherwin Road, Willoughby, Ohio 44094
(Address of principal executive offices) (Zip Code)
(216) 953-2700
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at November 10, 1994
<S> <C>
Class A Common Stock, par value $.10 per share 13,789,723
Class B Common Stock, par value $.10 per share 4,958,655
18,748,378
</TABLE>
Total number of pages contained in this report 16 .
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<PAGE> 2
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
<S> <C>
Consolidated Statements of Income for the Nine Months
Ended September 30, 1994 and 1993 3
Consolidated Statements of Income for the Three Months
Ended September 30, 1994 and 1993 4
Consolidated Balance Sheets as of September 30, 1994
and December 31, 1993 5 - 6
Consolidated Statements of Cash Flow
for the Nine Months Ended September 30, 1994 and 1993 7
Notes to Consolidated Financial Statements 8 - 11
Management's Discussion and Analysis of
Financial Condition and Results of Operations 12 - 15
PART II. OTHER INFORMATION 16
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(in thousands, except for per share data)
(U N A U D I T E D)
1994 1993
<S> <C> <C>
CONTINUING OPERATIONS:
SALES AND OTHER INCOME
Net Sales $ 557,664 $ 547,314
Other income/(expense) (25) (1,490)
Total sales and other income 557,639 545,824
COSTS AND EXPENSES
Cost of sales 474,452 421,056
Selling, general and administrative expenses 119,213 102,058
Bad debt expense 1,805 1,389
Interest expense, net 31,770 24,899
Restructuring charges 1,474 16,065
Total costs and expenses 628,714 565,467
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (BENEFIT) (71,075) (19,643)
INCOME TAXES/(BENEFIT) (18,122) (5,344)
LOSS BEFORE DISCONTINUED OPERATIONS
AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING (52,953) (14,299)
LOSS FROM DISCONTINUED OPERATIONS,
NET OF TAX (1,098) (231)
LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING FOR INCOME TAXES (54,051) (14,530)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES - 5,839
NET LOSS $ (54,051) $ (8,691)
WEIGHTED AVERAGE SHARES 17,780,850 17,711,391
LOSS PER COMMON SHARE:
CONTINUING OPERATIONS $ (2.98) $ (.81)
DISCONTINUED OPERATIONS (.06) (.01)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING - .33
NET LOSS $ (3.04) $ (.49)
COMMON DIVIDENDS DECLARED
CLASS A $ - $ 0.375
CLASS B $ - $ 0.375
The accompanying Notes to Consolidated Financial Statements are an integral part of these
statements.
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(in thousands, except for per share data)
(U N A U D I T E D)
1994 1993
<S> <C> <C>
CONTINUING OPERATIONS:
SALES AND OTHER INCOME
Net Sales $ 196,225 $ 182,447
Other income/(expense) 6,919 (3,254)
Total sales and other income 203,144 179,193
COSTS AND EXPENSES
Cost of sales 166,628 147,953
Selling, general and administrative expenses 39,993 36,175
Bad debt expense 586 578
Interest expense, net 10,867 8,103
Restructuring charges 553 7,338
Total costs and expenses 218,627 200,147
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (BENEFIT) (15,483) (20,954)
INCOME TAXES/(BENEFIT) 360 (5,824)
LOSS BEFORE DISCONTINUED OPERATIONS
AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING (15,843) (15,130)
LOSS FROM DISCONTINUED OPERATIONS,
NET OF TAX - (3,719)
LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING FOR INCOME TAXES (15,843) (18,849)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES - -
NET LOSS $ (15,843) $ (18,849)
WEIGHTED AVERAGE SHARES 17,721,824 17,997,017
LOSS PER COMMON SHARE:
CONTINUING OPERATIONS $ (.89) $ (.84)
DISCONTINUED OPERATIONS - (.21)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING - -
NET LOSS $ (.89) $ (1.05)
COMMON DIVIDENDS DECLARED
CLASS A $ - $ 0.125
CLASS B $ - $ 0.125
The accompanying Notes to Consolidated Financial Statements are an integral part of these
statements.
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(in thousands)
(U N A U D I T E D)
Sept 30, 1994 Dec 31, 1993
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 32,014 $ 5,240
Marketable securities 36,779 27,314
Trade accounts receivable, less allowance for
uncollectible accounts of $513 at September 30, 1994
and $397 at December 31, 1993 139,625 135,246
Finance receivables 4,794 5,715
Inventories 104,428 119,608
Prepaid expenses 30,587 15,796
Recoverable income taxes 8,107 36,283
Net assets related to discontinued operations 59,194 213,927
Total current assets 415,528 559,129
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 50,789 50,786
Buildings and leasehold improvements 84,479 88,034
Machinery and equipment 164,666 148,278
Rental equipment 40,054 39,800
Oil and gas properties 49,255 47,901
389,243 374,799
Accumulated depreciation and amortization (132,259) (126,183)
256,984 248,616
Property under capital leases, less accumulated
amortization of $9,842 at September 30, 1994 and
$14,430 at December 31, 1993 7,242 12,540
Net property, plant and equipment 264,226 261,156
OTHER ASSETS:
Investments in affiliates 2,463 10,324
Patents 1,138 1,218
Goodwill 38,116 39,178
Prepaid pension costs 12,007 10,591
Prepaid rent on leased equipment 16,245 -
Other 77,010 86,540
Long-term receivables 23,685 28,549
Total Other Assets 170,664 176,400
Total Assets $ 850,418 $ 996,685
The accompanying Notes to Consolidated Financial Statements are an integral part of these
balance sheets.
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(in thousands)
(U N A U D I T E D)
Sept 30, 1994 Dec 31, 1993
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
Notes payable $ 73,435 $ 90,891
Current maturities of long-term debt 137,203 109,633
Accounts payable 101,738 110,126
Accrued salaries and wages 16,005 15,023
Other accrued expenses 65,514 66,908
Insurance loss reserves 6,929 6,752
Total current liabilities 400,824 399,333
LONG-TERM DEBT 242,296 334,843
DEFERRED FEDERAL INCOME TAXES 17,665 20,110
OTHER LONG-TERM LIABILITIES 33,012 33,691
Total Liabilities 693,797 787,977
STOCKHOLDERS' EQUITY
Preferred Stock - $1.00 par value $ - $ -
Common Stock A - $0.10 par value 1,366 1,375
Common Stock B - $0.10 par value 472 499
Capital surplus 121,471 127,488
Retained earnings 70,329 124,020
Unearned compensation (24,452) (31,003)
Cumulative translation adjustment (12,472) (13,671)
Unrealized loss on investments (93) -
Total stockholders' equity 156,621 208,708
Total liabilities and stockholders' equity $ 850,418 $ 996,685
SUPPLEMENTAL STOCK INFORMATION
Shares Outstanding at
Sept 30, 1994 Dec 31, 1993
Preferred Stock - Authorized Shares 3,217,495 - -
Common Stock A - Authorized Shares 18,000,000 13,666,698 13,750,863
Common Stock B - Authorized Shares 18,000,000 4,717,118 4,988,507
18,383,816 18,739,370
The accompanying Notes to Consolidated Financial Statements are an integral part of these
balance sheets.
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(in thousands)
(U N A U D I T E D)
1994 1993
<S> <C> <C>
Operating Activities:
Loss from continuing operations $ (52,953) $ (14,299)
Loss from discontinued operations (1,098) (231)
Cumulative effect of accounting change - 5,839
Adjustments to reconcile net loss to
net cash used by operating activities-
Depreciation and amortization 37,885 25,008
Amortization of unearned compensation 2,292 1,803
Other, net (18,232) 3,048
Changes in operating assets and liabilities
Trade accounts receivable (1,873) 15,047
Allowance for doubtful accounts 280 999
Finance receivables 4,413 (9,071)
Inventories 9,771 (44,192)
Prepaid expenses (12,965) (8,033)
Prepaid pension cost (1,188) (1,131)
Other assets 1,526 (16,835)
Accounts payable (12,777) 17,062
Accrued expenses (4,172) 8,566
Deferred and accrued taxes 24,802 3,156
Insurance loss reserves 4,698 (1,668)
Other long-term liabilities (679) (2,921)
Unearned premiums (150) 2,374
Net cash used by operating activities (20,420) (15,479)
Investing Activities:
Capital expenditures (43,805) (62,101)
Sale of investment in affiliate 7,861 -
Payment for purchase of businesses and investments,
net of cash acquired - (6,110)
Proceeds from sale of property, plant, and equipment 9,274 57,890
Proceeds from sale of discontinued operations 173,565 -
(Purchases) sales of marketable securities, net (16,635) 952
Net cash provided (used) in investing activities 130,260 (9,369)
Financing Activities:
Proceeds from long-term debt 3,126 15,491
Principal payments on long-term debt (67,263) (34,329)
(Repayments) borrowing under notes payable, net (18,114) 51,292
Dividends paid - (6,864)
Common stock transactions, net (2,614) (6,030)
Net cash provided by (used by) financing activities (84,865) 19,560
Net (decrease) in cash and equivalents 24,975 (5,288)
Cash and equivalents at beginning of year 10,131 14,613
Cash and equivalents at SEPTEMBER 30 $ 35,106 $ 9,325
- Continuing operations $ 32,014 $ 5,638
- Discontinued operations $ 3,092 $ 3,687
The accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
<PAGE>
<PAGE> 8
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1994 and 1993
The financial information included herein has been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange
Commission and properly reflects all adjustments (consisting of normal
recurring accruals) which are, in the opinion of management, necessary to
present a fair statement of the financial results for the periods covered
by this report. The results of operations for the nine months ended
September 30, 1994 are not necessarily indicative of the results to be
expected for the entire year.
(1) Significant Accounting and Reporting Policies:
The Company's financial information for the nine months ended September
30, 1994 and 1993 has been prepared in accordance with the accounting
policies described in Note 1 of the Notes to Consolidated Financial
Statements appearing in Figgie International Inc.'s Form 10-K for the
year ended December 31, 1993.
(2) Inventories:
Inventories are stated at the lower of cost or market and include cost
of material, labor and overhead. The first-in, first-out method of
inventory accounting is used in the determination of cost of sales.
The Company conducts physical inventories of its raw materials, work in
process and finished goods between September 30 and December 31. The
amounts shown for inventories at September 30, 1994 have been
determined under the Company's regular accounting system.
It is impractical to segregate inventories into major classes due to
the nature of the items and the businesses carried on by the Company.
(3) Federal Income Taxes:
The Company provides for Federal income taxes for interim reporting
purposes using applicable statutory tax rates and considering available
tax credits. Effective January 1, 1993, the Company adopted SFAS No.
109, Accounting for Income Taxes, the effect of which was to increase
first quarter 1993 net income by $5.8 million.
(4) Commitments and Contingent Liabilities:
As reported under Item 3 "Legal Proceedings" in the Company's 1993 Form
10-K Annual Report, the Company appealed to the United States Court of
Appeals for the Ninth Circuit a Federal District Court's summary
judgment against the Company in a suit brought by the Federal Trade
Commission seeking consumer redress in connection with the sale of heat
detectors manufactured by the Company's Interstate Engineering
division. The Court of Appeals held that the District Court had
committed error in ordering the Company to pay a minimum amount of
approximately $7,600,000 but held that the Company could be required
topay refunds to those buyers who, after notification, can make a valid
claim for redress. The Company is working with the Federal Trade
Commission toward the completion of a redress program. The Company had
established an accrual and no additional material charge to earnings is
anticipated.
<PAGE>
<PAGE> 9
In a class action suit filed on April 18, 1994 in the U.S. District
Court for the Northern District of Ohio against the Company and two
former officers and directors, the plaintiff stockholder alleged that
the defendants disseminated false and misleading information to the
investing public concerning the Company's business, management,
financial condition, and future prospects in violation of Section
10(b) and 20(a) of the Securities Exchange Act of 1934. A separate
class action suit was filed by another stockholder on May 11, 1994, in
the same court against the Company, certain former and present
officers and directors, and the Company's auditing firm, setting forth
similar allegations. Both suits seek monetary damages and costs.
The Company and certain of its subsidiaries are defendants in various
other lawsuits arising in the ordinary course of business. In the
opinion of Company management, the outcome of the litigation will not
have a material adverse effect on the operations or financial position
of the Company. Costs incurred by the Company in the performance of
U.S. Government contracts are subject to audit. In the opinion of
management, the final settlement of these costs will not result in
significant adjustments to recorded amounts.
(5) Reclassification of Amounts:
Certain amounts for 1993 have been reclassified to reflect
comparability with account classifications for 1994.
(6) Discontinued Operations:
In December of 1993, the Company instituted a divestiture program of
certain businesses as part of its debt restructuring efforts. These
entities represent separate major lines of business, classes of
customers, or non-reportable business segments and, accordingly, have
been treated as discontinued operations as required by generally
accepted accounting principles. In June 1994, this program was amended
to include the Fred Perry and Casi-Rusco businesses. The accompanying
consolidated financial statements have been reclassified to report as
discontinued operations the net assets and operating results of the
following operations: Rawlings Sporting Goods, Sherwood-Drolet Corp.
Ltd., Advance Security, American Lafrance, Safety Supply America,
Medical Devices, Huber/Essick/Mayco Pump, Cardinal Casualty Co., Colony
Insurance Co., Hamilton Insurance Co., Fred Perry, and Casi-Rusco.
Net assets of the discontinued operations at September 30, 1994 and
December 31, 1993 consisted primarily of accounts receivable, inventory
and machinery and equipment, offset by payables, accruals and reserves.
As of the discontinued measurement date, the operating results of
discontinued operations are excluded from the Company's consolidated
operating results. No provision for loss on disposal of discontinued
operations has been provided as the Company does not expect its
divestiture plan to result in a net loss.
During the first nine months of 1994, the Company completed the sale of
Advance Security, Casi-Rusco, Rawlings Sporting Goods, Safety Supply
America and Essick Mayco; and signed a definitive agreement to sell the
three insurance companies, which is subject to regulatory and other
approvals.
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<PAGE> 10
(7) Debt Restructuring:
On August 1, 1994, the Company executed agreements with its lenders to
restructure approximately $315 million in debt and commitments, of
which $277 million was outstanding ("Override Debt"), and $172 million
in leases. Mortgages, the 9-7/8% Notes, the Subordinated Debentures
and certain other debt were not part of the restructured debt. Prior
to the restructuring, the Company had divested certain businesses and
accumulated sale proceeds to effect the refinancing.
On August 1, the Company distributed $124.7 million in cash as follows:
$18.1 million to pay down notes payable; $43.7 million to pay down
long-term debt; $36.5 million to pay down operating leases (of which
$17.1 million represented pre-payments and are recorded as non-current
assets); $7.0 million to pay bank fees, interest and expenses of the
transaction; and $19.4 million to establish escrow accounts for income
taxes and expenses associated with the divestiture program. Between
August 1 and September 30, 1994, the Company made additional payments
to its lenders of $18.0 million.
Between October 1, 1994 and June 30, 1995, the agreements require $70
million in debt amortization payments to be made. The agreement
matures on June 30, 1995, at which time the Company would expect to
refinance the then outstanding balance of approximately $130 million.
The agreement bears interest at base rate plus 2%. This agreement also
contains restrictions and financial covenants on capital expenditures,
cash flow and consolidated tangible net worth. All required
restrictions and financial covenants have been met and debt repayments
have exceeded those required at September 30, 1994.
<TABLE>
<CAPTION>
Notes payable and long-term debt at September 30, 1994 and December 31,
1993 are as follows:
(in thousands of dollars)
Sept 30, 1994 Dec 31, 1993
<S> <C> <C>
Notes Payable
Override Debt * $ 69,444 $ 88,101
Other Debt 3,991 2,790
73,435 90,891
Long-Term Debt
Override Debt * 128,811 185,000
9-7/8% Notes due 1999 174,000 174,000
Mortgage Notes Payable 60,563 63,850
Other Debt 494 614
Capital Leases 6,131 10,012
Subordinated Debentures 9,500 11,000
Total Long-Term Debt 379,499 444,476
Less- Current Maturities 137,203 109,633
Long-Term Debt $ 242,296 $ 334,843
* Funded debt refinanced effective June 30, 1994.
</TABLE>
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<PAGE> 11
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CONTINUING OPERATIONS:
The Company's operating performance has improved in each of the first three
quarters of 1994 as shown by sales increases and decreasing operating
losses.
<TABLE>
<CAPTION>
(in millions)
September
First Second Third 1994
Quarter Quarter Quarter Year-to-Date
<S> <C> <C> <C> <C>
Net Sales $171.2 $190.3 $196.2 $557.7
Loss from Continuing Operations
before tax benefit (30.9) (24.7) (15.5) (71.1)
Tax Benefit 10.8 7.7 (.4) 18.1
(20.1) (17.0) (15.9) (53.0)
Loss from Discontinued
Operations (.2) (.9) - (1.1)
Net Loss (20.3) (17.9) (15.9) (54.1)
</TABLE>
Sales increased $19.1 million in the second quarter as compared to the first
quarter and $5.9 million in the third quarter. Increases are as a result of a
progressive return to full production capabilities at Snorkel following the
midwest floods last August, strong health and safety product sales at Scott,
higher industrial maintenance contracts of scaffolding, offset by lower
packaging machinery sales and lower construction contracts at "Automatic"
Sprinkler.
The operating loss of $30.9 million in the first quarter was reduced by $6.2
million to a loss of $24.7 in the second quarter. In the third quarter the
net loss was reduced by $9.2 million. The improvements are from Hartman's
and "Automatic" Sprinkler's continued turnaround, lower research and
development costs than in the third quarter, business interruption
insurance proceeds in August and increased sales.
Consolidated net sales in the first nine months of 1994 were $557.7 million,
which is $10.4 million (2%) higher than the net sales of $547.3 million
reported in the first nine months of 1993. Sales in the third quarter of
1994 were $196.2 million, which is $13.8 million higher than the third
quarter of 1993.
Sales by segment are stated below:
<TABLE>
<CAPTION>
Sales to Unaffiliated Customers
(in millions)
1st Qtr 2nd Qtr 3rd Qtr Nine Mos Nine Mos 3rd qtr
1994 1994 1994 1994 1993 1993
Business Segment:
<S> <C> <C> <C> <C> <C> <C>
Consumer Products $ 10.6 $ 11.5 $ 11.8 $ 33.9 $ 32.5 $ 12.0
Fire Protection and
Safety Products 46.6 52.9 56.2 155.7 167.9 62.7
Machinery and Allied
Products 67.1 77.4 79.8 224.3 199.4 56.1
Technical Products 39.7 40.9 41.4 122.0 128.9 44.3
Services 7.2 7.6 7.0 21.8 18.6 7.3
Total Sales $171.2 $190.3 $196.2 $557.7 $547.3 $182.4
</TABLE>
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<PAGE> 12
The Consumer Products segment's year-to-date increase of $1.4 million is due
to a volume increase at Interstate Engineering as well as new product
introduction at Interstate Engineering and Taylor.
Fire Protection and Safety segment's year-to-date sales declined $12.2
million or 7.2%. Third quarter sales declined $6.5 million (10.4%). The
declines, as compared to 1993, were primarily attributed to "Automatic"
Sprinkler's lower construction contracts, offset somewhat by service and
inspection sales increases and sales of Scott's health and safety products.
Lower construction contracts for "Automatic" Sprinkler resulted primarily
from two matters of uncertainty -- the announcement in early 1994 of the
Corporation's liquidity crunch and losses and the uncertainty of the outcome
of the injunction sought by the labor union. These factors caused some
prospects to book contract orders with others or delay their decision. In
October, 1994, the union's injunction request was denied.
The Machinery and Allied Products segment's year-to-date sales increased by
$24.9 million. Third quarter sales increased $23.7 million (42.2%).
Snorkel's sales increased significantly due to a solid and expanding market
for elevating work platforms. Also, last year Snorkel's plants were
devastated by the Missouri River floods, which resulted in few sales in
August and September 1993. Scaffolding product increases were due to
continued earthquake-related work in Los Angeles, and several industrial
maintenance contracts. Partially offsetting this favorable performance were
reduced shipments of packaging machinery.
The Technical Products segment's year-to-date sales decreased $6.9 million.
Third quarter sales decreased $2.5 million. These declines are due to a
reduction in airline orders and a decline in government spending.
The Service segment's sales are relatively constant.
Other Expense for the first nine months of 1994 was $25 thousand compared
to $1.5 million for the same period last year. 1993 includes a $2.6 million
recovery of a canceled mask contract with the U.S. government. 1994
includes the collection of business interruption insurance proceeds in the
third quarter and financing expenses related to the prior lease agreements.
Costs of sales were $474.5 million (85.1% of sales) in the first nine months
of 1994, an increase of $53.4 million from $421.1 million (76.9% of sales)
during the same period in 1993. Costs of sales were $166.6 million (84.9%
of sales) in the third quarter of 1994, an increase of $18.6 million from
$148.0 million (81.1% of sales) during the same period in 1993. The major
reasons for these variances to prior year are: (1) competition between
contractors and a revision of cost estimates of approximately $14.2 million
at "Automatic" Sprinkler ($2.0 million in the third quarter); (2) higher
production costs at Packaging Systems and Fire Protection; and (3) increased
R&D expenses of approximately $11.7 million for new product development
($3.8 million in the third quarter).
Selling, General and Administrative expenses were $119.2 million (21.4% of
sales) for the first nine months of 1994, an increase of $17.1 million from
$102.1 million (18.6% of sales) in 1993. Selling, General and
Administrative expenses were $40.0 million (20.4% of sales) for the third
quarter of 1994, an increase of $3.8 million from $36.2 million (19.8% of
sales) in 1993. Selling expenses were lower by $1.6 million for the nine
months ($.5 for the third quarter) as compared to 1993. General and
Administrative expenses increased by $18.7 million for the nine months ($4.3
million for the quarter), of which $15.0 million ($4.1 million for the
<PAGE>
<PAGE> 13
quarter) is due to legal and professional fees as a direct result of debt
restructuring and the defense of lawsuits.
Interest expense during 1994 increased compared to the same periods in 1993.
The increase in debt and a rise in interest rates caused the increases.
In prior years, the Company reported restructuring costs associated with the
consolidation and modernization of production facilities, equipment, and
support systems. The Company completed the major portions of this
program in prior years; however, some work is still continuing. Charges
reflected in the first nine months of 1994 are $1.5 million compared to
$16.1 million for the same period last year.
The Company's segment pre-tax income (loss) are stated below:
<TABLE>
<CAPTION>
Pre-tax Income (Loss)
(in millions)
1st Qtr 2nd Qtr 3rd Qtr Nine Mos Nine Mos 3rd qtr
1994 1994 1994 1994 1993 1993
Business Segment:
<S> <C> <C> <C> <C> <C> <C>
Consumer Products $ 1.9 $ 1.8 $ 1.5 $ 5.2 $ 6.7 $ 2.6
Fire Protection and
Safety Products (2.9) (.1) (.9) (3.9) 15.4 6.2
Machinery and Allied
Products (.6) .6 7.6 7.6 (8.9) (12.6)
Technical Products (1.1) (4.3) 4.2 (1.2) 9.1 (3.8)
Services .5 .5 .2 1.2 5.7 2.1
(2.2) (1.5) 12.6 8.9 28.0 (5.5)
General Corporate
Expenses (18.0) (13.0) (17.2) (48.2) (22.8) (7.3)
Operating
(Loss) Profit (20.2) (14.5) (4.6) (39.3) 5.2 (12.8)
Interest Expense, Net (10.7) (10.2) (10.9) (31.8) (24.9) (8.1)
Pretax (Loss) Income $(30.9) $(24.7) $(15.5) $(71.1) $(19.7) $(20.9)
</TABLE>
The Consumer Products segment's operating profits for the first nine months
of 1994 were $5.2 million compared to $6.7 million for the same period in
1993. The profit decline resulted from the 1994 cost to establish and
introduce new product lines and, at Taylor, the 1994 effect of expensing
world class conversion costs as incurred of approximately $800,000.
Fire Protection and Safety Products segment operating losses were $3.9
million for the first nine months of 1994 as compared to operating profits
of $15.4 million during the same period in 1993. The substantial decline
in profits is primarily at "Automatic" Sprinkler and is due to lower volume,
competition between contractors for fewer jobs, and revised estimates of
contract completion costs. Increased manufacturing costs and higher
inventory shrink provisions at Fire Protection have contributed to the
lower profits and the lack of improvement from the second quarter to the
third quarter of 1994.
<PAGE>
<PAGE> 14
The Machinery and Allied Products segment had operating profits of $7.6
million for the first nine months of 1994 compared to operating losses of
$8.9 million for the same period in 1993. At Packaging Systems lower sales
volume and increased manufacturing costs generated a sizeable operating
loss. These losses were substantially offset by the Snorkel business
interruption insurance proceeds recorded in the third quarter and cost
reductions related to closure of unprofitable locations of other business
units.
The Technical Products segment operating loss was $1.2 million for the first
nine months of 1994 as compared to an operating income of $9.1 million for
the same period in 1993. Interstate Electronics profits declined due to
substantial product R&D costs related to the Global Positioning System and
lower government spending. Hartman has continued to show improved quarter-
to-quarter performance. Also, volume reductions and the mask contract
recovery proceeds in 1993 contributed to the year-to-year profit
decline.
The Services segment operating profits were $1.2 million for the first nine
months of 1994 compared to $5.7 million for the same period in 1993. The
decline in profits is due to higher financing costs at Financial Services.
General corporate expenses during the first nine months of 1994 were $48.2
million which is $25.4 million higher than the same period last year ($17.2
million for the third quarter compared to $7.3 last year). The increases
are primarily due to a $15.0 million increase ($4.1 million income in the
third quarter) in legal and professional fees as a direct result of debt
restructuring and defense of lawsuits, the loss on sale of assets of $3.1
million, and costs incurred upon the August 1 refinancing, other than
professional fees.
The year-to-date income tax benefit is 25.5% compared to 27.2% during the
same period last year. For the third quarter, the income tax rate is 2.3%
compared to a 27.8% benefit during the same period last year. The third
quarter income tax provision does not give effect for tax benefits which may
be realized in future periods from the third quarter loss.
Operating results from discontinued operations is being deferred on the
balance sheet in accordance with generally accepted accounting principles.
The Company does not expect a loss on the disposal of the discontinued
operations and, therefore, no provisions for losses are required.
As of June 30, two additional divisions, Casi-Rusco and Fred Perry, were
reclassified from Continuing Operations to Discontinued Operations. The net
loss of $1.1 million from discontinued operations is comprised of the six
month results for Casi-Rusco and Fred Perry prior to being discontinued.
<PAGE>
<PAGE> 15
Financial Position and Liquidity
Receivables increased $4.4 million to $139.6 million and reflect a
combination of increased sales and customers' holdbacks on contract
retentions pending completion and acceptance of long-term projects.
Inventories decreased by $15.2 million, reflecting the Company's concerted
efforts to reduce inventory and concentrate on purchasing only essential
products.
Cash flow from operations and working capital required $20.4 million,
capital expenditures required $43.6 million, and debt paydowns required
$84.9 million, all of which were funded by proceeds from divestitures.
Liquidity is provided by the Company's cash and marketable securities,
a $20 million facility secured by certain receivables and a portion of
divestiture proceeds. As discussed in the Notes to the Consolidated
Financial Statements, the Company completed a complex debt restructuring,
which was initiated in December, 1993 and completed July 29, 1994.
This new refinancing does not provide additional financing to the
Company; rather, it specifies repayment and other terms. This refinancing
will allow the Company to develop a long-term capital structure reflective
of the restructured Company's longer-term financing requirements. Under the
terms of the Override Agreement, a payment of approximately $130 million is
payable at the maturity date of June 30, 1995 unless the debt subject to the
Override Agreement is extended, restructured or refinanced.
<PAGE>
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
In two separate suits reported in the Company's 1993 Form 10-K Annual
Report, three stockholders of the Company filed derivative complaints
during 1993 in the Common Pleas Court of Lake County, Ohio seeking
recovery on behalf of the Company for alleged self-dealing, waste of
corporate assets, financial statement over-statements, gross
mismanagement and participation or acquiescence in such practices by
Directors of the Company, all of whom were named as defendants. The
Court consolidated the two suits and subsequently dismissed them with
respect to all defendants. The plaintiffs have appealed the Court's
decision. See also Footnote (4) of Notes to Consolidated Financial
Statements.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
10(a). Override Agreement for Figgie International, Inc. dated as
of June 30, 1994
10(b). Executive Employment Agreement dated July 1, 1994.
(b) Reports on Form 8-K
8-K filed July 25, 1994.
Item 2.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIGGIE INTERNATIONAL INC.
Date: November 14, 1994 /s/
Steven L. Siemborski
Senior Vice President and
Chief Financial Officer
(Principal financial and accounting officer
for purposes of this report)
<PAGE> 1
EXHIBIT INDEX
Exhibit 10(a) Override Agreement for Figgie International,
Inc. dated as of June 30, 1994
Exhibit 10(b) Executive Employment Agreement dated July 1,
1994
Exhibit 27 Financial Data Schedule
<PAGE> 1
_____________________________
OVERRIDE AGREEMENT
_____________________________
for
FIGGIE INTERNATIONAL INC.
dated
as of
June 30, 1994
___________________________
[ PORTIONS OF THIS DOCUMENT ARE
SUBJECT TO A CONFIDENTIAL TREATMENT
REQUEST FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ]
<PAGE>
<PAGE> 2
TABLE OF CONTENTS
Section No.
