SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-10281
SMITH CORONA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 51-0286862
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
65 Locust Avenue, New Canaan, Connecticut 06840
(Address of principal executive offices)(Zip Code)
(203) 972-1471
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K Annual Report or any amendment to this
Form 10-K Annual Report. [ ]
The aggregate market value of the voting stock of the registrant held
by non-affiliates of the registrant as of August 23, 1995: $8,774,606.
Number of shares of Common Stock outstanding as of August 23, 1995:
30,250,000 shares.
Documents Incorporated by Reference
Document Part of Form 10-K
None.
TABLE OF CONTENTS
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . 1
General . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Restructuring and Bankruptcy Reorganizations. . . . . . . . 1
Recent Changes in Senior Management . . . . . . . . . . . . 3
History of the Business . . . . . . . . . . . . . . . . . . 3
Products. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Marketing, Sales and Distribution . . . . . . . . . . . . . 5
Service . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Seasonality . . . . . . . . . . . . . . . . . . . . . . . . 6
Foreign Operations. . . . . . . . . . . . . . . . . . . . . 6
Competition . . . . . . . . . . . . . . . . . . . . . . . . 8
Patents, Trademarks and Licenses. . . . . . . . . . . . . . 8
Employees . . . . . . . . . . . . . . . . . . . . . . . . . 9
Research and Development. . . . . . . . . . . . . . . . . . 9
Raw Materials . . . . . . . . . . . . . . . . . . . . . . . 9
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . 9
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . .11
Item 4. Submission of Matters to a Vote of Security Holders.13
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . .13
Item 6. Selected Financial Data. . . . . . . . . . . . . . .14
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition..................16
Item 8. Financial Statements and Supplementary Data. . . . .23
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . .23
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Item 10. Directors and Executive Officers of the Registrant .23
Item 11. Executive Compensation . . . . . . . . . . . . . . .28
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . .42
Item 13. Certain Relationships and Related Transactions . . .43
PART IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K. . . . . . . . . . . . . . . . .46
Index to Consolidated Financial Statements and Financial Statement
Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
PART I
Item 1. Business
The Company
General
Smith Corona Corporation (the "Company") designs, manufactures
and sells portable and compact electronic typewriters, personal
word processors, printers and related accessories and supplies.
These products are generally used in the home, at school and in
small offices. The Company also sells facsimile machines,
laminators, calculators and product labelers.
The Company was incorporated in 1985 in the State of Delaware.
Prior to 1986, the businesses of the Company were operated by SCM
Corporation ("SCM") which was acquired by Hanson PLC ("Hanson")
in March 1986. At the time it was acquired, SCM consisted of a
number of businesses, including the current businesses of the
Company and businesses in the chemical, paper and food
industries. Although Hanson owned the businesses of the Company
through various subsidiaries, the typewriter and personal word
processor operations were managed as an integrated business. On
August 3, 1989, the Company completed a registered public
offering of 14,750,000 shares of common stock, par value $.01 per
share (the "Common Stock"), in the United States and abroad (the
"Offerings"). In connection with the Offerings, Hanson initiated
a series of transactions to combine the electronic typewriter,
personal word processor and office supplies business under a
single parent entity being the Company (the "Reorganization").
Restructuring and Bankruptcy Reorganizations
Over the past few years, the Company has faced intense
competition from foreign producers. On May 8, 1995, the Company
announced a major restructuring plan intended to lower the
Company's production costs pursuant to which the Company's
typewriter manufacturing will be relocated from its Singapore and
Batam Island, Indonesia facilities to its Mexico facility. This
action is expected to result in the termination of approximately
1,100 workers in Singapore and Batam Island who will be replaced
with approximately 600 workers in Mexico. This action is
expected to save approximately $10.0 million pretax annually
primarily through lower labor costs as well as the greater
utilization of the Mexico facility. The Company expects to cease
production in Singapore and Batam Island by mid-November 1995,
thereafter relocating equipment to Mexico where typewriter
production is expected to commence in the third quarter of the
fiscal year ending June 30, 1996 ("Fiscal 1996"). The Company
has placed its Singapore facility and the underlying land lease
up for sale. The Batam Island facility lease expires December 26,
1995.
In addition to the relocation of the typewriter manufacturing to
Mexico, the Company has, in connection with the restructuring,
eliminated approximately 180 support positions within the
research and development, finance, service, distribution, selling
and marketing areas in the Company's Cortland, New York and New
Canaan, Connecticut locations. Approximately $10.0 million in
additional annual pretax savings are expected from elimination of
these support positions. These reductions should be completed by
the end of the first quarter of Fiscal 1996.
With the Company experiencing sales declines and operating
losses, having obtained extended payment terms from trade
vendors, and needing additional financing to meet operating
requirements and fund the restructuring program, the Company
filed a voluntary petition for reorganization under Chapter 11 of
the United States Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court") on July 5, 1995. The Company's management
has continued to manage the operations and affairs of the Company
as debtor-in-possession, subject to the jurisdiction of the
Bankruptcy Court. Consequently, certain actions of the Company
during the pendency of the bankruptcy proceedings including,
without limitation, transactions outside of the ordinary course
of business, are subject to the approval of the Bankruptcy Court.
Prior to August 18, 1995, the bankruptcy proceedings did not
include any of the subsidiaries of the Company. On August 18,
1995, three of the Company's wholly-owned but nonoperating
subsidiaries: SCM Office Supplies, Inc., SCC LI Corp. (formerly
known as Histacount Corporation), and Hulse Manufacturing Company
(such subsidiaries being hereinafter collectively referred to as
the "Nonoperating Subsidiaries") filed voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code.
Substantially all of the assets of each of the Nonoperating
Subsidiaries had been sold, but each Nonoperating Subsidiary
retains certain residual liabilities. The Company's other
wholly-owned subsidiaries (including its international
subsidiaries) are not included in the bankruptcy proceedings and,
as such, are not subject to the provisions of the federal
bankruptcy laws or the supervision of the Bankruptcy Court. The
Company, however, is generally unable to provide direct financial
support outside of the normal course of business to such other
subsidiaries without Bankruptcy Court approval. The Company has
obtained a debtor-in-possession revolving line of credit of up to
$24.0 million to finance operations and restructuring activities
during the bankruptcy reorganization.
An Administrator was appointed on August 2, 1995 for the
Company's wholly-owned subsidiary in Australia. The
Administrator was appointed as Liquidator on August 29, 1995.
The Company is currently exploring potential distributor
relationships in its Australian market for the purpose of
maintaining its distribution capacity.
For further discussion of the Company's restructuring plan and
bankruptcy reorganization, see "Business - Foreign Operations"
and "Managements' Discussion and Analysis of Results of
Operations and Financial Condition."
Recent Changes in Senior Management
During 1995, the following changes in senior management of the
Company took place, primarily related to the restructuring.
On March 24, 1995, G. Lee Thompson, then Chairman and Chief
Executive Officer of the Company, retired and was replaced by
Robert Van Buren, a member of the board of directors. Effective
June 3, 1995, Mr. Van Buren was elected President, succeeding
William D. Henderson upon his termination. On July 1, 1995,
Ronald F. Stengel was elected President and Chief Executive
Officer of the Company, succeeding Mr. Van Buren in those
positions only. Also, on July 1, 1995, Mr. Stengel was elected
to the Company's Board of Directors.
Thomas C. DeFazio, Executive Vice President and Chief Financial
Officer of the Company, and Manfred E. Eckhardt, Vice President
and Treasurer of the Company, retired effective March 31, 1995
and June 30, 1995, respectively. Succeeding Thomas C. DeFazio,
John A. Piontkowski was elected Vice President - Finance and
Controller of the Company on March 28, 1995. Mr. Piontkowski
held these positions until June 21, 1995, when he was elected
Senior Vice President, Chief Financial Officer and Treasurer of
the Company. On July 26, 1995, Martin D. Wilson was elected
Controller, succeeding Mr. Piontkowski.
See "Directors and Executive Officers of the Registrant,"
"Executive Compensation" and "Certain Relationships and Related
Transactions - Other Agreements."
History of the Business
The Company's typewriter and personal word processor business
traces its origins back to the 1880's with the development of
office typewriters. The Company introduced the world's first
portable electric typewriter in 1957 and, for the next decade,
the Company had the only portable electric typewriter available
in the marketplace. In 1973, the Company introduced its
revolutionary cartridge ribbon system, which is still used today.
Beginning in 1979, the Company moved into electronics with major
research and development efforts and, in 1981, introduced its
first electronic product to the marketplace.
During the early 1980's, as the market shifted to electronic
typewriters, Japanese manufacturers became a significant factor
in the world marketplace. In order to compete effectively,
between 1984 and 1986 the Company developed and implemented a
major business restructuring of its typewriter operations which
resulted in substantially reduced manufacturing costs, a
streamlined product line, a 50% reduction in worldwide employment
and the consolidation of certain of its United States operations.
In 1985, the Company developed and introduced the industry's
first personal word processors, and, in 1989, the Company
introduced the industry's first laptop personal word processor.
On July 5, 1994 and November 4, 1994 the Company sold
substantially all the assets and liabilities of SCM Office
Supplies, Inc. and Histacount Corporation ("Histacount"),
respectively, two of its wholly-owned subsidiaries. The results
of operations, gain (loss) on sale and net assets and liabilities
related to SCM Office Supplies, Inc. and Histacount are presented
as discontinued operations in the consolidated financial
statements (see index on page 54 of this Form 10-K Annual
Report). Business operations of these two entities primarily
consisted of the manufacture and distribution of office supplies
and customized printed products, respectively. As a result of
these dispositions, the Company currently consists of one
business segment -- the design, manufacture and distribution of
typewriters, personal word processors and related accessories.
On May 8, 1995, the Company announced a restructuring plan and on
July 5, 1995, the Company filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code. See
"Business -- Restructuring and Bankruptcy Reorganizations" and
"Management's Discussion and Analysis of Results of Operations
and Financial Condition."
Products
The Company designs, manufactures and sells, domestically and
internationally, portable and compact electronic typewriters,
personal word processors and related accessories and supplies for
use in the home, at school and in small offices. These products
are developed with focus on meeting the major desires of
purchasers: ease of use, incorporation of monitors or displays,
full array of word processing features including dictionary spell
checkers and grammar features. The Company's installed base of
typewriters and personal word processors results in a substantial
accessories and supplies business.
During the fiscal year ended June 30, 1994 ("Fiscal 1994"), the
Company began selling various other products for use in the home,
at school and in small offices. These items include facsimile
machines, laminators, calculators and product labelers.
The only products or classes of similar products that accounted
for 10% or more of net sales of the Company in any of the
Company's last three fiscal years were (i) portable and compact
electronic typewriters, which accounted for 39.7%, 40.6% and
41.3% of net sales in the fiscal years ended June 30, 1995, 1994
and 1993 respectively, and (ii) personal word processors, which
accounted for 34.5%, 37.1% and 34.7% of net sales in the fiscal
years ended June 30, 1995, 1994 and 1993, respectively.
Marketing, Sales and Distribution
Domestically, the Company extensively advertises, markets and
promotes its electronic typewriters and personal word processors
through national print media, both consumer and trade.
Advertisements focus on the key features and benefits of the
various product lines. The Company also supports local
advertising campaigns of its customers, if the campaigns comply
with certain standards set by the Company.
The Company makes available for use, at retail store locations,
various point-of-sale materials and other in-store visual
supports. In addition, the Company provides training support for
its customers' sales staffs conducted by Company field-
based marketing support representatives.
In the United States, the Company distributes its products
through over 8,000 outlets in all major channels of distribution,
including (i) national retail chain stores, such as K-
Mart, Montgomery Ward, Sears and Wal-Mart; (ii) department stores
and department store chains, such as Federated Department Stores
& May Co; (iii) catalog merchandisers, such as Best Products, and
Service Merchandise; (iv) national television and appliance
dealers, such as Best Buy and Circuit City; (v) office
superstores, such as Staples, Office Max and Office Depot; (vi)
office equipment dealers; (vii) regional discount stores, such as
Bradlees and Caldor; and (viii) the United States military
exchanges. The Company does not enter into long-term contracts
with its customers and, accordingly, there can be no assurance
that the Company will continue to receive sales revenues from any
particular source.
The Company offers various derivative product lines for each of
its major channels of distribution. In addition, the Company
supplies private label products to K-Mart, and private brand
products (which identify only the retailer brand name) to Singer
and Metro.
The Company also conducts sales activities in Canada, the United
Kingdom, Australia, the Benelux countries, France, Germany and in
other international markets. The channels of distribution in the
international markets are similar to those in the United States
market and include national retail chains, catalog merchandisers,
department stores, office equipment dealers, discount stores,
stationers and direct mail accounts. In other international
markets, the Company currently has approximately forty-
two distributors serving the Far East, Latin America, Europe and
the Caribbean. Reference is made to Note 10 to the Consolidated
Financial Statements (see index on page 54 of this Form
10-K Annual Report) for information regarding the Company's
business operations within and outside the United States.
Payment terms granted to customers reflect general practices in
the industry. Terms vary with product and competitive
conditions, but generally require payment within 30 to 90 days.
Historically, bad debts have been insignificant. Sales to the
Company's largest customer, Wal-Mart Stores, Inc., amounted to
14.0%, 12.2% and 12.3% of consolidated net sales during 1995,
1994 and 1993, respectively, and was the only customer
responsible for more than 10% of net sales. Substantially all of
the Company's sales are to customers who are not affiliated with
the Company.
Service
The Company's typewriter and personal word processor products are
serviced in the United States by Smith Corona factory service
centers and at factory-appointed service stations. These service
centers and stations employ trained technicians, maintain parts
inventory and perform warranty and other repairs.
Seasonality
The Company believes that its business in the aggregate is not
seasonal; however, certain of its products sell more heavily in
gift-giving seasons such as the Christmas and school graduation
seasons.
Foreign Operations
The Company's foreign manufacturing operations are in Mexico,
Singapore and Indonesia. Over the past few years, the Company
has faced intense competition from foreign producers. On May 8,
1995 the Company announced a major restructuring plan pursuant to
which the Company's typewriter manufacturing will be relocated
from its Singapore and Batam Island, Indonesia facilities to its
Mexico facility. This action is expected to result in the
termination of approximately 1,100 workers in Singapore and Batam
Island who will be replaced with approximately 600 workers in
Mexico. This action is expected to save approximately $10.0
million pretax annually primarily through lower labor costs as
well as the greater utilization of the Mexico facility. The
Company expects to cease production in Singapore and Batam Island
by mid-November 1995, thereafter relocating equipment to Mexico
where typewriter production is expected to commence in the third
quarter of Fiscal 1996. The Company has placed its Singapore
facility and the underlying land lease up for sale. The Batam
Island facility lease expires December 26, 1995.