PART 1 - INTERPRETATION
1.1 General Definitions
1.2 Construction
PART 2 - GENERAL OVERRIDE APPLICATION
2.1 Application to Subject Facilities
2.2 Conditions Precedent
2.3 Suspension and Amendment of Subject Facilities
and Documents
2.4 Maturity of Subject Facilities and Documents
2.5 Interest and Subject Facility Fees Under the
Override Agreement
2.6 Suspension of Subject Facility Maturities
2.7 Voluntary Subject Facility Reductions by the
Subject Companies 26
2.8 Amendments to Subject Facility Documents
2.9 Co-operation with Override Agent
PART 3 - SPECIAL OVERRIDE APPLICATIONS
3.1 Continued Availability Under Variable Amount
Subject Facilities 26
3.2 Contingent Amount Subject Facilities Generally
3.3 Special Provisions Applicable to Stand-By
Letters of Credit
PART 4 - OVERRIDE REPRESENTATIONS
4.1 Subject Companies' Representations
4.2 Subject Lenders' Representations
PART 5 - GENERAL REPRESENTATIONS 30
5.1 Incorporation: Good Standing
5.2 Authorization
5.3 Conflicts
5.4 Enforceability
5.5 Compliance with other Documents, Laws, Etc.
5.6 Litigation
5.7 Financial Arrangements
5.8 Financial Statements
5.9 Holding Company and Investment Company Acts
5.10 Environmental Compliance
<PAGE>
<PAGE> 3
PART 6 - AFFIRMATIVE COVENANTS
6.1 Perform all Acts
6.2 Corporate Existence
6.3 Rights and Franchises
6.4 Maintenance of Properties
6.5 Compliance with Laws
6.6 Taxes
6.7 Insurance
6.8 Business Plan
6.9 Licenses, Permits and Franchises
6.10 Inspection of Properties and Books
6.11 Records and Accounts
6.12 Employee Benefit Plan
6.13 Financial Statements
6.14 Compliance Certificates
6.15 Reporting Requirements
6.16 Further Information
6.17 Notice of Default
6.18 Financial Covenants
6.19 Amortization Payments
PART 7 - NEGATIVE COVENANTS
7.1 Restrictions on Indebtedness
7.2 Restrictions on Liens
7.3 Restrictions on Investments
7.4 Distributions
7.5 Merger, Consolidation, Disposals
7.6 Sale and Leaseback
7.7 Compliance with Environmental Laws
7.8 Environmental Events
7.9 Employee Benefit Plans
7.10 Excluded Facilities
PART 8 - EVENTS OF DEFAULT
8.1 Events of Default
8.2 Remedies
PART 9 - DISPOSAL AND CAPITAL TRANSACTIONS
9.1 Notification and Further Assurances
9.2 Payment of Proceeds
9.3 Allocation of Proceeds
9.4 Equalization
<PAGE>
<PAGE> 4
9.5 Figgie Leasing Corporation
PART 10 - COLLATERALIZATION OF OVERRIDE
OBLIGATIONS
10.1 Collateral Security
10.2 Recourse of Subject Lenders; Other Collateral
10.3 Acts of Subject Lenders
10.4 Duties of Collateral Agent
10.5 Proceeds Received Under Security Documents
10.6 Concerning the Collateral Agent
10.7 Certain Intercreditor Arrangements
10.8 Release or Subordination of Collateral;
Freedom to Deal
10.9 Enforcement
10.10 Collateral Agent as Agent and Lender
10.11 Termination
PART 11 - RESTRUCTURING FEE
PART 12 - AGENCY FEE, COSTS AND EXPENSES
12.1 Agency Fees
12.2 General Costs
12.3 Enforcement Costs
12.4 Stamp Duty and Registration Taxes
12.5 Lender's Contributions
PART 13 - INDEMNITIES
13.1 Indemnities
PART 14 - AGENCY PROVISIONS
14.1 Appointment of Override Agent
14.2 Assumptions
14.3 Obligations of Override Agent
14.4 No Inquiries
14.5 Indemnification
14.6 Accuracy of Information
14.7 No Claims
14.8 Other Business
14.9 Resignation
14.10 Appointment of Successor
14.11 Discharge
14.12 Financial Evaluation
<PAGE>
<PAGE> 5
PART 15 - ASSIGNMENTS AND TRANSFERS
15.1 Benefit of Agreement
15.2 Assignments and Transfers by
the Subject Companies
15.3 Assignments and Transfers by the Subject Lenders
PART 16 - AMENDMENTS AND WAIVERS
16.1 Amendments by Override Agent
16.2 Amendments and Waivers by Instructing Lenders
16.3 Binding on all Parties
16.4 Unanimous Consent
16.5 Waivers and Remedies Cumulative
PART 17 - MISCELLANEOUS
17.1 Currency of Account and Payment
17.2 Currency Indemnity
17.3 Payment Accounts
17.4 Alternative Arrangements
17.5 No Set-Off or Counterclaim
17.6 Suspense Accounts
17.7 Non-receipt
17.8 Set-Off
17.9 Calculations and Evidence of Debt
17.10 Partial Invalidity
17.11 Giving of Notices
17.12 Addresses for Notices
17.13 Counterparts
17.14 Several Obligations
PART 18 - LAW AND JURISDICTION
18.1 Law
18.2 Jurisdiction
18.3 Waiver of Jury Trial
PART 19 - ADDITIONAL PROVISIONS APPLICABLE SOLELY
TO FAC SUBJECT LENDERS, FAC, AND THE FAC
SUBSIDIARIES
19.1 General Provisions
19.2 Representations and Warranties of FAC and
the FAC Subsidiaries
19.3 Affirmative Covenants of FAC
and the FAC Subsidiaries
19.4 Negative Covenants of FAC
and the FAC Subsidiaries
19.5 Cash Distribution to FAC Subject Lenders
19.6 Events of Default
19.7 Amendments and Waivers
<PAGE>
<PAGE> 6
<TABLE>
<CAPTION>
THE SCHEDULES AND EXHIBITS
<S> <C>
Schedule I Subject Companies
Schedule II Subject Lenders
Schedule III Subject Agents
Schedule IV Contingent Amount Subject Facilities
Schedule V Additional Excepted Disposals
Schedule VI Excluded Facilities
Schedule VII FAC Subject Facilities
Schedule VIII Facility Office
Schedule IX Fixed Amount Subject Facilities
Schedule X Intentionally Omitted
Schedule XI Security Documents
Schedule XII Subject Facilities
Schedule XIII Conditions Precedent
Schedule XIV Additional Interest Adjustment Payments
Schedule XV Litigation
Schedule XVI Environmental Compliance
Schedule XVII Existing Liens
Schedule XVIII Existing Investments
Schedule XIX Sale and Leaseback Transactions
Schedule XX FAC Financing Statements
Schedule XXI FAC Mortgaged Property
Schedule XXII FAC Real Property
Schedule XXIII FAC Subject Lenders
Schedule XXIV Existing FAC Indebtedness
Schedule XXV Existing FAC Liens
Schedule XXVI Existing FAC Investments
Exhibit A Form of Compliance Certificate
Exhibit B Monthly Account Analysis
Exhibit C FAC Budget
</TABLE>
<PAGE>
<PAGE> 7
OVERRIDE AGREEMENT
THIS OVERRIDE AGREEMENT is made as of the 30th day of
June, 1994, by and among:
(1) FIGGIE INTERNATIONAL INC. (the "Company") on behalf of
itself and certain of its Subsidiaries listed in Schedule I;
(2) FIGGIE ACCEPTANCE CORPORATION ("FAC"), on behalf
of itself and the FAC Subsidiaries (as defined herein);
(3) THE FIRST NATIONAL BANK OF BOSTON in its capacity as
agent for the Subject Lenders under this Agreement (the "Override
Agent");
(4) SWISS BANK CORPORATION, New York Branch, in its
capacity as collateral agent for the FAC Subject Lenders under this
Agreement (the "FAC Collateral Agent");
(5) THE FINANCIAL INSTITUTIONS listed in Schedule II, as such
schedule may be amended from time to time pursuant to Section
2.1(b), in their capacity as providers of credit or other financial
accommodations under any of the Subject Facilities (the "Subject
Lenders"); and
(6) THE FINANCIAL INSTITUTIONS listed in Schedule III in their
capacity as agents under certain of the Subject Facilities (the "Subject
Agents").
WITNESSETH:
(A) WHEREAS, the Subject Lenders have made available loans and
other credit facilities and provided credit and other financial
accommodations to the Subject Companies; and
(B) WHEREAS, the parties hereto have entered into this Agreement
in order to effect certain override arrangements relating to the
facilities, loans, credit and other accommodations made available to
the Subject Companies by the Subject Lenders.
NOW, THEREFORE, IT IS HEREBY AGREED as follows:
<PAGE>
<PAGE> 8
1 - INTERPRETATION
1.1 General Definitions. The following terms shall have the
meanings set forth in this Section 1 or elsewhere in this Agreement
referred to below:
Accounts Payable. Trade payables and other payables determined in
accordance with GAAP.
Accounts Receivable. Accounts receivable and notes receivable, net
of allowances for uncollectible accounts determined in accordance
with GAAP.
Accrual Rate. The sum of the Base Rate plus 2.0% per
annum.
Accrued and other Liabilities. Advance payments, accrued wages and
withholding taxes, accrued expenses, unearned premiums, insurance
loss reserves, accrued and deferred taxes, dividends payable, other
long-term liabilities, determined in accordance with GAAP and in
accordance with the June 6 Plan Update.
Adjusted Operating Cash Flow. For any fiscal quarter, an amount
equal to the sum of (i) Net Income (or Deficit) for such fiscal quarter
and (ii) the increase or decrease for any fiscal quarter from the prior
fiscal quarter in (A) Accounts Receivables, (B) Net Inventory, (C)
Accounts Payable, (D) Net Property, Plant and Equipment (excluding
Capital Expenditures), (E) Prepaid Expenses and Other Assets, (F)
Accrued and Other Liabilities, (G) Mortgages, Notes and Leases
Payable, (H) Minority Interest, and (I) Equity (excluding Net Income
and intercompany accounts). The increase or decrease in items (A)
through (I) in clause (ii) and the sum of all of the items in clauses (i)
and (ii) shall be determined in accordance with GAAP.
Adjusted Operating Cash Flow for Continuing Operations. For any
period, an amount equal to the sum of the Adjusted Operating Cash
Flow for the Continuing Operations.
Affiliate. As to any person, any other person that
would be considered to be an affiliate of such person under Rule
144(a) of the Rules and Regulations of the Securities and Exchange
Commission, as in effect on the date hereof, if such person were
issuing securities.
Agents. The Override Agent and the Subject Agents.
Agreement. This Override Agreement, including all of the Schedules
and Exhibits hereto.
Auditors. Arthur Andersen & Co. or such other accounting firm of
international standing as may be appointed by the Company.
<PAGE>
<PAGE> 9
Balance Sheet Date. December 31, 1993.
BancBoston Leases. Collectively, (i) the Aircraft Lease dated as of
the 21st day of June, 1988, as amended and in effect from time to
time, between Gilman Financial Services, Inc., successor in interest
to BancBoston Leasing, Inc., as lessor and the Company, (ii) the
Aircraft Lease dated as of the 21st day of June, 1988, as amended
and in effect from time to time, between BancBoston Leasing Inc. and
the Company, (iii) the Master Lease Finance Agreement dated as of
the 21st day of June, 1988, as amended and in effect from time to
time, between BancBoston Leasing Inc. and the Company, and (iv)
the Master Lease Finance Agreement No. Figgie-90/MI dated as of
the 5th day of March, 1991, as amended and in effect from time to
time, between Randolph Computer Corporation and the Company.
Base Rate. The higher of (i) the annual rate of interest announced
from time to time by The First National Bank of Boston at its head
office in Boston, Massachusetts, as its "base rate" and (ii) one-half of
one percent (1/2%) above the Federal Funds Effective Rate. For the
purposes of this definition, "Federal Funds Effective Rate" shall
mean, for any day, the rate per annum equal to the weighted average
of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as
published for such day (or if such day is not a business day, for the
next preceding business day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a
business day, the average of the quotations for such day on such
transactions received by the Override Agent from three funds brokers
of recognized standing selected by the Override Agent.
Beneficiaries. The Subject Lenders and the Agents.
Business Plan. The Divestiture Plan, strategic business plan and
related financial forecasts of the Company delivered and specifically
identified to the Subject Lenders as the March 17 Lending Meeting
Presentation and the June 6 Plan Update.
Capital Assets. Fixed assets, both tangible (such as
land, buildings, fixtures, machinery and equipment) and intangible
(such as patents, copyrights, trademarks, franchises and goodwill);
provided that Capital Assets shall not include any item customarily
charged directly to expense or depreciated over a useful life of twelve
(12) months or less in accordance with GAAP.
Capital Expenditures. Expenditures made or indebtedness incurred by
the Company or any of its Subsidiaries in connection with the
purchase or lease by the Company or any of its Subsidiaries of
Capital Assets that would be required to be capitalized and shown on
the balance sheet of such person in accordance with GAAP, and
including the financing of such expenditures by means of operating
leases.
<PAGE>
<PAGE> 10
Capital Expenditures Budget. The Capital Expenditures Budget dated
June 24, 1994, as prepared by the Company.
CIT Factoring Facility. The factoring facility entered into as of
February 17, 1994, between the Company and The CIT
Group/Commercial Services, Inc. pursuant to which the Company
sold certain accounts receivable of certain divisions of the Company
and which facility was paid down and retired on July 8, 1994.
CIT Interim Facility. The transactions contemplated by (i) the
Revolving Credit Agreement dated as of July 8, 1994, as amended,
between the Company and The CIT Group/Commercial Services, Inc.
and (ii) the Security Agreement dated as of July 8, 1994 by the
Company in favor of The CIT Group/Commercial Services, Inc.
pursuant to which the Company pledges to The CIT
Group/Commercial Services, Inc. all accounts and certain other assets
of the following divisions of the Company: [INFORMATION IS
SUBJECT TO CONFIDENTIAL TREATMENT REQUEST.]
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests of the Company
that are or are intended to be subject to the security interests created
by the Security Documents as set forth in Section 10.1(a).
Collateral Agent. See Section 10.6.
Compliance Certificate. A certificate of compliance executed by an
officer of the Company and in a form reasonably satisfactory to the
Override Agent a form of which is attached hereto as Exhibit A.
Consolidated Tangible Net Worth. The excess of Consolidated Total
Assets over Consolidated Total Liabilities, and less the sum of:
(i) the total book value of all assets of the Company and its
Subsidiaries properly classified as intangible assets under GAAP,
including such items as goodwill, the purchase price of acquired
assets in excess of the fair market value thereof, trademarks, trade
names, service marks, brand names, copyrights, patents and licenses,
and rights with respect to the foregoing; plus
(ii) all amounts representing any write-up in the book value of any
assets of the Company or its Subsidiaries resulting from a revaluation
thereof subsequent to the Balance Sheet Date, excluding adjustments
to translate foreign assets and liabilities for changes in foreign
exchange rates made in accordance with Financial Accounting
Standards Board Statement No. 52; plus
<PAGE>
<PAGE> 11
(iii) to the extent otherwise includable in the computation of
Consolidated Tangible Net Worth, any subscriptions receivable.
Consolidated Total Assets. All assets of the Company and its
Subsidiaries determined on a consolidated basis in accordance with
GAAP.
Consolidated Total Liabilities. All liabilities of the Company and its
Subsidiaries determined on a consolidated basis in accordance with
GAAP.
Continental Automobile Lease. The Lease Agreement dated as of
May 28, 1993, among Continental Bank (formerly known as
Continental Bank, National Association), as trustee, Figgie Leasing
Corporation and the Company and all security, participation, trust and
related agreements, as amended, modified, supplemented or otherwise
in effect from time to time.
Continental Scaffolding Lease. The Lease Agreement dated as of
March 29, 1993, between Continental Bank (formerly known as
Continental Bank, National Association), as trustee, and the Company
and all security, participation, trust and related agreements as
amended, modified, supplemented or otherwise in effect from time to
time. The Continental Scaffolding Lease will mean and include the
Lease Agreement among Continental Bank (formerly known as
Continental Bank, National Association), as trustee, the Company
and the Safway Subsidiary (as defined and provided for in Section 7.5
hereof) and all security, participation, trust and related agreements as
amended, modified, supplemented or otherwise in effect from time to
time.
Continental Synthetic Lease Collateral. As such term is defined in the
Security Agreement.
Continental Synthetic Leases. Collectively, the Continental
Automobile Lease and the Continental Scaffolding Lease.
Contingent Amount Subject Facility. Standby letters of credit and
related reimbursement obligations as to which the respective Subject
Company's Payment Liabilities are contingent, as listed as such in
Schedule IV.
Contingent Facility Distribution Account. Any cash collateral account
for the benefit of any relevant Subject Lender established pursuant to
Section 3.2 with respect to a Contingent Amount Subject Facility, as
such account may be renewed or redesignated from time to time in
accordance with this Agreement.
Continuing Operations. All of the operations of the Company and its
Subsidiaries as of June 6, 1994, other than Discontinued Operations.
Default Rate. The sum of the Base Rate plus 5% per annum.
<PAGE>
<PAGE> 12
Discontinued Operations. The operations of Advance Security, Inc.,
American LaFrance, Casi-Rusco, Inc., Essick/Mayco, Medical
Devices, Rawlings Sporting Goods Company, Rawlings Licensing,
Safety Supply America, Sherwood-Drolet, Spaceguard and Waite-Hill
Holdings, Inc. (other than the operations of Waite Hill Assurance
Ltd.-Bermuda).
Dividends. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Company,
other than dividends payable solely in shares of common stock of the
Company; the purchase, redemption, or other retirement of any shares
of any class of capital stock of the Company, directly or indirectly
through a Subsidiary of the Company or otherwise; the return of
capital by the Company to its shareholders as such; or any other
distribution on or in respect of any shares of any class of capital stock
of the Company.
Divestiture Plan. The Company's plan to sell the assets or capital
stock and businesses of its Rawlings Sporting Goods Company
division, Advance Security, Inc., Safety Supply America, Waite Hill
Holdings, Inc., Sherwood-Drolet Corporation Ltd., Casi-Rusco, Inc.,
American LaFrance, Essick/Mayco and SpaceGuard Products.
Effective Date. The business day on or prior to July 29, 1994 on
which the Override Agent notifies the Company that all the Subject
Lenders reasonably agree that the conditions set forth in Section 2.2
have been satisfied or waived by each Subject Lender.
Employee Benefit Plan. Any employee benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by
any Subject Company or any ERISA Affiliate, other than a
Multiemployer Plan.
Environmental Laws. The Resource Conservation and Recovery Act,
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any
other federal or any state or local statute, regulation, ordinance, order
or decree relating to health, safety or the environment.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any person which is treated as a single employer
with any Subject Company under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of
ERISA and the regulations promulgated thereunder as to which the
requirement of notice has not been waived.
<PAGE>
<PAGE> 13
Event of Default. Any of those events specified in Section 8.1.
Excepted Disposals. Any disposal:
(i) of inventory or obsolete or unused equipment or of equipment the
net proceeds of which are used, within one hundred twenty (120) days
of such disposal, to purchase replacement equipment occurring in the
ordinary course of business;
(ii) of equipment subject to leases, including, but not limited to, the
GECC Leases, the Continental Scaffolding Lease, the Continental
Automobile Lease and the BancBoston Leases;
(iii) of Continental Synthetic Lease Collateral or any other assets of
Safway Steel Products Division, of the Safway Subsidiary or of Figgie
Leasing Corporation;
(iv) of Advance Security, Inc.;
(v) of FAC Collateral or other assets of FAC;
(vi) of assets not included in the Divestiture Plan which do not
constitute all or substantially all of an operating business unit with
respect to which Net Disposal Proceeds for a single asset or a group
of related assets (the sale of artwork owned by the Company to one
or more buyers shall be considered a sale of related assets for the
purposes of this definition) do not exceed $250,000; provided, that if
the Net Disposal Proceeds for such assets or group of related assets
exceeds $250,000, the Company shall retain the first $250,000 of
such Net Disposal Proceeds; and
(vii) of certain real properties with respect to which the Net Disposal
Proceeds of which have been reflected in the cash flow projections of
the Company contained in the Business Plan and which are listed on
Schedule V hereto.
Excluded Facilities. (i) All those Financial Arrangements identified
in Schedule VI, (ii) obligations and liabilities related to or under
performance bonds, and (iii) any other Financial Arrangements (other
than the Subject Facilities) under which the maximum Payment
Liability is $5,000,000 or less.
Expiration Date. June 30, 1995.
FAC. Figgie Acceptance Corporation, a Delaware corporation and
a wholly-owned subsidiary of the Company.
<PAGE>
<PAGE> 14
FAC Capital Expenditure. Any expenditure by FAC or any of the
FAC subsidiaries for fixed or capital assets (including expenditures by
way of expenditures for maintenance and repairs which should be
capitalized in accordance with GAAP, capitalization of leasehold
improvements or otherwise).
FAC Cash Flow Payment Date. The first business day in the months
of November, February, May and August.
FAC Collateral. Collectively, the "Collateral" and "Mortgaged
Property", as defined in the FAC Security Documents, and other
property and interests in property and proceeds thereof now owned or
hereafter acquired by FAC or a FAC Subsidiary in or upon which a
FAC Lien is granted, or purported to be granted, pursuant to any of
the FAC Security Documents.
FAC Collateral Agent. Swiss Bank Corporation, New York Branch,
in its capacity as Collateral Agent pursuant to the FAC Intercreditor
Agreement and the FAC Security Documents.
FAC Event of Default. The meaning assigned to that term in Section
19.6 hereof.
FAC Excess Cash Flow. For each FAC Excess Cash Flow Period, an
amount equal to the remainder of (a) all cash receipts of FAC from
any and all sources, including cash income, repayments of any
Indebtedness owed to FAC, Sooner Net Available Cash Flow, X.Z.
Acquisition Net Available Cash Flow, the proceeds from the sale or
liquidation of assets, income tax refunds (including any sum due FAC
under any tax sharing agreement with the Company), insurance
proceeds (unless such proceeds are (i) subject to a valid, perfected
Lien with priority over the FAC Lien or (ii) used or intended to be
used by FAC to repair or replace the insured asset) and advances
made by the Company to FAC subsequent to June 30, 1994 (an
"Intercompany Debt Increase") minus (b) all cash disbursements of
FAC which do not violate any covenant set forth in Section 19.3 or
Section 19.4 including, without limitation, all reasonable, ordinary
and necessary operating costs and expenses, FAC Capital
Expenditures, net payments for ordinary course intercompany services
provided in accordance with the Service Agreement and the Budget,
the current policy and practices of the Company and Figgie Leasing
Corporation, actual payments to taxing authorities and payments to the
Company as reimbursement for an Intercompany Debt Increase (as
such term is defined in this Agreement). FAC Excess Cash Flow
shall be calculated in a manner consistent with the Budget as adjusted
to reflect FAC and the FAC Subsidiaries as stand alone operations.
In the event FAC fails to include a receipt or disbursement actually
received or paid in a FAC Excess Cash Flow Period in the calculation
of FAC Excess Cash Flow, it shall do so in the next FAC Excess
Cash Flow Period.
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FAC Excess Cash Flow Period. The fiscal quarter of FAC beginning
with the fiscal quarter ending on September 30, 1994, and each fiscal
quarter thereafter.
FAC Financing Statements. The UCC-1 and UCC-2 financing
statements listed on Schedule XX attached to this Agreement.
FAC Inactive Subsidiaries. Cannon Bumper Company and Colonial
Customs, Inc., Texas corporations and wholly-owned subsidiaries of
FAC.
FAC Indebtedness. The Indebtedness due the FAC Subject Lenders.
FAC Intercompany Debt. The intercompany account owing by FAC
to the Company.
FAC Intercreditor Agreement. An intercreditor agreement in form
and substance satisfactory to the FAC Subject Lenders and FAC.
FAC Lien. A Lien granted to the FAC Subject Lenders under this
Agreement and the FAC Security Documents.
FAC Majority Lenders. At any time FAC Subject Lenders, the
aggregate of whose FAC Subject Facility Maximum Exposure at such
time amounts to more than 50% of the aggregate FAC Subject
Facility Maximum Exposure at such time.
FAC Mortgaged Property. The real property owned by FAC or a
FAC Subsidiary as listed on Schedule XXI attached to this Agreement
and on which a FAC Mortgage has been recorded.
FAC Mortgage. Collectively. the mortgage, deed of trust, leasehold
mortgage, and assignment of leases or deeds to secure debt or other
security interests, in form and substance acceptable to the FAC
Subject Lenders and FAC, pursuant to which FAC or a FAC
Subsidiary shall grant to the FAC Collateral Agent for the benefit of
the FAC Subject Lenders a perfected security interest in certain FAC
Real Property of such person, together with any amendment or
modification, renewal, replacement, consolidation, extension or
substitution of any of the foregoing.
FAC Override Termination Date. The earlier to occur of (a) the
Override Termination Date and (b) the date of termination determined
under Section 19.6(b), below.
FAC Real Property. The real property owned by FAC or a FAC
Subsidiary listed on Schedule XXII attached hereto and any real
property subsequently acquired by FAC or a FAC Subsidiary.
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<PAGE> 16
FAC Security Agreement. A security agreement, in form and
substance acceptable to the FAC Subject Lenders and FAC, pursuant
to which FAC and each FAC Subsidiary separately grants to the FAC
Collateral Agent for the benefit of the FAC Subject Lenders a
perfected FAC Lien on its personal property as described therein.
FAC Security Documents. The FAC Security Agreement, the FAC
Stock Pledge Agreement and the FAC Mortgages.
FAC Stock Pledge Agreement. A stock pledge agreement. in form
and substance acceptable to the FAC Subject Lenders and FAC
pursuant to which FAC grants the FAC Collateral Agent for the
benefit of the FAC Subject Lenders a perfected Lien on all stock of
the FAC Subsidiaries.
FAC Subject Facilities. All those Financial Arrangements with
respect to which FAC is the primary obligor, as listed in
Schedule VII.
FAC Subject Facilities Maximum Exposure. In respect of any FAC
Subject Facility, means the amount (being the greater of any
maximum commitment, maximum underwritten amount, maximum
potential principal indebtedness, maximum limit of availability or
maximum outstanding principal indebtedness under the relevant FAC
Subject Facility) set out as such opposite such FAC Subject Facility
in Schedule VII as the same may be reduced or canceled in
accordance with the terms hereof.
FAC Subject Lender Debt. The principal Indebtedness owing by FAC
to the FAC Subject Lenders pursuant to the FAC Subject Facilities,
as reduced from time to time by any payments or distributions made
pursuant to this Agreement or otherwise.
FAC Subject Lenders. The financial institutions named in
Schedule XXIII in their capacity as providers of credit or other
financial accommodations under any of the FAC Subject Facilities.
FAC Subsidiaries. X.Z. Acquisition and Sooner.
Facility Office. The office or offices through which a Subject Lender
makes a Subject Facility available as identified in Schedule VIII.
Financial Arrangements. Any banking, financial or other facilities,
leases, accommodations or arrangements, in any such case, in respect
of Indebtedness or under which Indebtedness may be incurred and
which as at or after the Relevant Time were or have been made
available to the Company or any Subsidiary of the Company (other
than by the Company or any of its Subsidiaries).
Fiscal Quarter. Each period of approximately thirteen weeks ending
on the last day of each calendar quarter.
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<PAGE> 17
Fiscal Year. The fiscal year of the Company ending on December 31
in each year or such other date as the Company may from time to
time elect by appropriate corporate proceeding.
Fixed Amount Subject Facility. Any Subject Facility identified as
such in Schedule IX.
GAAP. (i) When used in Section 6.18, whether directly or indirectly
through reference to a capitalized term used therein, means (A)
principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet
Date, and (B) to the extent consistent with such principles, the
accounting practice of the Subject Companies reflected in their
financial statements for the year ended on the Balance Sheet Date, and
(ii) when used in general, other than as provided above, means
principles that are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors, as in effect from time to time and (B) consistently
applied with past financial statements of the Subject Companies
adopting the same principles, provided that in each case referred to
in this definition of "GAAP" a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a
position to deliver an unqualified opinion (other than a qualification
regarding changes in generally accepted accounting principles) as to
financial statements in which such principles have been properly
applied.
GECC Leases. Collectively, the Equipment Lease Agreements dated
as of December 31, 1992, June 15, 1993 and September 30, 1993,
respectively, as amended, modified, supplemented or otherwise in
effect from time to time, between General Electric Capital
Corporation, as agent, and the Company.
Guaranteed Pension Plan. Any employee pension benefit plan within
the meaning of Section 3(2) of ERISA maintained or contributed to
by any Subject Company or any ERISA Affiliate the benefits of which
are guaranteed on termination in full or in part by the PBGC pursuant
to Title IV of ERISA, other than a Multiemployer Plan.
Hazardous Substances. Any hazardous waste, as defined by 42
U.S.C. Section 9601(5), any hazardous substances as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant as defined by
42 U.S.C. Section 9601(33) and any toxic substances, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws.
Indebtedness. All obligations with respect to borrowed money,
contingent and otherwise, that in accordance with GAAP should be
classified upon the obligor's balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including in any event
and whether or not so classified: (i) all debt and similar monetary
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<PAGE> 18
obligations, whether direct or indirect; (ii) all liabilities secured by
any mortgage, pledge, security interest, lien, charge, or other
encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed;
and (iii) all guarantees, endorsements and other contingent obligations
whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest
in, directly or indirectly, the debtor, to purchase indebtedness, or to
assure the owner of indebtedness against loss, through an agreement
to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner
or otherwise, and the obligations to reimburse the issuer in respect of
any letters of credit.
Instructing Lenders. At any time Subject Lenders (i) the aggregate
of whose Subject Facility Maximum Exposure at such time amounts
to 66 2/3% or more of the sum of the Total Subject Facility
Maximum Exposure at such time and (ii) which constitute not less
than 51% by number of all the Subject Lenders.
Inventories. Raw materials, work in process and finished goods
determined in accordance with GAAP.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or
Indebtedness of, or for loans, advances, capital contributions or
transfers of property to, or in respect of any guaranties (or other
commitments described under Indebtedness), or obligations of, any
person. In determining the aggregate amount of Investments
outstanding at any particular time: (i) the amount of any Investment
represented by a guaranty shall be taken at not less than the principal
amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest
is paid; (iii) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend
or liquidating distribution); (iv) there shall not be deducted in respect
of any Investment any amounts received as earnings on such
Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (ii) may
be deducted when paid; and (v) there shall not be deducted from the
aggregate amount of Investments any decrease in the value thereof.
June 6 Plan Update. The update to the Cash Flow Summary
Projection - May 23, 1994 for the Company and its Subsidiaries titled
"Figgie International Inc. 1994 Plan Update" as prepared by the
Company, dated June 6, 1994, including the Consolidated Cash Flow
schedule included therein.
Lien. For the purposes of Section 19, any mortgage, deed of trust,
lien, pledge, hypothecation, assignment deposit arrangement, security
interest, encumbrance, charge or transfer intended as security,
including, without limitation, any conditional sale or other
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<PAGE> 19
title retention agreement, the interest of a lessor under a capital lease,
any financing lease having substantially the same economic effect as
any of the foregoing, and, in the case of securities, any purchase
option, call or similar right of a third party with respect to such
securities.
Mortgages, Notes and Leases Payable, Minority Interest and Equity.
All as determined in accordance with GAAP and in accordance with
the June 6 Plan Update.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by any Subject
Company or any ERISA Affiliate.
Net Capital Proceeds. In relation to any Relevant Capital Event, the
full amount of the cash proceeds thereof, including when received in
cash any cash proceeds paid under any deferred payment, installment
or similar arrangement, less direct costs actually paid or payable in
connection with such transaction (including, without limitation, filing
and registration fees, investment banking fees, brokers' fees, sales
commissions, in each case properly incurred on an arm's length basis
and properly incurred legal, accounting and other professional fees).
Net Disposal Proceeds. In relation to any Relevant Disposal, the cash
consideration due in respect of such Relevant Disposal, including
when received in cash any cash proceeds paid under any deferred
payment, earnout, installment or similar arrangement less:
(i) all reasonable, direct costs paid or payable in connection with
such Relevant Disposal (including, without limitation, filing and
registration fees, investment banking fees, brokers' fees, sales
commissions, severance payments, legal, accounting and other
professional fees and all other reasonable, direct costs, fees and
expenses, in each case properly incurred on an arm's length basis);
(ii) in the case of a Relevant Disposal of all of the shares of a
Subsidiary of the Company or of any of the shares of Figgie Leasing
Corporation or the Safway Subsidiary or of substantially all of the
assets of a Subsidiary of the Company, any amount required to repay
any Indebtedness of the applicable Subsidiary as necessary to
consummate the Relevant Disposal, to the extent actually paid directly
to satisfy and retire such Indebtedness;
(iii) in the case of a Relevant Disposal of less than substantially all
of the assets of a Subsidiary of the Company, any amount necessary
to satisfy and obtain releases with respect to any related encumbrances
as necessary to consummate the Relevant Disposal, to the extent
actually paid directly to satisfy and retire such Indebtedness; and
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<PAGE> 20
(iv) so long as no Event of Default has occurred and is continuing
hereunder, taxes paid or reasonably estimated to be payable within
one year as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements); provided,
that such amount shall not exceed ten percent (10%) of the cash
consideration due in respect of such Relevant Disposal upon the sale
thereof, and, provided, further, that such amount shall be deposited
by the Company or its Subsidiary, as the case may be, with the
Override Agent in the Tax Escrow Account as collateral security for
the Subject Companies' obligations under the Subject Facilities prior
to the actual payment of taxes in connection with such Relevant
Disposal.
Net Income (or Deficit). The net income (or deficit) of the
Continuing Operations, after deduction of all expenses, taxes, and
other proper charges, determined in accordance with GAAP.
Net Proceeds Distribution Account. The account established in the
name of the Collateral Agent, for the deposit of Net Disposal
Proceeds or Net Capital Proceeds for allocation and application to the
Subject Facilities pursuant to Section 9 hereof, as such account may
be renewed or redesignated from time to time in accordance with this
Agreement.
Net Proceeds Estimated Cost Account. Any interest bearing deposit
account established in the name of the Override Agent for the deposit
of Net Disposal Proceeds or Net Capital Proceeds for the purpose of
estimated costs as provided in Section 9.2(b).
Net Property, Plant and Equipment. Gross property, plant and
equipment and gross capital leases net of respective accumulated
depreciation.
Notice of Event of Default. A notice by the Instructing Lenders
delivered to the Collateral Agent and the Company, stating that an
Event of Default has occurred. A Notice of Event of Default shall be
deemed to have been given when the notice referred to in the
preceding sentence has actually been received by the Collateral Agent
and the Company and to have been rescinded when the Collateral
Agent and the Company have actually received from the notifying
party a notice withdrawing such Notice. A Notice of Event of
Default shall be deemed to be outstanding at all times after such
Notice has been given until such time, if any, as such Notice has been
rescinded.
Obligations. All indebtedness, obligations and liabilities of the
Subject Companies to any of the Subject Lenders and the Subject
Agents, individually or collectively, existing on the date of this
Agreement or arising thereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising or incurred under the
Subject Facility Documents, the Security Documents or this
Agreement.
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<PAGE> 21
Original Financial Statements. The audited consolidated financial
statements of the Subject Companies as of and for the Fiscal Year
ending on the Balance Sheet Date.
Override Arrangements. The terms and provisions of Sections 2 and
3 of this Agreement.
Override Documents. This Agreement together with the Security
Documents and any other agreement, notice, guarantee, certificate or
other document entered into pursuant to the terms hereof or otherwise
in connection herewith.
Override Termination Date. Close of business on the earlier of the
Expiration Date and the date on which the Override Arrangements are
terminated pursuant to the provisions of Section 8.2.
Payment Liability. Any Indebtedness or other obligation (whether
incurred as principal or a surety) for the payment or repayment of
money, whether present or future, actual or contingent.
PBGC. The Pension Benefit Guaranty Corporation created by Section
4002 of ERISA and any successor entity or entities having similar
responsibilities.
Potential Event of Default. Any condition, act or event which is or
(with the passage of time, the giving of notice or any combination
thereof) may (under any of the provisions of Section 8.1) become an
Event of Default.
Prepaid Expenses and Other Assets. Prepaid expenses, investments,
investments-acquisitions, noncurrent receivables, goodwill net of
goodwill transferred to any Discontinued Operation or to any division
or Subsidiary which is a Continuing Operation as of June 6, 1994
which subsequently becomes classified as discontinued by the
Company, patents, prepaid pension costs and other assets, determined
in accordance with GAAP and in accordance with the June 6 Plan
Update.
Rawlings IPO Transaction. The transactions substantially as
described in the Prospectus dated June 29, 1994 filed in connection
with the S-1 Registration Statement (No. 33-77906) filed by the
Rawlings Sporting Goods Company, Inc.
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Company or any of its Subsidiaries, except FAC
Collateral.
Relevant Capital Event. Any issuance of capital stock or other
securities or related instruments (or the sale of any warrants, options
or similar rights in respect thereof) by the Company or any of its
Subsidiaries (other than to the Company or any of its Subsidiaries)
and any receipt by any such person of any capital contribution or
similar payment.
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<PAGE> 22
Relevant Disposal. Any disposal other than an Excepted Disposal or
the disposal permitted by Section 7.5(b)(iv) of all or any portion of
the assets of the Company or any of its Subsidiaries, including any
disposal (other than to any Subsidiary) by the Company or any
Subsidiary of the capital stock of any Subsidiary.
Relevant Jurisdictions. In respect of any person, the country (and, in
the case of the United States, the state) in which such person is
incorporated and, if different, where it is resident or has its principal
place of business.
Relevant Laws. In respect of any person, the laws of its Relevant
Jurisdictions.
Relevant Time. The close of business in Boston, Massachusetts on
July 15, 1994.
Return. Any interest, acceptance commission, discount or other
return.
Safway Subsidiary. As such term is defined in Section 7.5.
Scaffolding Allocation. A portion of Net Disposal Proceeds or Net
Capital Proceeds to be retained by the Company at the time of a
Relevant Disposal or a Relevant Capital Event, as the case may be,
up to $8,333,333.33 in the aggregate, to be applied by the Company
to its obligations under the Continental Scaffolding Lease, determined
on a pro rata basis as follows:
(i)
at the time of the disposal of the Company's Rawlings Sporting Goods
Company division, by multiplying the Net Disposal Proceeds from
such disposal, less the payments set forth in clauses (i), (iii), (iv) and
(v) of Section 6.19(e), times a fraction the numerator of which is the
Scaffolding Outstanding and the denominator of which is the Total
Subject Facility Maximum Exposure plus the Scaffolding Outstanding;
and
(ii)
at the time of any other Relevant Disposal or Relevant Capital Event,
by multiplying the Net Disposal Proceeds or Net Capital Proceeds, as
the case may be, from such disposal times a fraction the numerator
of which is the Scaffolding Outstanding and the denominator of which
is the Total Subject Facility Maximum Exposure plus the Scaffolding
Outstanding.
Scaffolding Outstanding. At any time, the amount outstanding under
the Continental Scaffolding Lease.
Security Documents. Those documents set forth on Schedule XI
hereto each of which shall be in a form satisfactory to each of the
Company and the Override Agent.
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<PAGE> 23
Senior Notes. The $175,000,000 9 7/8% Senior Notes issued
pursuant to the Indenture dated as of October 1, 1989, between State
Street Bank and Trust Company, National Association (successor in
interest to Continental Bank, National Association), as trustee, and the
Company.
Service Agreements. The schedules under which the Company and
certain of its Subsidiaries provide services to the Company and certain
Subsidiaries.
Sooner. Sooner Hotel Corporation, a Delaware corporation.
Sooner Net Available Cash Flow. An amount equal to the remainder
of (a) all cash receipts of Sooner from any and all sources, including
cash income, repayments of any Indebtedness owed to Sooner, the
proceeds from the sale or liquidation of assets, tax refunds (including
any sum due Sooner under a tax sharing agreement), insurance
proceeds (unless such proceeds are used or intended to be used by
Sooner to repair or replace the insured asset) and any advances made
by FAC to Sooner from time to time, minus (b) all cash
disbursements of Sooner which do not violate any covenant set forth
in Sections 19.3 or 19.4, including, without limitation, all ordinary
and necessary operating costs and expenses, FAC Capital
Expenditures, actual payments to taxing authorities, repayments of
outstanding advances to FAC, and an amount equal to the ordinary
and necessary operating costs and expenses and capital expenditures
reasonably anticipated during the next succeeding three calendar
month period.
Subject Companies. The Company and each of its Subsidiaries
having any Payment Liability, either directly or as a guarantor, with
respect to any Subject Facilities. A list of the Subject Companies as
of the Relevant Time is set forth in Schedule I. The Figgie
International Inc. Stock Ownership Trust and Plan is neither a Subject
Company nor a Subsidiary.
Subject Facilities. Subject to Section 2.1(b) hereof, all those
Financial Arrangements identified in Schedule XII.
Subject Facility Document. Each agreement or other document
establishing or regulating the terms of a Subject Facility together with
each other agreement, instrument, notice, guarantee, certificate or
other document entered into by or between or in favor of any Subject
Company and/or any Subject Lender and/or any Subject Agent
pursuant to the terms thereof or otherwise in connection therewith.
Subject Facility Maximum Exposure. In respect of any Subject
Facility, the amount (being the greater of any maximum commitment,
maximum underwritten amount, maximum potential principal
indebtedness, maximum limit of availability or maximum outstanding
principal indebtedness under the relevant Subject Facility) set out as
such opposite such Subject Facility in Schedule XII, plus any amounts
added thereto pursuant to Section 2.5(d), less any permanent
reductions in such amounts as of such time.
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<PAGE> 24
Subject Facility Outstandings. At any time means the aggregate of
the dollar amounts outstanding under any particular Subject Facility.
Subject Lender Maximum Exposure. At any time means the
aggregate of the dollar amounts (being the greater of any maximum
commitment, maximum underwritten amount, maximum potential
principal indebtedness, maximum limit of availability or maximum
outstanding principal indebtedness under a relevant Subject Facility)
set out as such in Schedule XII from any particular Subject Lender
under all Subject Facilities less any permanent reductions in such
amounts as of such time.
Subject Lender Outstandings. At any time means the aggregate of the
dollar amounts outstanding from any particular Subject Lender under
all Subject Facilities.
Subsidiary. Any corporation, association, trust, partnership or other
business entity of which the designated parent shall at any time own
directly or indirectly through a Subsidiary or Subsidiaries at least a
majority (by number of votes) of the outstanding Voting Stock.
Tax Escrow Account. The interest bearing cash collateral account of
the Override Agent, in its capacity as Collateral Agent, for the benefit
of the Subject Lenders into which amounts allocated for the payment
of taxes estimated to be incurred but not yet paid in connection with
divestitures shall be deposited by the Company and its Subsidiaries
until payment.
Total FAC Subject Facility Maximum Exposure. At any time means
the aggregate of the FAC Subject Facility Maximum Exposure at such
time of all the FAC Subject Facilities, less any permanent reductions
in such amount as of such time.
Total Subject Facility Maximum Exposure. At any time means the
aggregate of the Subject Facility Maximum Exposure at such time of
all the Subject Facilities less any permanent reductions in such
amounts as of such time.
Total Subject Facility Outstandings. At any time means the aggregate
of the Subject Facility Outstandings at such time of all the Subject
Facilities.
U.C.C.C. Collectively, The First National Bank of Boston, Society
National Bank, Chemical Bank, Mellon Bank, N.A., The Sanwa
Bank, Limited, Chicago Branch, Banca Nazionale del Lavoro, S.p.A
and Swiss Bank Corporation, New York Branch.
United States. The United States of America (including the States and
the District of Columbia), its territories, possessions and other areas
subject to the jurisdiction of the United States of America.
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<PAGE> 25
Variable Amount Subject Facility. Any Subject Facility identified as
such in Schedule XII.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled,
as such holders, to vote for the election of a majority of the directors
(or persons performing similar functions) of the corporation,
association, trust or other business entity involved, whether or not the
right so to vote exists by reason of the happening of a contingency.
X.Z. Acquisition. X.Z. Acquisition Corporation, a Delaware
corporation.
X.Z. Acquisition Net Available Cash Flow. An amount equal to the
remainder of (a) all cash receipts of X.Z. Acquisition from any and
all sources, including cash income, repayments of any Indebtedness
owed to X.Z. Acquisition, the proceeds from the sale or liquidation
of assets, tax refunds (including any sum due X.Z. Acquisition under
a tax sharing agreement), insurance proceeds (unless such proceeds
are used or intended to be used by X.Z. Acquisition to repair or
replace the insured asset) and any advances made by FAC to X.Z.
Acquisition from time to time, minus (b) all cash disbursements of
X.Z. Acquisition which do not violate any covenant set forth in
Sections 19.3 or 19.4, including, without limitation, all ordinary and
necessary operating costs and expenses, FAC Capital Expenditures,
actual payments to taxing authorities, repayments of outstanding
advances to FAC, and an amount equal to the ordinary and necessary
operating costs and expenses and capital expenditures reasonably
anticipated during the next succeeding three calendar month period.
1.2 Construction.
(a) Any reference in this Agreement and in the recitals hereto to:
"acceleration" shall be construed to mean in respect of any facility,
liability or obligation the termination, cancellation, repayment,
reduction, purchase or defeasance thereof prior to the originally
scheduled date therefor or that an obligation arises to make any
payment in the nature of principal or cash collateral in respect thereof
prior to the originally scheduled maturity date of the facility, liability
or obligation in question;
on an "arm's-length basis" means on terms that are fair and
reasonable and no less favorable to the relevant Subject Company than
could reasonably be expected to be obtained in a comparable
arm's-length transaction with a person which is not an Affiliate of it;
a "business day" shall be construed as a reference to a day (other than
a Saturday or Sunday) on which banks are open for business in New
York, New York and (if such reference relates to a date for the
payment or purchase of any sum denominated in a
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<PAGE> 26
currency other than dollars) the principal financial center of the
country of the relevant currency;
a "capitalized lease" shall be construed as a reference to a lease,
conditional sale or other similar agreement constituting a finance or
capitalized lease for the purposes of GAAP;
the "constitutive documents" of a person shall be construed so as to
include the certificate of incorporation, by-laws, trust deed,
partnership, joint venture or shareholders' agreement or equivalent
documents of or constituting such person;
a "disposal" means any sale, lease, transfer, license or other disposal
(other than a disposal of Collateral pursuant to the terms of the
Security Documents) and "dispose" shall be construed accordingly;
an "encumbrance" shall be construed as a reference to a security
interest, mortgage, charge (whether legal or equitable), pledge, lien,
hypothecation or other encumbrance securing any obligation of any
person or any other type of preferential arrangement (including,
without limitation, title transfer and retention, sale and leaseback, sale
and repurchase or deferred purchase arrangements and the discounting
or factoring of receivables on recourse terms) having a similar effect
or any other arrangement having substantially the same economic
effect as any of the foregoing but excluding netting arrangements;
the expressions "enforceable" and "legally binding" are to be
construed as being subject to laws relating to fraudulent conveyance,
bankruptcy, liquidation or other similar laws affecting creditors rights
generally and to principles of equity regardless of whether considered
in an equitable or legal context;
the "equivalent" on any day in one currency of an amount
denominated in any other currency shall be construed as a reference
to the amount of the first currency which could be purchased with the
amount of such other currency at the spot rate of exchange quoted by
the Override Agent at or about 11.00 a.m. on such date for the
purchase of the first currency with such other currency for delivery
two business days thereafter;
a "guarantee" means any guarantee, indemnity, third party security or
other legally binding assurance against financial loss granted by one
person in respect of any Financial Arrangement of another person
(other than arising as a result of the endorsement of checks in the
ordinary course of business);
"netting arrangements" shall be construed so as to include any
unsecured cash management or netting arrangements entered into by
a corporation or group of corporations with its banks in the ordinary
course of business or any similar arrangement arising in connection
with the opening of ordinary current or deposit accounts with banks;
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any of the "Override Agent", the "Subject Agents" or the "Subject
Lenders" shall, subject as otherwise provided herein, be construed so
as to include their respective successors and assigns;
a "person" shall be construed as a reference to any person, firm,
company, corporation, business, trust, joint venture, government (or
sub-division thereof), state or agency of a state or any association or
partnership; and
"pro rata" means in the proportion that a person's share of the
relevant category of exposure, outstandings or liabilities bears to the
total amount of such category at any time.
(b) "$", "dollar" and "dollars" denote lawful currency of the United
States.
(c) Except where the contrary is indicated, any reference in this
Agreement to:
(i) this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may be,
such other agreement or document as the same may have been, or
may from time to time be, amended, varied or supplemented;
(ii) a statute shall be construed as a reference to such statute as the
same may have been, or may from time to time be, amended or
re-enacted; and
(iii) a time of day shall be construed as a reference to New York, New
York time.
(d) Section, sub-section, and Schedule headings are each for reference
only.
(e) Any financial term or expression not otherwise defined herein shall
be construed in accordance with GAAP.
(f) The singular includes the plural and the plural includes the singular.
(g) All terms not specifically defined herein or by GAAP, which terms
are defined in the Uniform Commercial Code as in effect in the State
of New York, have the meanings assigned to them therein.
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2 - GENERAL OVERRIDE APPLICATION
2.1 Application to Subject Facilities.
(a) This Agreement shall only apply to the Subject Facilities. The
Excluded Facilities and any other Financial Arrangement provided to
any Subject Company which is not a Subject Facility shall not be
subject to this Agreement.
(b) In the event any unsecured lender to the Company with respect to
borrowed money pursuant to credit facilities substantially similar to
any of the Subject Facilities and pari passu with the Subject Lenders
(based on their respective priority prior to the Effective Date) are
identified by the Company after the Relevant Time, such lender shall
become a Subject Lender and be added to Schedule II hereof and the
applicable credit facilities shall become Subject Facilities hereunder
upon the consent of the Instructing Lenders and the execution by
such lender of documentation pursuant to which such lender shall
become a party to this Agreement which shall be in form and
substance reasonably satisfactory to the Override Agent.
2.2 Conditions Precedent. The Override Agreement shall not come
into effect and the Effective Date shall not occur unless (i) each of the
Subject Lenders, each of the Subject Agents, the FAC Collateral
Agent and the Override Agent has received to its satisfaction each of
the documents and other evidence listed in Schedule XIII and (ii) the
FAC Collateral Agent has notified the Company, the FAC Subject
Lenders and the Override Agent that it has received the FAC Security
Documents. If the Effective Date has not occurred on or prior to
July 29, 1994, or such other date as may be agreed to by the
Company and the Instructing Lenders, the Override Agreement shall
not come into effect.
2.3 Suspension and Amendment of Subject Facilities and
Documents.
(a) From the Effective Date, this Agreement shall amend, vary and
supplement certain of the terms of the Subject Facility Documents and
the Subject Facilities so that the terms of this Agreement shall
supersede and prevail over those of the Subject Facility Documents
and the Subject Facilities and the Subject Facility Documents shall be
read, construed and enforced only as amended, varied and
supplemented hereby (and so that references therein to any document,
instrument or agreement shall be read, construed and enforced as
references to such document or agreement as amended, varied or
supplemented consistent with this Agreement).
(b) Notwithstanding any term or provision of any Subject Facility or
Subject Facility Document, nothing contained in any Override
Document or done pursuant to and in accordance with the terms
thereof shall constitute a breach of any term of or a default or event
of default (however described or defined) under any Subject Facility
or Subject Facility Document or otherwise permit the exercise of any
remedy thereunder.
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<PAGE> 29
(c) Except as provided in Section 19.6 hereof, prior to the Override
Termination Date, none of the Subject Lenders or the Subject Agents
shall:
(i) exercise or enforce any of its rights or remedies against, or take,
commence or continue any suit, action or proceedings against any
Subject Company or other person under, or in respect of or otherwise
relating to any obligation or liability under any Subject Facility or
Subject Facility Document or permit any such rights or remedies to
be exercised or enforced, or such suit, action or proceedings to be
taken or commenced, on its behalf;
(ii) accept or demand any payment or satisfaction in respect of any
Payment Liability in connection with or pursuant to the terms of a
Subject Facility other than as permitted hereunder;
(iii) accelerate or cause the acceleration (or otherwise enforce any
provisions which so require) of any Subject Facility or Payment
Liability in connection with or pursuant to the terms of a Subject
Facility;
(iv) require any Subject Company to provide, grant or create or accept
from any Subject Company (in either such case) any guarantee,
encumbrance or other security for or in respect of any Subject
Liability (whether or not it is provided in any Subject Facility
Documents that such guarantee, encumbrance or other security should
be provided, granted or created) other than to the extent that the same
are in existence at the date hereof or required by this Agreement;
(v) exercise any right of set-off, consolidation of accounts or
counterclaim in respect of any Subject Facility; or
(vi) reduce, withdraw, cancel, terminate or cease to make available
any of the Subject Facilities, including without limitation any advance
or other extension of credit under any Contingent Amount Subject
Facility, except as otherwise expressly permitted hereby.
2.4 Maturity of Subject Facilities and Documents.
(a) Upon the occurrence of the Override Termination Date, (i) each of
the Subject Facilities, Subject Facility Documents and all obligations,
commitments, liabilities, rights and remedies thereunder, except as
otherwise provided herein, shall be reinstated and all Payment
Liabilities thereunder shall mature and be due and payable in full in
cash; and (ii) each Subject Company shall use its best efforts to
terminate or provide a letter of credit backup or replacement letter of
credit for each Subject Lender that has issued any stand-by letters of
credit for the account of any Subject Company which expire after the
Override Termination Date (whereupon each such Subject Lender
shall, if provided a
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<PAGE> 30
backup letter of credit, transfer any amounts held in its Contingent
Facility Distribution Account to secure any such standby letter of
credit to the issuer of any backup or replacement letter of credit or,
if terminated, transfer such amounts to the Override Agent for
distribution to the Override Lenders). Each such Subject Lender shall
assist the Company in its effort to terminate or provide a letter of
credit backup or replacement letter of credit. If the applicable Subject
Company is not successful in such efforts, it shall deposit with each
such Subject Lender to hold in a separate Contingent Facility
Distribution Account of each Subject Lender that has issued any
stand-by letters of credit for the account of any Subject Company
which expire after the Override Termination Date cash in an amount
sufficient to cause the aggregate balance in such Subject Lender's
Contingent Facility Distribution Account to equal 105% of the then
undrawn stated amount of all such stand-by letters of credit as
collateral security for the relevant Subject Company's reimbursement
obligations in connection with such stand-by letters of credit, such
amount to be applied in satisfaction of any Payment Liability of the
relevant Subject Company upon any drawing under such stand-by
letters of credit and if the reimbursement obligation under such
stand-by letter of credit is satisfied and, if all of the Obligations have
been satisfied in full, subject to the terms of Sections 9.4 and 10.5(b)
hereof, to be returned to the Company or, otherwise, to be distributed
to the Subject Lenders pursuant to Section 9 hereof.
(b) Each Subject Company confirms and acknowledges that upon the
Override Termination Date all Subject Facility Documents, the
Subject Facilities and all Payment Liabilities, guarantees and other
obligations thereunder or with respect thereto to which it is a party or
by which it is bound shall continue and remain valid, binding and
enforceable obligations of such Subject Company.
(c) Except to the extent and for the periods expressly provided for in
this Agreement, after the Override Termination Date none of the
terms hereof shall constitute or be deemed to constitute a waiver by
any Subject Lender or Subject Agent of any default or event of
default (regardless of how described or defined or when such default
or event of default occurred) under or in respect of any of the Subject
Facilities or Subject Facility Documents; provided, however, that each
Subject Lender and each Subject Agent hereby agrees that the
Company shall not be required to pay a default rate of interest as a
result of such default or event of default except as provided in Section
2.5(b) hereof.
2.5 Interest and Subject Facility Fees Under the Override
Agreement. From June 30, 1994, all interest, discounts, fees and
similar charges and Returns provided for under any Subject Facility
or Subject Facility Document shall be suspended and shall be waived
and replaced as of June 30, 1994 as follows:
(a) So long as no Event of Default has occurred and is continuing
under the terms of this Agreement, interest on all Subject Facility
Outstandings shall accrue at the Accrual Rate and be paid to the
applicable Subject Lender as follows: (i) that portion of the Accrual
Rate equal to the Base Rate shall be paid monthly in arrears on the
first
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<PAGE> 31
business day of the succeeding calendar month and on the Override
Termination Date, and (ii) that portion of the Accrual Rate equal to
the difference between the Accrual Rate and the Base Rate shall be
due and payable on the Override Termination Date;
(b) Upon the occurrence and during the continuance of an Event of
Default under the terms of this Agreement, interest on all Subject
Facility Outstandings shall accrue at the Default Rate only and shall
be payable to the applicable Subject Lender on demand until all
Subject Facility Outstandings shall be paid in full (after as well as
before judgment);
(c) With respect to any period after the Effective Date, Contingent
Amount Subject Facilities consisting of standby letters of credit shall
be subject to a fee equal to two percent (2%) per annum of the face
amount of such letters of credit upon issuance, or reissuance as
applicable, until the termination of such letter of credit. Such fees
shall be payable in accordance with the terms of the relevant
Contingent Amount Subject Facility. Unreimbursed amounts under
drawn standby letters of credit shall bear interest, at rates then
applicable to the Subject Facility Outstandings hereunder;
(d) To compensate the short-term and overnight Subject Lenders listed
on Schedule XIV hereto for any differential between (i) interest
actually paid to such Subject Lenders from February 14, 1994 through
June 30, 1994 and (ii) a rate of interest equal to the Base Rate plus
2% per annum for the same period, the Company shall pay to each
such Subject Lender an additional interest adjustment payment as set
forth in Schedule XIV hereto. Such payments shall be due and
payable pro rata among such Subject Lenders in the aggregate amount
of $300,000 upon the Effective Date, and the amount of the remaining
balance shall be added to each such Subject Lender's Subject Facility
Maximum Exposure as of the Relevant Time and shall be paid ratably
in accordance with the provisions of Section 9.3 and Section
10.5(b)(ii); and
(e) To compensate two short-term and overnight Subject Lenders for
the differential between (i) interest actually paid to such Subject
Lenders from February 14, 1994 through March 31, 1994 and (ii) the
rate of interest quoted to the Company by such Subject Lenders
during the same period, the payment of which is not otherwise
provided for pursuant to Section 2.5(d), the Company shall execute
and deliver to each such Subject Lender a promissory note equal to
such amount in form and substance satisfactory to the Override
Agent, the payment of which is subordinated to the repayment of the
Obligations. The principal amount of such promissory notes shall not
bear interest.
2.6 Suspension of Subject Facility Maturities. Until the Override
Termination Date, any scheduled or required repayment, reduction or
discharge of any Payment Liability provided for under a relevant
Subject Facility Document or otherwise applicable in respect of such
Payment Liability shall not take place or be due or payable at the
times so provided or applicable other than as permitted by Section
3.4, but shall instead be due and effected in the manner provided for
and permitted by this Agreement.
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<PAGE> 32
2.7 Voluntary Subject Facility Reductions by the Subject
Companies. Subject to repayment, reborrowing and replacement
under Variable Amount Subject Facilities pursuant to Section 3.1 and
to the provisions of Section 19, no Subject Company shall (except as
expressly provided and permitted by Section 6.19 hereof) repay,
reduce or discharge any principal amount of any Subject Facility prior
to the Override Termination Date, except that a Subject Company
may repay or reduce and re-draw or replace (and make balancing
payments) with respect to Subject Facilities as permitted or provided
in this Agreement.
2.8 Amendments to Subject Facility Documents. Except as
expressly provided herein, including the provisions of Section 19,
until the Override Termination Date no Subject Agent or Subject
Lender shall amend, waive or supplement the terms of any of the
Subject Facilities or Subject Facility Documents; provided that prior
to the Override Termination Date any Subject Agent or Subject
Lender may amend, waive or supplement in writing any provision of
a Subject Facility Document to the extent that:
(a) such amendment, waiver or supplement is not inconsistent with the
terms hereof and does not have the effect of conferring on any Subject
Lender any priority over the rights of or otherwise prejudice or
adversely affect any other Subject Lenders;
(b) the Override Agent and each of the Subject Lenders receives at
least ten (10) business days prior written notice of the full terms
thereof and the Instructing Lenders approve the amendment, waiver
or supplement in question; and
(c) any Subject Company party to or bound by such Subject Facility
Document agrees.
2.9 Co-operation with Override Agent. Each of the Subject Lenders
and Subject Agents agrees to cooperate with the Override Agent and
to provide the Override Agent with such information as it reasonably
may require to carry out its functions hereunder (and in particular but
without limitation to make any determinations or calculations to be
made by it hereunder).
3 - SPECIAL OVERRIDE APPLICATIONS
3.1 Continued Availability Under Variable Amount Subject
Facilities.
(a) Each Subject Lender which at the Relevant Time provided a
Variable Amount Subject Facility to any Subject Company shall, to
the extent any Variable Amount Subject Facility is not drawn up to
the Subject Facility Maximum Exposure as of the Effective Date,
continue at and upon the election of such Subject Company to make
advances and extend credit under such Variable Amount Subject
Facility to such Subject
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<PAGE> 33
Company up to the amount of the Subject Facility Maximum
Exposure in respect of such Variable Amount Subject Facility.
(b) If the terms of any Subject Facility or related Subject Facility
Document provide that any Subject Company may repay and reborrow
or otherwise replace outstandings thereunder, then the Subject
Company shall continue to have such repayment, reborrowing and
replacement rights (subject to any currency and similar balancing
payments provided for thereunder) and no Subject Lender or Subject
Agent may rely upon or enforce any term of any Subject Facility
Document or Variable Amount Subject Facility if the effect of such
reliance or enforcement would be, contrary to the terms hereof, to
prevent or impede any such repayment, reborrowing or replacement.
3.2 Contingent Amount Subject Facilities Generally.
(a) Contingent Facility Distribution Account. If the Override Agent
or any Subject Lender receives any amount for application pursuant
to Section 9 or Section 10.5(b)(ii)3(C) hereof to a Contingent Amount
Subject Facility prior to maturity of any Payment Liability under such
Contingent Amount Subject Facility, the Override Agent or Subject
Lender, as applicable, shall immediately deposit any such amount in
a Contingent Facility Distribution Account to be held by such Subject
Lender as collateral security for the Subject Company's
reimbursement obligations with respect to such Contingent Amount
Subject Facility.
(b) Subject Company Election. Upon deposit of any such amount in
a Contingent Facility Distribution Account, the Override Agent will
notify the Company and the Company will have the following
alternatives with respect thereto:
(i) Permanent Reduction of Contingent Facility. The Company may
elect to permanently reduce the Subject Facility Maximum Exposure
with respect to such Contingent Amount Subject Facility by waiving
and releasing any further obligation of the Subject Lender under
Section 3.4 hereof to issue or reissue letters of credit, guarantees and
similar commitments with respect thereto and taking such other
actions as the Subject Lender may reasonably request. In such event,
the amount deposited in the Contingent Facility Distribution Account
will be applied to any Payment Liability arising with respect to the
applicable Contingent Amount Subject Facility or, if such Contingent
Amount Subject Facility terminates or expires without incurrence of
a Payment Liability, will be distributed in accordance with the terms
of Section 9 hereof; provided that, if the Scaffolding Allocation has
not been paid in full at such time, the Override Agent shall pay
Continental Bank, as collateral agent, under the Continental
Scaffolding Lease, the Scaffolding Allocation from such amount
deposited.
(ii) Continued Availability of Contingent Facility. The Company may
elect to continue to have access to the full amount of such Contingent
Amount
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<PAGE> 34
Subject Facility pursuant to the terms of Section 3.3 hereof. In such
event, the amount deposited in the Contingent Facility Distribution
Account will be applied to any Payment Liability arising with respect
to the applicable Contingent Amount Subject Facility and, if such
Contingent Amount Subject Facility terminates or expires without
incurrence of a Payment Liability, will continue to be held in the
Contingent Facility Distribution Account to secure subsequent letters
of credit, guarantees and similar commitments, if any, issued by the
applicable Subject Lender pursuant to Section 3.3 hereof.
(c) Notice of Election. The Company will notify the Override Agent
and the applicable Subject Lender of an election under subsection (b)
above within ten (10) business days of the Company's receipt of the
Override Agent's notice provided for in subsection (b). In the
absence of such notice from the Company, the Company will be
deemed to have made an election under subsection (b)(ii) above with
respect to the applicable Contingent Amount Subject Facility.
(d) Each Contingent Facility Distribution Account established pursuant
to this Section 3.2 shall be held for the benefit of the relevant
Beneficiary and no Subject Company nor any bankruptcy trustee or
other representative of any Subject Company shall have any right or
interest in any such account.
3.3 Special Provisions Applicable to Stand-By Letters of Credit.
If under any Contingent Amount Subject Facility:
(a) a Subject Lender is obliged to issue or has issued standby letters of
credit, guarantees or similar commitments; and
(b) through expiration, release or other event the liability or
obligations of the Subject Lender in question thereunder has reduced
such that the Subject Facility Maximum Exposure of such Subject
Lender thereunder has reduced;
then, provided no Event of Default has occurred and is continuing,
the Company shall have the right, prior to the Override Termination
Date, to require that the Subject Lender reissue stand-by letters of
credit, guarantees and similar commitments for the account of the
Company or any other Subject Company up to the amount of such
Subject Lender's related Subject Facility Maximum Exposure for such
Subject Lender's Contingent Amount Subject Facility and for
substantially the same purpose prior to such reduction in liability for
a period of up to twelve (12) months after the date of reissuance of
such stand-by letters of credit or to permanently reduce the Subject
Lender's related Subject Facility Maximum Exposure upon written
notice to such Subject Lender and the Override Agent in accordance
with Section 3.2 hereof.
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<PAGE> 35
4 - OVERRIDE REPRESENTATIONS
4.1 Subject Companies' Representations. The Company and each
Subject Company (other than FAC) represents and warrants that:
(a) the obligations which it has assumed or incurred prior to the date
hereof in respect of the Subject Facilities are legal and valid
obligations binding on it, subject only to the terms of this Agreement,
enforceable in accordance with the terms thereof as set forth in (and
subject as provided in) the Subject Facility Documents;
(b) since the Balance Sheet Date no Subject Company has made any
repayment or prepayment (other than payments which would have
been permitted under this Agreement had it been in effect at such time
and the payment made to BancBoston Leasing Inc. in connection with
the Rawlings IPO Transaction) of the principal amount of or effected
any reduction or collateralization of the principal amount of any
Indebtedness (other than reductions or collateralizations which would
have been permitted under this Agreement had it been in effect at
such time) nor has it received notice or is otherwise aware of any
setoffs or counterclaims having been exercised or encumbrances been
created or other preferential arrangements been entered into in respect
of any Indebtedness (other than any setoffs, counterclaims or
encumbrances or other preferential arrangements which would have
been permitted under this Agreement had it been in effect at such
time); and
(c) no Subject Company has taken any corporate action nor have legal
proceedings been started or (to the best of its knowledge and belief)
threatened against any such Subject Company for its winding-up,
dissolution, administration or reorganization or for the appointment
of a receiver, administrator, administrative receiver, trustee or similar
officer for it or any or all of its assets.
4.2 Subject Lenders' Representations.
(a) Each of the Subject Lenders represents and warrants in favor of
each of the other Subject Lenders only that:
(i) the information provided by it to the Override Agent in respect of
the Financial Arrangements as at the Relevant Time is complete and
accurate in all material respects; and
(ii) other than claims and rights arising in respect of the Subject
Facilities and certain of the Excluded Facilities as set forth in
Schedule VI, it has no other claim or right against any Subject
Company in respect of Indebtedness.
(b) The representation and warranties contained in this Section 4.2 are
for the benefit of the other Subject Lenders only and no Subject
Company shall be entitled to rely on or
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<PAGE> 36
assert that no such other claim or right exists by reason of such
representations and warranties.
5 - GENERAL REPRESENTATIONS
The Company and each Subject Company (other than FAC) represents
and warrants as follows:
5.1 Incorporation: Good Standing. The Company and each of the
other Subject Companies (a) is a corporation duly established (and, in
the case of a corporation incorporated in the United States, validly
existing and in good standing) under the laws of its country and/or
(where relevant) state of incorporation, (b) has all requisite corporate
power to own its properties and conduct its business as now
conducted and as presently contemplated except where the lack of
such power would not have a materially adverse effect on the
business, assets or financial condition of the Company and its
Subsidiaries taken as a whole and (c) is in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction
where such qualification is necessary except where a failure to be so
qualified would not have a materially adverse effect on the business,
assets or financial condition of the Company and its Subsidiaries taken
as a whole.
5.2 Authorization. The execution, delivery and performance of this
Agreement and the other Override Documents to which the Company
or any of the other Subject Companies is a party and the transactions
contemplated hereby and thereby (a) are within the corporate authority
of the Company and the other Subject Companies and (b) have been
duly authorized by all necessary corporate proceedings.
5.3 Conflicts. The execution, delivery and performance by any
Subject Company of the Override Documents will not: (a) conflict
with any law, regulation or official or judicial order applicable to such
Subject Company; (b) conflict with such Subject Company's
constitutive documents; (c) conflict with any agreement or document
to which such Subject Company is a party or which is binding upon
it or any of its assets in any material respect, except for any conflict
for which an appropriate waiver has been sought and obtained; or (d)
result in the creation or imposition of any encumbrance on any of
such Subject Company's respective assets except as provided or
permitted under this Agreement.
5.4 Enforceability. The execution and delivery of this Agreement and
the other Override Documents to which the Company and the other
Subject Companies are a party will result in valid and legally binding
obligations of the Company and the other Subject Companies
enforceable against them in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights
and except to the extent that availability of the remedy of
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<PAGE> 37
specific performance or injunctive relief is subject to the discretion of
the court before which any proceeding therefor may be brought.
5.5 Compliance with other Documents, Laws, Etc. Neither the
Company nor any of its Subsidiaries is in violation of any provision
of its constitutive documents, or any agreement or instrument to
which it may be subject or by which it or any of its properties may
be bound or any decree, order, judgment, statute, license, rule or
regulation, in any of the foregoing cases in a manner that could
reasonably be expected to result in the imposition of substantial
penalties or materially and adversely affect the financial condition,
properties or business of the Company and its Subsidiaries taken as
a whole.