In addition to the relocation of the typewriter manufacturing to
Mexico, the Company also eliminated approximately 180 support
positions within research and development, finance, service,
distribution, selling and marketing areas in the Company's
Cortland, New York and New Canaan, Connecticut locations.
Approximately $10.0 million in additional annual pretax savings
are expected from elimination of these support positions. These
reductions should be completed by the end of the first quarter of
Fiscal 1996.
The net result of the restructuring should be a reduction in the
Company's May 8, 1995 workforce of approximately 2,500 by
approximately 680.
As a result of these actions, the Company recorded a pretax
charge of approximately $14.9 million in the fourth quarter of
the fiscal year ended June 30, 1995 ("Fiscal 1995"), of which
approximately $1.9 million represents primarily non-
cash machinery and equipment asset write-offs, and the remainder
relates to employee severance. Additionally, certain costs,
primarily relating to the move of machinery and equipment,
temporary lease-back of facilities, and renovations, of
approximately $6.0 million pretax will be recognized as charges
to operations as incurred during Fiscal 1996. The fourth quarter
charge is lower than previously announced as a result of
revisions to prior estimates.
In July 1992, in order to maintain the Company's leadership as
the low-cost producer in a highly competitive worldwide business,
the Board of Directors approved and the Company announced a plan
to phase out the Company's manufacturing operations in Cortland,
New York and relocate them to a new facility in Mexico. As a
result of this decision, during the fiscal year ended June 30,
1993 ("Fiscal 1993"), the Company provided $16.5 million in
restructuring charges, of which approximately $3.0 million was
non-cash in nature. This action resulted in lower manufacturing
costs of approximately $15.0 million annually in Fiscal 1995,
primarily due to lower labor costs in Mexico.
The Company phased the relocation through the initial move of
assembly line operations in the third and fourth quarters of
Fiscal 1993 into a temporary Mexico location while site selection
activities for the permanent facility were undertaken. The
relocation plan, originally anticipated to take approximately one
year to complete, was delayed as a consequence of heavy spring
1993 rainfall in Baja California together with a reevaluation of
lease versus purchase of the facility. By the end of Fiscal
1994, the Company had essentially completed the relocation of the
entire manufacturing operation into the permanent Mexico
facility. The annual savings resulting from the restructuring
originally anticipated in 1994 were not realized as cost of sales
continued to reflect the higher Cortland manufacturing labor
costs.
After completion of the May 1995 announced restructuring action,
the Company will have one foreign manufacturing operation located
in Mexico. Reference is made to Note 15 to the Consolidated
Financial Statements (see index on page 54 of this Form
10-K Annual Report) for additional information. The Company also
sells a portion of its products internationally. As a result,
the Company's results of operations are subject to the risks of
doing business abroad, including currency exchange rate
fluctuations, nationalization, expropriation, limits on
repatriation of funds and other risks associated with economic or
political uncertainty in countries in which significant sales are
made or manufacturing operations are located. Reference is made
to Note 10 to the Consolidated Financial Statements (see index on
page 54 of this Form 10-K Annual Report) for financial
information regarding the Company's business operations within
and outside the United States.
Competition
The portable and compact electronic typewriter and personal word
processor business is highly competitive. Competition focuses on
price, product features and product quality. The Company faces
competition from various Japanese and other companies ,
including, among others, Brother International Corporation, which
manufacture portable and compact electronic typewriters and
personal word processors, some of which may have greater
financial resources than the Company. It also faces competition
from companies which manufacture office typewriters and word
processors, though these manufacturers currently serve a somewhat
different segment of the industry than the Company. As the
portable and compact electronic typewriter and personal word
processor market has continued to mature, competition has
increased. To remain competitive, the Company has been required
to reduce the prices of its typewriters and personal word
processors. Unless these price reductions are offset by
corresponding reductions in manufacturing and other costs, the
Company's results of operations will continue to be adversely
affected.
Patents, Trademarks and Licenses
The Company owns or licenses a number of patents and patent
applications which are valuable to its business but are not
material to the business of the Company as a whole. The Company
is the owner of a number of trademarks and U.S. and foreign
registrations thereof, the most important of which is the
trademark, "Smith Corona."
Employees
As of June 30, 1995, the Company employed approximately 2,300
people. The Company's Singapore manufacturing workers are
represented by the United Workers of Electronic and Electrical
Industries, a trade union registered under Singapore law.
Management considers its employee relations to be good. As of
August 31, 1995 the number of the Company's employees decreased
to approximately 2,100, primarily as a result of the
restructuring actions.
Research and Development
The Company's expenditures for research and development
activities were approximately $7.2 million, $8.0 million and
$10.0 million for the years ended June 30, 1995, 1994 and 1993,
respectively. Research and development expenses are concentrated
primarily in improving product manufacturing integration of
products/technology to the Company's product lines and
development of new products such as labelers, envelope printers
and software architecture for personal word processors. As part
of the restructuring program, research and development costs are
expected to significantly decline in the future, being limited
primarily to manufacturing support.
Raw Materials
The Company's products are manufactured from a wide variety of
electronic components, plastics, metals, paper and other
materials. The Company generally is not dependent on any one
source for the materials or purchased components essential to its
business and believes that such materials and components will be
available from a variety of sources in adequate quantities to
meet anticipated production schedules.
Item 2. Properties
The Company utilizes approximately 1,259,000 square feet of
space, of which about 671,000 square feet is in the United States
and the remaining 588,000 square feet is outside the United
States, primarily in Singapore and Mexico. Of the total of
1,259,000 square feet, approximately 618,000 square feet is owned
and 641,000 square feet is leased. The Company believes that its
properties are adequate for its needs and in good condition.
Information with respect to the principal facilities used by
Smith Corona is set forth below:
<TABLE>
<CAPTION>
Square Owned/
Location Primary Use Footage Leased
<S> <C> <C> <C>
New Canaan, CT..... Headquarters 27,000 Leased
Cortland, NY....... Warehousing/Office 422,000 Owned
Cortland, NY (1)... Warehousing 108,000 Leased
Singapore (2)...... Manufacturing 196,000 Owned/
Leased
Batam, Indonesia (3) Manufacturing 99,000 Leased
Toronto, Canada.... Warehousing/Sales 27,000 Leased
Tijuana, Mexico.... Manufacturing 252,000 Leased
San Diego, CA...... Warehousing/Office 77,000 Leased
1,208,000
All other locations. Warehousing/
Sales/Service 51,000 Leased
Total............. 1,259,000
</TABLE>
HM Holdings Inc., an indirect wholly-owned subsidiary of Hanson,
leased a Melville, New York facility, consisting of 100,000
square feet of manufacturing, warehousing and office space, to a
wholly-owned subsidiary of the Company, Histacount, for rent of
$75,000 per year, payable monthly, for a term which ended on
August 15, 1995. The rent charged under the lease was
substantially below market. After the sale of the assets of
Histacount on November 4, 1994, the Company subleased the
facility to HC Delaware Acquisition Corporation, the purchaser of
the Histacount assets. On May 31, 1995, the Melville, New York
facility and the rights of HM holdings, Inc. under the lease were
sold to U.S. Industries, Inc.
The Debtor-In-Possession Credit Agreement (as hereinafter
defined) is secured by, among other things, a security interest
in all of the Company's owned real property and the rights of the
Company pursuant to the lease agreements for certain other real
property occupied by the Company.
(1) The Company has entered into an agreement dated February 28,
1995 to purchase the building which comprises this facility, and
concurrently sell the building and the land on which the building
is located (which is owned by the Company) to a third party
purchaser. The Company anticipates closing on the transaction in
October 1995. The building is currently subleased by the Company
to the third party purchaser.
(2) The Company leases the land on which this facility is
located from the Housing and Development Board, an agency of
the Singapore government, for a term of 60 years ending
April 30, 2033.
(3) The Batam Island, Indonesia lease expires on December 26,
1995.
Item 3. Legal Proceedings
Automatic Stay of Litigation Due to Bankruptcy
On July 5, 1995, the Company filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code. Upon the
filing of the Company's bankruptcy petition, the provisions of
the Bankruptcy Code operated as a stay to all entities of, among
other things, the commencement or continuation of judicial,
administrative, or other actions or proceedings against the
Company that were or could have been commenced before the
bankruptcy petition was filed. This stay is subject to certain
exceptions. The Bankruptcy Court also has discretion to
terminate, annul, modify or condition the stay. See "Business -
Restructuring and Bankruptcy Reorganization" and "Management's
Discussion and Analysis of Results of Operations and Financial
Condition."
Description of Legal Proceedings
Certain past practices of the Company regarding hazardous
substances and/or hazardous wastes are the subject of
investigation by federal and state regulatory authorities, or are
the subject of lawsuits filed by such authorities. At June 30,
1995 and 1994, the Company had recorded liabilities of
approximately $4.2 million and $3.3 million, respectively,
related to environmental matters. Because of the uncertainties
associated with assessing environmental matters, the related
ultimate liability is not determinable. However, based on facts
presently known, management does not believe that these
investigations or lawsuits, if resolved adversely to the Company,
would individually or in the aggregate have a material adverse
effect on the Company's financial position or results of
operations.
The Company is involved in proceedings with the New York
Department of Environmental Conservation ("DEC") and the United
States Environmental Protection Agency regarding the clean-
up of a now-closed manufacturing facility and certain waste
disposal sites in upstate New York. The remedial investigation
and feasibility study of the now-closed manufacturing facility
site has been completed. The feasibility study report has been
approved by the DEC and the record of decision has been
finalized. On March 31, 1993, the Company executed a final
signed consent order from the DEC and remedial actions commenced.
Remediation activities at the site have been delayed as a result
of an extension of the public comment period to address the
remediation plan approved by the DEC. Management believes that
the Company has made adequate provision for the approved
remediation activities.
In June 1992, the Company was served with a summons and complaint
in the U.S. District Court, Northern District of New York in a
private contribution action. The plaintiffs in this action are
Coopers Industries, Inc., Keystone Consolidated Industries, Inc.,
The Monarch Machine Tool Co., Niagara Mohawk Power Corporation
and Overhead Door Corporation. The action, which lists the
Company as a defendant with fourteen other defendants, seeks
contribution for response costs incurred to date, and to be
incurred in the future, for the remediation of a site in
Cortland, New York. Management does not believe it disposed of
any hazardous substances at this site and is vigorously
contesting this matter.
The Company filed a complaint on November 4, 1994 against CoStar
Corporation("CoStar") seeking (i) a declaratory judgment that the
Company was not infringing CoStar's trade dress, (ii) damages for
breach of warranty and fraud and (iii) rescission of contracts
induced by such fraud. The Complaint related to envelope
printers purchased by the Company from CoStar and label printers
manufactured by a third party for the Company. CoStar
subsequently filed an answer denying the Company's allegations
and asserting counterclaims alleging that the Company had
infringed its label printer's trade dress, breached the
provisions of a confidentiality agreement between the Company and
CoStar, and tortiously injured CoStar's business reputation. In
addition, CoStar filed a related third-party complaint against DH
Technology, Inc. ("DH"). On June 23, 1995, the Company entered
into a Settlement Agreement with CoStar and DH in connection with
the lawsuit. Pursuant to the Settlement Agreement, the Company
agreed, among other things, to pay CoStar the sum of $55,085 on
each of June 23, 1995, July 31, 1995, August 31, 1995 and
September 29, 1995 and to return certain tooling and equipment to
CoStar, in exchange for, among other things, the release by
CoStar of its claims against the Company. In anticipation of a
future settlement, the Company recorded a $1.3 million pretax
third quarter charge primarily related to the writeoff of
inventory and tooling.
On June 8, 1990, the Company filed suit in the United States
District Court for the District of Tennessee against Pelikan,
Inc. alleging patent infringement and false advertising. On
February 24, 1992, the Court entered a judgment awarding the
Company approximately $3.1 million plus post-judgment interest.
Pelikan filed an appeal, petitioning for a rehearing by the Court
of Appeals, and subsequently offered to pay to the Company a
portion of the judgment aggregating approximately $1.9 million.
The $1.9 million portion of the judgment was reflected in the
June 30, 1993 financial statements. Pelikan's petition for
rehearing was subsequently denied and on August 9, 1993, the
Company and Pelikan entered into an agreement pursuant to which
Pelikan agreed to pay $.5 million to the Company for fees,
expenses and costs incurred in the suit along with the remaining
$1.2 million judgment. On August 11, 1993, Pelikan paid the
settlement amount to the Company and satisfied the judgment,
including interest.
The Company is also a defendant or plaintiff in various other
legal actions which have arisen in the ordinary course of its
business. It is the opinion of management, based on advice of
counsel with respect to legal matters, that the ultimate
resolution of these matters and the environmental matters
discussed above will not have a material adverse effect on the
Company's financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Common Stock of the Company (NYSE symbol: SCO) commenced
trading on the New York Stock Exchange on July 28, 1989. Prior
to that time, there was no market for the Common Stock of the
Company. The following table sets forth the range of high and
low sale prices of the Company's Common Stock on the Exchange
during the two most recent fiscal years.
<TABLE>
<CAPTION>
Fiscal 1995 Fiscal 1994
High Low High Low
<S> <C> <C> <C> <C>
First quarter. . . . . . . . . .$4 7/8 $4 1/8 $5 5/8 $4 1/8
Second quarter . . . . . . . . .$4 5/8 $2 3/8 $6 1/2 $4 5/8
Third quarter. . . . . . . . . .$3 7/8 $2 1/2 $6 1/2 $5 1/8
Fourth quarter . . . . . . . . .$2 7/8 $1 3/8 $5 1/2 $4 3/8
</TABLE>
As of August 15, 1995, there were approximately 1,061 holders of
record of the Common Stock.
The name and address of the Transfer Agent and Registrar for the
Company is Mellon Securities, Transfer Services, 85 Challenger
Road, Overpeck Center, Ridgefield Park, NJ 07660.
A cash dividend of $0.05 was declared in the first quarter of
Fiscal 1995. After reviewing the first quarter results and
outlook for the remainder of the fiscal year, the Board of
Directors voted to reduce the quarterly dividend by 50 percent to
$0.025 per share effective for the dividends paid on January 6,
1995 and April 6, 1995. On May 4, 1995 the Board of Directors
elected to discontinue the dividend. For each of the four
quarters of Fiscal 1994, the Company declared cash dividends of
$0.05 per share of common stock.
The Company is prohibited from paying dividends under the
provisions of its Debtor-In-Possession Credit Agreement (see
"Management's Discussion and Analysis of Results of Operations
and Financial Condition.")