5.6 Litigation. Except as otherwise disclosed in Schedule XV, there
are no actions, suits, proceedings or investigations of any kind
pending or (to the best of its knowledge) threatened against the
Company or any of its Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely determined, might
reasonably be expected to have a material adverse effect on the
business, assets or financial condition of the Company and its
Subsidiaries taken as a whole or materially impair the right of the
Company and its Subsidiaries, considered as a whole, to carry on
business substantially as now conducted by them, or result in any
substantial liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the consolidated balance sheet
of the Company, or which question the validity of this Agreement or
any of the other Override Documents, or any action taken or to be
taken pursuant hereto or thereto.
5.7 Financial Arrangements. Other than the Subject Facilities and
Excluded Facilities, the Company has no Financial Arrangements in
respect of which the Company or any Subsidiary has any Payment
Liability in excess of $5,000,000.
5.8 Financial Statements.
(a) Except as stated in the notes thereto the Original Financial
Statements were prepared in accordance with GAAP consistently
applied and gave (in conjunction with the notes thereto) a true and fair
view of the financial condition of the Company and its Subsidiaries
on a consolidated basis as at the Balance Sheet Date and the results
of their operations for the fiscal year then ended;
(b) at the Balance Sheet Date neither the Company nor its Subsidiaries
had any material liabilities (contingent or otherwise) which were not
disclosed thereby (or by the notes thereto) or reserved against thereon
or had any material unrealized or anticipated losses arising from
commitments entered into by it which were not so disclosed or
reserved against;
(c) the forecasts, projections and assumptions made, and information
contained in the Business Plan fairly represent the views and
expectations of the Company formed
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<PAGE> 38
in good faith on the basis of the assumptions stated therein, which
assumptions were believed by it to be fair in the light of the
conditions existing at the time of delivery of such Business Plan, and
represented, at the time of delivery, the Company's best estimate of
its future financial performance on the basis of such assumptions and
it is not aware of any facts or circumstances (other than future
economic conditions that would affect other companies or companies
carrying on similar businesses to those of the Company and its
Subsidiaries) which could reasonably be expected to render any such
forecasts, projections or assumptions inaccurate or misleading in any
respect material to the to the business, condition (financial or
otherwise), operations, performance, properties or prospects of the
Company and its Subsidiaries taken as a whole; and
(d) other than the possible continuance of operating losses in 1994 of
a magnitude reported to the Subject Lenders prior to the date hereof,
since the Balance Sheet Date, and taking into account the
arrangements set forth in the Override Documents, there has been no
material adverse change in the business, assets or financial condition
of the Company and its Subsidiaries taken as a whole.
5.9 Holding Company and Investment Company Acts. Neither the
Company nor any of its Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935; nor is it an "investment company",
or an "affiliated company" or a "principal underwriter" of an
"investment company", as such terms are defined in the Investment
Company Act of 1940.
5.10 Environmental Compliance. Based upon such investigation as
the Company has reasonably deemed necessary and prudent in the
ordinary course conduct of the Company's businesses:
(a) except as set forth in Schedule XVI, none of the Company, its
Subsidiaries or any operator of the Real Estate or any operations
thereon is in violation of any Environmental Laws, which violation
would have a material adverse effect on the business, assets or
financial condition of the Company and its Subsidiaries taken as a
whole;
(b) except as set forth in Schedule XVI, neither the Company nor any
of its Subsidiaries has received written notice from any third party
including, without limitation: any federal, state or local governmental
authority, (i) that any one of them has been identified by the United
States Environmental Protection Agency ("EPA) as a potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended ("CERCLA")
with respect to a site listed on the National Priorities List, 40 C.F.R.
Part 300 Appendix B (1986); (ii) that any Hazardous Substances
which any one of them has generated, transported or disposed of has
been found at any site at which a federal, state or local agency or
other third party has conducted or has
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<PAGE> 39
ordered that the Company or any of its Subsidiaries conduct a
remedial investigation, removal or other response action pursuant to
any Environmental Law; or (iii) that it is or shall be a named party
to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses
or damages of any kind whatsoever in connection with the release of
Hazardous Substances; and
(c) except as set forth on Schedule XVI, (i) no portion of the Real
Estate has been used for the handling, processing, storage or disposal
of Hazardous Substances except in accordance with applicable
Environmental Laws; (ii) in the course of any activities conducted by
the Company, its Subsidiaries or operators of the Real Estate, no
Hazardous Substances have been generated or are being used on the
Real Estate except in accordance with applicable Environmental Laws;
(iii) there have been no reportable releases (i.e. any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened
releases of Hazardous Substances on, upon, into or from the
properties of the Company or its Subsidiaries, which releases are in
violation of any Environmental Law and would have a material
adverse effect on the business, assets, or financial condition of the
Company and its Subsidiaries taken as a whole; (iv) the Company has
no knowledge of any reportable releases on, upon, from or into any
real property in the vicinity of any of the Real Estate which, through
soil or groundwater contamination, may have come to be located on,
and which would have a material adverse effect on the value of, the
Real Estate; and (v) in addition, any Hazardous Substances that have
been generated on any of the Real Estate have been transported offsite
to the Company's knowledge in material compliance with applicable
Environmental Laws.
6 - AFFIRMATIVE COVENANTS
The Company and each Subject Company (other than FAC) covenants
as follows:
6.1 Perform all Acts. Each of the Subject Companies shall do or
perform any act, condition or thing required to be done, fulfilled or
performed in order (a) to enable each Subject Company lawfully to
exercise its rights and perform its obligations under any of the
Override Documents and (b) to ensure that its obligations under the
Override Documents are legal, valid and binding on and enforceable
against such Subject Company.
6.2 Corporate Existence. Except as contemplated in the Business
Plan or otherwise permitted pursuant to the terms of this Agreement
or hereafter related to any disposal the Net Disposal Proceeds of
which are paid to the Override Agent for distribution in accordance
with Section 6.19, the Company and each of its Subsidiaries shall do
all things necessary to preserve and keep in full force and effect their
respective corporate existence.
<PAGE>
<PAGE> 40
6.3 Rights and Franchises. Each of the Company and its Subsidiaries
shall ensure that it has the right and is duly qualified to conduct its
business as it is conducted in all applicable jurisdictions and do all
things necessary to obtain, preserve and keep in full force and effect
all rights and franchises which are necessary for the conduct of its
business, except as otherwise contemplated in the Business Plan and
except to the extent that failure to do so could not reasonably be
expected to have a material adverse effect on the business, assets or
financial condition of the Company and its Subsidiaries taken as a
whole or on the ability of any Subject Company to perform its
obligations under the Override Documents.
6.4 Maintenance of Properties. Except as contemplated by the
Business Plan, each of the Company and its Subsidiaries shall
maintain and keep all of the properties that are used in the conduct of
its business in sound and working condition (ordinary wear and tear
excepted) except to the extent that failure to do so could not
reasonably be expected to have a material adverse effect on the
business, assets or financial condition of the Company and its
Subsidiaries taken as a whole or on the ability of any Subject
Company to perform its obligations under the Override Documents.
6.5 Compliance with Laws. Each of the Company and its
Subsidiaries shall comply with all applicable laws, statutes and
regulations and orders, requirements and guidelines of, and all
applicable restrictions imposed by, any governmental or administrative
authority in respect of the conduct of its business and the ownership
of its properties, including, compliance with ERISA and all applicable
Environmental Laws, except to the extent that failure to comply could
not reasonably be expected to have a material adverse effect on the
business, assets or financial condition of the Company and its
Subsidiaries taken as a whole or on the ability of any Subject
Company to perform its obligations under the Override Documents.
6.6 Taxes. The Company and each of its Subsidiaries shall duly and
punctually pay and discharge (a) all taxes, assessments and
governmental charges imposed upon it, or its properties and (b) all
lawful claims which, if unpaid, might by law become encumbrances
upon its properties, except where the same is being contested in good
faith and by appropriate proceedings and where adequate reserves are
being maintained with respect thereto except to the extent that failure
to do so could not reasonably be expected to have a material adverse
effect on the business, assets or financial condition of the Company
and its Subsidiaries taken as a whole or on the ability of any Subject
Company to perform its obligations under the Override Documents.
6.7 Insurance. The Company and each of its Subsidiaries shall:
(a) maintain insurance with reputable insurance companies or
associations covering such risks (including, without limitation,
property damage risks and product, public and third party liability
risks), on such properties and in such amounts as is
<PAGE>
<PAGE> 41
customarily maintained by companies being members of a group of
comparable size conducting similar businesses and owning similar
properties in the same general area, or
(b) maintain appropriate and reasonably sufficient book reserves with
respect to any self-insurance program in lieu of any such insurance
company coverage, and
(c) in either event, provide to the Override Agent from time to time,
upon its request, such information concerning such insurance,
reserves and related information as the Override Agent or any of the
Subject Lenders may reasonably specify.
6.8 Business Plan. The Company and each of its Subsidiaries shall,
so far as practicable and taking into account prudent business practice,
conduct its business in a manner consistent with the Business Plan.
The Company shall pursue diligently its plan to retain a new chief
executive officer and shall take such other actions as the Company
reasonably deems necessary and prudent in accomplishing the
implementation of the Business Plan.
6.9 Licenses, Permits and Franchises. The Company and each of its
Subsidiaries shall continue to own or license or otherwise have the
right to use all material licenses, permits, patents, trademarks, service
marks, trade names, copyrights, designs, franchises, authorizations,
know how and other intellectual property rights that are necessary for
the operation of its business, without infringement of or conflict with
the rights of any other person with respect thereto except as otherwise
contemplated in the Business Plan and except where such infringement
or conflict could not reasonably be expected to have a material
adverse effect on the business, assets or financial condition of the
Company and its Subsidiaries taken as a whole or on the ability of
any Subject Company to perform its obligations under the Override
Documents.
6.10 Inspection of Properties and Books. Upon the request of any
of the Subject Lenders, the Company and each of its Subsidiaries
shall, at any reasonable time and from time to time, permit the
Override Agent or any agents or representatives thereof or any agents
or representatives of the U.C.C.C., to examine and make copies of
and abstracts from the records and books of account of, and visit the
properties of such Subject Company, and to discuss the affairs,
finances and accounts of such Subject Company with any of its
employees or officers and with the Auditors and to share with the
Subject Lenders such copies and abstracts and information gathered
by the Override Agent in any such permitted discussions; provided,
that such information shall be maintained as confidential by the
Override Agent and the Subject Lenders unless such information
otherwise becomes public knowledge; provided, further, that any of
the Subject Lenders may disclose such information (i) to any
regulatory authority having jurisdiction over such Subject Lender, (ii)
as necessary to comply with any law, rule, regulation or order
applicable to the Subject Lender, (iii) in response to any subpoena or
other legal process or (iv) in connection with any litigation involving
this Agreement, any Subject Facility
<PAGE>
<PAGE> 42
Document or the transactions contemplated herein to which the
Subject Lenders are a party.
6.11 Records and Accounts. The Company and each of its
Subsidiaries shall keep proper books of record and account, in which
full and correct entries shall be made of material financial transactions
(including, without limitation, all Affiliate transactions) and the assets
and business of the Company and its Subsidiaries in accordance with
GAAP.
6.12 Employee Benefit Plan. The Company and each of its
Subsidiaries shall (a) promptly upon filing the same with the
Department of Labor or Internal Revenue Service, furnish to the
Override Agent a copy of the most recent actuarial statement required
to be submitted under Section 103(d) of ERISA and Annual Report,
Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan and (b) promptly upon receipt or dispatch,
furnish to the Override Agent any notice, report or demand sent or
received in respect of a Guaranteed Pension Plan under Sections 302,
4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in
respect of a Multiemployer Plan, under Sections 4041A, 4202, 4219,
4242, or 4245 of ERISA.
6.13 Financial Statements. The Company will furnish or cause to be
furnished to the Override Agent and each of the Subject Lenders:
(a) as soon as available, and in any event within 120 days after the end
of each fiscal year of the Company and subject to extensions
permitted by law, the consolidated balance sheet as at the end of each
such fiscal year and the consolidated statements of earnings,
shareholders' equity and statement of cash flows for such year of the
Company and its consolidated Subsidiaries, together with comparative
consolidated figures for the next preceding fiscal year, said
consolidated statements of the Company and its consolidated
Subsidiaries being accompanied by reports or certificates of Arthur
Andersen & Co. or, if they cease to be auditors of the Company,
other independent certified public accountants of national standing
selected by the Company, together with (i) computations by the
Company demonstrating, as of the close of such fiscal year,
compliance with Section 6.18 hereof, and (ii) the certificate of the
Chief Financial Officer of the Company that such officer has caused
the provisions of this Agreement to be reviewed and has no
knowledge of the existence of any Event of Default or Potential Event
of Default, or if such officer has such knowledge, specifying the
nature and period of existence thereof, and what action the Company
has taken, is taking or proposes to take with respect thereto; and
(b) as soon as available, and in any event within 60 days after the end
of each fiscal quarter of each fiscal year of the Company other than
the last fiscal quarter of each fiscal year, the consolidated balance
sheet as of the end of such quarter and consolidated statements of
earnings, shareholders' equity and statement of cash flows for the
portion of the fiscal year then ended of the Company and its
consolidated Subsidiaries (all in
<PAGE>
<PAGE> 43
reasonable detail), accompanied by computations by the Company
demonstrating, as of the close of such quarter, compliance with
Section 6.18 hereof, and the certificate of the Chief Financial Officer
of the Company that such officer has caused the provisions of this
Agreement to be reviewed and has no knowledge of the existence of
any Event of Default or Potential Event of Default, or if such officer
has such knowledge, specifying the nature and period of existence
thereof, and what action the Company has taken, is taking or proposes
to take with respect thereto;
6.14 Compliance Certificates. The Company shall furnish to the
Override Agent and each of the Subject Lenders together with each
set of financial statements delivered pursuant to Section 6.13: (a) a
Compliance Certificate of the Company signed on its behalf by its
chief financial officer certifying compliance by the Company with
each of the Financial Covenants set forth in Section 6.18, such
certificate to contain detailed calculations reasonably acceptable to the
Override Agent, (b) a certificate of the Company signed on its behalf
by its chief financial officer confirming that as of the date of such
certificate no Event of Default or Potential Event of Default has
occurred and is continuing or, if that is not the case, a description of
the Event of Default or Potential Event of Default that has occurred
and the action taken or proposed to be taken to remedy the same; and
(c) in the case of the financial statements delivered pursuant to Section
6.13(a), a statement from the Auditors (in such form as the Override
Agent may reasonably require) demonstrating compliance by the
Company with the Financial Covenants set forth in Section 6.18 and
stating that in the course of the annual audit of the business of the
Subject Companies such accounting firm has obtained no actual
knowledge that an Event of Default or Potential Event of Default has
occurred and is continuing, or if, in the opinion of such accounting
firm, an Event of Default or Potential Event of Default has occurred
and is continuing, a statement as to the nature thereof.
6.15 Reporting Requirements. The Company will furnish or cause
to be furnished to the Override Agent and each of the Subject
Lenders:
(a) as soon as available and in any event within forty-five (45) days
after the end of each calendar month, a written information package,
including an unaudited, preliminary consolidated balance sheet as at
the end of such month, and unaudited, preliminary consolidated
statements of earnings and cash flow for such month, which sets forth
the year to date and monthly actual performance of the Company and
its consolidated Subsidiaries as compared to the projected results set
forth in the Business Plan together with a narrative description of
significant variances on a year to date and monthly basis from the
projected results set forth in the Business Plan;
(b) within fifteen (15) business days after the end of each calendar
month, a report with respect to the status of the Divestiture Plan
which report shall include (i) an updated schedule for planned
divestitures, (ii) additional divisions or assets to be divested by the
Company, and (iii) such other information as may be reasonably
requested by the Override Agent;
<PAGE>
<PAGE> 44
(c) a daily cash report in the form previously provided to the Subject
Lenders;
(d) to the extent not duplicative of any financial statement or
information which is otherwise required to be provided by the terms
of this Agreement, any financial statement or information provided to
The CIT Group/Commercial Services, Inc. pursuant to the terms of
the CIT Interim Facility, except the statements and information
provided pursuant to Section 2.02, Section 5.01(a)(iii) - (vi) and
Section 6.02 thereof; and
(e) the Company will within sixty (60) days following the end of each
fiscal quarter, conduct a meeting to which the Override Agent, the
FAC Collateral Agent and the Subject Lenders will be invited to
discuss the Company's operating results and the status of the
Divestiture Plan.
6.16 Further Information. The Company shall deliver to the
Override Agent and each of the Subject Lenders:
(a) promptly after the sending or filing thereof, all material notices or
other material documents dispatched by the Company to its
shareholders (or any class thereof), or its creditors generally (or any
class thereof) and copies of all regular, periodic, special reports and
registration statements, that the Company files with the Securities and
Exchange Commission or any governmental authority that may be
substituted therefor, or with any national securities exchange;
(b) promptly, such further information in the possession or control of
the Company, regarding the financial condition and the operations of
the Company or its Subsidiaries, as the Override Agent or any of the
Subject Lenders may reasonably request acting through the Override
Agent; and
(c) details of any action, suit, investigation, litigation, arbitration or
administrative proceedings against or affecting the Company or any
of its Subsidiaries and which might reasonably be expected to have a
material adverse effect on the business, assets or financial condition
of the Company and its Subsidiaries taken as a whole or on the ability
of any Subject Company to perform its obligations under the Override
Documents or that purports to affect the legality, validity or
enforceability of any Override Document or the consummation of the
transactions contemplated hereby or thereby, in any such case as soon
as the same are, to the knowledge of the Company, instituted or
threatened.
6.17 Notice of Default.
(a) The Company shall as soon as is practicable and in any event
within five (5) business days after it becomes aware of the occurrence
of each Event of Default or Potential Event of Default which is
continuing on such date, deliver to the Override Agent
<PAGE>
<PAGE> 45
and each of the Subject Lenders a statement of the Company signed
on its behalf by its chief financial officer setting forth the details of
such Event of Default or Potential Event of Default and the action
that the Company has taken and proposes to take with respect thereto.
(b) The Company shall upon receipt of a written request to that effect
from the Override Agent or any Subject Lender, confirm to the
Override Agent and each of the Subject Lenders within five (5)
business days after the receipt of such notice that, except as
previously notified to it or as specified in such confirmation, no Event
of Default or Potential Event of Default has occurred and is
continuing.
6.18 Financial Covenants. The Company shall comply with the
financial covenants set forth below:
(a) The Company will not make, or permit any Subsidiary of the
Company to make, after June 30, 1994, Capital Expenditures for
Continuing Operations on a cumulative basis in excess of:
[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.]
provided, that each of the amounts set forth above shall be reduced
(upon receipt of quarterly financials for the fiscal quarter ending June
30, 1994) by an amount equal to the product of (i) the difference
between the amount of the actual Capital Expenditures for Continuing
Operations for the fiscal quarter of the Company ended as of June 30,
1994 and $6,632,000; and (ii) 1.2 (for the period ending
September 30, 1994); 1.1 (for the period ending December 31, 1994);
1.1 (for the period ending March 31, 1995); and 1.075 (for the period
ending June 30, 1995); provided further, that such amounts shall be
further adjusted from time to time after the date hereof to reflect
divisions or Subsidiaries of the Company which constitute Continuing
Operations which are disposed of by the Company after June 6, 1994
by reducing the amounts set forth above by the product of (i) the
amount of Capital Expenditures attributable to any division which is
disposed of after June 6, 1994 as presented in the June 6 Plan Update,
as supplemented by the Capital Expenditures Budget, which is unused
as of the time of such disposal and (ii) 1.2 (for the period ending
September 30, 1994); 1.1 (for the period ending December 31, 1994);
1.1 (for the period ending March 31, 1995); and 1.075 (for the period
ending June 30, 1995).
Cumulative Capital Expenditures made by the Company for any
division or Subsidiary which is a Continuing Operation as of June 6,
1994, (i) which subsequently becomes classified as discontinued by
the Company but has not been sold, shall be included for the purposes
of calculating compliance with this Section 6.18(a) and (ii) which is
subsequently sold shall be excluded for purposes of calculating
compliance with Section 6.18(a).
<PAGE>
<PAGE> 46
If at any time after June 30, 1994, the repurchase by the Company of
the lessor's undivided interest in the rental pool's of the Safway
Subsidiary and Figgie Leasing Corporation pursuant to the terms of
the Continental Synthetic Leases is classified as a capital expenditure
by the Company, pursuant to the direction of the Company's
independent auditor, the amount of such repurchase shall be excluded
for purpose of calculating compliance with Section 6.18(a).
The amounts set forth above assume the Company expends the entire
amount budgeted in the June 6 Plan Update for committed equipment
purchases. To the extent that the Company negotiates the cancellation
or postponement beyond the Expiration Date of such committed
equipment purchases, the Company agrees that the amount set forth
above shall be reduced by the amount of such committed equipment
purchases canceled or postponed beyond the Expiration Date.
(b) The Company will not permit cumulative Adjusted Operating Cash
Flow for Continuing Operations, for the period beginning July 1,
1994 and ending as of the dates set forth in the table below, to be less
the than the amount set forth opposite such period in such table:
Date Amount
[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.]
provided, that upon the sale of any division or Subsidiary of the
Company which is a Continuing Operation, the amount set forth
above for any period shall be adjusted, for the period during which
such sale occurred and for any subsequent periods, to exclude the
Adjusted Operating Cash Flow, as presented in the June 6 Plan
Update, of any division or Subsidiary of the Company which is a
Continuing Operation which is subsequently sold.
For the purposes of calculating compliance with this Section 6.18(b),
Adjusted Operating Cash Flow shall:
include (i) the Adjusted Operating Cash Flow of any division or
Subsidiary of the Company which is a Continuing Operation as of
June 6, 1994 which is subsequently classified as discontinued, and (ii)
the amount of Capital Expenditures, as presented in the June 6 Plan
Update as supplemented by the Capital Expenditures Budget,
attributable to FAC, Figgie Leasing Corporation and the Safway
Subsidiary; and
exclude (i) the Adjusted Operating Cash Flow of FAC, Figgie
Leasing Corporation and the Safway Subsidiary; (ii) for the period in
which any division or Subsidiary of the
<PAGE>
<PAGE> 47
Company which is a Continuing Operation is sold and all subsequent
periods, the Adjusted Operating Cash Flow of such division or
Subsidiary; (iii) the net cash proceeds received from, and the lease,
interest and principal payments, as the case may be, associated with
the incurrence of additional Indebtedness (including the CIT Interim
Facility); (iv) (a) Net Disposal Proceeds and Net Capital Proceeds
received by the Company pursuant to Section 6.19 hereof , (b)
payments of interest and principal made pursuant to Section
6.19(c)(iv) and (v), Section 6.19(e), Section 6.19(f) and Section 19
hereof (to the extent such payments are not presented in the June 6
Plan Update), the terms of the GECC Leases (to the extent such
payments are not presented in the June 6 Plan Update) and
Continental Synthetic Leases, (v) payments of restructuring or agency
fees pursuant to the terms of Sections 11 and 12.1 hereof, the GECC
Leases, the Continental Synthetic Leases and the BancBoston Leases
paid in the period beginning July 1, 1994 and ending September 30,
1994 and (vi) the payment of cash taxes in connection with Relevant
Disposals in an amount not to exceed ten percent (10%) of the Net
Disposal Proceeds.
(c) The Company will not permit Consolidated Tangible Net Worth
as of the dates in the table set forth below to be less than the amounts
opposite such dates in such table:
[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.]
For the purposes of calculating compliance with this Section 6.18(c),
(i) any changes in the accounting treatment of Excluded Facilities
required to be made by the Company subsequent to June 30, 1994 due
to the provisions of such Excluded Facilities, (ii) net losses which
result from asset sales with respect to FAC or Figgie Properties Inc.
in excess of the amounts projected in the June 6 Plan Update
(provided the net losses which result from asset sales with respect to
Figgie Properties Inc. will be included for the purposes of clause
(iii)), and (iii) net losses in an amount not to exceed $60,000,000 in
the aggregate which result from Relevant Disposals, shall be
excluded.
Net gains from the disposal of divisions and Subsidiaries other than
Discontinued Operations shall be reduced by the book amount of
intangible assets associated with such divisions and Subsidiaries for
the purposes of calculating Consolidated Tangible Net Worth.
6.19 Amortization Payments.
(a) Scheduled Amortization. The Company shall pay to the Override
Agent for deposit in the Net Proceeds Distribution Account and for
distribution to the Subject Lenders in accordance with Section 9.3
hereof to be applied in accordance with Section 10.5(b)(ii)
<PAGE>
<PAGE> 48
hereof the amounts set forth below on or prior to the date set forth
below opposite such amount.
Date Amount
Effective Date $ 5,000,000
September 30, 1994 $70,000,000
[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.]
Override Termination Date Remaining Total Subject
Facility Maximum Exposure
Payments made by the Company to the Override Agent pursuant to
Sections 6.19(b), 6.19(c), 6.19(d), 6.19(e) and 6.19(f) shall be
credited towards the payments set forth in this Section 6.19(a) in the
order of their maturity; provided, however, that the Company's
obligation to make the payments in the amounts and on or prior to the
dates set forth in this Section 6.19(a) shall continue to exist to the full
extent Net Disposal Proceeds and Net Capital Proceeds generated by
disposals of the Company's assets which actually result in payments
by the Company under any other subsection of this Section 6.19 are
not sufficient to make such payments in full.
(b) Voluntary Prepayments. The Company shall have the right, at its
election, by giving not less than five (5) business days' prior written
notice to the Override Agent to that effect, to make prepayments to
the Override Agent for deposit in the Net Proceeds Distribution
Account and for distribution to the Subject Lenders in accordance
with Section 9.3 hereof of the Total Subject Facility Maximum
Exposure as a whole, or in part, at any time and from time to time
without premium or penalty. Each such partial prepayment shall be
in an integral multiple of $1,000,000 and shall be applied by the
Override Agent to the required amortization payments set forth above
in the order of maturity. Any such prepayment shall permanently
reduce the Total Subject Facility Maximum Exposure.
(c) Mandatory Prepayments. Except as otherwise provided in this
Agreement, the Company shall make prepayments to the Override
Agent for deposit in the Net Proceeds Distribution Account and for
distribution to the Subject Lenders in accordance with Section 9.3
hereof to be applied against the Total Subject Facility Maximum
Exposure in accordance with Sections 9.3 and 10.5(b)(ii) hereof as
follows:
<PAGE>
<PAGE> 49
(i) all future domestic income tax refunds (other than tax refunds
attributable or owing to the Company's Safway Steel Products
division, Safway Subsidiary, Figgie Leasing Corporation or FAC) in
excess of $50,000 in the aggregate from and after the Relevant Time
shall be applied immediately upon receipt by the Company to
permanently reduce the Total Subject Facility Maximum Exposure in
accordance with Sections 9.3 and 10.5(b)(ii) hereof;
(ii) all insurance proceeds under property and casualty insurance with
respect to the Company's fixed assets (other than assets used in or
related to the Company's Safway Steel Products division, Safway
Subsidiary or Figgie Leasing Corporation) shall be applied
immediately upon receipt by the Company to permanently reduce the
Total Subject Facility Maximum Exposure in accordance with
Sections 9.3 and 10.5(b)(ii) hereof, except to the extent that such
proceeds are (w) casualty or property insurance proceeds relating to
equipment subject to leases in existence as of the Relevant Time or
otherwise permitted hereunder, (x) subject to a lien permitted by
Section 7.2, (y) used promptly by the Company to repair or replace
the relevant fixed assets, or (z) proceeds related to business
interruption coverage;
(iii) all net cash proceeds from the incurrence of additional
Indebtedness (other than Indebtedness incurred to refinance or refund
existing Indebtedness permitted under Section 7.1 other than
Indebtedness under a Subject Facility) shall be applied immediately
upon receipt by the Company to permanently reduce the Total Subject
Facility Maximum Exposure in accordance with Sections 9.3 and
10.5(b)(ii) hereof;
(iv) all Net Disposal Proceeds and Net Capital Proceeds from Relevant
Disposals or Relevant Capital Events in connection with the execution
of the Divestiture Plan (other than with respect to the Net Capital
Proceeds or Net Disposal Proceeds realized from the disposal by the
Company of its Rawlings Sporting Goods Company division, its Casi-
Rusco, Inc. subsidiary and its Safety Supply America division) shall
be applied immediately upon receipt by the Company to permanently
reduce the Total Subject Facility Maximum Exposure in accordance
with Sections 9.3 and 10.5(b)(ii) hereof; provided, that, (x) the
Scaffolding Allocation shall be retained by the Company for
application against its obligations under the Continental Scaffolding
Lease, and (y) so long as no Event of Default or Potential Event of
Default has occurred and is continuing hereunder,
[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.]
percent of the Net Disposal Proceeds, or as the case may be, Net
Capital Proceeds, shall be retained by the Company for working
capital purposes;
(v) Net Disposal Proceeds and Net Capital Proceeds from Relevant
Disposals or Relevant Capital Events in addition to those
contemplated by the Divestiture Plan shall be applied immediately
upon receipt by the Company to permanently reduce the Total Subject
Facility Maximum Exposure in accordance with Sections 9.3 and
10.5(b)(ii) hereof; provided, that (x) the Scaffolding Allocation shall
be retained by the Company for application against its obligations
under the Continental Scaffolding Lease, (y) and so long as no Event
of Default or Potential Event of Default has occurred and is
continuing
<PAGE>
<PAGE> 50
hereunder, with respect to any Relevant Disposal or Relevant Capital
Event or related series of Relevant Disposals or Relevant Capital
Events, the lesser of (A)
[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.]
percent of the Net Disposal Proceeds, or as the case may be, Net
Capital Proceeds, and (B)
[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.]
shall be retained by the Company for working capital purposes, and
(z) subject to the provisions of Section 19, the Company shall retain
all proceeds of Excepted Disposals; and
(vi) in addition to the payments set forth in clauses (i) - (v) of this
Section 6.19(c), the Company shall make prepayments to permanently
reduce the Total Subject Facility Maximum Exposure in accordance
with Sections 9.3 and 10.5(b)(ii) hereof within three (3) days of the
end of any fiscal quarter in the amount that the sum of (x) domestic
cash on hand in accounts of the Company and Investments permitted
by Section 7.3(a), (b) and (c) (other than cash or Investments
permitted by Section 7.3 the use of which is restricted by law or by
contractual limitation in effect at the Relevant Time) held by the
Company and its domestic Subsidiaries as at the end of any fiscal
quarter of the Company plus (y) unused availability under the CIT
Interim Facility exceeds $70,000,000; provided, however, that cash
and Investments permitted by Section 7.3 held by or for the benefit
of FAC, Figgie Leasing Corporation, the Company's Safway Steel
Products division or the Safway Subsidiary shall be excluded for
purposes of making the preceding calculation.
(d) Allocation of Cash Payments on Effective Date. On the Effective
Date, the Company shall allocate certain cash previously received
from divestitures and tax refunds as follows:
(i) $7,000,000 shall be retained by the Company to be applied against
or otherwise used to satisfy the Company's obligations under the
GECC Leases;
(ii) $3,000,000 shall be paid to the agent under the Continental
Automobile Lease to be applied against the Company's obligations
under such lease;
(iii) $5,000,000 shall be paid to the agent under the Continental
Scaffolding Lease to be applied against the Company's obligations
under such lease; and
(iv) $5,000,000 shall be paid to the Override Agent for deposit in the
Net Proceeds Distribution Account for distribution to the Subject
Lenders pursuant to the terms of Section 6.19(b).
(e) Allocation of Rawlings Proceeds. Upon the disposal of the
Company's Rawlings Sporting Goods Company division, the
Company shall allocate the Net Disposal Proceeds or the Net Capital
Proceeds, as the case may be, as follows:
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(i) up to $20,000,000 shall be paid by the Company as necessary to
paydown and retire the CIT Factoring Facility;
(ii) up to $8,333,333.33 to the Scaffolding Allocation;
(iii) $16,900,000 (provided the net cash proceeds from sales to third
parties of specified equipment as scheduled for purchase by the
Company in the GECC Leases on or prior to the Effective Date shall
be deemed to be Net Disposal Proceeds) shall be retained by the
Company to be applied against or otherwise used to satisfy the
Company's obligations under the GECC Leases;
(iv) $750,000 shall be paid to certain of the lessors under the
BancBoston Leases;
(v) $20,000,000 shall be retained by the Company for working capital
purposes; and
(vi) the remainder shall be paid to the Override Agent for deposit in
the Net Proceeds Distribution Account and for distribution among the
Subject Lenders pursuant to Section 9.3.
(f) Casi-Rusco and Safety Supply Proceeds. The Company shall pay
the Net Disposal Proceeds from the sale of its Casi-Rusco Inc.
subsidiary and its Safety Supply America division, less the retentions
permitted by Section 6.19(c)(iv) hereof, which occurred on June 6,
1994 in the case of Casi-Rusco Inc. and July 1, 1994 in the case of
Safety Supply America, to the Override Agent on the Effective Date
for deposit in the Net Proceeds Distribution Amount for distribution
to the Subject Lenders in accordance with Sections 9.3 and
10.5(b)(ii) hereof. Such payment shall be credited toward the
Company's scheduled amortization payment due September 30, 1994.
7 - NEGATIVE COVENANTS
The Company and each Subject Company (other than FAC) covenants
as follows:
7.1 Restrictions on Indebtedness. The Company shall not and shall
not permit any Subsidiary to create, incur, assume, guarantee or be
or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(a) Indebtedness under any of the Subject Facilities and any extension,
renewal or replacement thereof or under any of the Excluded
Facilities and any extension, renewal or replacement thereof up to the
amounts outstanding as of the Relevant Time;
(b) current liabilities incurred in the ordinary course of business not
incurred through (i) the borrowing of money, or (ii) the obtaining of
credit except for credit on an open account basis extended in
connection with purchases of goods and services;
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(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of this Agreement;
(d) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long
as execution is not levied thereunder or in respect of which the
Company or applicable Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of
which a stay of execution shall have been obtained pending such
appeal or review;
(e) endorsements for collection, deposit or negotiation and warranties
of products or services, in each case incurred in the ordinary course
of business;
(f) Indebtedness of the Company due its Subsidiaries or of any
Subsidiary due to the Company or another Subsidiary except as
otherwise limited by Section 7.1(l);
(g) obligations under capitalized leases not exceeding $20,000,000 in
aggregate amount at any time outstanding;
(h) Indebtedness incurred in connection with the acquisition or lease
after the date hereof of any real or personal property, provided that
the aggregate principal amount of such Indebtedness after the date
hereof together with Indebtedness permitted by Section 7.6 shall not
exceed at any time the aggregate amount of $35,000,000;
(i) Indebtedness in the form of guarantees, indemnities and similar
obligations permitted pursuant to Section 7.3;
(j) Indebtedness subordinated to all Indebtedness under the Subject
Facilities to the satisfaction of the Instructing Lenders, the net cash
proceeds of which are used to repay, in whole or in part,
Indebtedness under the Subject Facilities pursuant to Section 6.19(b)
and the subordinated Indebtedness permitted by Section 2.5(e) hereof;
(k) Indebtedness under the CIT Interim Facility not exceeding
$20,000,000 in principal at any time outstanding; and
(l) Indebtedness of (i) Logan Fenamec (U.K.) Limited in an amount up
to [INFORMATION IS SUBJECT TO CONFIDENTIAL
TREATMENT REQUEST.], (ii) Fred Perry Sportswear (U.K.)
Limited in an amount up to [INFORMATION IS SUBJECT TO
CONFIDENTIAL TREATMENT REQUEST.], (iii) Figgie Packaging
Systems Limited (U.K.) in an amount up to [INFORMATION IS
SUBJECT TO CONFIDENTIAL TREATMENT REQUEST.], (iv)
Sherwood-Drolet Corporation Ltd. (Canada) in an amount up to
[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.] and (v) additional Indebtedness of the Subsidiaries listed
in clauses (i), (ii), (iii) and (iv) of this Section 7.1(l) and Indebtedness
of other Subsidiaries of the Company which are not organized under
the laws of and do not principally conduct their business in, the
United States of America or any state thereof not exceeding
[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.] in the aggregate; provided, however, that the
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Company will neither (A) make Investments in or otherwise provide
funds after the Effective Date, for any purpose whatsoever, to any of
Logan Fenamec (U.K.) Ltd., Fred Perry Sportswear (U.K.) Limited,
Figgie Packaging Systems Limited (U.K.) or Sherwood-Drolet
Corporation Ltd. (Canada), whether by means of a capital
contribution, loan or otherwise except for reclassifications of
intercompany loans on the books of the Company at the Effective
Date to equity or such other accounting treatment required to meet
foreign statutory tax on solvency requirements or necessary to comply
with applicable law, nor (B) guarantee any of the indebtedness
incurred after the Effective Date and secured by the liens permitted
by Section 7.2(xi).
7.2 Restrictions on Liens. Except as provided in Section 19, the
Company shall not and shall not permit any Subsidiary to (a) create
or incur or suffer to be created or incurred or to exist any
encumbrance of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or
assets or the income or profits therefrom for the purpose of subjecting
the same to the payment of Indebtedness or performance of any
obligation in priority to payment of its general creditors; (c) acquire,
or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of
more than 30 days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid would by
law or upon bankruptcy or insolvency, or otherwise, be given priority
over its general creditors; or (e) sell, assign, pledge or otherwise
transfer any accounts (other than accounts sold with respect to any
Indebtedness permitted by Section 7.1), contract rights, general
intangibles, chattel paper or instruments, with or without recourse for
the purpose of securing Indebtedness; provided, that the Company and
any Subsidiary may create or incur or suffer to be created or incurred
or to exist:
(i) encumbrances in favor of the Company on all or part of the assets
of Subsidiaries of the Company, other than FAC and the FAC
Subsidiaries, securing Indebtedness owing by Subsidiaries of the
Company to the Company;
(ii) encumbrances to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties to
secure claims for labor, material or supplies in respect of obligations
not overdue or being contested by reasonable process and subject to
stay of enforcement;
(iii) customer deposits, progress payments and deposits or pledges
made in connection with, or to secure payment of, worker's
compensation, unemployment insurance, old age pensions or other
social security obligations;
(iv) encumbrances in respect of judgments or awards, Indebtedness
with respect to which is permitted by Section 7.1(d);
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(v) encumbrances of carriers, warehousemen, mechanics and
materialmen, and other like encumbrances on properties, either in
existence less than 120 days from the date of creation thereof in
respect of obligations not overdue, or subject to contest by reasonable
proceedings and subject to stay of enforcement;
(vi) encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens under
leases to which the Company or any of its Subsidiaries is a party, and
other minor liens or encumbrances none of which in the reasonable
opinion of the Company interferes materially with the use of the
property affected in the ordinary conduct of business, which defects
do not individually or in the aggregate have a materially adverse
effect on the business, operations or financial condition of the
Company and its Subsidiaries taken as a whole;
(vii) encumbrances listed in Schedule XVII and Schedule XXV and
any additional encumbrance in existence at the Relevant Time;
(viii) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof
to secure purchase money Indebtedness of the type and amount
permitted by Section 7.1, incurred in connection with the acquisition
of such property, which security interests or mortgages cover only the
real or personal property so acquired;
(ix) encumbrances in favor of the Collateral Agent for the benefit of
the Subject Lenders granted pursuant to the Security Documents;
(x) encumbrances in favor of the FAC Collateral Agent for the benefit
of the FAC Subject Lenders granted pursuant to the FAC Security
Documents;
(xi) encumbrances granted to secure indebtedness permitted by Section
7.1(l) provided that the lien is limited to the assets of the Subsidiary
incurring the Indebtedness; and
(xii) encumbrances granted to secure obligations of the Company (or
the Safway Subsidiary or Figgie Leasing Corporation) under the
GECC Leases and the Continental Synthetic Leases.
7.3 Restrictions on Investments. The Company shall not and shall
not permit any Subsidiary other than Investments by Waite Hill
Holdings Inc. and its Subsidiaries which are permitted by applicable
regulations and otherwise in the ordinary course of business, and
Investments by Figgie Acceptance Corporation and its Subsidiaries or
Figgie Leasing Corporation made in the ordinary course of business
and consistent with past practices to remain outstanding any
Investment except:
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(a) marketable direct or guaranteed obligations of the United States of
America that mature within one (1) year from the date of purchase
by the Company and its Subsidiaries;
(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks having total assets in excess of
$1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States
of America or any state thereof that at the time of purchase have been
rated and the ratings for which are not less than "P 1" if rated by
Moody's Investors Services, Inc., and not less than "A 1" if rated by
Standard and Poor's;
(d) Investments as listed in Schedule XVIII and Schedule XXVI;
(e) Investments consisting of the guaranty of obligations of, or
Investments by the Company in, Subsidiaries of the Company, except
as limited by Section 7.1(l);
(f) Investments consisting of promissory notes and other securities
received as proceeds of disposals permitted by Section 7.5;
(g) Investments consisting of loans and advances to employees for
moving, entertainment, travel and other similar expenses in the
ordinary course of business;
(h) Investments consisting of guarantees, indemnities and similar
obligations related to or incurred with respect to any disposal
permitted under this Agreement;
(i) Investments consisting of Indebtedness permitted by Section 7.1;
and
(j) Investments with a book value of less than $2,500 individually and
$200,000 in the aggregate.
7.4 Distributions. The Company shall not make and shall not permit
any Dividends other than Dividends by a Subsidiary of the Company
subject to the limitations of Section 19.
7.5 Merger, Consolidation, Disposals. The Company shall not and
shall not permit any Subsidiary to (a) become a party to any merger
or consolidation, or agree to or effect any asset acquisition or stock
acquisition (other than the acquisition of assets in the ordinary course
of business consistent with past practices) except the merger or
consolidation of one or more of the Subsidiaries of the Company with
and into the Company, or the merger or consolidation of two or more
Subsidiaries of the Company; and (b) become a party to or agree to
or effect any disposition of assets, other than (i) Excepted Disposals,
(ii) Relevant Disposals on an arms-length basis for fair and reasonable
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consideration as determined by the Company's board of directors so
long as the Net Disposal Proceeds are paid to the Override Agent in
accordance with Section 6.19 and the Company complies with the
notice provision set forth in Section 9, (iii) transfers and assignments
of assets, related operational liabilities and business of the Company's
Rawlings Sporting Goods Company division into an existing or
newly-created Subsidiary of the Company in preparation for a
Relevant Disposal and the transfer of assets of the Company to its
Subsidiaries in preparation for a Relevant Disposal so long as such
transfers occur substantially simultaneously with any such Relevant
Disposal, the terms of such transfers are substantially in accordance
with the Rawlings IPO Transaction (with respect to the disposal of the
Company's Rawlings Sporting Goods Company division) or (with
respect to other disposals) are otherwise satisfactory to the Instructing
Lenders and the Net Disposal Proceeds are paid to the Override Agent
for distribution to the Subject Lenders in accordance with Section
6.19, (iv) transfers and assignments of assets, related operation
liabilities and business of the Company's Safway Steel Products
division into an existing or newly-created Subsidiary (the "Safway
Subsidiary") of the Company so long as the terms of such transfer are
substantially as set forth in the Assignment Agreement between the
Company and the Safway Subsidiary previously provided to the
Override Agent, (v) transfers of substitution equipment pursuant to the
terms of the GECC Leases and (vi) disposals by the Company or any
Subsidiary to any Subsidiary of the capital stock of any Subsidiary.
7.6 Sale and Leaseback. Except as set forth in Schedule XIX or in
connection with a transaction permitted by Section 7.1, the Company
shall not and shall not permit any Subsidiary to enter into any
arrangement, directly or indirectly, whereby the Company or any
Subsidiary shall sell or transfer any property owned by it (other than
obsolete or unused assets) in order then or thereafter to lease such
property or lease other property intended for use for substantially the
same purpose as the property being sold or transferred unless the
proceeds of such sale or transfer (other than sales or transfers with
respect to Figgie Leasing Corporation, the Company's Safway Steel
Products division, the Safway Subsidiary or with respect to substitute
equipment pursuant to the terms of the GECC Leases) are to be paid
to the Override Agent for distribution to the Subject Lenders subject
to Section 9.2 and such sale or transfer otherwise complies with the
terms of this Agreement.
7.7 Compliance with Environmental Laws. Except as set forth in
Schedule XVI, the Company shall not and shall not permit any
Subsidiary to:
(a) use any of the Real Estate or any portion thereof for the handling,
processing, storage or disposal of Hazardous Substances, cause or
permit to be located on any of the Real Estate any underground tank
or other underground storage receptacle for Hazardous Substances,
generate any Hazardous Substances on any of the Real Estate, except
in the ordinary course of business and in material compliance with
applicable Environmental Laws;
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<PAGE> 57
(b) conduct any activity at any Real Estate or use any Real Estate in
any manner so as to cause a release or threatened release of
Hazardous Substances on, upon or into the Real Estate; or
(c) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law in
any material respect or bring such Real Estate in violation of any
Environmental Law in any material respect.
7.8 Environmental Events. The Company shall promptly give notice
to the Override Agent and each Subject Lender (a) of any violation of
any Environmental Laws that the Company or any of its Subsidiaries
reports in writing or is reportable by such person in writing (or for
which any written report supplemental to any oral report is made) to
any federal, state or local environmental agency and (b) upon
receiving written notification thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any agency of
potential environmental liability, or any federal, state or local
environmental agency or board, which notice would have a material
adverse effect on the business, assets or financial condition of the
Company and its Subsidiaries taken as a whole.
7.9 Employee Benefit Plans. The Company shall not and shall not
permit any Subsidiary or any ERISA Affiliate to:
(a) engage in any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code which could result
in a material liability for any Subject Company;
(b) permit any Guaranteed Pension Plan to incur in excess of
$5,000,000, an "accumulated funding deficiency", as such term is
defined in Section 302 of ERISA, whether or not such deficiency is
or may be waived;
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which,
could result in the imposition of a lien or encumbrance on the assets
of the Company or any Subsidiary pursuant to Section 302(f) or
Section 4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (within the meaning of Section 4001 of ERISA) of
all Guaranteed Pension Plans (calculated using a seven percent (7%)
interest rate) exceeding the value of the aggregate assets of such Plans
by an amount in excess of $5,000,000, disregarding for this purpose
the benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities.
7.10 Excluded Facilities. The Company shall not permit an increase
to the fixed amortization schedules under Excluded Facilities in effect
as of the Effective Date to the
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degree that such increase(s) would have a material adverse effect on
the Company's ability to meet its obligations under this Agreement.
8 - EVENTS OF DEFAULT
8.1 Events of Default. An Event of Default shall exist hereunder
upon the occurrence and during the continuation of any of the
following events:
(a) Non Payment. Any Subject Company fails to pay any sum due
from it under any Subject Facility Document (as amended or
superseded by this Agreement) or any Override Document at the time,
in the currency and in the manner specified therein;
(b) Breach of Representation. Any representation, warranty or
statement made or repeated by the Company or any of its Subsidiaries
in any Override Document, other than as set forth in Section 19 of
this Agreement, is or proves to have been incorrect or misleading
when made or repeated in a respect which the Instructing Lenders
reasonably consider to be material to the assets, properties, condition
(financial or otherwise) business or prospects of the Company and its
Subsidiaries taken as a whole;
(c) Breach of Covenant.
(i) the Company or any of its Subsidiaries fails to comply with any of
its covenants contained in any of Sections 6.2, 6.7, 6.13, 6.14, 6.15,
6.17, 6.18, 6.19, or 7;
(ii) the Company or any of its Subsidiaries fails to comply with any
other covenant set forth in Section 6 hereof (unless subject to any
other clause of this Section 8.1) and, if capable of remedy, such
failure is not remedied within thirty (30) business days after the
Override Agent has given notice thereof to the Company;
(iii) the Company fails to comply with any of its covenants contained
in any of the Security Documents; and
(iv) the Company or any Subsidiary fails to perform or comply with
any other obligation under any other Override Document and such
default is not remedied within thirty (30) business days after the
Override Agent has given notice thereof to the Company.
(d) Acceleration of Indebtedness.
(i) the Company or any of its Subsidiaries fails to pay at maturity any
amount outstanding in respect of any Indebtedness of the Company or
any of its Subsidiaries (subject to the terms of this Agreement with
respect to Subject Facilities), including, without limitation,
Indebtedness under the GECC Leases, the Continental Synthetic
Leases or under any other Excluded Facility, or the payment,
repurchase,
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defeasance or similar obligation of any amount outstanding in respect
of any Indebtedness of the Company or any of its Subsidiaries other
than FAC Indebtedness, including, without limitation, Indebtedness
under any Excluded Facility, is accelerated, upon demand or
otherwise and regardless of notice, by the holder of such Indebtedness
as a result of an event of default (regardless of how described or
defined) prior to its stated maturity; and
(ii) the amount of such Indebtedness (separately or as an aggregate)
exceeds $5,000,000;
(e) ERISA Events. With respect to any Guaranteed Pension Plan, (i)
an ERISA Reportable Event shall have occurred and the Instructing
Lenders shall have determined in their reasonable discretion that such
event reasonably could be expected to result in liability of the
Company or any of its Subsidiaries to the PBGC or such Guaranteed
Pension Plan, and (ii) such event could reasonably constitute grounds
for the termination of such Guaranteed Pension Plan by the PBGC or
for the appointment by the appropriate United States District Court
of a trustee to administer such Guaranteed Pension Plan; or a trustee
shall have been appointed by the United States District Court to
administer such Guaranteed Pension Plan; or the PBGC shall have
instituted proceedings to terminate such Guaranteed Pension Plan;
provided, that in any such event the aggregate liability of the
Company and its Subsidiaries shall exceed $5,000,000;
(f) Voluntary Proceedings. The Company or any of its domestic
Subsidiaries shall make an assignment for the benefit of creditors, or
admit in writing its inability to pay or generally fail to pay its debts
as they mature or become due, or shall petition or apply for the
appointment of a trustee or other custodian, liquidator or receiver of
the Company or any of its domestic Subsidiaries or of any substantial
part of their respective assets or shall commence any case or other
proceeding under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance of any of the foregoing, or if any
such petition or application shall be filed or any such case or other
proceeding shall be commenced against the Company or any of its
domestic Subsidiaries and the Company or such domestic Subsidiary
shall indicate its approval thereof, consent thereto or acquiescence
therein;
(g) Involuntary Proceedings. A decree or order is entered (i)
appointing any trustee, custodian, liquidator or receiver for the
Company or any of its domestic Subsidiaries, or (ii) adjudicating the
Company or any of its domestic Subsidiaries bankrupt or insolvent,
or approving a petition in any such case or other proceeding, or a
decree or order for relief is entered in respect of the Company or any
of its domestic Subsidiaries in an involuntary case under federal
bankruptcy laws as now or hereafter constituted and the applicable
case or proceeding remains undismissed or unstayed for a period of
more than forty-five (45) days, whether or not consecutive;
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(h) Judgments. Except as otherwise disclosed in Schedule XV there
shall remain in force, undischarged, uninsured, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive,
any final judgment against the Company or any of its Subsidiaries
other than FAC Indebtedness that, with other, similar outstanding
final judgments exceed in the aggregate $5,000,000;
(i) Rescission. If any of the Override Documents shall be canceled,
terminated, revoked or rescinded otherwise than in accordance with
the terms thereof, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Override
Documents shall be commenced by or on behalf of any Subject
Company party thereto or any of their respective stockholders, or any
court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more
of the Override Documents is illegal, invalid or unenforceable in
accordance with the terms thereof; or
(j) Illegality. At any time it is or becomes unlawful for any Subject
Company to perform or comply in any material respect with any or
all of its obligations under any of the Override Documents or any of
the obligations of any Subject Company thereunder are not or cease
to be legal, valid and binding on or enforceable against such Subject
Company, or any such Subject Company shall so state in writing.
8.2 Remedies. If any such event as is specified in Section 8.1 shall
occur and be continuing the Override Agent shall, if so directed by
the Instructing Lenders, by notice to the Company declare that the
Override Arrangements, except for those set forth in Section 2.4 and
Section 2.5, are terminated; provided, however, if any event set forth
in Sections 8.1(f) or 8.1(g) shall occur, the Override Arrangements,
except for those set forth in Section 2.4 and Section 2.5, shall
terminate automatically without any action by the Override Agent or
any of the Subject Lenders. Upon termination of the Override
Arrangements, each Subject Lender may proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding and the Override Agent acting in its capacity as Collateral
Agent may, with the consent of the Instructing Lenders or shall at the
direction of the Instructing Lenders but not otherwise proceed to
protect and enforce its rights under the Security Documents with
respect to the Collateral. No remedy herein conferred upon any
Subject Lender or the Override Agent is intended to be exclusive of
any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or any other
provision of law.
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9 - DISPOSAL AND CAPITAL TRANSACTIONS
9.1 Notification and Further Assurances.
(a) If any Subject Company is proposing that a Relevant Disposal or
Relevant Capital Event should occur other than the Rawlings IPO
Transaction and the creation of the Safway Subsidiary, it shall provide
written notice to the Override Agent with reasonable details of the
proposed Relevant Disposal or Relevant Capital Event, including
copies of the most recent drafts of the documentation pursuant to
which such Relevant Disposal or Relevant Capital Event is governed
not less than ten (10) business days prior to the proposed date of
completion of the Relevant Disposal or Relevant Capital Event;
provided, however, that, if the Relevant Disposal or Relevant Capital
Event, other than the Rawlings IPO Transaction and the creation of
the Safway Subsidiary will result in proceeds in excess of $5,000,000,
the Subject Company will provide such notice not less than thirty (30)
days prior to the proposed date of completion of the Relevant
Disposal or Relevant Capital Event. The Company agrees that all
Relevant Disposals and Relevant Capital Events shall be conducted on
an arms-length basis for fair and reasonable consideration as
determined by the Company's Board of Directors.
(b) Upon any such notice, the Override Agent and each Subject Lender
shall take such action and execute and deliver such consents, waivers
and other documentation and agreements as reasonably are requested
by the Company to permit consummation of the proposed Relevant
Disposal or Relevant Capital Event notwithstanding the terms of any
of the Subject Facilities or Subject Facility Documents; provided, that
the foregoing shall apply only if the proposed Relevant Disposal or
Relevant Capital Event is permitted under the terms of this
Agreement.
(c) In addition to the notice required by Section 9.1(a), the Company
shall at the time of the Relevant Disposal or Relevant Capital Event
deliver a Compliance Certificate signed on its behalf by its chief
financial officer certifying (i) that no Event of Default or Potential
Event of Default has occurred and is continuing, and (ii) that the Net
Disposal Proceeds or Net Capital Proceeds have been paid or, in the
event any such Net Disposal Proceeds or Net Capital Proceeds are to
be received after the closing of the applicable Relevant Disposal or
Relevant Capital Event, will be paid to the Override Agent in
accordance with Section 6.19 and Section 9.
9.2 Payment of Proceeds.
(a) If any Relevant Disposal or Relevant Capital Event occurs, the
Company shall, or shall cause any applicable Subsidiary to, pay or
cause to be paid to the Override Agent for credit to the Net Proceeds
Distribution Account an amount equal to the Net Disposal Proceeds
or, as the case may be, the Net Capital Proceeds less any deduction
permitted by Section 6.19(c) hereof.
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(b) Each payment to be made pursuant to Section 9.2(a) above shall be
made immediately upon the receipt by any Subject Company of the
Net Disposal Proceeds or Net Capital Proceeds (or, if received in
several parts, on receipt of the relevant part thereof) pursuant to
arrangements reasonably satisfactory to the Override Agent; provided,
however, that prior to or upon the receipt of any such Net Disposal
Proceeds or Net Capital Proceeds, the Company may notify the
Override Agent that it is unable to determine the precise amount of
all or any portion of the costs to be taken account of in the
determination of Net Disposal Proceeds or Net Capital Proceeds. If
the Company so notifies the Override Agent the Company shall
provide to the Override Agent a written certificate of its bona fide
estimate of the amount of such undetermined costs. Such estimated
amount of the proceeds of the Relevant Disposal or Relevant Capital
Event in question shall be deposited in a Net Proceeds Estimated Cost
Account with the Override Agent to be held until such time as the
actual amount of such costs are determined, at which time, so long as
no Event of Default or Potential Event of Default has occurred and is
continuing or the Override Arrangements have not been terminated
pursuant to Section 8.2, such actual amount promptly shall be
released to the Company and any remaining balance (including
interest earned thereon) shall be allocated in accordance with the
provision of Section 6.19 relating to the event which created such
proceeds of the Relevant Disposal or Relevant Capital Event and any
amount due the Override Agent or attributable to the Scaffolding
Allocation, as applicable, shall be deposited into the Net Proceeds
Distribution Account for allocation and distribution in accordance with
Section 9.3; provided, that if the Scaffolding Allocation with respect
to such Relevant Disposal or Relevant Capital Event has not been paid
in full at such time, the Override Agent shall pay to Continental Bank
as collateral agent under the Continental Scaffolding Lease the
Scaffolding Allocation from such balance regardless of whether an
Event of Default or Potential Event of Default has occurred and is
continuing; provided further, that, if an Event of Default has occurred
and is continuing hereunder, the Company shall not retain any portion
of such amount.
(c) Pending each such payment to the Override Agent, the Net
Disposal Proceeds or, as the case may be, the Net Capital Proceeds
(less any amounts which the Subject Companies are permitted to
retain or deposit under this Agreement) shall be held in trust for the
Beneficiaries with the sole purpose of making payment to the
Override Agent in accordance with this Section 9.2.
(d) Each payment and deposit to be made pursuant to this Section 9.2
shall be accompanied by written instructions to credit such payment
to the Net Proceeds Distribution Account or Net Proceeds Estimated
Cost Account, as applicable, and a notice identifying the Relevant
Disposal or Relevant Capital Event by reference to which such
amount is paid.
(e) Prior to the occurrence of an Event of Default, the Company shall
have the right, upon providing the Override Agent five (5) days prior
written notice and appropriate
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supporting documentation, to direct the Override Agent to disburse
monies deposited in the Tax Escrow Account to pay taxes actually
incurred in connection with any Relevant Disposal or Relevant Capital
Event in which proceeds from such Relevant Disposal or Relevant
Capital Event have been deposited in the Tax Escrow Account
pursuant to the terms of this Agreement. In the event that (i) the
Company instructs the Override Agent that monies deposited in the
Tax Escrow Account will not be needed to pay taxes in connection
with a disposal, or (ii) monies in the Tax Escrow Account are set off
by the Override Agent after the occurrence of an Event of Default,
such amounts (including interest earned thereon) shall be allocated in
accordance with the provision of Section 6.19 relating to the event
which created such proceeds of the Relevant Disposal or Relevant
Capital Event and any amount due the Override Agent or attributable
to the Scaffolding Allocation, as applicable, shall be allocated by the
Override Agent for distribution to the Subject Lenders pursuant to
Section 9.3; provided, that if the Scaffolding Allocation has not been
paid in full at such time, the Override Agent shall pay to Continental
Bank as collateral agent under the Continental Scaffolding Lease the
Scaffolding Allocation from such amounts regardless of whether an
Event of Default or Potential Event of Default has occurred and is
continuing; provided further, that, if an Event of Default has occurred
and is continuing hereunder, the Company shall not retain any portion
of such amount.
(f) The Override Agent shall establish and maintain at its head office
in Boston, Massachusetts or such other location as the Override Agent
shall deem appropriate the Net Proceeds Distribution Account into
which it shall deposit all Net Disposal Proceeds and all Net Capital
Proceeds received from the Company and not otherwise deposited
pursuant to this Agreement.
9.3 Allocation of Proceeds. Deposits in the Net Proceeds Distribution
Account shall be allocated to the Subject Lenders based upon each
Subject Lender's pro rata share of the Total Subject Facilities
Maximum Exposure as calculated in accordance with and on the same
basis as the allocation priorities set forth in Section 10.5(b)(ii). The
Override Agent shall distribute such amounts to the Subject Lenders
to be applied in accordance with Section 6.19 and in the order of
priority set forth in Section 10.5(b) at (i) any time that the balance in
the Net Proceeds Distribution Account equals or exceeds $1,000,000
(such amounts shall be distributed within one (1) business day of such
time), (ii) the end of each calendar quarter, or (iii) any other time that
the Override Agent determines in its sole discretion. At the time of
any such distribution, the Override Agent shall immediately provide
the Company with written notice of such distribution which sets forth
the amount paid to each Subject Lender, each Subject Lender's
Maximum Exposure and each Subject Lender's Subject Facility
Outstanding after taking into account such distribution.
9.4 Equalization. If (i) at the time any distribution is made from the
Net Proceeds Distribution Account (ii) upon the occurrence of the
Override Termination Date or (iii) at the time any payment is made
by the Company pursuant to Section 6.19(a) hereof, any
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Subject Lender's Maximum Exposure has been reduced
disproportionately to that of any other Subject Lender because of the
cancellation of any Contingent Amount Subject Facility at less than
the Subject Facility Maximum Exposure under such Contingent
Amount Subject Facility or for any other reason, other than the
payments received from FAC by the FAC Subject Lenders pursuant
to Section 19, and other than payments received by Continental Bank
by reason of any proceeds received on account of any asset or stock
sale or refinancing involving Figgie Leasing Corporation, then (x) in
the case of corrections made at the time of a distribution is made from
the Net Proceeds Distribution Account, such Subject Lender shall not
receive any amounts distributed by the Override Agent from the Net
Proceeds Distribution Account until the disproportionate reduction in
such Subject Lender's Maximum Exposure has been corrected, or (y)
in the case of corrections made upon the occurrence of the Override
Termination Date, the Override Agent shall redistribute such
disproportionate amount among the Subject Lenders in accordance
with Section 10.5(b)(iii) on or within seven (7) business days after the
Override Agent acquires actual notice or knowledge that any Subject
Lender's Maximum Exposure has been reduced disproportionately;
provided, that if the Scaffolding Allocation has not been paid in full
at such time, the Override Agent shall pay to Continental Bank as
collateral agent under the Continental Scaffolding Lease the
Scaffolding Allocation from such amount. In such event, such
Subject Lender shall repay such disproportionate amount to the
Override Agent for redistribution to the Subject Lenders in accordance
with Section 10.5(b) on or within seven (7) business days after
receiving a request for such repayment from the Override Agent;
provided, that if the Scaffolding Allocation has not been paid in full
at such time, the Override Agent shall pay to Continental Bank as
collateral agent under the Continental Scaffolding Lease the
Scaffolding Allocation from such amount. The Obligations of the
Subject Lenders set forth in this Section 9.4 shall survive the Override
Termination Date. In the event a Subject Lender shall not repay a
disproportionate distribution to the Override Agent for redistribution,
the Override Agent shall not be required to make the other Subject
Lenders whole from its own funds.
9.5 Figgie Leasing Corporation. Anything to the contrary in this
Agreement notwithstanding, in the case of a sale of any of the shares
of Figgie Leasing Corporation, a sale of any or all of the assets of
Figgie Leasing Corporation, or a refinancing of Continental Bank's
Subject Facility to Figgie Leasing Corporation, Continental Bank shall
be entitled to receive and retain the proceeds of such sale or
refinancing without sharing with any other Subject Lender as
repayments, in whole or in part, of Continental Bank's Subject
Facility to Figgie Leasing Corporation. Nothing in the foregoing
sentence shall be construed as a waiver by Continental Bank of any
of its rights as a Subject Lender under this Agreement, and
Continental Bank shall be entitled to receive its pro rata share of any
payments and distributions made by the Company or any of its
Subsidiaries under this Agreement, adjusted based upon any amounts
previously paid by the Company or Figgie Leasing Corporation to
Continental Bank by reason of any sales or refinancing described in
the foregoing sentence.
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10 - COLLATERALIZATION OF OVERRIDE OBLIGATIONS
10.1 Collateral Security.
(a) To secure the payment and performance of the Obligations, the
Company shall grant to the Collateral Agent for the benefit of the
Subject Lenders a security interest in all of the Company's assets
(excluding (i) the assets used in or related to the Company's Safway
Steel Products division, (ii) "Principal Property" as defined in the
Senior Notes, and (iii) the stock of Restricted Subsidiaries as defined
in the Senior Notes, the stock of the Safway Subsidiary and the stock
of foreign subsidiaries, except for up to sixty-five percent (65%) of
the stock of first tier foreign subsidiaries), whether now owned or
hereafter acquired to the extent permitted by the covenants of the
Senior Notes and the CIT Interim Facility pursuant to the terms of the
Security Documents (the "Collateral"); provided, however, the
Collateral shall not include "Excluded Collateral" as defined in the
Security Agreement or any item described in Section 2.1(ii)-(v) of the
Security Agreement. The Collateral shall include all domestic tax
refunds (other than tax refunds attributable to or owing to the
Company's Safway Steel Products division, the Safway Subsidiary,
Figgie Leasing Corporation or FAC), all insurance proceeds under
property and casualty policies on the Company's fixed assets (other
than proceeds used by the Company to repair or replace the relevant
fixed assets, other than proceeds related to business interruption
coverage and other than proceeds relating to assets used in or related
to the Company's Safway Steel Products division or the Safway
Subsidiary, Figgie Leasing Corporation or FAC) to the extent they are
not already encumbered, all monies in the Tax Escrow Account (other
than the Scaffolding Allocation of such amounts, if any) and the stock
of domestic subsidiaries of the Company (other than FAC Subsidiaries
and as provided above) to the extent permitted by the Senior Notes.
(b) The Company hereby agrees that it shall promptly, and in any
event within forty-five (45) days of the Effective Date, merge its
Economy Engineering Co. and SP/Sheffer International Inc.
Subsidiaries with or otherwise transfer substantially all of the assets
of such Subsidiaries to the Company and, upon such merger or
transfer, take such actions and execute and deliver to the Collateral
Agent such agreements, schedules, amendments and other documents
as the Collateral Agent may reasonably request to include such assets
in the Security Documents to the extent not otherwise excluded herein
or therein; provided that the trademarks owned by such Subsidiary
may be transferred to Figgie Licensing Corporation and the real estate
owned by such Subsidiaries may be transferred to Figgie Properties
Inc. as consistent with past practices of the Company.
(c) [INFORMATION IS SUBJECT TO CONFIDENTIAL
TREATMENT REQUEST.]
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[INFORMATION IS SUBJECT TO CONFIDENTIAL TREATMENT
REQUEST.]
10.2 Recourse of Subject Lenders; Other Collateral.
(a) Each of the Subject Lenders acknowledges and agrees that (i) it
shall only have recourse to the Collateral through the Collateral Agent
and that it shall have no independent recourse to the Collat eral
and (ii) the Collateral Agent shall have no obligation to take any
action, or refrain from taking any action, except upon instructions
from the Instructing Lenders in accordance with Section 10.3 hereof.