In addition, the New York Stock Exchange may, as a result of the
Company's bankruptcy filing, apply additional or more stringent
criteria for continued inclusion of the Company's Common Stock on
the New York Stock Exchange or take action to suspend the
Company's Common Stock from trading on the New York Stock
Exchange or delist the Company's Common Stock from the New York
Stock Exchange. The New York Stock Exchange has not informed the
Company of any current intention to implement any of the
aforementioned measures.
The calculation of the number of shares of Common Stock held by
non-affiliates used in determining the aggregate market value of
voting stock shown on the cover of this Form 10-K Annual Report
was made on the assumption that there were no affiliates other
than the executive officers and directors of the Company and
Hanson.
Item 6. Selected Financial Data
The following table summarizes certain historical financial
information derived from the consolidated financial statements of
the Company. This information should be read in conjunction with
the consolidated financial statements and related notes and
Management's Discussion and Analysis of Results of Operations and
Financial Condition, both of which are contained in this Form
10-K Annual Report.
<PAGE>
<TABLE>
<CAPTION>
SELECTED FIVE-YEAR FINANCIAL DATA (1)
(Dollars in thousands, For the year ended June 30,
except per share amounts) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net sales $196,309 $261,306 $236,846 $300,023 $307,758
Gross margin 15,350 56,979 57,491 85,166 86,349
Operating income (loss) $(46,766)(2) $ 8,422 $(15,348)(2)$ 29,968 $ 29,029
Income (loss) from
continuing operations $(62,245) $5,094 $(10,244) $19,405 $17,365
Discontinued operations
(net of income taxes):
Income from operations 671 2,233 1,222 2,678 2,221
Gain (loss) on disposal
of discontinued
operations 9,127 (2,200) - - -
Net income (loss) $(52,447) $ 5,127 $(9,022) $22,083 $19,586
Earnings per common
share (3) -
Income (loss) from
continuing operations $ (2.05) $ .17 $ (.34) $ .64 $ .58
Discontinued operations:
Income from operations .02 .07 .04 .09 .07
Gain (loss) on disposal
of discontinued
operations .30 (.07) - - -
Net income (loss)
per share $ (1.73) $ .17 $ (.30) $ .73 $ .65
Working capital $ 30,016 $ 89,469 $97,375 $92,029 $95,988
Total assets 136,066 193,688 190,616 182,532 176,225
Bank loans 17,400 20,002 18,669 9,899 33,276
Stockholders' equity 20,250 75,722 76,645 91,717 80,684
Cash dividends declared
per common share $ .10 $ .20 $ .20 $ .20 $ .20
</TABLE>
(1) Amounts have been reclassified, where applicable, to reflect the
discontinued operations of SCM Office Supplies, Inc. and Histacount
(see "Business - History of the Business" and "Management's Discussion and
Analysis of Results of Operations and Financial Condition").
(2) Includes a $14.9 million provision in 1995 and a $16.5 million provision in
1993 for restructuring costs.
(3) Based on 30,250,000 shares of common stock outstanding.
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition
With the Company experiencing sales declines and operating losses,
having extended payments to trade vendors, and needing additional
financing to meet operating requirements and fund the restructuring
program, the Company filed a voluntary petition for reorganization
under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware on July 5, 1995.
Prior to August 18, 1995, the bankruptcy proceedings did not
include any of the subsidiaries of the Company. On August 18,
1995, SCM Office Supplies, Inc., SCC LI Corporation (formerly
Histacount Corporation) and Hulse Manufacturing Company, all
wholly-owned Nonoperating Subsidiaries of the Company filed Chapter
11 petitions (collectively the "Bankruptcy Proceedings") (see Note
1 to the consolidated financial statements contained in this Form
10-K Annual Report).
An Administrator was appointed on August 2, 1995 for the Company's
wholly-owned subsidiary in Australia. The Administrator was
appointed as Liquidator on August 29, 1995. The Company is
currently exploring potential distributor relationships in its
Australian market for the purpose of maintaining its distribution
capacity.
On July 5, 1994 and November 4, 1994, the Company sold
substantially all the assets and liabilities of SCM Office
Supplies, Inc. and Histacount Corporation, respectively (see Note
12 to the Consolidated Financial Statements included in this Form
10-K Annual Report). Accordingly, the consolidated statements of
operations reflect their operating results and gain or loss on
disposals as discontinued operations and the consolidated balance
sheets segregates the net assets and liabilities of discontinued
operations. The following discussion of results of operations and
financial condition is presented for continuing operations only and
should be read in conjunction with the consolidated financial
statements and notes thereto, contained in this Form 10-K
Annual Report.
Fiscal 1995 Compared to Fiscal 1994
Results of Operations
Net sales declined 24.9 percent to $196.3 million in Fiscal 1995
compared to Fiscal 1994. Approximately 76.0 percent of the
decrease related to lower volumes with the balance related to
pricing reductions. Typewriters and personal word processors
volumes are sharply lower than a year ago, both domestically and
internationally, as a result of a continuing difficult competitive
environment. The Company believes that the market for typewriters
and personal word processors is declining along with its share of
that market. New product net sales for the year were $11.8 million
as compared with $7.6 million for last year.
Gross margin as a percentage of net sales was 7.8 percent for the
year, as compared to 21.8 percent last year. The Fiscal 1995 gross
margin decline was the result of lower volumes and price
reductions, as well as writedowns of property, plant and equipment
of approximately $4.6 million and inventory of approximately $8.1
million of which approximately $3.4 million and $5.5 million,
respectively, were recorded in the fourth quarter. The fourth
quarter charges resulted from continued price pressures and unit
volume decreases as well as the Company's projected usage of
certain property, plant and equipment and the outlook for Fiscal
1996. Included in gross margin for Fiscal 1994 was a benefit of
$1.8 million pretax representing the final payment from Pelikan,
Inc. in a patent infringement case.
Selling, administrative and research expenses as a percent of sales
increased to 24.7 percent from 18.6 percent primarily due to the
decrease in sales revenues and, to a lesser degree, higher
employee-related expenses.
On May 8, 1995 the Company announced a major restructuring plan
pursuant to which the Company's typewriter manufacturing will be
relocated from its Singapore and Batam Island, Indonesia facilities
to its Mexico facility. This action will result in the termination
of approximately 1,100 workers in Singapore and Batam Island who
will be replaced with approximately 600 workers in Mexico. This
action is expected to save approximately $10.0 million pretax
annually primarily through lower labor costs as well as the greater
utilization of the Mexico facility. The Company expects to cease
production in Singapore and Batam Island by mid-November 1995,
thereafter relocating equipment to Mexico where typewriter
manufacturing is expected to commence in the third quarter of
Fiscal 1996. The Company has placed its Singapore facility and
underlying land lease up for sale. The Batam Island facility lease
expires December 26, 1995.
In addition to the relocation of the typewriter manufacturing to
Mexico, the Company also eliminated approximately 180 support
positions which relate to support staff within research and
development, finance, service, distribution, selling and marketing
areas in the Company's Cortland, New York and New Canaan,
Connecticut locations. Approximately $10.0 million in additional
annual pretax savings are expected from elimination of these
support positions. These reductions should be completed by the end
of the first quarter of Fiscal 1996. The restructuring is expected
to reduce the Company's May 8, 1995 workforce of approximately
2,500 by approximately 680. As a result of these actions, the
Company recorded a pretax charge of approximately $14.9 million in
the fourth quarter of Fiscal 1995, of which approximately $1.9
million represents primarily non-cash machinery and equipment asset
write-offs, and the remainder relates to employee severance.
Additionally, certain costs, primarily relating to the move of
machinery and equipment, temporary lease-back of facilities, and
renovations, of approximately $6.0 million pretax, will be
recognized as charges to operations as incurred during Fiscal 1996.
The fourth quarter charge is lower than previously announced as a
result of revisions to prior estimates. As a consequence of this
restructuring action, severance costs of approximately $1.3 million
associated with the Fiscal 1993 restructuring charge will not be
incurred and accordingly, have been reflected as a reduction of
Fiscal 1995 restructuring costs.
The Company recorded a fourth quarter Fiscal 1995 charge to income
tax expense representing establishment of valuation allowances
against substantially all of its domestic deferred income tax
assets. The valuation allowance reflects the Company's assessment
that the Bankruptcy Proceedings and the short-term outlook resulted
in an impairment to the realization of such deferred income tax
assets.
Financial Condition
The Company's primary source of liquidity and capital resources, on
both a short- and long-term basis, are cash flows generated from
operations and borrowing under its Debtor-In-Possession Credit
Agreement.
On July 5, 1995, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code and on August
18, 1995, SCM Office Supplies, Inc., SCC LI Corporation (Histacount
Corporation) and Hulse Manufacturing Company, all wholly-owned
Nonoperating Subsidiaries of the Company, also filed. Since that
date, the Company has continued business operations as debtor-in-
possession under the supervision of the Bankruptcy Court. The
Bankruptcy Proceedings primarily relate to all U.S. assets and
operations and do not pertain to the Company's international
subsidiaries. The Bankruptcy Proceedings restrict the Company's
ability to provide direct financial support outside of the normal
course of business to its international subsidiaries without the
approval of the Bankruptcy Court. Furthermore, certain actions,
including actions outside of the normal course of business, must be
approved by the Bankruptcy Court. An Administrator was appointed
as Liquidator on August 2, 1995 for the Company's wholly-owned
subsidiary in Australia. The Administrator was appointed as
Liquidator on August 29, 1995. The Company is currently exploring
potential distributor relationships in its Australian market for
the purpose of maintaining its distribution capacity.
On July 10, 1995, the Company entered into a Debtor-In-Possession
Credit Agreement (the "Debtor-In-Possession Credit Agreement") with
two banks (the "Lenders") which was approved by the Bankruptcy
Court on August 2, 1995. The Debtor-In-Possession Credit Agreement
paid-off the Amended and Restated Credit Agreement (described
below). The Debtor-In-Possession Credit Agreement, as amended,
provides for extensions of revolving credit loans, term loans and
letters of credit, limited to a percentage of eligible receivables
and inventories, in an amount not to exceed $24.0 million through
the June 30, 1996 termination date. The Debtor-In-Possession
Credit Agreement provides for a security interest in substantially
all of the Company's assets. The Debtor-In-Possession Credit
Agreement provides certain restrictive covenants for which
management believes that it has adequate flexibility and that such
covenants should not impose undue restrictions on the operations of
the Company during its Chapter 11 proceedings. The Company is
currently in compliance with the terms of the Debtor-In-Possession
Credit Agreement or has obtained waivers as necessary.
On April 7, 1995, the Company entered into an Amended and Restated
Revolving Credit Agreement (the "Amended and Restated Credit
Agreement") with the Lenders. The Amended and Restated Credit
Agreement provided for extensions of revolving credit loans and
letters of credit, limited to a percentage of eligible receivables
and inventories, in an amount not to exceed $30.0 million up
through March 30, 1996; the aggregate principal amount of such
lending commitment decreased to an amount not in excess of $25.0
million from March 31, 1996 through the July 1, 1996 termination
date. The Amended and Restated Credit Agreement was secured by a
security interest in the domestic assets of the Company pursuant to
a Security Agreement of even date therewith. On June 9, 1995, the
Company announced that it was in technical default of the Amended
and Restated Credit Agreement due to the restructuring charge
announced May 8, 1995.
Due to the Bankruptcy Proceedings, substantially all claims against
the Company, prior to July 5, 1995, (and prior to August 18, 1995
for the three Nonoperating Subsidiaries additional subsidiaries
added to the proceedings) are subject to the automatic stay
provisions under the Bankruptcy Code while the Company continues
business operations as a debtor-in-possession. Pre-petition claims
may arise from the determination by the Bankruptcy Court of allowed
claims for contingencies and other disputed amounts.
At the Company's request, the Bankruptcy Court established a bar
date of October 31, 1995 for pre-petition claims against the
Company. A bar date is the date by which claims against the
Company must be filed if the claimants wish to receive any
distribution in the Bankruptcy Proceedings. The Company has given
notice to all known actual or potential claimants subject to the
bar date of their need to file a proof of claim with the Bankruptcy
Court. The Company will reconcile claims that differ from the
Company's records, and any differences that cannot be resolved by
negotiated agreement between the Company and the claimant will be
resolved by the Bankruptcy Court. Accordingly, allowed claims may
arise which are not currently reflected in the Company's financial
statements and recorded claims are subject to change. The ultimate
amount of and settlement terms for such liabilities are subject to
a plan of reorganization which is subject to approval by the
Bankruptcy Court and, accordingly, are not presently determinable.
Since the filing date, the Company has initiated preliminary
discussions with the official committee of its unsecured creditors
that was appointed by the U.S. Trustee pursuant to the Bankruptcy
Code. The timing of any filing of a Plan of Reorganization cannot
be predicted.
During Fiscal 1995, the Company's operating activities used $16.7
million of cash, primarily the result of the losses from
operations. Accounts Receivable decreased $10.6 million primarily
related to lower fourth quarter sales. The reduction in
inventories of $8.4 million reflects the Company's writedowns of
inventory due to obsolescence and continued focus on controlling
inventory levels. Accrued liabilities increased approximately $8.5
million primarily due to the recording of the May 1995
restructuring charge partially offset by certain payouts thereon
and adjustment of the Fiscal 1993 restructuring charge. At June
30, 1995, bank loans had been reduced to $17.4 million from $20.0
million at June 30, 1994. Proceeds from the sale of discontinued
operations of $27.5 million were used to pay down bank loans and
payment of accounts payable.
Capital expenditures in Fiscal 1995 were $3.2 million compared to
$11.4 million in the prior year, decreasing primarily as a result
of the Fiscal 1994 capital expenditure requirements for relocation
of manufacturing operations to Mexico. The Company had no material
commitments for capital expenditures at June 30, 1995. Under the
provisions of the Debtor-In-Possession Credit Agreement, the
Company is restricted to $.5 million of capital expenditures in
each six month period ended December 31, 1995 and June 30, 1996.
A quarterly cash dividend of $1.5 million ($.05 per share) was paid
in the first and second quarters of Fiscal 1995. After reviewing
the first quarter results and the outlook for the remainder of the
fiscal year, on November 15, 1994, the Board of Directors voted to
reduce the quarterly dividend by 50 percent to $.025 per share
which was effective for the dividends paid on January 6, 1995 and
April 6, 1995. On May 4, 1995 the Board of Directors elected to
discontinue the dividend.
From time to time the Company enters into foreign exchange
contracts to reduce its exposure to foreign currency rate changes.
As of June 30, 1995, no contracts were outstanding.
While the Company believes it has adequate financing to operate in
bankruptcy for a reasonable period of time, its ability to
successfully continue operations is dependent upon, among other
things, confirmation of a plan of reorganization that will enable
the Company to emerge from bankruptcy proceedings, obtaining
adequate post-confirmation financing to fund restructuring and
working capital requirements, successfully implementing the
restructuring program, and generating sufficient cash from
operations and financing sources to meet obligations. There can be
no guarantee that any or all above noted actions will be
accomplished.
Fiscal 1994 Compared to Fiscal 1993
Results of Operations
Net sales increased by 10.3 percent or $24.5 million to $261.3
million in Fiscal 1994 compared to Fiscal 1993. Increased unit
sales of personal word processors and typewriters in both domestic
and international markets accounted for approximately $39.0 million
of the increased sales growth while lower pricing, principally in
the domestic market, offset approximately 50 percent of the unit
sales gains. New products, introduced late in Fiscal 1993,
accounted for approximately $7.6 million of the increase in net
sales. As noted above, domestic unit sales out paced revenue
increases as lower pricing impacted sales growth and gross margins.
Internationally, unit sales increased substantially as the Company
continued to increase its market share in Europe as well as other
geographic areas. Price pressures, while less than in the U.S.
market, nevertheless hindered net sales increases for the year.
Operating income of $8.4 million in Fiscal 1994 compared favorably
to a $15.3 million loss in Fiscal 1993 due principally to lower
advertising, administrative and research expenses in Fiscal 1994,
and the 1993 pretax restructuring charge of $16.5 million.
Payments of approximately $1.8 million from Pelikan, Inc. for
satisfaction of a judgment won by the Company for patent
infringement and misleading advertising litigation are included as
reductions in cost of goods sold in both Fiscal 1994 and 1993.
In July 1992, in order to maintain its leadership as the low-cost
producer in a highly competitive worldwide business, the Board of
Directors approved and the Company announced a plan to phase out
the Company's manufacturing operations in Cortland, New York and
relocate them to a new facility in Mexico. As a result of this
decision, during Fiscal 1993, the Company provided $16.5 million in
restructuring charges, of which approximately $3.0 million was non-
cash in nature. This action was expected to result in lower
manufacturing costs of approximately $15.0 million annually,
primarily due to lower labor costs in Mexico. The restructuring
charge included $8.3 million relating to severance of employees,
$3.3 million relating to asset redeployment costs, $3.0 million for
the write-down of impaired equipment and other assets predicated on
management's decision to close the facility and $1.9 million of
other costs, primarily costs associated with site selection and
outside consulting fees. The cash portion of the charge was
substantially expended by the end of Fiscal 1995. In addition, as
a result of the previously noted May 1995 restructuring action,
severance costs of approximately $1.3 million will not be incurred
and accordingly, have been reflected as a reduction in Fiscal 1995
restructuring costs.
In the first quarter of Fiscal 1993, $9.0 million was recorded for
employees' severance liabilities and asset impairments stemming
from the restructuring decision to close the Cortland manufacturing
facility. Additional direct costs of $1.3 million associated with
the relocation to the Mexico facility were charged to restructuring
during the second and third quarters of Fiscal 1993. In the fourth
quarter, the Company provided an additional $6.2 million, $2.5
million for asset redeployment costs, $1.9 million for the value of
additional fixed assets which became impaired, and the balance
principally for consulting and other costs associated with site
selection activities.
The fourth quarter provision of $2.5 million for asset redeployment
costs consisted primarily of incremental personnel costs, travel
and lodging for 39 employees responsible for the set-up and
establishment of the equipment in the Mexican facility. The
employees responsible for the set-up and establishment were
notified of their termination and subsequent temporary assignment.
As a consequence of final site selection in the fourth quarter,
certain additional fixed assets were identified which would not be
relocated to Mexico and the associated impairment of value was
recorded.
Financial Condition
The Company's primary sources of liquidity and capital resources
during fiscal 1994, on both a short- and long-term basis, were cash
flows generated from operations and borrowings under its Credit
Facility.
During Fiscal 1994, the Company's operating activities provided
cash of $8.7 million, largely a result of the increased net income
and lower inventories offset in part by increased accounts
receivable. Accounts receivable increased $16.8 million over the
prior fiscal year as a result of increased sales late in the fourth
quarter. The reduction in inventories reflects the Company's
continued focus on controlling inventory levels. Accrued
restructuring costs decreased principally due to the pay-out of
severance and other personnel related liabilities during Fiscal
1994. The balance of accrued restructuring costs at June 30, 1994
was expected to be paid in the next fiscal year. Capital
expenditures in Fiscal 1994 were $11.4 million compared to $5.0
million in the prior year increasing primarily as a result of
relocating manufacturing operations to Mexico. The Company had no
material commitments for capital expenditures at June 30, 1994 and
anticipated capital expenditures in Fiscal 1995 to return to pre-
fiscal 1994 levels.
During Fiscal 1994, the Company had a credit facility in the amount
of $32.0 million expiring June 25, 1996. As of June 30, 1994, the
Company was in compliance with all covenants of that credit
facility. The Company also had an uncommitted line of credit
arrangement for $20.0 million. At June 30, 1994, the interest rate
on combined borrowings was 5.63 percent per annum. The proceeds
from the sale of SCM Office Supplies, Inc. of approximately $13.0
million were used to pay down the bank loans subsequent to year-
end.
The Company's Singapore operations had been granted "pioneer tax
status" until February 1994 and as a result, have paid no Singapore
income tax on unremitted Singapore earnings up to that date. Since
the expiration of the "pioneer tax status," the Singapore
operations have been subject to a tax of approximately 27 percent.
The impact of the change in tax status, which serves to increase
the effective income tax rate, was not significant in Fiscal 1994.
Item 8. Financial Statements and Supplementary Data
See Index to Consolidated Financial Statements and Schedules which
appears on page 54 of this Form 10-K Annual Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The officers of the Company are elected by and serve at the
pleasure of the Board of Directors. The directors and executive
officers of the Company and their respective positions, ages at
September 14, 1995 and backgrounds are as follows:
<TABLE>
<CAPTION>
Name Position Age
<S> <C> <C>
Robert Van Buren............ Chairman of the Board and Director 70
Ronald F. Stengel........... President, Chief Executive
Officer and Director 47
John A. Piontkowski ........ Senior Vice President, Chief
Financial Officer, Treasurer
and Assistant Secretary 41
Mark A. Alexander........... Director 38
Thomas A. Cawley............ Vice President/Administration
and Director 39
John A. Cutrone ............ Senior Vice President/Marketing
and Sales 41
Jerry L. Diener ............ Senior Vice President/Sales 59
W. Michael Driscoll ........ Vice President/Operations 49
George H. Hempstead, III.... Director 51
Robert J. Kammerer ......... Director 58
John E. Lushefski .......... Director 39
Doris J. McRae ............. Vice President/Product
Development 44
Alfred N. Scallon .......... Vice President/International
Operations 44
Craig C. Sergeant .......... Director 49
David P. Verostko........... Vice President/Human Resources 52
Richard R. West ............ Director 57
Martin D. Wilson............ Controller 35
</TABLE>
Mr. Van Buren has served as Chairman of the Board of Directors of
the Company since March 24, 1995. He served as Chief Executive
Officer of the Company from March 24, 1995 to July 1, 1995. Mr.
Van Buren has been a Director of the Company since August 1989.
Mr. Van Buren served as Chairman of the Board and Chief Executive
Officer of Midlantic Corporation, a bank holding company, from 1978
until April 1991. Mr. Van Buren is currently a director of Foster
Wheeler Corporation. He has been a director of the Company since
August 1989.
Mr. Stengel was named President, Chief Executive Officer and
Director of the Company on July 1, 1995. Mr. Stengel served as
Chief Operating Officer of The Rytex Company, a printing and
catalog business, from February 1995 through June 1995. Mr.
Stengel is currently President of R.F. Stengel & Co., Inc. Founded
in 1985, the principal focus of R.F. Stengel & Co., Inc. is interim
crisis management and turnaround consulting services.
Mr. Piontkowski was named Senior Vice President, Chief Financial
Officer and Treasurer of the Company on June 21, 1995. He has
served as an Assistant Secretary of the Company since May, 1992.
Mr. Piontkowski served as Vice President/Finance and Controller
from March 28, 1995 to June 21, 1995 and as Vice President/
Controller of the Company from July 1, 1993 to March 28, 1995. Mr.
Piontkowski served as Director of Accounting and Financial
Reporting of the Company from December 1991 to July 1, 1993. Prior
to joining the Company, Mr. Piontkowski was Chief Financial Officer
of Pyramid Management Group, a shopping mall management company,
from 1989 through 1991, and was Senior Vice President and Chief
Financial Officer of Addis & Dey's, a department store, prior to
that time.
Mr. Alexander was named Senior Vice President - Corporate
Development and a Director of Hanson Industries on June 21, 1995.
Mr. Alexander served as Vice President-Corporate Development of
Hanson Industries from January 1993 to June 21, 1995, and has
served as a Director of Hanson Pacific since June 1994. He served
as Vice President-Mergers and Acquisitions of Hanson Industries
from January 1990 to January 1993. Mr. Alexander is currently a
director of Lynton Group, Inc. and an Associate Director of Hanson
PLC. He has been a director of the Company since June 21, 1995.
Mr. Cawley was named Vice President/Administration on July 27,
1995. He has served as a Director of the Company since July 1,
1995. Mr. Cawley is currently Vice President and Secretary of R.F.
Stengel & Co., Inc. Founded in 1985, the principal focus of R.F.
Stengel & Co., Inc. is interim crisis management and turnaround
consulting services.
Mr. Cutrone has served as Senior Vice President/Marketing and Sales
since November 1993. He served as Vice President/New Product
Development from May 1993 to November 1993. Prior to joining the
Company, Mr. Cutrone served as President of Vertical Marketing
Corporation, a consulting firm for consumer electronics companies,
from 1989 to 1993. From 1990 to 1992, Mr. Cutrone served as
President of Faxnet Corporation ("Faxnet"), a company which
provided public telecopying facilities. In November 1991, while
Mr. Cutrone was President of Faxnet, Faxnet filed for bankruptcy
under Chapter 7 of the United States Bankruptcy Code. In July
1993, Mr. Cutrone filed for personal bankruptcy under Chapter 7 of
the United States Bankruptcy Code.
Mr. Diener has served as Senior Vice President/Sales since January
1, 1992. He served as Vice President/Sales of the Company and its
predecessor, SCM/Consumer Products, from 1978 to January 1, 1992,
and as Secretary of Smith Corona International, LTD, a wholly-owned
subsidiary of the Company from July 25, 1989 to March 30, 1992.
Mr. Driscoll was named Vice President/Operations on March 16, 1995.
He previously served as Vice President/Operations and Engineering
since July 1, 1992. He served as Director of Materials from
February 17, 1992 to July 1, 1992. Prior to joining the Company,
Mr. Driscoll was President and a director of Code-A-Phone, a
telephone sales company, from February through August 1991 and was
Chief Executive Officer and a director of Technology Applications,
Ltd., an electronic and telecommunications manufacturing company,
from November 1986 through August 1991.
Mr. Hempstead has served as Senior Vice President-Law and
Administration of Hanson Industries since 1995, as Senior Vice
President and General Counsel since 1994 and as Vice President and
General Counsel since 1982. He has served as a director of Hanson
Industries since 1986 and as an Associate Director of Hanson since
1990. Mr. Hempstead also served as Vice President and Secretary of
the Company from 1985 to August 1989. He serves as a director of
the Lynton Group, Inc. Mr. Hempstead has been a director of the
Company since September 1985.
Mr. Kammerer has been a Partner of Baldwin Associates, Inc., a
management consulting firm, since April 1992. From July 1964
through March 1992, Mr. Kammerer was in management at Xerox
Corporation, serving as a Corporate Vice President of that company
from May 1979 through March 1992. Mr. Kammerer has been a director
of the Company since November 1993.
Mr. Lushefski has served as Senior Vice President, Chief Financial
Officer and Associate Director of Hanson since May 1995. He served
as Vice President and Chief Financial Officer of Peabody Holding
Company, Inc. from 1991 to 1995. Mr. Lushefski served as Vice
President and Controller of Hanson Industries from 1990 to 1991,
and as Corporate Controller from 1987 to 1990. He has been a
director of the Company since June 21, 1995.
Ms. McRae was named Vice President/Product Development on July 1,
1994. Prior to that time, she served as Vice President/Product
Marketing of the Company from July 1, 1993 through June 30, 1994
and as Vice President/Product Development from May 1991 through
June 1993. She served as Staff Vice President, Advanced Product
Development of the Company from December 1990 through April 1991.
Prior to that time, Ms. McRae was Director, Strategic Planning and
Advanced Product Development of the Company from February 1987
through November 1990.
Mr. Scallon has served as Vice President/International Operations
of the Company since 1987. Prior to that time, he served as
Director of Private Brand Sales of the Company for three years.
Mr. Sergeant has served as Group Vice President of Hanson
Industries for various consumer, building and industrial products
divisions since 1984. Prior to that time, commencing in 1974, Mr.
Sergeant was Vice President and Chief Financial Officer of Seacoast
Products, Inc., formerly a subsidiary of Hanson Industries. He has
also served as an Associate Director of Hanson since 1990. Mr.
Sergeant has been a director of the Company since June 1989.
Mr. Verostko was named Vice President/Human Resources of the
Company on January 1, 1992. He served as Corporate Director/Human
Resources from September 1, 1990 to January 1, 1992. Prior to that
time, Mr. Verostko was Director, Employee Relations for seven
years.
Mr. West is Dean Emeritus of the Leonard N. Stern School of
Business at New York University. He was the School's Dean from
1984 until 1993. Mr. West previously was the Nathaniel Leverone
Professor of Management at Dartmouth's Amos Tuck School of Business
Administration, where he also served as Dean for seven years. He
also serves as director of Alexander's, Inc., Vornado Realty Trust,
Browne & Co., Inc. and various registered investment companies
managed by Merrill Lynch Asset Management, Inc. Mr. West has been
a director of the Company since August 1989.
Mr. Wilson was named Controller of the Company on July 26, 1995.
Prior to that time, he served as Assistant Controller from April
16, 1995 to July 26, 1995, and as Director/Accounting and Financial
Reporting from January 3, 1994 to April 16, 1995. Prior to joining
the Company, he served as Financial Reporting Manager for Fisher-
Price Inc., an international manufacturer, marketer and distributor
of infant and preschool toys and juvenile products, from November
1991 through December 1993, and as Corporate Accounting Manager for
Sullivan Graphics, Inc., a printing company, from September 1989 to
November 1991.