(b) Each Subject Lender which has provided a Subject Facility to
Economy Engineering Co., acknowledges and agrees that (i) it shall
not have a claim to the assets of Economy Engineering Co. prior to
that of the Subject Lenders, (ii) it shall not take any action with
respect to the assets of Economy Engineering Co. and (iii) such
Subject Facility shall be repaid in accordance with the terms hereof.
10.3 Acts of Subject Lenders. Any request, demand, authorization,
direction, notice, consent, waiver or other action permitted or
required by this Agreement to be given or taken by the Instructing
Lenders, may be and, at the request of the Collateral Agent, shall be
embodied in and evidenced by one or more instruments satisfactory
in form to the Collateral Agent and signed by or on behalf of the
Instructing Lenders and, except as otherwise expressly provided in
any such instrument, any such action shall become effective when
such instrument or instruments have been delivered to the Collateral
Agent. The instrument or ins truments evidencing any action (and
the action embodied therein and evidenced thereby) are sometimes
referred to herein as an "Act" of the persons signing such instrument
or instruments. The Collateral Agent shall be entitled to rely
absolutely upon an Act of the Instructing Lenders if such Act purports
to be taken by or on behalf of the Instructing Lenders, and nothing in
this Section 10.3 or elsewhere in this Agreement shall be construed
to require the Collateral Agent to demonstrate that it has been
authorized by the Subject Lenders to take any action which it purports
to be taking, the Collateral Agent being entitled to rely conclusively,
and being fully protected in so relying, on any Act of the Instructing
Lenders.
10.4 Duties of Collateral Agent.
(a) Notices to the Subject Lenders and the Company. The Collateral
Agent shall within five (5) business days following receipt thereof
furnish to each of the Subject Lenders and the Company:
(i) a copy of each Notice of Event of Default received by the
Collateral Agent;
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(ii) a copy of each certificate received by the Collateral Agent
rescinding a Notice of Event of Default;
(iii) written notice of any release or subordination by the Collateral
Agent of any Collateral;
(iv) such other notices required by the terms of this Agreement to be
furnished by the Collateral Agent; and
(v) written notice of any distribution made by the Collateral Agent
pursuant to Section 10.5(b) which sets forth the amount paid to each
Subject Lender, each Subject Lender's Maximum Exposure and each
Subject Lender's Subject Facility Outstanding after taking into account
such distribution.
(b) Actions Under Security Documents. The Collateral Agent shall not
be obligated to take any action under this Agreement or any of the
Security Documents except for the performance of such duties as are
specifically set forth herein or therein. Subject to the provisions of
Section 10.6 hereof, the Collateral Agent shall take any action under
or with respect to the Security Documents which is requested by the
Instructing Lenders and which is not inconsistent with or contrary to
the provisions of this Agreement; provided that the Collateral Agent
shall not amend or waive any provision of the Security Documents
except in accordance with Section 16 hereof. At any time when a
Notice of Event of Default shall have been given and shall be
outstanding under this Agreement, the Collateral Agent shall, subject
in all cases to the provisions of Section 10.6 hereof, exercise or
refrain from exercising all such rights, powers and remedies as shall
be available to it under the Security Documents or any of them in
accordance with any written instructions received from the Instructing
Lenders. The Collateral Agent shall have the right to decline to
follow any such direction if the Collateral Agent, being advised by
counsel, determines that the directed action is not permitted by the
terms of this Agreement or the Security Documents, may not lawfully
be taken or would involve it in personal liability which is not
otherwise indemnified by the Subject Lenders, and the Collateral
Agent shall not be required to take any such action unless any
indemnity which is required hereunder in respect of such action has
been provided. Subject to Section 10.6 hereof, the Collateral Agent
may rely on any such direction given to it by the Instructing Lenders
and shall be fully protected, and shall under no circumstances (absent
the gross negligence and willful misconduct of the Collateral Agent)
be liable to the Company, any holder of any Obligations or any other
person for taking or refraining from taking action in accordance
therewith. Absent written instructions from the Instructing Lenders
(i) at a time when a Notice of Event of Default shall be outstanding
or (ii) in the case of an emergency in order to protect any of the
Collateral, the Collateral Agent may take, but shall have no obligation
to take, any and all such actions under the Security Documents or any
of them or otherwise as it shall deem to be in the best interests of the
Subject Lenders. Except as otherwise provided herein, in the absence
of written instructions (which may relate to the exercise of specific
remedies
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or to the exercise of remedies in general) from the Instructing
Lenders, the Collateral Agent shall not exercise remedies available to
it under any Security Documents with respect to the Collateral or any
part thereof.
(c) CIT Intercreditor Agreement. Each of the Subject Lenders hereby
authorizes the Collateral Agent to execute on its behalf the
Intercreditor Agreement dated July 28, 1994, with The CIT
Group/Commercial Services, Inc.
10.5 Proceeds Received Under Security Documents.
(a) Net Proceeds Distribution Account. The Collateral Agent shall
deposit all amounts received by it in its capacity as Collateral Agent
including, without limitation, all Net Disposal Proceeds of any of the
Collateral or other assets of the Company and any of its Subsidiaries
into the Net Proceeds Distribution Account.
(b) Allocation of Proceeds.
(i) General Rule. All amounts owing with respect to the Obligations
shall be secured by the Collateral, without distinction as to whether
some Obligations are then due and payable and other Obligations are
not then due and payable, all in accordance with the priorities
established in this Section 10.5(b).
(ii) Application of Proceeds Generally. If the Collateral Agent
receives any cash amounts as proceeds of or otherwise constituting the
Collateral (which amounts, under the terms of any of the Security
Documents, are to be applied to any of the Obligations), including
without limitation any Net Disposal Proceeds received by the
Collateral Agent in connection with Relevant Disposals of any of the
Collateral and, if applicable, any sum received by the Collateral
Agent pursuant to Section 507(b) of the Bankruptcy Code in any
bankruptcy case in which the Company is a debtor, such cash
amounts shall be applied:
1. first, equally and ratably to reimburse the Subject Lenders for any
amounts paid by the Subject Lenders pursuant to Section 10.6(j) and,
to the extent permitted by the terms of the Subject Facility
Documents, for any reasonable and documented out of pocket costs
and expenses (including legal fees and disbursements) incurred by any
Subject Lenders in connection with the enforcement of or preservation
of its rights under the Subject Facility Documents after the occurrence
and during the continuance of an Event of Default, according to the
aggregate unreimbursed amounts thereof paid by each Subject Lender
on the time of such distribution;
2. second, equally and ratably to all amounts of interest, including
amounts payable under Section 2.5(b), outstanding which constitute
Obligations according to the aggregate amounts thereof due and
payable to each Subject Lender on the date of such distribution;
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3. third, subject to the provisions of Section 9.4 hereof, equally and
ratably to reduce each Subject Lender's Subject Facility Outstandings;
provided, however, that each Subject Lender agrees to apply such
amounts received by it as follows:
A. first, to reduce any Fixed Amount Subject Facilities provided by
such Subject Lender to any Subject Company;
B. second, to reduce any Variable Amount Subject Facilities
provided by such Subject Lender to any Subject Company, with a
corresponding reduction in the amount of such Subject Lender's
commitment to make loans under such Variable Amount Subject
Facilities;
C. third, after all of the Subject Facility Outstandings under each
Variable Amount Subject Facility and each Fixed Amount Subject
Facility provided to any Subject Company have been paid in full, to
the Override Agent for deposit in such Subject Lender's Contingent
Facility Distribution Account to be held in accordance with Section
3.2(a) hereof; and
D. fourth, after payment of and provision for all of the Obligations,
to the Company or to whomever else the Collateral Agent may be
required to pay by applicable law.
(iii) Basis for Determination of Pro Rata. For the purposes of Section
10.5(b) of this Agreement, any pro rata allocation to the Obligations
shall be based upon the ratio of the principal amount of the relevant
Subject Lender's Subject Facility Maximum Exposure to the Total
Subject Facility Maximum Exposure, with the amount of each of the
relevant Subject Facility Maximum Exposure and Total Subject
Facility Maximum Exposure to be determined initially as of the
Effective Date. Such ratio shall be subject to adjustment from time
to time to reflect any changes in any Subject Lender Maximum
Exposure as a result of payments to such lenders, as provided in this
Agreement.
10.6 Concerning the Collateral Agent.
(a) Appointment of Collateral Agent. Each of the Subject Lenders and
the Override Agent, hereby appoints The First National Bank of
Boston to act as collateral agent (in such capacity the "Collateral
Agent") pursuant to the terms of this Agreement and the Security
Documents. The relationship between the Collateral Agent and the
holders of the Obligation is and shall be that of agent and principal
only, and nothing contained in this Agreement or in any of the
Subject Facility Documents shall be construed to constitute the
Collateral Agent as a trustee for any such holder.
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(b) Limitations on Responsibility of Collateral Agent. The Collateral
Agent shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties
contained herein or in any Security Document. The Collateral Agent
makes no representations as to the value or condition of the Collateral
or any part thereof, as to the title of the Company or any of its
Subsidiaries to the Collateral, as to the security afforded by this
Agreement or any Security Document or, as to the validity,
execution, enforceability, legality or sufficiency of this Agreement or
any Security Document, and the Collateral Agent shall incur no
liability or responsibility in respect of any such matters. The
Collateral Agent shall not be responsible for insuring the Collateral,
for the payment of taxes, charges, assessments or liens upon the
Collateral or otherwise as to the maintenance of the Collateral, except
as provided in the immediately following sentence when the Collateral
Agent has possession of the Collateral. The Collateral Agent shall
have no duty to the Company or any of its Subsidiaries or to the
holders of any of the Obligations as to any Collateral in its possession
or control or in the possession or control of any agent or nominee of
the Collateral Agent or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining thereto,
except the duty to accord such of the Collateral as may be in its
possession substantially the same care as it accords its own assets and
the duty to account for monies received by it. The Collateral Agent
shall not be responsible for any loss suffered with respect to any
investment permitted to be made under this Agreement and shall not
be responsible for the consequences of any oversight or error of
judgment whatsoever, except that the Collateral Agent may be liable
for losses due to its willful misconduct or gross negligence. The
Collateral Agent shall not be required to ascertain or inquire as to the
performance by the Company or any of its Subsidiaries of any of the
covenants or agreements contained herein or under any of the Security
Documents. Neither the Collateral Agent nor any officer, agent or
representative thereof shall be personally liable for any action taken
or omitted to be taken by any such person in connection with this
Agreement or any Security Document except for such person's own
gross negligence or willful misconduct. Neither the Collateral Agent
nor any officer, agent or representative thereof shall be personally
liable for any action taken by any such person in accordance with any
notice given by the Instructing Lenders pursuant to the terms of this
Agreement even if, at the time such action is taken by any such
person, the Instructing Lenders or person purporting to be acting on
behalf of the Instructing Lenders is not entitled to give such notice,
except where the account officer of the Collateral Agent acting upon
the Company's account has actual knowledge that the Instructing
Lenders or person purporting to be the Instructing Lenders is not
entitled to give such notice. The Collateral Agent may execute any
of the powers granted under this Agreement or any of the Security
Documents and perform any duty hereunder or thereunder either
directly or by or through agents or attorneys-in-fact, and shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact, and shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it without
gross negligence or willful misconduct.
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(c) Reliance by Collateral Agent, etc. Whenever in the performance
of its duties under this Agreement the Collateral Agent shall deem it
necessary or desirable that a matter be proved or established with
respect to any person in connection with the taking, suffering or
omitting of any action hereunder by the Collateral Agent, such matter
may be conclusively deemed to be proved or established by a
certificate executed by an officer of such person, and the Collateral
Agent shall have no liability with respect to any action taken, suffered
or omitted in reliance thereon. The Collateral Agent may consult
with counsel and shall be fully protected in taking any action
hereunder in accordance with any advice of such counsel. The
Collateral Agent shall have the right but not the obligation at any time
to seek instructions concerning the administration of this Agreement,
the duties created hereunder, or any of the Collateral from any court
of competent jurisdiction.
(d) Resolutions, etc. The Collateral Agent shall be fully protected in
relying upon any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order or other paper or
document which it believes to be genuine and to have been signed or
presented by the proper party or parties. In the absence of its gross
negligence or willful misconduct, the Collateral Agent may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificate or opinions
furnished to the Collateral Agent in connection with this Agreement.
(e) Events of Default. The Collateral Agent shall not be deemed to
have actual, constructive, direct or indirect notice or knowledge of the
occurrence of any Event of Default unless and until the Collateral
Agent shall have received a Notice of Event of Default. The
Collateral Agent shall have no obligation whatsoever either prior to
or after receiving such a Notice of Event of Default to inquire
whether an Event of Default has, in fact, occurred and shall be
entitled to rely conclusively, and shall be fully protected in so relying,
on any certificate so furnished to it and shall have no obligation,
absent written instructions from the Instructing Lenders, to take or
omit to take any action with respect to such Notice of Event of
Default.
(f) No Obligation to Act. If the Collateral Agent has been requested
by the Instructing Lenders to take any specific action pursuant to any
provision of this Agreement, the Collateral Agent shall not be under
any obligation to exercise any of the rights or powers vested in it by
this Agreement in the manner so requested unless, if so requested by
the Collateral Agent, it shall have been provided indemnity
satisfactory to it against the costs, expenses and liabilities which may
be incurred by it in compliance with such request or direction.
(g) Disputes. If any dispute or disagreement shall arise as to the
allocation of any sum of money received by the Collateral Agent
hereunder or under any Security Document, the Collateral Agent shall
have the right to deliver such sum to a court of competent jurisdiction
and therein commence an action for interpleader.
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(h) Resignation of the Collateral Agent. The Collateral Agent may at
any time resign by giving 30 days prior written notice thereof to each
Subject Lender and the Company, provided that no resignation shall
be effective until a successor for the Collateral Agent is appointed.
Upon such resignation, the Instructing Lenders shall have the right to
appoint a successor Collateral Agent. If no successor Collateral
Agent shall have been so appointed by the Instructing Lenders and
shall have accepted such appointment within 60 days after the retiring
Collateral Agent's giving of notice of resignation, then the retiring
Collateral Agent may, on behalf of the Subject Lenders, appoint a
successor Collateral Agent, which shall be a domestic financial
institution having a long-term bank deposit rating of not less than "A"
if rated by Standard & Poor's Corporation or Moody's Investors
Services, Inc. Upon the acceptance of any appointment as Collateral
Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Collateral
Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations hereunder. After any retiring Collateral
Agent's resignation, the provisions of this Agreement and the Security
Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
Collateral Agent.
(i) Expenses and Indemnification by the Company. By countersigning
this Agreement, the Company agrees (i) to reimburse the Collateral
Agent, on demand, for any reasonable and documented expenses
incurred by the Collateral Agent, including reasonable counsel fees
and disbursements and compensation of agents, arising out of, in any
way connected with, or as a result of, the execution or delivery of
this Agreement or any Security Document or any agreement or
instrument contemplated hereby or thereby or the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder or in connection with the enforcement or protection of the
rights of the Collateral Agent and the Subject Lenders hereunder or
under the Security Documents, (ii) to indemnify and hold harmless the
Collateral Agent and its directors, officers, employees and agents, on
demand, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Collateral Agent in its
capacity as the Collateral Agent or any of them in any way relating
to or arising out of this Agreement or any Security Document or any
action taken or omitted by them under this Agreement or any Security
Document; provided that the Company shall not be liable to the
Collateral Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful
misconduct of the Collateral Agent or any of its directors, officers,
employees or agents as determined by a final nonappealable order of
a court of competent jurisdiction, (iii) to indemnify and hold harmless
the Collateral Agent, on demand, from and against any and all
liabilities which may be imposed on or incurred by the Collateral
Agent (in its capacity as Collateral Agent) for the net amount of taxes
(after taking into account any deduction, credit or other tax
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reduction or benefit available by reason of the imposition of any such
tax) in any jurisdiction in which the Collateral Agent would not
otherwise be subject to tax except by reason of its acting under this
Agreement or the Security Documents (directly or through agents);
provided that such indemnification for taxes (A) shall apply only in
respect of taxes attributable to the performance of the Collateral
Agent's obligations hereunder and only to the extent of income earned
by the Collateral Agent hereunder, and (B) cover any federal, state,
local or other taxes imposed upon the Collateral Agent that is
submitted to the Company with respect to the amount of such
expenses and containing a basic description thereof and/or the amount
of its indemnification obligation shall be prima facie evidence of the
amount thereof owing to the Collateral Agent.
(j) Expenses and Indemnification by Subject Lenders. Each of the
Subject Lenders severally agree (i) to reimburse the Collateral Agent,
on demand, in the amount of its pro rata share, for any expenses
referred to in Section 10.6(i) which shall not have been reimbursed
or paid by the Company or paid from the proceeds of Collateral as
provided herein and (ii) to indemnify and hold harmless the Collateral
Agent and its directors, officers, employees and agents, on demand,
in the amount of such pro rata share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements referred to in Section 10.6(i)
to the extent the same shall not have been reimbursed by the
Company or paid from the proceeds of Collateral as provided herein;
provided that no Lender shall be liable to the Collateral Agent for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting
from the gross negligence or willful misconduct of the Collateral
Agent or any of its directors, officers, employees or agents as
determined by a final non-appealable order of a court of competent
jurisdiction.
10.7 Certain Intercreditor Arrangements.
(a) Turnover of Collateral. If any Subject Lender acquires custody,
control or possession of any Collateral or proceeds therefrom, other
than pursuant to the terms of this Agreement, such Subject Lender
shall promptly cause such Collateral or proceeds to be delivered to or
put in the custody, possession or control of the Collateral Agent or,
if the Collateral Agent shall so designate, an agent of the Collateral
Agent (which agent may be a branch or affiliate of the Collateral
Agent or any Subject Lender) in the same form of payment received,
with appropriate endorsements, in the country in which such
Collateral is held for distribution in accordance with the provisions of
Section 10.5(b). Until such time as the provisions of the immediately
preceding sentence have been complied with, such Subject Lender
shall be deemed to hold such Collateral and proceeds in trust for the
Collateral Agent.
(b) Setoffs. If any Subject Lender exercises any right of setoff,
banker's lien or similar right with respect to any Collateral for
payment of any Obligations, each of the Subject Lenders agrees with
each other Subject Lender that (i) if an amount to be set off
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is to be applied to Indebtedness of the Company to such Subject
Lender, other than Indebtedness under the relevant Subject Facility
and other than Indebtedness of the Company with respect to cash
management services provided to the Company by such Subject
Lender, such amount shall be applied ratably to such other
Indebtedness and to the Indebtedness under the relevant Subject
Facility, and (ii) if such Subject Lender shall receive from the
Company, whether by voluntary payment, exercise of the right of
setoff, counterclaim, cross action, enforcement of that claim under the
relevant Subject Facility by proceedings against the Company at law
or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and
shall retain and apply to the payment of the Obligations held by such
Subject Lender any amount from the Collateral in excess of its ratable
portion of the payments received by the other Subject Lender with
respect to the Obligations held by all of the Subject Lenders as
contemplated by this Agreement, such Subject Lender will make such
disposition and arrangements with the other Subject Lender with
respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in each
Subject Lender receiving in respect of the Obligations held by it its
proportionate payment as contemplated by this Agreement; provided
that if all or any part of such excess payment is thereafter recovered
from such Subject Lender, such disposition and arrangements shall be
rescinded and the amount restored to the extent of such recovery, but
without interest.
10.8 Release or Subordination of Collateral; Freedom to Deal.
(a) Release of Collateral. The Collateral Agent is hereby authorized,
(i) to release any Collateral and to provide such releases and
termination statements with respect to any Collateral in connection
with any Relevant Disposal so long as (A) the Collateral Agent
obtains a perfected security interest in any noncash proceeds of such
sale, exchange or other disposition and (B) any Net Disposal Proceeds
(less any deduction permitted by Section 6.19) of such sale, exchange
or other disposition are paid in accordance with Section 9.2; and (ii)
subject to Section 16.4 hereof, upon the receipt of instructions from
the Instructing Lenders to otherwise release any Collateral and to
provide termination statements with respect to any Collateral. The
Company shall not be required to pay any release or similar fee or
charge in connection with any such release of Collateral except for
actual costs incurred by the Override Agent in connection therewith
(including reasonable attorneys' fees).
(b) Subordination of Lien. Subject to Section 16.4 hereof, the
Collateral Agent shall, on the written instructions of the Instructing
Lenders, subordinate by written instrument the lien on all or any
portion of the Collateral to any other lender extending to the
Company Indebtedness permitted by the terms hereof.
(c) Legally Required Releases. Whether or not so instructed by the
Instructing Lenders, the Collateral Agent may release any Collateral
and may provide any release,
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termination statement or instrument of subordination required by order
of a court of competent jurisdiction or otherwise required by
applicable law.
10.9 Enforcement. At any time when a Notice of Event of Default
shall have been given and shall have been outstanding, the Collateral
Agent shall, in accordance with Section 10.4(b) and the other
provisions of this Agreement and the Security Documents, act in
accordance with the written instructions received from the Instructing
Lenders to exercise any and all rights, powers and remedies as shall
be available to it under the Security Documents.
10.10 Collateral Agent as Agent and Lender. In its individual
capacity and in its capacity as Collateral Agent, The First National
Bank of Boston shall have the same obligations and the same rights,
powers and privileges as it would have had were it not also the
Collateral Agent.
10.11 Termination. Upon (i) receipt by the Collateral Agent from the
Override Agent of notice stating that either (A) the Obligations have
been paid in full in cash and the Company has satisfied all of its
Obligations pursuant to Section 2.4(a) hereof or (B) the Total Subject
Facility Outstandings otherwise no longer constitute Obligations under
the Security Documents and (ii) payment in full in cash of all amounts
payable to the Collateral Agent pursuant to Section 10.6(i), any
remaining liens created by the Security Documents shall terminate
forthwith and all right, title and interest in the Collateral shall revert
to the Company and its successors and assigns. Unless the liens
created by the Security Documents are terminated in accordance with
the preceding sentence or released in accordance with Section 10.8(a)
or (c), the Collateral Agent shall continue to have a security interest
in the Collateral and shall retain all of its rights with respect to the
Collateral granted to it in the Security Documents.
(a) Actions of Collateral Agent. Upon the termination of the
Collateral Agent's liens and the release of the Collateral in accordance
with this Section 10.11 the Collateral Agent will promptly at the
Company's written request and expense, (i) execute and deliver to the
Company such documents as the Company shall reasonably request
to evidence the termination of such security interest or the release of
the Collateral and (ii) deliver or cause to be delivered to the Company
or any of its Subsidiaries all property of the Company constituting
Collateral and then held by Collateral Agent or any agent thereof.
(b) Insolvency of the Company. If at any time any payment made or
value received with respect to the Obligations is rescinded or must
otherwise be returned by the Override Agent or any Subject Lender
upon the insolvency, bankruptcy or reorganization of the Company,
or otherwise, all as though such payment had not been made or value
received, to the extent previously terminated, the liens in the
Collateral created by the Security Documents in favor of the
Collateral Agent and the Subject Lenders and the rights
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of the Subject Lenders to act as Instructing Lenders and to receive
amounts pursuant to this Agreement shall be reinstated.
(c) Survival of Agreement. Notwithstanding any termination of liens
and release of Collateral, Sections 10.6(i) and 10.6(j) of this
Agreement shall survive, and remain operative and in full force and
effect.
11 - RESTRUCTURING FEE
In addition to any other amounts payable by the Company hereunder,
the Company shall pay to the Override Agent for distribution to the
Subject Lenders on a pro rata basis in accordance with the Subject
Lender Maximum Exposure of each Subject Lender in relation to the
Total Subject Facility Maximum Exposure, in each case as of the
Relevant Time, a restructuring fee (the "Restructuring Fee") equal to
three and one half of one percent (3-1/2%) of the Total Subject
Facility Maximum Exposure which fee shall be due and accrue as of
the Effective Date. The Restructuring Fee shall be payable in two
installments. The first installment in an amount equal to one and one
quarter of one percent (1-1/4%) of the Total Subject Facility
Maximum Exposure as of the Relevant Time shall be payable on the
Effective Date. The second installment in an amount equal to two
and one quarter of one percent (2-1/4%) of the Total Subject Facility
Maximum Exposure as of the Relevant Time shall be payable on the
Override Termination Date.
12 - AGENCY FEE, COSTS AND EXPENSES
12.1 Agency Fees. The Company shall pay, or cause to be paid, to
the Override Agent in arrears a fee of $20,000 per month and to the
FAC Collateral Agent a fee of $6,000 for the period beginning on the
Effective Date and ending on June 30, 1995.
12.2 General Costs.
(a) The Company shall forthwith pay to the Override Agent on demand
accompanied by appropriate supporting documentation the amount of
all reasonable costs and expenses (including the reasonable fees,
expenses and disbursements of legal counsel to the Override Agent,
legal counsel to the Subject Lenders as a group and a financial advisor
to the Subject Lenders) incurred by the Override Agent or the Subject
Lenders in connection with the negotiation, preparation, execution,
administration or interpretation of the Override Documents, any
Override Document executed after the date hereof, any other matter
arising out of or in connection with any Override Document or the
completion of the transactions therein contemplated, and any
amendment, waiver, consent or suspension of rights relating to any
Override Document. The Company has, prior to the date hereof,
deposited with the Override Agent $400,000 from which such fees
and expenses shall be paid and from time to time shall deposit
additional funds with the Override Agent at the Override Agent's
request to replace funds disbursed to pay such fees and expenses.
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(b) In accordance with the terms of the relevant Subject Facility
Documents, the Company shall reimburse each Subject Agent on the
date hereof for all reasonable out-of-pocket fees (including the
reasonable fees, expenses and disbursements of legal counsel) in
connection with the performance by any Subject Agent of its
obligations as agent under the relevant Subject Facility Document.
(c) The Company shall on the date hereof reimburse each Subject
Lender for the reasonable out-of-pocket expenses for legal counsel
incurred by each Subject Lender in connection with the negotiation,
documentation and execution of the Override Documents to the extent
such expenses have not been previously paid by the Company in an
amount not to exceed $7,500 with respect to each Subject Lender.
(d) The Company shall on the date hereof reimburse each Subject
Lender for all reasonable out-of-pocket costs and expense incurred by
each Subject Lender for air travel, accommodations and related
expenses in an amount not to exceed for any Subject Lender actual
transportation costs plus a per diem rate of $175.00 per person.
12.3 Enforcement Costs. The Company shall forthwith on demand
pay to (i) the Override Agent for the account of the Override Agent
and the other Beneficiaries and (ii) the FAC Collateral Agent for the
account of the FAC Collateral Agent and the FAC Subject Lenders
the amount of all reasonable costs and expenses (including reasonable
attorneys' fees) properly incurred:
(a) by any of them in connection with the enforcement or the
preservation of any of the rights of the Beneficiaries under any
Override Document or the FAC Security Documents after the
occurrence and during the continuance of an Event of Default or a
FAC Event of Default, as the case may be;
(b) by any of them in investigating any possible Potential Event of
Default or Event of Default; or
(c) by the FAC Collateral Agent in investigating any possible FAC
Event of Default.
12.4 Stamp Duty and Registration Taxes. The Company shall pay
or shall procure the payment of all stamp, registration and other taxes
to which any Override Document or FAC Security Document or any
judgment given in connection therewith is or at any time may be
subject and shall, from time to time on demand of the Override
Agent or the FAC Collateral Agent, indemnify the Beneficiaries or
the FAC Subject Lenders, as the case may be, against any liabilities,
costs, claims and expenses resulting from any failure to pay or any
delay in paying any such tax.
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12.5 Lender's Contributions. If the Company fails to perform any
of its obligations under this Section 12, each Subject Lender shall, in
the proportion borne by its Subject Facility Outstandings to the Total
Subject Facilities Outstanding for all Subject Lenders for the time
being, indemnify the Override Agent against any loss incurred by it
as a result of such failure and the Company shall forthwith reimburse
each Subject Lender for any payment made by it pursuant to this
Section 12.
13 - INDEMNITIES
13.1 Indemnities. The Company undertakes without limitation to:
(a) indemnify each of the Beneficiaries against any loss or reasonable
expense, including legal fees, which any of them may sustain or incur
as a consequence of (i) any Event of Default by the Company under
any of the Override Documents and (ii) any FAC Event of Default by
FAC under any of the FAC Security Documents;
(b) indemnify the Override Agent against any loss it may suffer as a
result of its entering into, or performing, any foreign exchange
contract in connection with any of the Override Documents other than
where such loss arises as a result of the gross negligence or willful
misconduct of the Override Agent; and
(c) indemnify each of the Beneficiaries against any loss, claim, damage
or expense, including reasonable legal fees, arising from legal or
similar proceedings arising out of or in connection with the
involvement of the Beneficiaries or any of them with any of the
Override Documents or the FAC Security Documents or the
transactions contemplated thereby (whether or not such proceedings
are instituted by any Subject Company or on their behalf); provided
that this indemnity shall not extend to a Beneficiary to the extent that
any such loss, claim, damage or expense arises as a result of its own
gross negligence or willful misconduct or the breach by it of any of
the terms of any Override Document, any FAC Security Documents
or any Subject Facility Document.
14 - AGENCY PROVISIONS
14.1 Appointment of Override Agent. Each of the Subject Agents
and the Subject Lenders hereby appoints the Override Agent to act as
its agent in connection with the Override Documents and irrevocably
authorizes the Override Agent to exercise such rights, powers and
discretions as are specifically delegated to such Override Agent by the
terms hereof together with all such rights, powers and discretions as
are reasonably incidental thereto.
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14.2 Assumptions. The Override Agent may:
(a) assume that:
(i) any representation made by any Subject Company in connection
with the Override Documents is true;
(ii) no event which is or may become any of those events specified in
Section 8.1 has occurred; and
(iii) each Subject Company is not in breach of or default under its
obligations hereunder or under any of the Override Documents;
unless it has actual knowledge or actual notice to the contrary and the
Override Agent shall not be deemed to have such knowledge or notice
unless it has received written notice from a Beneficiary or a Subject
Company, stating that it is a notice of default and identifies the
potential event that has occurred;
(b) assume that the Facility Office (or, as the case may be, each
Facility Office) of each Beneficiary is that identified on Schedule VI
until it has received from such Subject Lender a notice designating
some other office of such Subject Lender to replace any such Facility
Office and act upon any such notice until the same is superseded by
a further such notice;
(c) engage and pay for the advice or services of any lawyers,
accountants or other experts whose advice or services may to it seem
necessary, expedient or desirable and rely upon any advice so
obtained;
(d) rely as to any matters of fact which might reasonably be expected
to be within the knowledge of any Subject Company upon a certificate
signed by or on behalf of such Subject Company;
(e) rely upon any communication or document believed by it to be
genuine;
(f) refrain from exercising any right, power or discretion vested in it
as agent or, as the case may be, as trustee under any of the Override
Documents unless and until instructed by the Instructing Lenders or
(where expressly required under the Override Documents) by all of
the Subject Lenders as to whether or not such right, power or
discretion is to be exercised and, if it is to be exercised, as to the
manner in which it should be exercised; and
(g) refrain from acting in accordance with any instructions of the
Instructing Lenders to begin any legal action or proceeding arising out
of or in connection with any of the Override Documents until it shall
have received such security as it may require
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(whether by way of payment in advance or otherwise) for all costs,
claims, expenses (including legal fees) and liabilities which it will or
may expend or incur in complying with such instructions.
14.3 Obligations of Override Agent. The Override Agent shall:
(a) promptly inform each Subject Lender and each of the Subject
Agents of the contents of any material notice or document received by
it from any Subject Company pursuant to the provisions hereof if such
notice or document is not required by the terms of this Agreement to
be sent directly to such Subject Lender;
(b) promptly notify each Subject Lender and each Subject Agent of the
occurrence of any of those events specified in Section 8.1 or any
default by any Subject Company in the due performance of or
compliance with its obligations under any of the Override Documents
of which the Override Agent has actual knowledge or actual notice;
(c) except as otherwise provided herein, act as agent under the
Override Documents in accordance with any instructions given to it
by the Instructing Lenders, which instructions shall be binding on the
other Beneficiaries; and
(d) if so instructed by the Instructing Lenders, refrain from exercising
any right, power or discretion vested in it as agent hereunder.
14.4 No Inquiries. Notwithstanding anything to the contrary
expressed or implied herein, the Override Agent shall not:
(a) be bound to inquire as to:
(i) whether or not any representation made by any Subject Company
in connection with the Override Documents is true;
(ii) the occurrence of any event which is or may become an Event of
Default;
(iii) the performance by any Subject Company of its obligations under
any of the Override Documents; or
(iv) any breach of or default by any Subject Company of its obligations
under any of the Override Documents;
(b) be bound to account to any other Beneficiaries for any sum or the
profit element of any sum received by it for its own account;
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(c) be bound to disclose to any other person any information relating
to any Subject Company if such disclosure would or might in its
opinion constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person;
(d) be under any obligations other than those for which express
provision is made herein;
(e) be liable to any person in respect of any exercise of discretion
under or in connection with any of the Override Documents otherwise
than by reason of its own gross negligence or willful misconduct in
acting in its capacity as agent under the Override Documents; or
(f) be under any duty whether initially or on a continuing basis to
provide any Subject Lender with any credit or other information
concerning the financial condition or affairs of any Subject Company
whether coming into its possession before, on or after the date hereof.