Mark A. Alexander and John E. Lushefski, each of which was
appointed as a Director of the Company on June 21, 1995, did not
file with the Securities and Exchange Commission a Form 3 --
Initial Statement of Beneficial Ownership of Securities as required
by the Securities Exchange Act of 1934. The information required
by Form 3 was filed with the Securities and Exchange Commission by
each such person on Form 5 -- Annual Statement of Beneficial
Ownership of Securities. Each Form 5 was filed on a timely basis.
Certain Committees of the Board of Directors
The directors comprising the Company's Audit Committee are Messrs.
Kammerer, Van Buren and West. The directors comprising the
Company's Compensation and Benefits Committee are Messrs.
Hempstead, Kammerer, West and Sergeant. The directors comprising
the Company's Nominating Committee are Messrs. Kammerer, Van Buren
and West.
Item 11. Executive Compensation
Set forth below is information concerning the Company's
compensation of both persons who served as chief executive officer
during Fiscal 1995 and certain other highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
Other Securities All
Fiscal Annual Restricted Underlying LTIP Other
Year Bonus Compen- Stock Options/SAR's Pay- Compen-
Name and Ending Salary(6) (7) sation(8) Awards (9) (10) outs(11) sation
Principal Position June 30 ($) ($) ($) ($) (#) ($) ($)
- ------------------ ------- -------- ----- --------- ---------- ----------- --------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert Van Buren(1) 1995 $98,307 - - 0 100,000 0 - (12)
Chairman, Chief 1994 - - - 0 - 0 - (13)
Executive Officer 1993 - - - 0 - 0 -
and President
G. Lee Thompson(2) 1995 270,215 - 1,941 0 60,000 0 185,372(12,14,15,16,23)
Chairman and Chief 1994 360,222 257,250 479 0 50,000 0 10,240 (13)
Executive Officer 1993 350,016 - 756 0 150,000 0 9,957
John A. Cutrone, Jr. 1995 134,500 - - 0 25,000 0 5,640 (12)
Senior Vice President 1994 130,688 40,625 24,134(19) 0 13,000 0 38,772(13,18)
Sales and Marketing 1993 17,500 - - 0 10,000 0 165
John A. Piontkowski 1995 127,000 - - 0 20,000 0 21,547(12,17)
Senior Vice President, 1994 117,000 52,650 56,453(19) 0 24,000 0 102,199(13,18)
Chief Financial Officer 1993 84,167 - - 0 10,000 0 4,988
Treasurer and Assistant
Secretary
W. Michael Driscoll 1995 120,650 - - 0 25,000 0 42 (12)
Vice President - 1994 114,950 57,659 - 0 12,000 0 48 (13)
Operations 1993 110,000 - - 0 25,000 0 32
Jerry L. Diener 1995 118,025 - 4 0 20,000 0 3,950 (12)
Senior Vice President- 1994 132,484 36,138 - 0 10,000 0 3,975 (13)
Sales 1993 112,000 - - 0 25,000 0 3,982
William D. Henderson(4) 1995 277,449 - 3,715 0 50,000 0 20,892 (12,21,23)
President and Chief 1994 283,762 173,700 1,257 0 45,000 0 9,228 (13)
Operating Officer 1993 275,712 - 34,876 0 50,000 0 8,670
Thomas C. DeFazio(5) 1995 157,500 - 17,156(20) 0 50,000 0 28,861(12,22
23)
Executive Vice 1994 205,833 126,000 2,075 0 45,000 0 7,923 (13)
President and Chief 1993 200,000 - 1,541 0 80,000 0 7,484
Financial Officer
</TABLE>
(1) Mr. Van Buren was elected Chairman and Chief Executive
Officer on March 24, 1995. On July 1, 1995, Mr. Van Buren
resigned as Chief Executive Officer and President, and Ronald F.
Stengel was elected Chief Executive Officer and President of the
Company. Mr. Van Buren remains Chairman of the Board of the
Company.
(2) Mr. Thompson's employment with the Company terminated on
March 24, 1995. See "-- Severance Agreements" below.
(3) Mr. Piontkowski was elected Senior Vice President, Chief
Financial Officer and Treasurer on June 21, 1995.
(4) Mr. Henderson's employment with the Company terminated on
June 3, 1995. See "-- Employment Agreements" below.
(5) Mr. DeFazio's employment with the Company terminated on
March 31, 1995.
(6) Amounts shown include compensation deferred under the
Company's Retirement Savings and Investment Plan ("RSIP").
(7) Amounts shown indicate the annual bonus earned by the
executive officers under the Company's Bonus Plan (as hereinafter
defined) in the fiscal years shown. The Company pays such bonus
amounts to the executive officers in the subsequent fiscal year.
(8) None of the executive officers, except for Mr. Cutrone and
Mr. Piontkowski during Fiscal 1994, and Mr. DeFazio in Fiscal
1995 received perquisites or other personal benefits, securities
or property that exceeded the lesser of $50,000 or 10 percent of
such officer's salary and bonus.
(9) No restricted stock awards have been made since shortly
after the closing of the Offerings. At that time, restricted
shares were awarded to certain key executives pursuant to the
Supplemental Performance Plan ("SPP"), which plan thereupon
terminated. Of the eight executives named in the Summary
Compensation Table only Mr. Thompson was awarded restricted
shares under the SPP. As of the end of Fiscal 1995, Mr. Thompson
owned 7,800 restricted shares.
(10) The Company does not grant Stock Appreciation Rights
("SAR's").
(11) The Company has no long-term incentive plans.
(12) Includes matching contributions by the Company under the
RSIP for Messrs. Van Buren, Thompson, Cutrone, Piontkowski,
Driscoll, Diener, Henderson and DeFazio of $0, $3,654, $5,254,
$4,755, $0, $3,950, $4,305 and $3,072, respectively. Includes
net term life insurance premium payments by the Company for
Messrs. Van Buren, Thompson, Cutrone, Piontkowski, Driscoll,
Diener, Henderson and DeFazio of $0, $5,741, $386, $47, $42, $0,
$4,524 and $2,457, respectively.
(13) Includes matching contributions by the Company under the
RSIP for Messrs. Van Buren, Thompson, Cutrone, Piontkowski,
Driscoll, Diener, Henderson and DeFazio of $0, $4,500, $0,
$3,510, $0, $3,975, $4,704 and $4,647, respectively. Includes
net term life insurance premium payments by the Company for
Messrs. Van Buren, Thompson, Cutrone, Piontkowski, Driscoll,
Diener, Henderson and DeFazio of $0, $5,740, $471, $47, $48, $0,
$4,524 and $3,276, respectively.
(14) Includes amount paid under the Supplemental Executive
Retirement Plan ("SERP") for Mr. Thompson of $18,344.
(15) Includes amount paid under a Severance Agreement for Mr.
Thompson of $97,297.
(16) Includes amount paid under a Severance Agreement for Mr.
Thompson for outplacement assistance of $25,000.
(17) Includes amount paid for mortgage assistance for Mr.
Piontkowski of $16,745.
(18) Includes amounts paid for relocation expenses for Messrs.
Cutrone and Piontkowski of $38,301 and $98,642, respectively.
(19) Includes taxes paid by the Company for relocation expenses
for Messrs. Cutrone and Piontkowski of $24,134 and $56,453,
respectively.
(20) Includes amount paid under the Company's Executive Medical
Plan of $15,870.
(21) Includes amount paid under a Termination Agreement for Mr.
Henderson of $6,496.
(22) Includes amount paid under a Supplemental Pension Benefit
provision included in the Employment Agreement for Mr. DeFazio of
$7,178.
(23) Includes amounts paid for accrued but unused vacation for
Messrs. Thompson, Henderson and DeFazio of $35,337, $5,567 and
$16,154, respectively.
The following table sets forth certain specific information
regarding options granted to the eight executive officers named
in the Summary Compensation Table under the Company's 1990 Stock
Option Plan, as amended (the "Stock Option Plan").
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1995
Number of Percent of
Securities Total Exer- Grant
Underlying Options cise or Date
Options Granted to Base Expir- Present
Granted(1) Employees in Price(4) ation Value(9)
(#) Fiscal Year(1) ($/Sh) Date(5) ($)
<S> <C> <C> <C> <C> <C>
Robert Van Buren 100,000(2) 16.00% 2.75 03/23/05 145,000
G. Lee Thompson 60,000(3) 9.60% 3.25 11/14/04(6) 106,200
John A. Cutrone, Jr. 25,000(3) 4.00% 3.25 11/14/04 44,250
John A. Piontkowski 20,000(3) 3.20% 3.25 11/14/04 35,400
W. Michael Driscoll 25,000(3) 4.00% 3.25 11/14/04 44,250
Jerry L. Diener 20,000(3) 3.20% 3.25 11/14/04 35,400
William D. Henderson 50,000(3) 8.00% 3.25 11/14/04(7) 88,500
Thomas C. DeFazio 50,000(3) 8.00% 3.25 11/14/04(8) 88,500
All other employees 274,000(10) 44.00% Various Various 484,180
624,000(10) 100.00% 1,071,680
</TABLE>
<TABLE>
<CAPTION>
Value at Value on $3.092
Number of 6/30/95 ($1.375 Per Share
Outstanding Shares Per Share) (11)
<S> <C> <C>
30,250,000 $41,593,750 $93,533,000
</TABLE>
(1) The Company does not grant SAR's.
(2) These options were granted on March 24, 1995 and become exercisable
June 24, 1995 upon receipt of approval of the Company's Stockholders.
(3) These options were granted on November 15, 1994 and will vest on
November 15, 1997.
(4) The exercise price is the fair market value of the Company's Common
Stock on the date of grant.
(5) The options granted expire the day before the tenth anniversary of
the date of grant.
(6) Due to the retirement of Mr. Thompson from the Pension Plan as
defined below on July 1, 1995, these options will expire on May 15,
1998.
(7) These nonvested options were canceled on June 3, 1995 due to Mr.
Henderson's termination of employment with the Company on such date.
(8) Due to the retirement of Mr. DeFazio from the Pension Plan as
defined below on April 1, 1995, these options will expire on May 15,
1998.
(9) The grant date present value, calculated using the Black-Scholes
options pricing method, is based on certain assumptions as to interest
rates, stock price volatility and future dividend yield. There is no
assurance that these assumptions will prove to be true in the future.
The actual value, if any, that an executive will realize upon exercise
of an option will be the excess of the stock price over the exercise
price.
(10) Amount shown is net of 60,000 options which the Company granted in
Fiscal 1995 but which have lapsed due to termination of employment.
(11) In order for the named executives to realize the value stated in
the "Grant Date Present Value" column upon the exercise of their
options, the price of the Common Stock on the date of exercise must be
$3.092 per share. At that price per share, the aggregate value of all
outstanding shares (30,250,000) would be $93,533,000. On June 30, 1995,
when the stock price was $1.375, the aggregate value of the same number
of outstanding shares was $41,593,750.
The following table sets forth certain information about
outstanding stock options held by the eight executive officers named in
the Summary Compensation Table pursuant to the Stock Option Plan. No
stock options have been exercised under the Plan.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Value of
Unexercised
Shares Number of Securities In-the-Money
Acquired Underlying Unexercised Options at
on Exer- Value Options at Fiscal Fiscal
cise Realized Year-End(1) Year-End(1)
Name (#) ($) (#) ($)
- ---- -------- -------- ---------------------- ------------
Unexer-
Exercisable cisable
----------- -------
<S> <C> <C> <C> <C> <C>
Robert Van Buren -- -- 100,000 (2) 0 $0.00
G. Lee Thompson -- -- 100,000 (3) 260,000 $0.00
John A. Cutrone, Jr. -- -- 0 48,000 $0.00
John A. Piontkowski -- -- 5,000 (4) 54,000 $0.00
W. Michael Driscoll -- -- 16,000 (5) 62,000 $0.00
Jerry L. Diener -- -- 22,500 (6) 55,000 $0.00
William D. Henderson -- -- 185,000 (7) 0 $0.00
Thomas C. DeFazio -- -- 240,000 (8) 0 $0.00
</TABLE>
(1) The Company does not grant SAR's.
(2) These options became exercisable on:
June 24, 1995 at an exercise price of $2.75 per share
(100,000)
(3) The options became exercisable on:
January 22, 1993 at an exercise price of $12.50 per
share (20,000)
November 13, 1993 at an exercise price of $6.00 per
share (20,000)
November 19, 1994 at an exercise price of $6.875 per
share (60,000)
(4) The options became exercisable on:
February 18, 1995 at an exercise price of $9.25 per
share (5,000)
(5) The options became exercisable on:
February 18, 1995 at an exercise price of $9.25 per
share (6,000)
May 19, 1995 at an exercise price of $8.75 per share
(10,000)
(6) The options became exercisable on:
January 22, 1993 at an exercise price of $12.50 per
share (7,000)
November 13, 1993 at an exercise price of $6.00 per
share (7,000)
November 19, 1994 at an exercise price of $6.875 per
share (8,500)
(7) The options became exercisable on:
July 2, 1993 at an exercise price of $5.625 per share
(145,000)
November 13, 1993 at an exercise price of $6.00 per
share (15,000)
November 19, 1994 at an exercise price of $6.875 per
share (25,000)
(8) The options became exercisable on:
April 1, 1994 at an exercise price of $9.25 per share
(40,000)
November 19, 1994 at an exercise price of $6.875 per
share (25,000)
April 1, 1995 at an exercise price of $6.50 per share
(80,000)
April 1, 1995 at an exercise price of $5.75 per share
(45,000)
April 1, 1995 at an exercise price of $3.25 per share
(50,000)
The table below illustrates the estimated annual benefits
upon retirement under the Smith Corona Corporation Salaried
Employees' Retirement Plan (the "Pension Plan") to persons in the
specified compensation and years-of-service classifications.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service
Remuneration 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$125,000 $24,500 $32,700 $40,880 $49,060 $49,060
$150,000 $30,200 $40,200 $50,260 $60,300 $60,300
$175,000 $30,200 $40,200 $50,260 $60,300 $60,300
$200,000 $30,200 $40,200 $50,260 $60,300 $60,300
$225,000 $30,200 $40,200 $50,260 $60,300 $60,300
$250,000 $30,200 $40,200 $50,260 $60,300 $60,300
$300,000 $30,200 $40,200 $50,260 $60,300 $60,300
$350,000 $30,200 $40,200 $50,260 $60,300 $60,300
$400,000 $30,200 $40,200 $50,260 $60,300 $60,300
$450,000 $30,200 $40,200 $50,260 $60,300 $60,300
$500,000 $30,200 $40,200 $50,260 $60,300 $60,300
</TABLE>
The amounts set forth in the table above as estimated
benefits are computed on a straight life annuity basis and
include an offset for a percentage of Social Security benefits.
Effective on January 1, 1989, the amount of compensation taken
into account under a qualified plan is limited (the "Annual
Compensation Limitation") under Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended (the "Code"), subject
to a cost-of-living adjustment announced by the Secretary of the
Treasury. The cap on pension earnings has been limited to
$150,000 as of January 1, 1994 due to the Omnibus Budget
Reconciliation Act of 1993. This limit is reflected in the above
chart. The above chart does not, however, reflect any additional
benefits payable pursuant to grandfathering provisions as a
result of changes in the earnings cap. This Annual Compensation
Limitation may reduce future benefit accruals payable to highly
compensated individuals under the Pension Plan.
The total compensation set forth in the Summary Compensation
table above is, in general, compensation covered by the Pension
Plan for those respective individuals. Mr. Van Buren did not
participate in the Pension Plan. Messrs. Thompson, Henderson and
DeFazio terminated employment with the Company during Fiscal
1995, and at such time of termination had 13, 5 and 5 years of
credited service under the Pension Plan, respectively, for
purposes of calculating annual retirement benefits under the
Pension Plan. As of June 30, 1995, Messrs. Cutrone, Piontkowski,
Driscoll and Diener had 2, 4, 14 and 36 years of credited service
under the Pension Plan, respectively, for purposes of calculating
annual retirement benefits under the Pension Plan.
Summarized below are actual accrued benefits under the
Pension Plan for Messrs. Thompson and DeFazio, and estimated
accrued benefits under the Pension Plan for Mr. Henderson, as of
the date each of them terminated employment with the Company.
G. Lee Thompson $50,790
William D. Henderson $12,700
Thomas C. DeFazio $13,465
Summarized below are estimated accrued benefits under the
Pension Plan as of June 30, 1995 for the four executive officers
named in the Summary Compensation Table who are currently
employed by the Company.
John A. Cutrone, Jr. $ 3,840
John A. Piontkowski $ 5,180
W. Michael Driscoll $20,600
Jerry Diener $56,980
These benefits represent the annual benefit payable at
normal retirement age. Unlike the pension plan table, these
benefits include the grandfathered portion of the benefit
attributable to the prior pay cap. The Company has decided to
use the transitional method under the Omnibus Budget
Reconciliation Act of 1993 which produces the largest possible
benefit under the Pension Plan.
Supplemental Executive Retirement Plan
Certain executive officers of the Company participate in the
Smith Corona Supplemental Executive Retirement Plan (the "SERP")
which provides additional retirement benefits in excess of the
maximum allowable under plans qualified under the Code. As of
June 30, 1995, the only executive officers participating in the
SERP were Messrs. Diener, Driscoll, Scallon, Verostko and Ms.
McRae. The SERP provides for payment of 100% of the
participant's retirement benefit upon retirement from the Company
at age 62, and permits earlier retirement, with a reduced
benefit, in certain cases, but only if approved by the Plan
Administrator. The amount of the retirement benefit payable
under the SERP at age 62 is equal to the difference between (i) a
percentage (based on years of credited service (maximum 30 years)
with the Company) of the executive's Average Final Compensation
(as defined below), less an offset for the primary Social
Security benefit, and (ii) the sum of amounts payable under the
Pension Plan. "Average Final Compensation" is defined as the
greater of the executive's average earnings (excluding Company
payments or awards made under the RSIP, SPP or Pension Plan, as
such terms are described herein, or the stock option plan of
Hanson, and any income from other benefits) (x) in any three
highest paid years of the last ten calendar years of employment
or (y) during the last 36 months of employment. Executives with
at least 5 and less than 10 years of credited service receive
12.5% of Average Final Compensation plus 2.5% for each year over
5 years; those with at least 10 but less than 20 years of
credited service receive 25% of Average Final Compensation, plus
1.5% for each year over 10 years; those with at least 20 but less
than 30 years, receive 40% of Average Final Compensation, plus 1%
for each year over 20 years; and those with 30 years or more
receive 50% of Average Final Compensation.
Notwithstanding the early retirement provisions described in
the previous paragraph, if a Change of Control shall occur, any
executive with fewer than 5 years of credited service would
receive 2.5% of Average Final Compensation for each year of
credited service. "Change of Control" is defined as (1) a
reorganization, consolidation or merger of the Company with or
into another entity, (2) a sale, transfer or lease of
substantially all of the Company's property or (3) the
acquisition by an entity or group not affiliated with Hanson or
the Company, of 20% or more of the outstanding shares of Common
Stock of the Company, unless Hanson also owns 20% or more of such
shares on and after such acquisition.
The table below illustrates the estimated annual benefits
upon retirement pursuant to the SERP to persons in the specified
compensation and years-of-service classifications.
<TABLE>
<CAPTION>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE
Years of Service
Average
Final
Compen-
sation 15 20 25 30 35
- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000 $12,500 $12,500 $9,380 $6,250 $6,250
$150,000 $15,000 $15,000 $11,250 $7,500 $7,500
$175,000 $23,120 $25,000 $22,500 $20,000 $20,000
$200,000 $31,250 $35,000 $33,750 $32,500 $32,500
$225,000 $39,380 $45,000 $45,000 $45,000 $45,000
$250,000 $47,500 $55,000 $56,250 $57,500 $57,500
$300,000 $63,750 $75,000 $78,750 $82,500 $82,500
$350,000 $80,000 $95,000 $101,250 $107,500 $107,500
$400,000 $96,250 $115,000 $123,750 $132,500 $132,500
$450,000 $112,500 $135,000 $146,250 $157,500 $157,500
$500,000 $128,750 $155,000 $168,750 $182,500 $182,500
</TABLE>
The total compensation set forth in the Summary Compensation
Table above is, in general, compensation covered by the SERP. The
amounts set forth on the table above are computed on a straight life
annuity basis and include offsets for the primary Social Security
benefit and for the amount payable under the Pension Plan.
Under the SERP, the Plan Administrator (as defined in the SERP)
may grant up to 5 years' age and up to 5 years' credited service to a
participant. In July of 1990, the Plan Administrator granted Mr.
Thompson 3 years' adjusted credited service and 3 years' adjusted
credited age.
Mr. Van Buren did not participate in the SERP. Due to the
termination of employment of Messrs. Henderson and DeFazio, their
eligibility to participate in the SERP was terminated. As of his
date of termination of employment with the Company, Mr. Thompson had
the credited age of 65 years and credited service of 15 years.
As of June 30, 1995, the four executive officers named in the
Summary Compensation Table who are currently employed by the Company
had the credited age and credited service set forth below:
Name Credited Age Credited Service
John A. Cutrone, Jr. 40 2
John A. Piontkowski 40 4
W. Michael Driscoll 49 14
Jerry L. Diener 60 36
Supplemental Pension Benefit
On December 5, 1990, the Compensation and Benefits Committee
authorized the Company to enter into an agreement with Mr. Manfred
Eckhardt, formerly Vice President and Treasurer of the Company,
pursuant to which the Company agreed to pay supplemental pension
benefits. As a result of his retirement on June 8, 1995, Mr.
Eckhardt received his supplemental pension benefit in a lump sum
payment of $53,060 on June 15, 1995. No other officers have received
this benefit.
Employment Agreements
On May 23, 1990, the Company entered into an employment
agreement with Mr. Henderson providing that he would serve as
President and Chief Operating Officer of the Company through June 30,
1992. The term of the agreement was subsequently extended through
June 30, 1995. The agreement provides that Mr. Henderson would be
paid an initial annual base salary of $250,000 and such additional
compensation as may be provided under the Company's benefit plans
including the SERP, which provides additionalretirement benefits in
excess of the maximum allowable under plans qualified under the Code.
The agreement provided for the payment of a supplemental pension
benefit equal to (a) the amount that would be payable to Mr.
Henderson under the Pension Plan based on credited
service with Hanson Industries and the Company, minus (b) the amount
payable to Mr. Henderson under the Pension Plan based on his credited
service with the Company, minus (c) the amount payable to Mr.
Henderson under the Hanson Industries Pension Plan, minus (d) the
amount payable under the SERP. In Mr. Henderson's case, the
supplemental pension benefit payment was terminated upon the
involuntary termination of his employment on June 3, 1995. The
employment agreement also provides that if Mr. Henderson's employment
is terminated by the Company for reasons other than cause, or if he
terminated his employment for good reason (as defined in the
agreement), he will continue to receive (a) his base salary at the
rate then in effect for the longer period of (i) the remainder of the
term of the agreement or (ii) 24 months and (b) certain benefits.
This continuation of salary is not applicable if Mr. Henderson
obtains employment or enters into any personal service arrangement
with a competitor of the Company. Substantially all of the terms of
Mr. Henderson's employment agreement were confirmed in an agreement
dated February 3, 1995 between the Company and Mr. Henderson. Mr.
Henderson's employment with the Company was terminated on June 3,
1995 pursuant to his involuntary resignation in connection with the
Company's restructuring for "reasons other than cause" within the
meaning of his employment agreement. Mr. Henderson has agreed to
provide consulting services to the Company upon its reasonable
request for a period of one year, at specified daily rates.
On January 23, 1991, the Company entered into an employment
agreement with Mr. DeFazio providing that he would serve as Executive
Vice President and Chief Financial Officer of the Company through
June 30, 1993. The agreement was subsequently extended through June
30, 1995. The agreement provides that Mr. DeFazio would be paid an
initial annual base salary of $185,000 and such additional
compensation as may be provided under the Company's benefit plans
including the SERP, which provides additional retirement benefits in
excess of the maximum allowable under plans qualified under the Code.
The agreement provides for the payment of a supplemental pension
benefit equal to (a) the amount that would be payable to Mr. DeFazio
under the Pension Plan based on his credited service with SCM
Corporation and the Company, minus (b) the amount that would be
payable to Mr. DeFazio under the Pension Plan based on his credited
service with the Company, minus (c) the amount payable to Mr. DeFazio
under the SCM Corporation Salaried Retirement Plan, minus (d) the
amount payable under the SERP. The agreement also provides that if
Mr. DeFazio's employment is terminated by the Company for reasons
other than cause, or if he terminates his employment for good reason
(as defined in the agreement), he will continue to receive (a) his
base salary at the rate then in effect for the longer period of (i)
the remainder of the term of the agreement or (ii) 24 months and (b)
certain benefits. This continuation of salary is not applicable if
Mr. DeFazio obtains employment or enters into any personal service
arrangement with a competitor of the Company. The terms of Mr.
DeFazio's employment agreement were confirmed in a letter agreement
dated February 3, 1995 between the Company and Mr. DeFazio.
Mr. DeFazio terminated his employment with the Company on March 31,
1995. Since the termination, Mr. DeFazio has been receiving a
supplemental pension benefit pursuant to the terms of his employment
agreement in the amount of $2,393 per month payable as a 50% joint
and survivor annuity.
On March 28, 1995, the Company entered into an employment agreement
with Mr. Van Buren providing that he would serve as Chairman and
Chief Executive Officer of the Company. Mr. Van Buren's employment
agreement had no expiration date; however, the agreement provided
that Mr. Van Buren's employment could be terminated by the Company at
any time at the discretion of the Board of Directors. The agreement
provided that Mr. Van Buren would be paid a monthly salary of
$30,000, would be eligible for option grants under the Company's
Stock Option Plan and would receive benefits under the Company's life
insurance and medical insurance plans. The agreement provided that
upon termination of Mr. Van Buren's employment for "reasons other
than cause" within the meaning of the employment agreement, he would
continue to receive his base salary plus his benefits until the last
day of the month in which such termination took place. Mr. Van
Buren's employment was terminated on July 1, 1995. He remains
Chairman of the Board and a Director of the Company.
Severance Agreements
Messrs. Cutrone, Piontkowski, Driscoll and Diener have entered
into severance agreements with the Company. The severance agreements
provide for the continued regular payment of an amount equal to the
executive's annual rate of base pay in effect on the date of
cessation of employment for a period of two years following the
involuntary termination (as defined in the severance agreement) of an
executive officer. The severance agreement of Mr. Piontkowski
expires on June 30, 1996. The severance agreements of Messrs.
Cutrone, Driscoll and Diener were to expire on June 30, 1995;
however, they were amended to extend the expiration date. In the
case of Messrs. Cutrone and Driscoll, the agreements were extended
to June 30, 1996 and in the case of Mr. Diener, to December 31, 1995.
The severance agreements provide for the lump sum payment of all
accrued vacation time in the current year, Pension Plan credit only
for service attributable to the severance period allotted under the
Company's Corporate Policy on Termination Allowance for Company
salaried employees generally, continuation of participation in the
Company's medical and life insurance programs during the period that
the executive officer is receiving severance payments, and
outplacement assistance at the Company's expense up to $10,000.
Messrs. Thompson and Noblitt entered into severance agreements
with the Company. The severance agreements provided for the
continued regular payment of an amount equal to the executive's
annual rate of base pay in effect on the date of cessation of
employment for a period of 2.99 years in Mr. Thompson's case and 2
years in Mr. Noblitt's case, following the involuntary termination
(as defined in the severance agreement) of an executive officer. The
severance agreements provided for the lump sum payment of all accrued
vacation time in the current year, Pension Plan credit only for
service attributable to the severance period allotted under the
Company's Corporate Policy on Termination Allowance for Company
salaried employees generally, continuation of participation in the
Company's medical and life insurance programs during the period that
the executive officer is receiving severance payments, and
outplacement assistance at the Company's expense up to $10,000, or,
in Mr. Thompson's case, $25,000. Since Mr. Thompson's termination of
employment with the Company on March 24, 1995, Mr. Thompson has
received severance benefits pursuant to the terms of his severance
agreement with the Company. Upon Mr. Noblitt's termination of
employment with the Company as a result of the sale of SCM Office
Supplies, Inc. by the Company on July 5, 1994, Mr. Noblitt received
severance benefits pursuant to the terms of his severance agreement
with the Company.
Certain other officers and employees of the Company have entered
into similar severance agreements with terms ranging from six months
to two years.
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board of
Directors of the Company is comprised of directors who are not and
have not been employees of the Company. The Committee is responsible
for reviewing and approving all matters related to executive
compensation and reviewing the structure of long-term incentive plans
and approving grants to executives under such plans.
The Company adheres to a policy of blending several components
of executive compensation in order to attract and retain top
employees, reward its executives for performance that results in
profits to the Company, and motivate management to continue to
optimize value for the Company's shareholders. The three aspects of
each executive's compensation are:
base salary,
short-term incentive compensation based on the Company's
annual performance, and
stock option grants to reward successful long-range planning.