14.5 Indemnification. Each Subject Lender shall, from time to time
on demand by the Override Agent, indemnify the Override Agent in
the proportion its Subject Facility Outstandings bear to the Total
Subject Facility Outstandings at the time of such demand (or, if the
Total Subject Outstandings has then been repaid in full, immediately
prior to the final repayment thereof) against any and all costs, claims,
expenses (including legal fees) and liabilities which the Override
Agent may incur, otherwise than by reason of its own gross
negligence or willful misconduct in acting in its capacity as agent
under or in connection with the Override Documents.
14.6 Accuracy of Information. The Override Agent accepts no
responsibility for the accuracy and/or completeness of any information
supplied by any Subject Company in connection herewith or for the
legality, validity, effectiveness, adequacy or enforceability of any
Override Document and the Override Agent shall not be under any
liability as a result of taking or omitting to take any action in relation
to any Override Document, except in the case of its gross negligence
or willful misconduct.
14.7 No Claims. Each of the Beneficiaries agrees that it will not
assert or seek to assert against any director, officer or employee of
the Override Agent any claim it might have against any of them in
respect of the matters referred to in Section 14.6.
14.8 Other Business. The Override Agent or any of its affiliates may
accept deposits from, lend money to and generally engage in any kind
of banking or other business with any Subject Company.
14.9 Resignation. The Override Agent may resign its appointment
hereunder at any time without assigning any reason therefor by giving
not less than thirty days' prior written notice to that effect to each of
the other parties hereto; provided that no such
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resignation shall be effective until a successor for the Override Agent
is appointed in accordance with the succeeding provisions of this
Section 14.
14.10 Appointment of Successor. If the Override Agent gives
notice of its resignation pursuant to Section 14.9, then the Instructing
Lenders shall have the right to appoint a successor to such Override
Agent (provided that such successor must be a domestic Subject
Lender) following consultation with the Company during the period
of any such notice but, if no such successor is so appointed, the
Override Agent may appoint such a successor itself, which shall be
a financial institution having a long-term bank deposit rating of not
less than "A" if rated by Standard & Poor's Corporation or Moody's
Investors Services, Inc. Upon the acceptance of any appointment as
Override Agent hereunder by a successor Override Agent, such
successor Override Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Override Agent, and the retiring Override Agent shall be discharged
from its duties and obligations hereunder. After any retiring Override
Agent's resignation, the provisions of this Agreement and the Security
Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting a
Override Agent.
14.11 Discharge. If a successor to the Override Agent is appointed
under the provisions of Section 14, then (a) the retiring Override
Agent shall be discharged from any further obligation hereunder but
shall remain entitled to the benefit of the provisions of this Section 14
and (b) its successor and each of the other parties hereto shall have
the same rights and obligations amongst themselves as they would
have had if such successor had been a party hereto.
14.12 Financial Evaluation. It is understood and agreed by each
Beneficiary that it has itself been, and will continue to be, solely
responsible for making its own independent appraisal of and
investigations into the financial condition, credit worthiness,
condition, affairs, status and nature of the Subject Companies and,
accordingly, each Beneficiary warrants to the Override Agent that it
has not relied and will not hereafter rely on the Override Agent:
(a) to check or inquire on its behalf into the adequacy, accuracy or
completeness of any information provided by any Subject Company
in connection with any of the Override Documents or the transactions
herein contemplated (whether or not such information has been or is
hereafter circulated to such Beneficiary by the Override Agent); or
(b) to assess or keep under review on its behalf the financial condition,
credit worthiness, condition, affairs, status or nature of the Subject
Companies.
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15 - ASSIGNMENTS AND TRANSFERS
15.1 Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of each party hereto and its successors and
permitted assigns, and with respect to the payment of the Scaffolding
Allocation under Sections 9.2(b) and (e) and 9.4, Continental Bank as
collateral agent under the Continental Synthetic Leases shall be a third
party beneficiary of this Agreement.
15.2 Assignments and Transfers by the Subject Companies. No
Subject Company shall be entitled to assign or transfer all or any of
its rights, benefits and obligations hereunder.
15.3 Assignments and Transfers by the Subject Lenders. Each
Subject Lender may, after providing five (5) business days prior
written notice to the Override Agent, at any time assign or transfer
any of its rights and/or obligations under the Subject Facility
Documents in accordance with the provisions thereof to another bank
or financial institution. Any such assignment or transfer will be
effective only if the transferee becomes a Subject Lender hereunder
and undertakes to be bound by the terms of the Override Documents
by execution of a document reasonably satisfactory to the Override
Agent.
16 - AMENDMENTS AND WAIVERS
16.1 Amendments by Override Agent. The Override Agent may
agree with the Company to any amendment to or modification of any
provision of any of the Override Documents which is necessary to
correct a manifest error.
16.2 Amendments and Waivers by Instructing Lenders. Subject to
Section 16.4 and Section 19.7 or unless provided to the contrary by
any other provision of any of the Override Documents, any provision
of any of the Override Documents other than the provisions of Section
19 may be amended, waived or varied with the agreement of the
Company and the Instructing Lenders and the Instructing Lenders may
otherwise grant any consent under or with respect to any of the
Override Documents other than the provisions of Section 19.
16.3 Binding on all Parties. Any amendment, waiver, variation or
consent effected pursuant to and in accordance with the terms of this
Agreement shall be binding on each of the Beneficiaries and each
Subject Company upon written notification thereof to such persons.
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16.4 Unanimous Consent
(a) An amendment, waiver, variation or consent which relates to:
(i) the definition of "Instructing Lenders" in Section 1.1;
(ii) [INFORMATION IS SUBJECT TO CONFIDENTIAL
TREATMENT REQUEST.]
(iii) [INFORMATION IS SUBJECT TO CONFIDENTIAL
TREATMENT REQUEST.]
(iv) [INFORMATION IS SUBJECT TO CONFIDENTIAL
TREATMENT REQUEST.]
(v) except as provided in Section 10.8(a)(i) the release of Collateral
with an aggregate value in excess of $5,000,000, as determined by
the Override Agent;
(vi) the subordination of the Collateral Agent's lien on all or any
portion of the Collateral to other liens or encumbrances securing
Indebtedness in excess of $5,000,000 in the aggregate; or
(vii) this Section 16
may not be effected without the consent of each Beneficiary.
(b) An amendment or waiver which relates to the rights and/or
obligations of the Override Agent may not be made without its
consent.
(c) This Section 16.4 does not apply to any amendment, waiver,
variation or consent related to Section 19.
16.5 Waivers and Remedies Cumulative. The rights of each
Beneficiary under the Override Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
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17 - MISCELLANEOUS
17.1 Currency of Account and Payment. The dollar is the currency
of account and payment for each and every sum at any time due from
any of the Subject Companies hereunder; provided that:
(a) each repayment of any of Subject Liabilities or a part thereof shall
be made in the currency in which the relevant obligation is
denominated at the time of that repayment;
(b) each payment of interest shall be made in the currency in which the
sum in respect of which such interest is payable is denominated;
(c) each payment in respect of costs and expenses shall be made in the
currency in which the same were incurred; and
(d) any amount expressed to be payable in a currency other than
dollars shall be paid in that other currency.
17.2 Currency Indemnity. If any sum due from any of the Subject
Companies under any of the Override Documents or any order or
judgment given or made in relation hereto has to be converted from
the currency (the "first currency") in which the same is payable
hereunder or under such order or judgment into another currency (the
"second currency") for the purpose of (a) making or filing a claim or
proof against such Subject Company, (b) obtaining an order or
judgment in any court or other tribunal or (c) enforcing any order or
judgment given or made in relation hereto or thereto, the Company
and such Subject Company shall indemnify and hold harmless each of
the persons to whom such sum is due from and against any loss
suffered as a result of any discrepancy between (i) the rate of
exchange used for such purpose to convert the sum in question from
the first currency into the second currency and (ii) the rate or rates of
exchange at which such person may in the ordinary course of business
purchase the first currency with the second currency upon receipt of
a sum paid to it in satisfaction, in whole or in part, of any such order,
judgment, claim or proof.
17.3 Payment Accounts. On each date on which any of the Override
Documents requires an amount to be paid by any of the Subject
Companies or any of the Subject Lenders hereunder, such Subject
Company or, as the case may be, such Subject Lender shall make the
same available to the Override Agent:
(a) where such amount is denominated in dollars, by payment in
dollars and in same day funds to the Override Agent's account
number 285-5485 (Attention: The Loan Department, Donna Tuggle)
with The First National Bank of Boston (or such other account or
bank as the Override Agent may have specified for this purpose); or
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(b) where such amount is denominated in any other currency, by
payment in such other currency and in immediately available, freely
transferable, cleared funds to such account with such bank in the
principal financial center of the country of such other currency as the
Override Agent shall have specified for this purpose.
17.4 Alternative Arrangements. If, at any time, it shall become
impracticable (by reason of any action of any governmental authority
or any change in law, exchange control regulations or any similar
event) for any of the Subject Companies to make any payments under
any of the Override Documents in the manner specified in Section
17.3, then such Subject Company may agree with the Override Agent
to alternative arrangements for the payment direct to any Subject
Lender of amounts due to such Subject Lender under any of the
Override Documents; provided that, in the absence of any such
agreement, such Subject Company shall be obliged to make all
payments due to the Override Agent in the manner specified herein.
17.5 No Set-Off or Counterclaim.
(a) All payments required to be made by any of the Subject Companies
hereunder shall be calculated without reference to any set-off,
counterclaim or taxes and shall be made free and clear of and without
any deduction for or on account of any set-off or counterclaim or
taxes.
(b) So long as no Potential Default or Event of Default has occurred,
each of the Collateral Agent, the Override Agent, the FAC Collateral
Agent, the Subject Lenders and the Subject Agents will not exercise
any and all set-off and similar rights and remedies with respect to all
amounts at any time remaining in either the Contingent Facility
Distribution Account or, the Net Proceeds Estimated Cost Account
and payable or returnable to any of the Subject Companies.
17.6 Suspense Accounts. All moneys received or recovered by a
Beneficiary may in that Beneficiary's discretion, be credited to a
suspense or impersonal account and may be held in such account for
so long as such Beneficiary thinks fit pending the application from
time to time (as such Beneficiary may think fit) of such moneys in or
towards the payment and discharge of any amounts owing by any of
the Subject Companies to such Beneficiary hereunder.
17.7 Non-receipt. Where a sum is to be paid hereunder to the
Override Agent for account of another person, the Override Agent
shall not be obliged to make the same available to that other person
or to enter into or perform any exchange contract in connection
therewith until it has been able to establish to its satisfaction that it
has actually received such sum, but if it does so and it proves to be
the case that it had not actually received such sum, then the person to
whom such sum or the proceeds of such exchange contract was so
made available shall on request refund the same to the Override Agent
together with an amount sufficient to indemnify the Override Agent
against any cost or
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loss it may have suffered or incurred by reason of its having paid out
such sum or the proceeds of such exchange contract prior to its
having received such sum.
17.8 Set-Off. Subject to the terms and conditions of Section 2.3(c)
and Section 17.5 of this Agreement, the Company and each of the
other Subject Companies which are not Restricted Subsidiaries as
defined in the Senior Notes authorizes each of the Beneficiaries to
apply any credit balance to which such Subject Company is entitled
on any account of such Subject Company with that Beneficiary in
satisfaction of any sum due and payable from such Subject Company
to all Beneficiaries under any of the Override Documents; for this
purpose, each Beneficiary is authorized to purchase with the moneys
standing to the credit of any such account such other currencies as
may be necessary to effect such application. No Beneficiary shall be
obliged to exercise any right given to it by this Section 17.8.
17.9 Calculations and Evidence of Debt.
(a) Returns payable hereunder or calculated hereunder shall accrue
from day to day and be calculated on the basis of a year of 360 days
and the actual number of days elapsed.
(b) Each Subject Lender, shall maintain in accordance with its usual
practice accounts evidencing from time to time amounts lent by and
owing to it under the Subject Facilities.
(c) The Override Agent shall maintain books and records in connection
with its duties hereunder.
(d) In any legal action or proceeding arising out of or in connection
with any of the Override Documents, the entries made in the accounts
maintained pursuant to Section 17.9(c) shall be prima facie evidence
of the existence and amounts of the obligations of the Subject
Companies therein recorded.
(e) A certificate of the Override Agent as to the amount at any time
due from or to any of the parties under any of the Override
Documents shall be prima facie evidence as to such amounts due for
the purposes of the Override Documents.
17.10 Partial Invalidity. If, at any time, any provision of any
Override Document is or becomes illegal, invalid or unenforceable in
any respect under the law of any jurisdiction, neither the legality or
validity or enforceability of the remaining provisions thereof nor the
legality, validity or enforceability of such provision under the law or
any other jurisdiction shall in any way be affected or impaired
thereby.
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17.11 Giving of Notices. All notices or other communications under
or in connection with any Override Document shall be given in
writing or by facsimile (followed by a writing). Any such notice will
be deemed to be given as follows:
(a) if in writing, when delivered; and
(b) if by facsimile, when received.
However, a notice given in accordance with the above but received
on a non-working day or after business hours in the place of receipt
will only be deemed to be given on the next working day in that
place.
17.12 Addresses for Notices.
(a) For all notices under or in connection with the Override
Documents:
(i) the address and facsimile number of the Company are:
Figgie International Inc.
4420 Sherwin Road
Willoughby, Ohio 44094
Attention: Steven L. Siemborski,
Senior Vice President and
Chief Financial Officer
Facsimile Number: 216-951-1724
with a copy to:
Figgie International Inc.
4420 Sherwin Road
Willoughby, Ohio 44094
Attention: Luther A. Harthun
Senior Vice President - International,
General Counsel and Secretary
with a copy to:
Calfee, Halter & Griswold
800 Superior Avenue, Suite 1800
Cleveland, Ohio 44114
Attention: Lawrence N. Schultz, Esquire
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(ii) the address and facsimile number of the Override Agent are:
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attention: Gregory R.D. Clark, Vice President
Facsimile Number: 617-434-1508
(b) The address and facsimile number of each party (other than an
Override Agent) for all notices under or in connection with the
Override Documents are:
(i) those notified by the party for this purpose to the Override Agent
on or before the date it becomes a party; or
(ii) any other notified by that party for this purpose to the Override
Agent by not less than five (5) business days' notice.
17.13 Counterparts. Each Override Document may be executed in
any number of counterparts and by different parties hereto on separate
counterparts each of which, when executed and delivered, shall
constitute an original, but all executed counterparts shall together
constitute one and the same instrument.
17.14 Several Obligations. The obligations of each Subject Lender
under each of the Override Documents are several. The failure by a
Subject Lender to perform its obligations under any of the Override
Documents shall not affect the obligations of any Subject Company or
other Subject Lender towards any other party hereto nor shall any
other party be liable for the failure by such Subject Lender to perform
its obligations under the relevant Override Document.
18 - LAW AND JURISDICTION
18.1 Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
18.2 Jurisdiction.
(a) The Company, for itself and each of the Subject Companies, and
each of the other parties hereto irrevocably agree for the benefit of
each of the Beneficiaries that the courts of the State of New York
and the courts of the United States in New York shall have
jurisdiction to hear and determine any suit, action or proceeding,
and to settle any disputes, which may arise out of or in connection
with any of the Override Documents and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
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(b) The Company, for itself and for each of the Subject Companies,
irrevocably waives any objection which it might now or hereafter
have to the courts referred to in Sections 18.2(a) being nominated
as the forum to hear and determine any suit, action or proceeding,
and to settle any disputes, which may arise out of or in connection
with any of the Override Documents and agrees not to claim that
any such court is not a convenient or appropriate forum.
(c) The Company, for itself and for each of the Subject Companies,
agrees that the process by which any suit, action or proceeding is
begun may be served on it by being delivered in connection with
any suit, action or proceeding in New York to the Company at its
address set forth in Section 17.13 or other registered office for the
time being and the Company agrees to accept service of such suit,
action or proceeding.
(e) The submission to the jurisdiction of the courts referred to in
Section 18.2(a) shall not (and shall not be construed so as to) limit
the right of the Beneficiaries or any of them to take proceedings
against any of the Subject Companies in any other court of
competent jurisdiction nor shall the taking of proceedings in any
one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.
(f) The Company, for itself and for each of the Subject Companies,
hereby consents generally in respect of any legal action or
proceeding arising out of or in connection with the giving of any
relief or the issue of any process in connection with such action or
proceeding including, without limitation, the making, enforcement
or execution against any property whatsoever (irrespective of its
use or intended use) of any order or judgment which may be made
or given in such action or proceeding.
(g) To the extent that any of the Subject Companies may in any
jurisdiction claim for itself or its assets immunity from suit,
execution, attachment (whether in aid of execution, before
judgment or otherwise) or other legal process and to the extent that
in any such jurisdiction there may be attributed to itself or its assets
such immunity (whether or not claimed), the Company on behalf of
such Subject Company hereby irrevocably agrees not to claim and
hereby irrevocably waives such immunity to the full extent
permitted by the laws of such jurisdiction and, in particular, to the
intent that in any proceedings taken in the United States the
foregoing waiver of immunity shall have effect under and be
construed in accordance with the United States Foreign Sovereign
Immunities Act of 1976.
18.3 WAIVER OF JURY TRIAL. THE COMPANY, FOR
ITSELF AND FOR EACH OF THE SUBJECT COMPANIES,
AND EACH OF THE OTHER PARTIES HERETO HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY
OF THE OVERRIDE DOCUMENTS OR THE ACTIONS
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OF THE OVERRIDE AGENT OR ANY SUBJECT LENDER
IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF OR
THEREOF.
19 - ADDITIONAL PROVISIONS APPLICABLE SOLELY TO
FAC
SUBJECT LENDERS, FAC AND THE FAC SUBSIDIARIES
19.1 General Provisions.
(a) Grant of Liens. In consideration of the financial
accommodations provided to FAC under the FAC Subject Facilities
and this Agreement and to secure the payment and performance of
the FAC Indebtedness and the Obligations to the FAC Subject
Lenders, FAC and each FAC Subsidiary shall grant, pursuant to
the FAC Security Documents to the FAC Collateral Agent for the
benefit of the FAC Subject Lenders a security interest in and Lien
upon the FAC Collateral, whether now owned or hereafter acquired
by FAC or a FAC Subsidiary, which FAC Collateral constitutes
substantially all of the assets and properties of FAC and each FAC
Subsidiary. FAC and each FAC Subsidiary shall execute the FAC
Security Documents to effectuate the grant of the Lien on the FAC
Collateral.
(b) Recourse of FAC Subject Lenders. Each of the FAC Subject
Lenders acknowledges and agrees that it shall only have recourse to
the FAC Collateral through the FAC Collateral Agent in
accordance with the provisions of the FAC Intercreditor
Agreement.
(c) Reaffirmation of Guarantees. The Company hereby reaffirms
and ratifies its unconditional guarantee of the FAC Indebtedness
pursuant to the various guarantees it has executed in favor of each
of the FAC Subject Lenders. Subject to the provisions of Section 2
of this Agreement, no provision of this Agreement or of the FAC
Security Documents shall amend, limit or alter the guarantees of
the FAC Subject Facilities by the Company, which guarantees
remain in full force and effect. The Company further agrees that
any amount due a FAC Subject Lender hereunder, under the FAC
Intercreditor Agreement or under the FAC Security Documents
shall be additional FAC Indebtedness under any guarantee.
(d) Cross Default. Subject to the provisions of Section 2 hereof,
FAC and the Company agree that the occurrence of an event of
default under any of the FAC Subject Facilities shall constitute an
event of default under each of the FAC Subject Facilities.
(e) Breakage Costs. On or before the Effective Date, the Company
shall reimburse The Long Term Credit Bank of Japan for its
documented breakage costs in the amount of approximately $55,000
(such amount to be determined as of the Effective Date) related to
interest rate swaps or other contracts entered into before
December 31, 1993 and incurred as a result of the conversion
pursuant to this
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Agreement from a fixed rate to a floating rate obligation.
(f) Controlling Provisions. In the event of any conflict between the
provisions of this Section 19 and the other provisions of this
Agreement, the provisions of this Section 19 shall be controlling.
(g) Release of FAC Liens. The FAC Subject Lenders shall release
the FAC Liens on FAC Collateral in accordance with Section 7.04
of the FAC Intercreditor Agreement.
19.2 Representations and Warranties of FAC and the FAC
Subsidiaries.
Each of FAC and the FAC Subsidiaries hereby represents and
warrants to each FAC Subject Lender as follows:
(a) Organization. FAC and each FAC Subsidiary is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) Good Standing. FAC and each FAC Subsidiary is qualified to
do business and in good standing as a foreign corporation in each
jurisdiction where the ownership or leasing of its property or the
conduct of its business requires such qualification, and where the
failure to so qualify would have a material adverse effect on the
business or assets of FAC and the FAC Subsidiaries taken as a
whole.
(c) Power. FAC and each FAC Subsidiary has full corporate power
and authority to own its property and assets and to carry on its
business and operations as now being conducted and as presently
contemplated, to execute, deliver and perform, as applicable, this
Agreement and each of the FAC Security Documents to which it is
or will be a party, to consummate this Agreement and to grant to
the FAC Collateral Agent for the benefit of the FAC Subject
Lenders a perfected and continuing Lien on and security interests in
the FAC Collateral as contemplated hereby pursuant to the FAC
Security Documents.
(d) Authorization. The execution, delivery and performance of the
FAC Security Documents and the grant of the FAC Liens pursuant
to the FAC Security Documents to which it is a party have been
duly authorized by all requisite corporate actions and will not (i)
violate any provision of its certificate of incorporation or by-laws
or any law or order, (ii) except as disclosed prior to the Effective
Date violate any provisions of any material indenture, agreement,
mortgage, contract or other instrument to which it is a party or by
which it or any of its property is bound or result in a breach of or
constitute a default or require any payment or prepayment under,
any such material indenture, agreement, mortgage, contract or
other instrument or (iii) result in the creation or imposition of any
Lien, except those in favor of the FAC Collateral
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Agent for the benefit of the FAC Subject Lenders as provided
herein and in the FAC Security Documents to which it is a party.
(e) Enforceability. When executed and delivered, this Agreement
and the FAC Security Documents will constitute the legal, valid
and binding obligations of FAC and each FAC Subsidiary and are
enforceable against FAC and each FAC Subsidiary, as the case
may be, in accordance with its terms, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting generally the enforcement of
creditors' rights and except to the extent that availability of the
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may
be brought.
(f) Title. Except as disclosed prior to the Effective Date, FAC and
each FAC Subsidiary has good and marketable title to, or valid
leasehold interests in, and is or will be the lawful owner of the
FAC Collateral, free and clear of all Liens, except FAC Liens
securing the FAC Indebtedness and other Liens permitted
hereunder or under the FAC Security Documents. The FAC Real
Property and interests related thereto or arising therefrom
constitutes all real property and interests in real property (other
than security interests) owned by FAC or any FAC Subsidiary as
of the Relevant Time.
(g) Agreements; Laws. Except as disclosed prior to the Effective
Date, none of FAC or the FAC Subsidiaries is (i) a party to any
agreement, indenture or instrument or (ii) subject to any corporate
restriction or any judgment, order, writ, injunction, decree, rule or
regulation which individually or in the aggregate materially and
adversely affects the business, properties, assets, operations or
condition (financial or otherwise) of FAC and the FAC Subsidiaries
taken as a whole or its ability to perform its obligations under this
Agreement or the FAC Security Documents to which it is or will
be a party.
(h) Lien on Collateral. Except as disclosed prior to the Effective
Date, upon taking possession of the notes and other instruments and
the stock of each FAC Subsidiary and the timely recording of the
FAC Mortgages and the filing of the FAC Financing Statements,
the FAC Collateral Agent, for the benefit of the FAC Subject
Lenders, shall have a valid, perfected Lien on the FAC Collateral,
free and clear of all Liens, except as may be expressly permitted
hereunder or under the FAC Security Documents.
(i) Environmental Matters. Except as disclosed prior to the
Effective Date, none of the FAC Real Property or any other real
property operated by FAC or any FAC Subsidiary is subject to any
litigation or proceeding arising out of any violation or asserted
violation of any Environmental Law, the operations of FAC and
each of the FAC Subsidiaries comply in all material respects with
all Environmental Laws which violation would have a material
adverse effect on the business, assets or financial
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condition of FAC and FAC Subsidiaries taken as a whole, none of
the operations of FAC or any of the FAC Subsidiaries is the
subject of federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any Hazardous
Substances, and neither FAC nor any of the FAC Subsidiaries has
any material contingent liability in connection with any release of
any Hazardous Substances.
(j) Subsidiaries. The FAC Subsidiaries and the FAC Inactive
Subsidiaries are the only Subsidiaries in which FAC or any of its
Subsidiaries has an equity interest.
(k) Projections. Based upon facts and circumstances known by
FAC as of the Relevant Time, there are no statements or
conclusions in any of the financial projections or budgets delivered
by FAC hereunder which are based upon or include information
known to FAC to be misleading or which fail to take into account
material information regarding the matters reported therein.
(l) Disclosure. No representation or warranty made by FAC or any
FAC Subsidiary in Section 19.2 of this Agreement or in any FAC
Security Document or in any other document furnished from time
to time in connection herewith, contains or will contain any untrue
statement of a material fact or omits or will omit to state any
material fact necessary to make the statements herein or therein, in
light of the circumstances in which made, not misleading.
19.3 Affirmative Covenants of FAC and the FAC Subsidiaries.
FAC and each of the FAC Subsidiaries hereby covenants and
agrees with each FAC Subject Lender that at all times prior to the
FAC Override Termination Date, unless the FAC Majority Lenders
otherwise consent (in their sole and absolute discretion) in writing,
each such entity shall:
(a) Existence. Taking into account the primary objective of
liquidation of its loans and business operations, do or cause to be
done all things necessary to preserve, renew and keep in full force
and effect its corporate existence and its material rights, licenses,
permits and franchises, conduct and operate its business
substantially in the manner in which it is presently conducted and
operated and substantially in the manner that it contemplates that its
business will be conducted and operated; at all times maintain,
preserve and protect substantially all its property used or useful in
the conduct of its business whether owned in fee or otherwise, and
keep the same in good repair, working order and condition (fire or
other casualty, eminent domain or similar proceeding and normal
wear and tear excepted), and from time to time make or cause to
be made, all needed repairs, renewals and replacements thereto so
that the business carried on in connection therewith may be
properly conducted at all times.
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(b) Insurance. Maintain or cause to be maintained insurance for
FAC and each FAC Subsidiary in accordance with Section 6.7
hereof and name the FAC Collateral Agent as an additional insured
or loss payee on each such insurance policy maintained by the
Company, FAC or any FAC Subsidiary.
(c) Financial Statements, Reports etc. In addition to the financial
information to be provided under Section 6.13, in the case of FAC
and the FAC Subsidiaries, furnish to each FAC Subject Lender:
(i) as soon as practicable but in any case within 60 days after the
end of each calendar quarter of each fiscal year, a balance sheet
and related statements of operations and changes in cash flow in
form and substance previously provided to the FAC Collateral
Agent, showing the financial condition of FAC as of the close of
such fiscal quarter and the results of its operations during such
fiscal quarter and the then elapsed portion of the fiscal year, all
certified by one of its financial officers as fairly presenting the
financial condition and results of operations of FAC (with due
reliance upon financial statements provided by the management
company of each FAC Subsidiary) consistently applied with prior
practice and with such changes to GAAP as may be concurred with
by the Company's independent public accountants, subject to
normal year-end audit adjustments;
(ii) as soon as available but in any case within 60 days after the end
of each calendar quarter of each fiscal year, copies of the financial
statements received from the management company of each FAC
Subsidiary;
(iii) within 30 days after the end or each fiscal month other than at
the end of a fiscal quarter, a balance sheet, income statement and
cash flow statement setting forth the calculation of FAC Excess
Cash flow for the month and for the then elapsed portion of the
current quarter;
(iv) as soon as available and in any event within 30 days after the
end of each fiscal month, copies of the monthly account analysis in
the form of Exhibit B attached hereto;
(v) as soon as available and in any event within 60 days of each
fiscal quarter end, a quarterly operating budget including projected
statements of operations and cash flows (the "Budget") for FAC in
the form of Exhibit C attached hereto with appropriate discussions
of the principal assumptions and all updates thereof showing a
comparison of actual operations to Budget; and
(vi) promptly from time to time, such other material information
regarding the operations, business, affairs and financial condition
of FAC and, to the extent readily available, the FAC Subsidiaries
as any FAC Subject Lender may reasonably request.
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All such financial statements delivered pursuant to paragraph (c)
above shall be complete and correct in all material respects and
shall be prepared in reasonable detail consistent with past practices
and with such changes to GAAP as may be concurred by the
Company's independent public accountants.
(d) Notice of Attachment. Promptly give written notice to the FAC
Collateral Agent of any levy or attachment, execution or other
process against any of the FAC Collateral to the extent material to
the value or enforceability of the FAC Lien.
(e) Access to Premises and Records. At all reasonable times during
normal business hours and upon reasonable notice and as often as
the FAC Collateral Agent may reasonably request, permit
authorized representatives designated by the FAC Collateral Agent
to (i) have access to the premises and properties of FAC and the
FAC Subsidiaries and to the financial records of FAC and the FAC
Subsidiaries and other records relating to the operations and
procedures of FAC and the FAC Subsidiaries; (ii) make copies and
abstracts from such records; and (iii) discuss the affairs, finances
and accounts of FAC and the FAC Subsidiaries with the executive
officers, accountants and other agents of FAC and the FAC
Subsidiaries (which officers, accountants and agents shall be made
reasonably available to the designated representatives); provided
that such information shall be maintained as confidential by the
FAC Collateral Agent and the FAC Subject Lenders unless such
information otherwise becomes public knowledge and provided,
further, that any of the FAC Subject Lenders may disclose such
information (i) to any regulatory authority having jurisdiction over
such FAC Subject Lender, (ii) as necessary to comply with any
law, rule, regulation or order applicable to the FAC Subject
Lender, (iii) in response to any subpoena or other legal process or
(iv) in connection with any litigation involving this Agreement, any
Subject Facility Document or the transactions contemplated herein
to which the FAC Subject Lenders are a party. All reasonable out
of pocket costs and expenses in connection with any such
examination shall be paid by FAC upon demand.
(f) Litigation and Other Notices. Give the FAC Collateral Agent
prompt written notice of (i) any FAC Event of Default, specifying
the nature and extent thereof and the corrective action (if any)
proposed to be taken with respect thereto; and (ii) except as already
disclosed on Schedule XV, any action, suit or proceeding at law or
in equity brought against FAC or a FAC Subsidiary or by or before
any governmental authority brought against FAC or a FAC
Subsidiary that, if adversely determined, could result in a material
adverse effect on FAC and the FAC Subsidiaries taken as a whole.
(g) Taxes and Obligations. Duly pay and discharge, or cause to be
paid and discharged, before the same shall become in arrears (after
giving effect to any grace period applicable thereto) all income,
franchise, sales, use, personal property, leasing, use, stamp or
other taxes, assessments, levies and other governmental charges
imposed
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upon it, or any of its owned or leased properties, sales and
activities, or any part thereof, or upon the income or profits
therefrom, as well as any claims for labor, materials or supplies
that. if unpaid, might become a Lien upon any of its owned or
leased properties; provided, however, that any such tax,
assessment, charge, levy or claim need not be paid if the validity
or amount thereof shall be diligently contested in good faith by
appropriate proceedings.
(h) Compliance with Law. Comply in all material respects with all
Federal, state, local and foreign laws and regulations applicable to
it which could reasonably be expected to materially and adversely
affect the financial condition, properties or business of FAC and
the FAC Subsidiaries taken as a whole, provided, that any such law
or regulation may be contested in good faith by appropriate
proceedings, if (i) failure to comply therewith could not subject the
FAC Subject Lenders to any civil or criminal liability, and (ii) such
failure to comply may not cause the FAC Collateral to be subject
to any FAC Lien.
(i) Books and Records. Except as otherwise provided in Section
19.3(c), keep adequate records and books of account with respect
to its business activities, in which proper entries, reflecting all of
its material financial transactions shall be made in accordance with
GAAP.
(j) Further Assurances. Execute and file all such further
documents, statements and instruments, and perform such other
acts, as the FAC Collateral Agent may determine are reasonably
necessary or advisable in the opinion of the FAC Collateral Agent
or the FAC Majority Lenders to maintain the rights of the FAC
Collateral Agent and the FAC Majority Lenders hereunder and
under the FAC Security Documents. Without limiting the
generality of the foregoing, such further documents, statements,
instruments and actions shall include FAC Financing Statements,
FAC Mortgages, agreements and instruments in order to effectuate
the transactions contemplated by this Agreement and in order to
grant, preserve, protect and perfect the validity and priority of the
FAC Liens created or intended to be created by the FAC Security
Documents.
(k) Best Efforts to Liquidate. Use its best efforts to liquidate the
FAC Collateral and any other assets owned by FAC or a FAC
Subsidiary.
19.4 Negative Covenants of FAC and the FAC Subsidiaries.
FAC and each of the FAC subsidiaries hereby covenants and
agrees with each FAC Subject Lender that at all times prior to the
FAC Override Termination Date, unless the FAC Majority Lenders
otherwise consent (in their sole and absolute discretion) in writing,
it shall not:
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(a) Indebtedness. Incur, create, assume or suffer or otherwise
become liable for or permit to exist any Indebtedness, except:
(i) FAC Subject Lender Debt and any extensions, modifications or
renewals thereof;
(ii) Any other indebtedness that is described on Schedule XXIV
hereto;
(iii) Normal trade payables or current liabilities incurred in the
ordinary course of business that are not the result of a transaction
that is basically the borrowing of money;
(iv) FAC Intercompany Debt and Intercompany Debt Increases;
(v) As permitted by Section 7.1(c), (d) and (e); and
(vi) Indebtedness of FAC due a FAC Subsidiary or of a FAC
Subsidiary due FAC incurred in the ordinary course of business.
(b) Liens. Incur, create or suffer to exist any lien on any property
or assets (including, without limitation, the stock of any FAC
Subsidiary) now owned or hereafter acquired by it or on any
income or any rights in respect of any thereof. except:
(i) FAC Liens granted to the FAC Collateral Agent for the benefit
of the FAC Subject Lenders pursuant to this Agreement and the
FAC Security Documents;
(ii) Other Liens existing as of the Relevant Time and listed on
Schedule XXV provided any such Lien shall not be subsequently
amended or modified to extend to any other property or assets of
FAC or any FAC Subsidiary;
(iii) Liens for taxes not yet due or which are being diligently
contested in good faith by appropriate proceedings;
(iv) Pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations; and
(v) As permitted by Section 7.2(ii), (iv), (v), (vi) and (vii).
(c) Restricted Payments. Declare, make or pay any amount to the
Company or a Subsidiary (other than by and among FAC
Subsidiaries and FAC) or an Affiliate other than in accordance with
Section 19.5 of this Agreement.
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<PAGE> 99
(d) Formation of Subsidiaries. Incorporate or otherwise organize
any new Subsidiary without the consent of the FAC Subject
Lenders which will not be unreasonably withheld, conditioned or
delayed.
(e) Transactions with Affiliates. Except as otherwise permitted by
this Agreement and as contemplated by the Service Agreement,
engage in any transaction with an Affiliate upon terms that are not
substantially equivalent to terms that could be obtained elsewhere
on an arm's length basis.
(f) Limitations on Business. Engage (directly or indirectly) in any
business other than the businesses in which it is engaged as of the
Relevant Time, and any other reasonably related business
including, without limitation, the continued operation of those
businesses engaged in by FAC borrowers who are in default under
their loans.
(g) Limitation on Investments. Make any Investment except as
permitted under Sections 7.3(a), (b), (c) and (f) of this Agreement
or as listed on Schedule XXVI or as necessary or appropriate in
connection with the exercise of rights and remedies under
applicable loan documents or as necessary or appropriate to
preserve and protect its interests thereunder.
19.5 Cash Distribution to FAC Subject Lenders
(a) Calculation of FAC Excess Cash Flow. As soon as possible
upon the close of each fiscal quarter of FAC and, in any event, not
less than five days prior to the FAC Cash Flow Payment Date,
FAC shall calculate the FAC Excess Cash Flow for the preceding
FAC Excess Cash Flow Period. The calculation shall be consistent
with and be prepared in the same manner and use the same line
items as the presentation used by FAC in preparing the most
current Budget, a copy of which for the period July 1, 1994
through September 30, 1994 is attached as Exhibit C. A copy of
the calculation shall be sent by FAC to each FAC Subject Lender.
In the event any FAC Subject Lender does not agree with the
calculation of the FAC Excess Cash Flow, the FAC Subject Lender
and FAC shall attempt in good faith to resolve any such
disagreement. In the event any such dispute is not resolved prior
to the FAC Cash Flow Payment Date, the payment to be made by
FAC pursuant to Section 19.5(b) shall be based upon the amount
which is undisputed as of that date. Upon resolution of the
dispute, FAC shall remit any additional amount due the FAC
Subject Lenders on the next business day after the resolution of the
dispute. To the extent finalization results in an amount due FAC,
such amount shall be deducted from the next payment due to the
FAC Subject Lenders.
(b) Payment of FAC Excess Cash Flow. On each FAC Cash Flow
Payment Date, FAC shall, after payment of any Intercompany Debt
Increase under Section 19.5(e) that has not been previously repaid,
pay to the FAC Collateral Agent for distribution to the
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<PAGE> 100
FAC Subject Lenders, an amount equal to the FAC Excess Cash
Flow for the FAC Excess Cash Flow Period.
(c) Method of Payment. All payments by FAC to the FAC Subject
Lenders shall be made by wire transfer to the FAC Collateral
Agent for the account of the FAC Subject Lenders not later than
12:00 noon (New York time) on the date when due in dollars in
immediately available funds at the office of the FAC Collateral
Agent located at 10 East 50th Street, New York, New York 10022,
or such other office as the FAC Collateral Agent may hereafter
designate in writing. Whenever any payment due hereunder is
stated to be due on a day which is not a business day for the FAC
Collateral Agent, the due date shall be extended to the next
succeeding business day for the FAC Collateral Agent.
(d) Distribution to FAC Subject Lenders. Any amounts payable
under Section 19.5 hereof to the FAC Collateral Agent shall be
held and distributed by the FAC Collateral Agent pursuant to the
FAC Intercreditor Agreement.
(e) Payments to the Company. FAC may pay the Company and
Figgie Leasing Corporation on a monthly basis for net amounts
owed for intercompany services provided to FAC in the ordinary
course and in accordance with the Service Agreements and the
Budget and current policy and practices of the Company and Figgie
Leasing Corporation. FAC shall also pay the Company on each
FAC Cash Flow Payment Date the amount of any net Intercompany
Debt Increase then outstanding provided there is FAC Excess Cash
Flow sufficient to pay same and provided any amount remaining
unpaid shall be payable in subsequent Excess Cash Flow Periods,
as applicable.
19.6 Events of Default
(a) Events of Default. A FAC Event of Default shall exist upon the
occurrence and during the continuation of any of the following
events:
(i) Nonpayment. FAC or any FAC Subsidiary shall fail to pay or
cause to be paid any sum due to any FAC Subject Lender under
this Agreement, any FAC Security Document or under the FAC
Subject Facilities (as amended or superseded by this Agreement) at
the time, in the currency and in the manner specified therein; or
(ii) Breach of Representation. Any representation or warranty set
forth in Section 19.2 hereof or in any report, certificate financial
statement or other instrument, agreement or document furnished by
or on behalf of FAC or a FAC Subsidiary in connection with this
Agreement or the FAC Security Documents which the FAC
Majority Lenders reasonably consider to be material to the assets,
properties, condition (financial or otherwise) business or prospects
of FAC or the FAC Subsidiaries taken as
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<PAGE> 101
a whole shall prove to have been materially false or misleading as
of the time made or deemed made or furnished; or
(iii) Breach of Covenant. A FAC or a FAC Subsidiary fails to
comply in any material respect with any of the covenants contained
in this Agreement or any FAC Security Document for a period of
30 days after the date of notice to FAC by the FAC Collateral
Agent of such default or breach; or
(iv) Cross Default. An "Event of Default" occurs and is continuing
under any FAC Security Document; or
(v) Override Default. An "Event of Default" occurs and is
continuing under Section 8.1 hereof which results in the
termination of the Override Arrangements; or
(vi) Change of Ownership. The Company ceases to own (legally or
beneficially) 100% of FAC's issued and outstanding capital stock.
(b) Remedies. If a FAC Event of Default shall occur and be
continuing, the FAC Collateral Agent may, and shall, if so directed
by the FAC Majority Lenders, upon notice to FAC and the
Company, terminate the Override Arrangements to the extent they
are applicable to FAC and the FAC Subsidiaries. Upon such
termination, the FAC Indebtedness shall be accelerated, and the
FAC Subject Lenders may proceed to enforce any and all of their
rights and remedies against FAC or the FAC Subsidiaries under the
FAC Subject Facilities but not any guarantees executed and
delivered by the Company, and the FAC Collateral Agent, acting
in such capacity pursuant to the FAC Intercreditor Agreement,
may, with the consent of the FAC Majority Lenders, and shall, at
their direction, protect and enforce its rights and remedies under
the FAC Security Documents with respect to the FAC Collateral.
Subject to Section 19.1(b) and Section 2 hereof, no remedy herein
conferred upon any FAC Subject Lender is intended to limit such
FAC Subject Lender's rights and remedies under any other section
hereof (including the right to receive payments from the Company
hereunder) or to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder, under the FAC Subject Facilities,
under the FAC Security Documents, or now or hereafter existing at
law or in equity. Nothing herein shall limit a FAC Subject
Lender's rights as a Subject Lender under this Agreement or any
guarantee by the Company upon the occurrence of an Event of
Default under Section 19.6(a)(v) which results in the termination of
the Override Arrangements.
19.7 Amendments and Waivers
(a) Amendments, Waiver. Notwithstanding any other provisions of
this Agreement, the provisions of the FAC Security Documents,
the FAC Intercreditor Agreement, this Section 19 and the
definitions related to FAC or a FAC Subsidiary may be
<PAGE>
<PAGE> 102
amended or waived only if such amendment or waiver is in writing
and is approved by the FAC Majority Lenders, provided, however,
except as otherwise set forth in Section 19, the FAC Intercreditor
Agreement or the FAC Security Documents, the consent of all of
the FAC Subject Lenders will be required to release all, or
substantially all, of the FAC Collateral or extend beyond sixty (60)
days the date of payment of any amount due the FAC Subject
Lenders. Nothing herein shall alter or amend the provisions with
respect to amendment and waiver set forth in each of the FAC
Subject Facilities and related documents. The Subject Lenders
shall have no right to amended or waive any provision of this
Section 19 and any purported amendment or waiver by the Subject
Lenders which affects the provisions of this Section 19 or the FAC
Security Documents shall be of no force or effect.
(b) Notices. For all notices under or in connection with this Section
19:
(i) the address and facsimile number of FAC are:
Figgie Acceptance Corporation
28300 Euclid Avenue
Wickliffe, Ohio 44092
Attention: Richard J. Subel, President
Facsimile Number: (216) 289-3844
(ii) the address and facsimile number of the Company are as set
forth in Section 17.3 hereof; and
(iii) the address and facsimile number of the FAC Collateral Agent
are:
Swiss Bank Corporation
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
Attention: IMBG Restructuring
Facsimile Number: (212) 574-3162
All other notices shall be sent to the FAC Subject Lenders to the
person and in the manner set forth in the FAC Subject Facilities.
<PAGE>
<PAGE> 103
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
FIGGIE INTERNATIONAL INC.
By:_______/s/_____________ ___
Name: Walter M. Vannoy
Title: Chairman & Chief
Executive Officer
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
FIGGIE ACCEPTANCE
CORPORATION
By:_____/s/______________
Name: Richard S. Subel
Title: President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
THE FIRST NATIONAL BANK
OF BOSTON, individually and as
Override Agent
By:_______/s/______________
Name: Gregory R.D. Clark
Title: Vice Pres., Director
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
SWISS BANK CORPORATION
New York Branch, individually
and as FAC Collaterial Agent
By:_______/s/______________
Name: Phyllis J. Karno
Title: Director, Restructuring
By:_______/s/______________
Name: Andrew N. Shapiro
Title: Director, Restructuring
<PAGE>
<PAGE> 104
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
SOCIETY NATIONAL BANK
By:_______/s/______________
Name: Nancy Terrill
Title: Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
CHEMICAL BANK
By:_______/s/______________
Name: Thomas M. Cambern
Title: Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
MELLON BANK, N.A.
By:_______/s/______________
Name: Martin T. Hanning
Title: Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
CONTINENTAL BANK
By:_______/s/______________
Name: A. J. Sutherland
Title: Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION
By:_______/s/______________
Name: Wendy Loring
Title: Vice President
<PAGE>
<PAGE> 105
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
DRESDNER BANK AG, New York
and Grand Cayman Branches
By:_______/s/______________
Name: D. Slusarczyk
Title: VP
By:_______/s/______________
Name: A.R. Morris
Title: VP
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
NATIONAL CITY BANK
CLEVELAND
By:_______/s/______________
Name: John H. Tarter
Title: Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
THE LONG-TERM CREDIT
BANK OF JAPAN, LTD.,
Chicago Branch
By:_______/s/______________
Name: Brady S. Sadek
Title: Vice President &
Deputy Manager
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
THE SANWA BANK LIMITED,
Chicago Branch
By:_______/s/______________
Name: James P. Byrnes
Title: Vice President
<PAGE>
<PAGE> 106
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
ABN AMRO BANK N.V.
By:_______/s/______________
Name: James M. Janovsky
Title: Group Vice President
By:_______/s/______________
Name: Craig P. Guinane
Title: Assistant Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
AUSTRALIA AND NEW
ZEALAND BANKING GROUP
LIMITED
By:_______/s/______________
Name: Robert Sloan
Title: First Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
THE PROVIDENT BANK
By:_______/s/______________
Name: Mark Whitson
Title: Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
BANQUE NATIONALE de PARIS
By:_______/s/______________
Name: Arnaud Collin du Bocage
Title: Executive Vice President
and General Manager
<PAGE>
<PAGE> 107
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
BANCA NAZIONALE DEL
LAVORO, S.p.A.
By:_______/s/______________
Name: John Gray
Title: Vice President
By: ______/s/______________
Name: Pietro De Lorrett
Title: Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
INSTITUTO BANCARIO SAN
PAOLO di TORINO S.p.A.,
New York Branch
By:_______/s/______________
Name: William J. De Angelo
Title: First Vice President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
THE FIFTH THIRD BANK
By:_______/s/______________
Name: Deborah Perkins
Title:
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
SOCIETE GENERALE
By:_______/s/______________
Name: Harry T. Nullut
Title: Vice President
<PAGE>
<PAGE> 108
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
NATIONAL CITY BANK,
KENTUCKY (as successor in
interest to First National
Bank of Louisville)
By:_______/s/______________
Name: Leonard Hardin
Title: President
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as a sealed instrument as of the date first set forth
above.
BARCLAYS BANK PLC
By:_______/s/______________
Name: John N. Sweeney
Title: Assistant Vice President
<PAGE>
<PAGE> 109
Executed to acknowledge and agree that the lenders which provided
a credit facility to Figgie International Inc. Stock Ownership Trust
and Plan shall be Subject Lenders hereunder and that such credit
facility shall be a Subject Facility hereunder subject to the terms of
the Override Arrangements set forth herein:
FIGGIE INTERNATIONAL INC. STOCK
OWNERSHIP TRUST AND PLAN
By:__________/s/_____________
Name: F. Rush McKnight
Title: Trustee
<PAGE>
<PAGE> 110
LIST OF RELATED DOCUMENTS
LIST OF SECURITY DOCUMENTS
Security Agreement between the Company and the Collateral
Agent
Schedule A - License Agreements
Schedule B-1 - List of Owned Trademarks
Schedule B-2 - List of Licensed Trademarks
Schedule C - Litigation, Infringement and Third-Party Claims
Exhibit 1 - Form of Trademark Assignment
Trademark Assignment Executed in Blank by the Company
Trademark Collateral Security and Pledge Agreement between
Figgie Licensing Corporation ("PLC") and the Company
Schedule A - License Agreements
Schedule B - List of Trademarks
Schedule C - Litigation, Infringement and Third-Party Claims
Exhibit 1 - Form of Trademark Assignment
Trademark Assignment Executed in Blank by FLC
Patent Collateral Assignment and Security Agreement between
the Company and the Collateral Agent
Schedule A - List of Patents
Schedule B - Litigation, Infringement and Third-Party Claims
Memorandum of Security Interest in Copyrights
Exhibit A - List of Copyrights
Stock Pledge Agreement between the Company and the
Collateral Agent
Cash Collateral Agreement between the Company and the
Collateral Agent
Perfection Certificate from the Company
Form of UCC-1 Financing Statements for (i) the Company as
Debtor and (ii) FLC as Debtor and Summary of Filing
Locations
Intercreditor Agreement between Override Agent, the Company
and CIT
LIST OF DOCUMENTS RELATING TO CORPORATE
AUTHORITY
Certificate of Good-Standing for the Company
Certificate of the Secretary of the Company regarding:
charter documents
by-laws
resolutions
incumbency
Certificates of Foreign Qualification for the Company
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<PAGE> 111
Certificate of Good Standing for FLC
Certificate of the Secretary of FLC regarding:
charter documents
by-laws
resolutions
incumbency
Certificate of Good Standing for FAC
Certificate of the Secretary of FAC regarding:
charter documents
by-laws
resolutions
incumbency
Certificate of Foreign Qualification for FAC
Action of Board of Directors of Economy Engineering Company
Action of Board of Directors of Figgie Leasing Corporation
Action of Shareholders of Mojonnier do Brasil Industria e
Commercio de Equipmentos Ltda.
Action of Sole Shareholder of Logan Fenamec
Transporttechnick GmbH
LIST OF MISCELLANEOUS DOCUMENTS
Legal Opinion of Calfee, Halter & Griswold
Legal Opinion of Luther A. Harthun, Esq., General Counsel of
the Company
Certificate of Company re: amounts to be deposited in the cash
collateral accounts
Post-closing Letter
<PAGE> 1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement is entered into as of this
1st day of July, 1994 between Steven L. Siemborski (the
"Executive") and Figgie International Inc., a Delaware
corporation ("Figgie" or "Company"):
WHEREAS, Figgie wishes to obtain the services of the Executive;
and
WHEREAS, the Executive desires to obtain employment with Figgie
pursuant to the terms of this Agreement;
NOW THEREFORE, in consideration of the mutual promises
contained herein and other consideration the receipt and
sufficiency of which is hereby acknowledged, the Executive and
Figgie agree as follows:
1. Employment. As of the date of this Agreement, Figgie will
employ the Executive as Senior Vice President and Chief
Financial Officer of Figgie and the Executive agrees to be
employed by Figgie as Senior Vice President and Chief Financial
Officer of Figgie in accordance with the terms and conditions
set forth herein.
2. Duties. The Executive will devote his full business time
and best efforts to the business of Figgie and its related
organizations performing such duties as are customary to his
position and as may be reasonable requested by the Chief
Executive Officer of Figgie. The Executive will at all times
conduct himself in conformity with the policies of Figgie.
3. Compensation. The Executive shall be entitled to the
following compensation for the performance of his duties during
the term of this Agreement:
a. As soon as possible after the execution of this
Agreement, the Executive will be paid a special transition
payment of $50,000.00.
b. During the first year of this Agreement (July 1, 1994 -
June 30, 1995), the Executive will be paid a base salary at an
annual rate of $350,000.00. In addition, the Executive will
receive an incentive bonus of $25,000.00 if the financial
consulting fees presently paid by Figgie are reduced by 50%
within the first 120 days of the Executive's employment. If
such financial consulting fees payable by Figgie are reduced to
zero (0) by June 30, 1995, the Executive will be paid an
additional incentive bonus of $50,000.00 for a total potential
incentive bonus of $75,000.00. The incentive bonuses will be
paid at the end of the first year of this Agreement if earned
by the Executive.
<PAGE>
<PAGE> 2
c. During the second year of this Agreement, the Executive
will be paid a base salary of $350,000.00 and in addition will
be awarded the greater of (i) a bonus of $50,000.00 or (ii) the
bonus payable to him with respect to the 1995 calendar year
under the regular bonus programs of Figgie applicable to senior
executives in effect at that time.
d. During the third and fourth years of this Agreement, the
Executive will be paid a base salary at the annual rate of
$350,000.00 per year and will continue to participate in the
regular bonus programs of Figgie applicable to senior
executives but will not be guaranteed any payments pursuant to
such programs.
4. Stock Purchases.
a. The Executive will be given the right on the following
dates to purchase 150,000 shares of Figgie's Common Stock for
One Dollar ($1.00) per share in the following amounts:
Date Number of Shares
July 1, 1994 37,500
July 1, 1995 37,500
July 1, 1996 37,500
July 1, 1997 37,500
Such shares shall be either Class A Common Stock or Class B
Common Stock as shall be determined by the Stock Option
Committee of Figgie in its sole discretion. Each such right to
purchase such shares shall expire on the next following
November 1st if not exercised by the Executive prior to such
November 1st. Upon the purchase of the shares, they will be
fully vested and nonforfeitable by the Executive.
b. Figgie will issue the shares to the Executive out of
authorized but unissued shares or treasury shares as Figgie
shall deem appropriate. Such shares may be issued to the
Executive under Figgie's 1993 Restricted Stock Purchase Plan
For Employees if there are sufficient shares for such purpose
and if Executive is satisfied that the shares will be fully
vested and nonforfeitable on the date of purchase.
c. The shares will be issued to the Executive upon the
payment to Figgie of the purchase price for the shares and any
federal, state and local withholding taxes related to the
issuance of the shares. In lieu of payment of withholding
taxes, the Executive can make an election similar to the
"Elections" described in Section 11 of Figgie's 1993 Restricted
Stock Purchase Plan For Employees upon the same terms and
restrictions as are set forth in such Section 11. Such Section
11 is hereby incorporated by reference in this Agreement.
<PAGE>
<PAGE> 3
d. The issuance of shares to the Executive will occur on
each of the dates specified above regardless of whether the
Executive continues to be employed by Figgie provided that the
Executive's employment was not terminated by Figgie for Good
Cause as defined in Section 7(b) hereof and provided that the
Executive did not quit without Good Reason as described in
Section 7(d) below.
e. The Compensation Committee may impose such restrictions
on any shares purchased by the Executive under this Agreement
as it may deem advisable under the Securities Act of 1933, as
amended, under the requirements of any stock exchange upon
which such shares are then listed, and under any state blue sky
or securities laws applicable to such shares. The Committee
may cause a legend or legends to be placed on any certificates
representing shares issued pursuant to this Agreement, which
legend or legends shall make appropriate reference to the
various restrictions imposed hereunder.
5. Benefit Plans. During the term of this Agreement,
Executive shall be entitled to participate in all employee
benefit plans which are maintained or established by the
Company from time to time and which cover Figgie's senior
executives provided he satisfies any applicable eligibility
requirements therefor. Executive acknowledges the right of the
Company to amend or terminate such plans at any time in the
exercise of its discretion. Executive further acknowledges
that the Company may wish to maintain insurance on his life for
its benefit and agrees to submit to any physical examination
which may be required in order to obtain such insurance.
6. Expenses. The Executive will be reimbursed for all
reasonable expenses incurred by him in performing his duties
hereunder provided that such expenses are incurred and
accounted for in accordance with the policies and procedures
established by Figgie.
7. Termination of Employment.
a. Death; Disability. In the event of Executive's death or
Disability (as hereinafter defined), his employment with the
Company shall be deemed terminated as of the end of the month
in which such death or Disability occurs, and all rights,
duties and obligations of the parties hereunder shall thereupon
cease, except that the Company shall pay a prorata portion of
any bonus which would have been payable to the Executive under
Sections 2(c) and 2(d) hereof, the Company's obligations under
Section 4 shall continue and, in the case of a termination due
to Disability, Executive's obligations under Section 11 shall
continue. For purposes of this Section, Disability shall be
deemed to have occurred if (a) Executive shall be unable to
perform his duties on an active full-time basis by reason of
disability or impairment of health for a period of at least one
hundred eighty
<PAGE>
<PAGE> 4
(180) consecutive calendar days or (b) the Company shall have
received a certificate from a physician reasonably acceptable
to both the Company and Executive (or his representative) to
the effect that Executive is incapable of reasonably performing
services under this Agreement in accordance with past
practices.
b. By Company for Good Cause. Executive's employment with
the Company may be terminated at the option of and by written
notice from the Company if the Board of Directors of the
Company shall find Good Cause for termination. For purposes of
this Agreement, Good Cause shall mean only (i) Executive's
willful failure to perform his duties under this Agreement
within a reasonable period of time after receipt of written
notice from the Company setting forth in reasonable detail the
duties which Executive has failed to perform and the corrective
actions expected of him; (ii) a breach of Executive's duty of
loyalty to the Company, including but not limited to a breach
of Executive's obligations under Sections 10 or 11 below; (iii)
indictment for, conviction of, or written confession to a crime
against the Company or a crime which otherwise materially
adversely affects Executive's ability to perform his
obligations under this Agreement, any business relationships
which the Company maintains or the general reputation and good
will of the Company; or (iv) Executive shall have been found by
the Board of Directors of the Company to have been repeatedly
and excessively using alcohol, drugs and/or any other
intoxicating or controlled substance. Upon any such
termination all rights, obligations and duties of the parties
hereunder shall immediately cease, (including but not limited
to the Company's obligation to pay severance pay under Section
8 hereor or to issue stock under Section 4 hereof), except
Executive's obligations under Section 11 hereof.
c. By Company Without Good Cause. The Company may also
terminate Executive's employment at any time by written notice
without Good Cause, whereupon all rights, obligations and
duties of the parties hereunder shall immediately cease, except
that the Company shall pay Executive amounts due under Section
8 hereof and shall issue shares of Common Stock of Figgie
pursuant to Section 4 hereof, and except for Executive's
obligations under Section 11 hereof.
d. By Executive For Good Reason. Executive may terminate
his employment with the Company upon not less than ninety (90)
days advance written notice for "Good Reason." Upon the
effective date of any such termination all rights, obligations
and duties of the parties hereunder shall immediately cease,
except for Executive's obligations under Section 11 hereof and
the Company's obligations under Sections 4 and 8 hereof. For
purposes of this Agreement, the Executive will have "Good
Reason" if (i) the Board of Directors of Figgie shall fail to
re-elect, or shall remove Executive from the office of Senior
Vice President and Chief Financial
<PAGE>
<PAGE> 5
Officer of Figgie, (ii) the Chief Executive Officer or the
Board of Directors of Figgie shall make a significant negative
change in the nature or scope of the authorities, powers,
functions or duties of Executive hereunder, (iii) Figgie shall
fail to pay when due any compensation provided for in this
Agreement and such failure is not corrected within ten days
after notice thereof to Figgie by the Executive, or (iv) any
pattern of harassment done with the approval of the Chief
Executive Officer or the Board of Directors of Figgie which
impedes the Executive in the exercise of his authorities,
powers, functions or duties hereunder in the manner in which
they would normally be exercised by a Senior Vice President and
Chief Financial Officer.
e. By Executive Without Good Reason. Executive may
terminate his employment with the Company upon not less than
ninety (90) days advance written notice but in any event not
prior to July 1, 1995. Upon the effective date of any such
termination all rights, obligations and duties of the parties
hereunder shall immediately cease, except for Executive's
obligations under Section 11 hereof. The Company shall not be
prohibited from terminating Executive under Section 7(c) above
following receipt of a notice of termination from Executive,
subject to its obligations thereunder.
8. Severance Pay. If Executive's employment is terminated by
the Company pursuant to Section 7(c) or by the Executive
pursuant to 7(d) above, Executive shall be entitled to
severance pay based upon the date of termination of his
employment as follows:
a. If the Executive's employment is so terminated during the
first year of this Agreement, the Executive will be paid a
proportional amount of $400,000.00 with respect to the year of
his termination and will be paid the amounts of $400,000.00,
$350,000.00 and $350,000.00 over the succeeding three years in
accordance with the Company's normal payroll practices.
b. If the Executive's employment is so terminated during the
second year of this Agreement, he will receive the proportional
amount of $400,000.00 with respect to the year of termination
and will be paid the amounts of $350,000.00 and $350,000.00
respectively over the next succeeding two years in accordance
with the Company's normal payroll practices.
c. If the Executive's employment is so terminated during the
third year of this Agreement, he will be paid the proportional
amount of $350,000.00 for the balance of the year in which the
termination occurred and will be paid $350,000.00 over the
succeeding one year period in accordance with the Company's
normal payroll practices.
<PAGE>
<PAGE> 6
If the Executive's employment is terminated for any of the
reasons set forth in Sections 7(a), 7(b) or 7(e) hereof, none
of the payments provided in this Section 8 will be made by
Figgie.
9. Term. This Agreement will continue in effect from the date
hereof until July 1, 1998 unless sooner terminated under
Section 7 hereof.
10. Non-Competition.
a. Restrictions. As consideration for the compensation and
benefits to be provided to the Executive under this Agreement,
and as an additional incentive for Figgie to enter into this
Agreement, the Executive will not during the term of this
Agreement directly or indirectly, for himself or for others, in
any state of the United States or in any foreign country where
Figgie or any of its Affiliates (as defined below) is then
conducting the Business (as defined below) or has, during the
previous twelve (12) months, conducted the Business:
(1) engage in the Business;
(2) render advice, consultation, or services to or
otherwise assist any other person or entity who competes,
directly or indirectly, with Figgie or any of its Affiliates;
(3) transact any business in any manner pertaining to
suppliers or customers of Figgie or any of its Affiliates
which, in any manner, would have, or is likely to have, an
adverse effect upon the conduct of the Business of Figgie or
any of its Affiliates; or
(4) induce any employee, agent or representative of Figgie
or any of its Affiliates to terminate his or her employment
with Figgie or such Affiliate.
b. Definitions. For the purposes of this Section 10, the
"Business" will mean the business activities of whatever nature
of Figgie and its Affiliates carried on within a 100 mile
radius of any facility or office operated or maintained by
Figgie or any of its Affiliates. The term "Affiliates" shall
mean any entity controlling, controlled by or under common
control with Figgie, including, but not limited to, Figgie
divisions and subsidiaries.
c. Reasonableness; Enforcement. The Executive understands
that the foregoing restrictions may limit his ability to engage
in certain business pursuits during the period provided for
above, but acknowledges that he will receive sufficiently
higher remuneration and other benefits from Figgie hereunder
than he would otherwise receive to justify such restriction.
The Executive acknowledges that he understands the effect of
the provisions of this Section 10, that he has had reasonable
time to consider the effect of these provisions, and
<PAGE>
<PAGE> 7
that he was encouraged to and had an opportunity to consult an
attorney with respect to these provisions. Figgie and the
Executive consider the restrictions contained in this
Section 10 to be reasonable and necessary. Nevertheless, if
any aspect of these restrictions is found to be unreasonable or
otherwise unenforceable by a Court of competent jurisdiction,
the parties intend for such restrictions to be modified by such
Court so as to be reasonable and enforceable and, as so
modified by the Court, to be fully enforced. In the event of
a breach or threatened breach of this Section 10 by the
Executive, Figgie will be entitled to preliminary and permanent
injunctive relief, without bond or security, sufficient to
enforce the provisions thereof and Figgie will be entitled to
pursue such other remedies at law or in equity which it deems
appropriate.
11. Confidential Information.
a. Prohibition on Disclosure or Use of Confidential
Information. The Executive will at all times keep and maintain
Confidential Information (as defined below) confidential and
will not, at any time, either during or subsequent to his
employment with Figgie, either directly or indirectly, use any
Confidential Information for his own benefit, or otherwise
divulge, disclose, or communicate any Confidential Information
to any person or entity in any manner whatsoever, other than
employees or agents of Figgie or its Affiliates who have a need
to know such information, and then only to the extent necessary
to perform their responsibilities on behalf of Figgie or its
Affiliates.
b. Definition of Confidential Information. "Confidential
Information" will mean any and all information (excluding
information in the public domain) relating to the Business,
including, without limitation, all patents and patent
applications; copyrights (whether registered or to be
registered in the United States or elsewhere) which are applied
for, issued to or owned by Figgie or any of its Affiliates;
inventions; trade secrets; computer programs, engineering and
technical data, drawings or designs; manufacturing techniques;
information concerning pricing and pricing policies; marketing
techniques; suppliers; methods and manner of operations; and
information relating to the identity and location of all past,
present and prospective customers.
c. Enforcement. The Executive's obligations contained in
this Section 11 are of a special and unique character which
gives them a peculiar value to Figgie. The parties recognize
that Figgie cannot be reasonably or adequately compensated in
damages alone in an action at law should the Executive breach
such obligations. The Executive therefore expressly agrees
that, in addition to any other rights or remedies which Figgie
may possess, it will be entitled to
<PAGE>
<PAGE> 8
injunctive and other equitable relief in the form of
preliminary and permanent injunctions, without bond or other
security, in the event of any actual or threatened breach of
such obligations by the Executive, in order to enforce this
Section 11.
12. Successors. This Agreement is personal to the Executive
and will not be assignable by him without the prior written
consent of Figgie. Any amounts payable and stock issuable
after the death of the Executive shall be paid to his spouse if
then living and otherwise to the executor or administrator of
his estate. This Agreement will inure to the benefit of and be
binding upon Figgie, its Affiliates and their successors and
assigns.
13. Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Ohio
without reference to principles of conflict of laws. Any
action brought to enforce this Agreement or to seek relief
based upon any provision of it will be brought in a court of
competent jurisdiction in the State of Ohio.
14. Merger. This Agreement supersedes any and all prior
agreements, whether written or oral, with respect to the
Executive's employment by Figgie or any of its Affiliates and
contains all of the promises, representations, warranties and
agreements between the parties with respect to such employment.
15. Modification. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties or their respective successors.
16. Notices. All notices or other communications hereunder
will be writing and will be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, to the following:
If to the Executive:
Steven L. Siemborski
P.O. Box 93
Cleveland, Ohio 44040
If to Figgie:
Figgie International Inc.
4420 Sherwin Road
Willoughby, Ohio 44094
Attn: Vice President Human Resources
Any party may from time to time change its address for purposes
of this Agreement by giving notice of such change to the other
party, but no such change will be deemed effective until
actually received by the party to whom it is directed. Notice
and communications under this Agreement will be effective when
actually received by the party to whom they are directed.
<PAGE>
<PAGE> 9
IN WITNESS WHEREOF, this Agreement is executed by or on behalf
of the undersigned as of this ______ day of June, 1994.
THE EXECUTIVE:
______________________________
FIGGIE INTERNATIONAL INC.
By:___________________________
Title:________________________
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