Base Salary. In 1993, the Company engaged a consultant to
perform a study of its executive officers' base salaries as compared
with those of other durable manufacturing companies. The study
revealed that the Company's executive officers' salaries ranged from
19% below average market value to 15% above. Based on the findings
of this study, as well as ongoing research performed by the Company,
the Company believes that the base salaries paid to its executives
compare favorably overall with those paid to executives of similar
companies.
Increases in base salary are considered annually and reflect the
Company's profitability and return on capital employed, the
individual executive's salary level as compared with those of similar
executives of the Company's competitors, and the individual
executive's level of responsibility and performance. Executive
performance is measured using a "management by objectives" system.
Salary increases for executives other than the Chief Executive
Officer are recommended to the Committee by the Chief Executive
Officer.
Short-Term Incentive Compensation. The Company and its major
subsidiaries maintain a short-term incentive compensation plan
("Bonus Plan"), pursuant to which management establishes graduated
performance targets for the Company and its major subsidiaries. At
each level of performance target reached, a portion of the bonus
amount is paid to top management pursuant to a schedule of payments
established at the beginning of the fiscal year. Typically, payments
under the Bonus Plan are tied to levels of operating income generated
and return on capital employed by the Company and its major
subsidiaries during the fiscal year. In Fiscal 1994, the payments
under the Bonus Plan to certain employees were also tied to other
factors, including gross margin, inventory control, research and
development costs and manufacturing performance. Performance levels
are established in coordination with the Company's operating plan for
the fiscal year.
All of the named executives, excluding Mr. Van Buren,
participated or participate in the Bonus Plan. No payments have been
made during Fiscal 1996 under the Bonus Plan with respect to Fiscal
1995, since no bonuses were earned by the named executives in Fiscal
1995.
Stock Option Grants. In order to encourage executives to make
decisions for the Company based on long-range planning, and to stress
the importance of maximizing shareholder returns through strong
performance, the Company instituted the Stock Option Plan in 1990.
The Company has made a number of option grants to date under the
Stock Option Plan. See "Executive Compensation Option Grants in
Fiscal 1995" above. Option grants are made by the Company based upon
each recipient's performance, impact on profitability, level of
responsibility and salary level. The exercise price of any option
granted under the Stock Option Plan may not be less than the fair
market value of the Company's stock on the date of grant. Except
under certain circumstances, options may not be exercised until at
least three years after they were granted, thereby creating a
personal incentive for executives to maximize shareholder gains over
the long-term. Notwithstanding the previous sentence, the options
granted to Mr. Van Buren on March 24, 1995 vested on June 24, 1995.
Compensation of the Chief Executive Officer
The compensation of the Chief Executive Officer, like that of
the other executive officers of the Company, is comprised of base
salary, bonus and stock options. The Committee's policy with respect
to determining the Chief Executive Officer's base salary is based on
the same criteria used for determining the base salary of other
executives of the Company. The criteria for bonus payments made and
stock options granted to the Chief Executive Officer are the same as
those described above for other executives.
Item 12. Security Ownership of Certain Beneficial Owners
and Management
The following table sets forth, as of June 30, 1995, certain
information regarding beneficial ownership of Common Stock by (a)
each person known by the Company to own beneficially more than 5% of
its outstanding Common Stock, (b) each director and nominee for
director of the Company, (c) the eight executive officers named in
the Summary Compensation Table, and (d) all directors and executive
officers as a group. Unless otherwise indicated, each person has
sole investment and voting power with respect to the shares
indicated.
<TABLE>
<CAPTION>
Name of Number of Percent of Common
Beneficial Owner Shares Stock Outstanding
<S> <C> <C>
Hanson PLC (1) 14,480,000 47.9%
Ronald F. Stengel 0 0
Robert Van Buren 2,500 *
G. Lee Thompson 7,800 *
John A. Piontkowski 2,242 *
Mark A. Alexander 0 0
Thomas A. Cawley 0 0
John E. Lushefski 400 *
George H. Hempstead, III 950 *
Craig C. Sergeant 0 0
John A. Cutrone, Jr. 2,064 *
Richard R. West 1,000 *
Robert J. Kammerer 500 *
Jerry L. Diener 75,216 *
W. Michael Driscoll 0 0
William D. Henderson 0 0
Thomas C. DeFazio 2,590 *
All directors and
executive officers
as a group (20 persons) 170,701 *
</TABLE>
*Less than one percent of the outstanding shares of Common
Stock.
(1) Record ownership of the shares indicated is in the name of
Hanson Natural Resources Company. The business address of Hanson PLC
is 1 Grosvenor Place, London SW1X 7JH, England. The business address
of Hanson Natural Resources Company is c/o Hanson Industries, 99 Wood
Avenue South, Iselin, New Jersey 08830.
Item 13. Certain Relationships and Related Transactions
On August 3, 1989, the Company completed the Offerings. In
connection with the Offerings, Hanson initiated the Reorganization.
Prior to the closing of the Offerings, the Company had been an
indirect, wholly-owned subsidiary of Hanson, an industrial management
company. Pursuant to the Offerings, the Company sold 14,750,000
shares of Common Stock to the public in public offerings registered
pursuant to the Securities Act of 1933, as amended (the "1933 Act").
Following the Offerings, Hanson owned 47.9% of the outstanding Common
Stock and, pursuant to a Stockholders Agreement, retained the right,
subject to certain conditions, to elect four of the Company's
directors. See "Stockholders Agreement" below. Subsequent to the
Offerings, all proposed agreements between the Company and Hanson or
its affiliates must be approved in advance by the Audit Committee.
Stockholders Agreement
The Company and Hanson Natural Resources Company, an indirect,
wholly-owned subsidiary of Hanson ("HNR"), as assignee of HM
Holdings, Inc. ("HMH"), have entered into a Stockholders Agreement,
dated as of June 2, 1989 (the "Stockholders Agreement"), which
provides that, so long as HNR and its affiliates own 38% or more of
the outstanding Common Stock, the Company shall nominate at least
four designees of HNR for election to the Company's Board of
Directors. The Company agreed in the Stockholders Agreement to use
its best efforts to cause the Board of Directors to consist of nine
members during the term of the Stockholders Agreement, which expires
on June 2, 1999. However, HNR consented to the increase of the
Company's Board of Directors to ten members, and the Board of
Directors authorized such increase on August 20, 1991. The number of
HNR designees is subject to reduction as follows: (i) if HNR's share
ownership is at least 27% but less than 38%, three designees; (ii) if
HNR's share ownership is at least 16% but less than 27%, two
designees; and (iii) if HNR's share ownership is at least 5% but less
than 16%, one designee. In the Stockholders Agreement, HNR agreed
that immediately after the Reorganization and the Offerings it would
cause stockholders' equity of the Company to equal $50 million and
the ratio of net debt (bank debt and indebtedness to HNR less
invested cash and cash equivalents) to equity not to exceed 195%.
The Stockholders Agreement also grants HNR the right to require the
Company to register under the 1933 Act shares of Common Stock held by
HNR and its affiliates and certain members of management on not more
than two occasions provided that at least 10% of the outstanding
shares of Common Stock are registered pursuant to each such request.
It further provides that HNR may require its shares to be registered
if it notifies the Company within 30 days of receiving notice that
the Company has determined to register its own securities. The
Company and HNR have agreed to indemnify each other against certain
liabilities incurred in connection with the registration of such
shares.
Cross-Indemnification Agreement
The Company and HMH entered into an Amended and Restated Cross-
Indemnification Agreement dated as of June 2, 1989 (the "Cross-
Indemnity Agreement"). In the Cross-Indemnity Agreement, the Company
agreed generally to indemnify HMH and Hanson against substantially
all liabilities relating to the business of the Company, including
environmental liabilities but excluding tax liabilities which are
addressed under the Tax Sharing Agreement (as defined below). HMH,
in turn, agreed to indemnify the Company against substantially all
liabilities relating to the business of Hanson (other than the
business of the Company), including environmental liabilities but
excluding tax liabilities which are addressed under the Tax Sharing
Agreement described below.
Tax Sharing Agreement
Following Hanson's acquisition of the Company's predecessor, SCM, the
Company and its subsidiaries were included as members of the Hanson
affiliated group of corporations, which filed a consolidated United
States federal income tax return (the "Consolidated Group"). After
the Offerings, the Company no longer qualified to be a member of the
Consolidated Group for federal income tax purposes. The Company and
HMH entered into an Amended and Restated Tax Sharing and
Indemnification Agreement dated as of June 2, 1989 (the "Tax Sharing
Agreement"). Under the Tax Sharing Agreement, HMH generally will
indemnify the Company with respect to all income tax liabilities or
obligations in respect of all tax periods prior to the closing of the
Offerings and for all tax liabilities which arise solely with respect
to the Reorganization. Similarly, the Company agreed to indemnify
HMH for all income tax liabilities or obligations imposed on the
Company attributable to periods beginning on or after the closing of
the Offerings and all other tax liabilities and obligations imposed
on the Company for all prior and future periods. With respect to
income tax liabilities or obligations attributable to periods prior
to the date of the closing of the Offerings, but which have been
reserved for or accrued for in the ordinary course of business prior
to the closing of the Offerings, the Company will indemnify HMH and
HMH will be under no obligation to indemnify the Company to the
extent so reserved or accrued. The Tax Sharing Agreement also
provides that the Company will assign to HMH (i) all refunds of taxes
for which HMH indemnifies the Company and (ii) any tax benefits
realized by the Company on or after the date on which the Company
ceased to be a member of the Consolidated Group as a result of
payments by the Company pursuant to the SPP adopted by Hanson and the
Company soon after Hanson's acquisition of SCM in 1986. The Tax
Sharing Agreement also provides that HMH generally will direct any
audit, legal or administrative proceedings concerning any tax matters
for which HMH has indemnified the Company or with respect to any
refund to which HMH is entitled. To implement the Tax Sharing
Agreement, Hanson funded certain tax liabilities which became
liabilities of the Company as a result of the Reorganization.
Other Agreements
Effective July 1, 1995, the Company engaged the firm of R.F. Stengel
& Co., Inc. ("RFS") to provide interim management and financial
consulting services pursuant to the terms of a letter agreement dated
June 29, 1995 (the "RFS Agreement") between the Company and RFS. The
RFS Agreement provides, among other things, that RFS will provide the
Company with leadership to guide the Company through the bankruptcy
proceeding and to work toward the confirmation and consummation of a
plan of reorganization. The RFS Agreement also provides that RFS
will support as required the information requests of, and ongoing
conversations with, the Lenders, and will work with the Company's
other outside professionals. RFS will report directly to the
Company's Board of Directors.
The terms of the RFS Agreement provide that Ronald F. Stengel,
President of RFS, will serve as President, Chief Executive Officer
and a director of the Company while the RFS Agreement is in effect.
On July 1, 1995, Mr. Stengel was elected President and Chief
Executive Officer of the Company, and was elected to the Board of
Directors of the Company. On July 1, 1995, Thomas A. Cawley, Vice
President and Secretary of RFS, was also elected a director of the
Company, and on July 26, 1995, Mr. Cawley was elected Vice President-
Administration of the Company. RFS has also agreed to provide
additional professional staff as necessary for RFS to perform its
obligations under the RFS Agreement.
Pursuant to the terms of the RFS Agreement, RFS's fees will be billed
and payable monthly. The daily professional fees of Mr. Stengel and
Mr. Cawley are $2,500 and $1,700 respectively. In addition, the
billing rate for other professional staff is from $1,700 to $2,500
per day. Twenty percent of professional fees incurred by the Company
for services rendered by RFS is set aside and accumulated as
incentive compensation, and will be payable, subject to the approval
of the Bankruptcy Court, upon the successful completion of activities
and timetables. The Bankruptcy Court authorized and approved the
retention of RFS under Sections 327 and 328 of the Bankruptcy Code
pursuant to the terms of the RFS Agreement on July 5, 1995.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(a)(1) Financial Statements. See Index to Consolidated
Financial Statements and Schedules which appears on page 54 of this
Form 10-K Annual Report.
(a)(2) Financial Schedules. See Index to Consolidated
Financial Statements and Schedules which appears on page 54 of this
Form 10-K Annual Report. All other schedules are omitted because
they are not applicable or the required information is shown in the
financial statements or notes thereto.
(b) Report on Form 8-K. Two Current Reports on Form 8-K were
filed with the Commission during the last quarter of the Company's
1995 fiscal year.
1. The Form 8-K Current Report dated April 7, 1995 reported a
press release under Item 5 announcing Smith Corona Corporation
entered into an Amended and Restated Revolving Credit Agreement with
Chemical Bank and the Lenders parties thereto.
2. The Form 8-K Current Report dated June 3, 1995 reported a
press release under Item 5 announcing that it is in technical default
of its Credit Agreement as a result of the restructuring charge
announced May 8, 1995.
In addition, there was a second press release under Item 5
announcing the replacements of two members of its Board of Directors
effective June 8, 1995. It also stated that Robert Van Buren was
elected President, succeeding William D. Henderson who involuntarily
resigned in connection with the restructuring effective June 3, 1995.
(c) Exhibits (filed herewith or incorporated by reference; see
index to exhibits).
3.1 Amended and Restated Certificate of Incorporation of Smith
Corona Corporation (incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on file with the Commission
(Registration No. 33-29101)).
3.2 By-Laws of Smith Corona Corporation (incorporated by reference
to Exhibit 3.2 to the Company's Registration Statement on file with
the Commission (Registration No. 33-29101)).
4.1 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on file with the
Commission (Registration No. 33-29101)).
10.1 Lease Agreement between Cherry Street Associates and Smith
Corona Corporation dated March 13, 1992 (incorporated by reference to
Exhibit 10.1 to the Company's Form 10-K Annual Report for the fiscal
year ended June 30, 1992, which is on file with the Commission).
10.2 Lease between REBA Properties, Inc. and SCM Corporation dated
June 15, 1970 (incorporated by reference to Exhibit 10.1b to the
Company's Registration Statement on file with the Commission
(Registration No. 33-29101)).
10.3 Lease between the Housing and Development Board and Corona
Manufacturers (PTE) Limited dated April 18, 1975 (incorporated by
reference to Exhibit 10.1e to the Company's Registration Statement on
file with the Commission (Registration No. 33-29101)).
10.4 Tenancy between Jurong Town Corporation and Smith Corona
(Private) Limited dated February 16, 1989 (incorporated by reference
to Exhibit 10.1f to the Company's Registration Statement on file with
the Commission (Registration No. 33-29101)).
10.5 Lease between HM Holdings, Inc. and Histacount Corporation dated
June 1, 1989 (incorporated by reference to Exhibit 10.1g to the
Company's Registration Statement on file with the Commission
(Registration No. 33-29101)).
10.6 Memorandum dated August 11, 1994 evidencing Lease Extension
between HM Holdings, Inc. and Histacount Corporation dated June 1,
1989 (incorporated by reference to Exhibit 10.6 to the Company's Form
10-K Annual Report for the fiscal year ended June 30, 1994, which is
on file with the Commission).
*10.7 SCM Office Supplies, Inc. Salaried Employees' Retirement Plan as
amended and restated as of January 1, 1994.
*10.8 Smith Corona Corporation Retirement Savings and Investment Plan
adopted effective July 1, 1989, as amended through January 1, 1994.
*10.9 Memorandum dated July 28, 1995 amending the Smith Corona
Corporation Retirement Savings and Investment Plan adopted effective
July 1, 1989, as amended through January 1, 1994.
*10.10 Histacount Corporation Retirement Savings and Investment Plan
adopted effective July 1, 1989, as amended through January 1, 1994.
10.11 Histacount Corporation Salaried and Non-Union Hourly Employees'
Pension Plan as amended and restated effective October 1, 1989
(incorporated by reference to Exhibit 10.12 to the Company's Form 10-
K Annual Report for the fiscal year ended June 30, 1992, which is on
file with the Commission).
*10.12 Smith Corona Corporation Supplemental Executive Retirement Plan
as restated and amended as of July 28, 1989, through November 16,
1993.
10.13 Smith Corona Corporation 1990 Stock Option Plan, effective as of
December 1, 1989, amended through November 15, 1994 (incorporated by
reference to Exhibit 10.12 to the Company's Form 10-Q Quarterly
Report for the quarter ended December 31, 1994, which is on file with
the Commission).
10.14 Trust Agreement between SCM Corporation, The Chase Manhattan
Bank, N.A. and Kwasha Lipton dated October 7, 1985 (incorporated by
reference to Exhibit 10.8 to the Company's Registration Statement on
file with the Commission (Registration No. 33-29101)).
*10.15 Smith Corona Corporation Short Term Incentive Compensation Plan.
10.16 Export Enterprise Certificate No. 156 granted to Smith-Corona
Private Limited by the Ministry of Trade and Industry, Republic of
Singapore, dated May 12, 1981 (incorporated by reference to Exhibit
10.15 to the Company's Registration Statement on file with the
Commission (Registration No. 33-29101)).
10.17 Pioneer Certificate No. 942 granted to Smith Corona PTE Ltd. by
the Ministry of Trade and Industry, Republic of Singapore, dated
March 23, 1987 (incorporated by reference to Exhibit 10.16 to the
Company's Registration Statement on file with the Commission
(Registration No. 33-29101)).
10.18 Stockholders' Agreement between Smith Corona Corporation and HM
Holdings, Inc. dated as of June 2, 1989 (incorporated by reference to
Exhibit 10.17 to the Company's Registration Statement on file with
the Commission (Registration No. 33-29101)).
10.19 Memorandum of Sale dated May 22, 1991 between HM Holdings, Inc.
and Hanson Natural Resources Company; Consent and Amendment Agreement
dated May 21, 1991 between Smith Corona Corporation and HM Holdings,
Inc.; and Letter of George H. Hempstead III to G. Lee Thompson dated
May 28, 1991 (incorporated by reference to Exhibit 10.17 to the
Company's Form 10-K Annual Report for the fiscal year ended June 30,
1991, which is on file with the Commission).
10.20 Amended and Restated Cross-Indemnification Agreement between
Smith Corona Corporation and HM Holdings, Inc. dated as of July 14,
1989 (incorporated by reference to Exhibit 10.18 to the Company's
Registration Statement on file with the Commission (Registration No.
33-29101)).
10.21 Amended and Restated Tax Sharing and Indemnification Agreement
between Smith Corona Corporation and HM Holdings, Inc. dated as of
June 2, 1989 (incorporated by reference to Exhibit 10.19 to the
Company's Registration Statement on file with the Commission
(Registration No. 33-29101)).
10.22 Stock Purchase Agreement by and among Smith Corona Overseas
Holdings, Inc., SCM Industries Limited and Smith Corona Corporation
dated as of June 2, 1989 (incorporated by reference to Exhibit 10.21
to the Company's Registration Statement on file with the Commission
(Registration No. 33-29101)).
10.23 Employment Agreement between Smith Corona Corporation and
William D. Henderson, dated as of May 22, 1990 (incorporated by
reference to Exhibit 10.29 to the Company's Form 10-K Annual Report
for the fiscal year ended June 30, 1990, which is on file with the
Commission).
10.24 One year extension, effective June 30, 1992, of Employment
Agreement described in 10.23 (incorporated by reference to Exhibit
10.30 to the Company's Form 10-K Annual Report for the fiscal year
ended June 30, 1993, which is on file with the Commission).
10.25 Two year extension, effective June 30, 1993, of Employment
Agreement described in 10.23 (incorporated by reference to Exhibit
10.31 to the Company's Form 10-K Annual Report for the fiscal year
ended June 30, 1993, which is on file with the Commission).
*10.26 Employment Agreement between Smith Corona Corporation and
William D. Henderson, dated as of February 3, 1995.
*10.27 Severance Letter between Smith Corona Corporation and G. Lee
Thompson, dated as of February 3, 1995.
10.28 Employment Agreement between Smith Corona Corporation and Thomas
C. DeFazio, dated as of January 23, 1991 (incorporated by reference
to Exhibit 10.30 to the Company's Form 10-K Annual Report for the
fiscal year ended June 30, 1991, which is on file with the
Commission).
10.29 Two year extension, effective June 30, 1993, of Employment
Agreement described in 10.28 (incorporated by reference to Exhibit
10.34 to the Company's Form 10-K Annual Report for the fiscal year
ended June 30, 1993, which is on file with the Commission).
*10.30 Employment Agreement between Smith Corona Corporation and Thomas
C. DeFazio, dated as of February 3, 1995.
10.31 Memorandum evidencing severance agreement between Smith Corona
Corporation and Manfred J. Eckhardt (incorporated by reference to
exhibit 10.31 to the Company's Form 10-K Annual Report for the fiscal
year ended June 30, 1991, which is on file with the Commission).
*10.32 Smith Corona Corporation Salaried Employees Retirement Plan, as
amended and restated as of January 1, 1994.
10.33 Supplemental pension benefit arrangement between Smith Corona
Corporation and William D. Henderson dated November 19, 1992
(incorporated by reference to Exhibit 10.40 to the Company's Form 10-
K Annual Report for the fiscal year ended June 30, 1993, which is on
file with the Commission).
10.34 Supplemental pension benefit arrangement between Smith Corona
Corporation and Thomas C. DeFazio dated November 19, 1992
(incorporated by reference to Exhibit 10.41 to the Company's Form 10-
K Annual Report for the fiscal year ended June 30, 1993, which is on
file with the Commission).
10.35 Memorandum dated January 14, 1994 evidencing retention agreement
between John R. Noblitt and Smith Corona Corporation
(incorporated by reference to Exhibit 10.37 to the Company's Form 10-
K Annual Report for the fiscal year ended June 30, 1994, which is on
file with the Commission).
10.36 Credit Agreement dated as of April 7, 1995 among Smith Corona
Corporation, the lenders party thereto and Chemical Bank, as Agent
(incorporated by reference to Exhibit 99.2 to the Company's Form 8-K
Current Report dated April 7, 1995, which is on file with the
Commission).
10.37 Lease Agreement between City of Marion, Indiana and SCM
Corporation dated as of March 1, 1971 (incorporated by reference to
Exhibit 10.44 to the Company's Form 10-K Annual Report for the fiscal
year ended June 30, 1993, which is on file with the Commission).
10.38 Lease Agreement between Inmobiliarian Mex-Hong, S.A. De E.V. and
Smith Corona De Mexico, S.A. De C.V. dated November 24, 1992
(incorporated by reference to Exhibit 10.47 to the Company's Form 10-
K Annual Report for the fiscal year ended June 30, 1993, which is on
file with the Commission).
10.39 Lease Agreement between Inmobiliarian Mex Hong, S.A. De E.V. and
Smith Corona De Mexico, S.A. De C.V. dated June 4, 1993 (incorporated
by reference to Exhibit 10.48 to the Company's Form 10-K Annual
Report for the fiscal year ended June 30, 1993, which is on file with
the Commission).
10.40 Lease Agreement between Turnberry Associates and Smith Corona
Corporation dated May 5, 1993 (incorporated by reference to Exhibit
10.49 to the Company's Form 10-K Annual Report for the fiscal year
ended June 30, 1993, which is on file with the Commission).
10.41 Asset Purchase Agreement, dated as of June 8, 1994, among Ampad
Corporation, SCM Office Supplies, Inc. and Smith Corona Corporation
(incorporated by reference to exhibit 1 to the Company's Form 8-K
Current Report dated July 19, 1994, which is on file with the
Commission).
10.42 Asset Purchase Agreement, dated as of November 4, 1994, by and
among HC Delaware Acquisition Corporation, Histacount Corporation and
Smith Corona Corporation (incorporated by reference to Exhibit 10.44
to the Company's Form 10-Q Quarterly Report for the quarter ended
December 31, 1994, which is on file with the Commission).
10.43 Security Agreement, dated as of April 7, 1995, among Smith
Corona Corporation and Chemical Bank, as Agent (incorporated by
reference to Exhibit 10.45 to the Company's Form 10-Q Quarterly
Report for the quarter ended March 31, 1995, which is on file with
the Commission).
*10.44 Debtor-in-Possession Credit Agreement dated as of July 10, 1995
among Smith Corona Corporation, the lenders party thereto and
Chemical Bank, as Agent.
*10.45 First Amendment to Debtor-In-Possession Credit Agreement dated
as of July 24, 1995.
*10.46 Second Amendment to Debtor-In-Possession Credit Agreement dated
as of August 15, 1995.
*10.47 Consulting Agreement between Smith Corona Corporation and R. F.
Stengel & Co., Inc., dated June 29, 1995.
*10.48 Lease between Smith Corona Corporation and J.M. Murray Center,
Inc., dated February 8, 1995.
*10.49 Purchase and Sale Agreement, dated as of February 28, 1995,
between Smith Corona Corporation and J.M. Murray Center.
*10.50 Severance Agreement between Smith Corona Corporation and John A.
Cutrone, dated as of June 13, 1994.
*10.51 One year extension, effective June 30, 1995, of Severance
Agreement described in 10.50.
*10.52 Severance Agreement between Smith Corona Corporation and W.
Michael Driscoll, dated as of June 13, 1994.
*10.53 One year extension, effective June 30, 1995, of Severance
Agreement described in 10.52.
*10.54 Severance Agreement between Smith Corona Corporation and John A.
Piontkowski, dated as of April 3, 1995.
*10.55 Amendment of Severance Letter, effective June 29, 1995,
described in 10.54.
*10.56 Severance Agreement between Smith Corona Corporation and Jerry
L. Diener, dated as of June 1, 1990.
*10.57 Six month extension, effective June 30, 1995, of Severance
Agreement described in 10.56.
*10.58 Consulting Agreement between Smith Corona Corporation and
Manfred J. Eckhardt, dated as of June 9, 1995.
*10.59 Stock Option Agreement between Smith Corona Corporation and
Robert Van Buren, dated as of April 13, 1995.
*10.60 Employment Agreement between Smith Corona Corporation and
Robert Van Buren, dated March 28, 1995.
*21 Schedule of Subsidiaries of the Registrant
*23 Consent of Deloitte & Touche LLP
*27 Financial Data Schedule
* filed herewith
Stockholders may, upon payment of a fee therefore, obtain copies of
any of the exhibits to this Form 10-K Annual Report by writing to the
Secretary, Smith Corona Corporation, 65 Locust Avenue, New Canaan,
Connecticut 06840.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SMITH CORONA CORPORATION
September 28, 1995 By /s/ Robert Van Buren
Robert Van Buren
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION
Signature Title Date
<S> <C> <C>
/s/ Robert Van Buren
....................... Chairman of the Board September 28, 1995
(Robert Van Buren)
/s/ Ronald F. Stengel
........................ President, Chief Executive September 28, 1995
(Ronald F. Stengel) Officer and Director
/s/ John A. Piontkowski
........................ Senior Vice President, September 28, 1995
(John A. Piontkowski) Chief Financial Officer and
Treasurer (Principal Financial
Officer)
/s/ Mark A. Alexander
........................ Director September 28, 1995
(Mark A. Alexander)
/s/ Thomas A. Cawley
........................ Vice President/Administration September 28, 1995
(Thomas A. Cawley) and Director
/s/George H.Hempstead,III
........................ Director September 28, 1995
(George H. Hempstead,III)
/s/ Robert J. Kammerer
........................ Director September 28, 1995
(Robert J. Kammerer)
/s/ John E. Lushefski
........................ Director September 28, 1995
(John E. Lushefski)
/s/ Craig C. Sergeant
........................ Director September 28, 1995
(Craig C. Sergeant)
/s/ Richard R. West
........................ Director September 28, 1995
(Richard R. West)
/s/ Martin D. Wilson
........................ Controller September 28, 1995
(Martin D. Wilson) (Principal Accounting
Officer)
Index to Consolidated Financial Statements and Financial Statement Schedule
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . 55
Consolidated Balance Sheets as of June 30, 1995 and 1994 . . . . . . . . . . 57
Consolidated Statements of Operations for the Years Ended June 30, 1995,
1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended June 30, 1995, 1994 and 1993. . . . . . . . . . . . . . . . . . . . 59
Consolidated Statements of Cash Flows for the Years Ended June 30, 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . 61
Consolidated Supplemental Financial Statement Schedule for the Years
Ended June 30, 1995, 1994 and 1993
Schedule II - Valuation and Qualifying Accounts . . . . . . . . . . . 87
INDEPENDENT AUDITORS' REPORT
Smith Corona Corporation:
We have audited the accompanying consolidated balance sheets of
Smith Corona Corporation and subsidiaries (in reorganization under
Chapter 11 of the Federal Bankruptcy Code since July 5, 1995 - see
Note 1) (the "Company") as of June 30, 1995 and 1994, and the related
consolidated statements of operations, statements of changes in
stockholders' equity and statements of cash flows for each of the
three years in the period ended June 30, 1995. Our audits also
include the financial statement schedule listed in the Index to
Consolidated Financial Statements and Financial Statement Schedule.
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Smith
Corona Corporation and subsidiaries at June 30, 1995 and 1994 and
the results of their operations and their cash flows for each of the
three years in the period ended June 30, 1995 in conformity with
generally accepted accounting principles. Also, in our opinion,
such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth
therein.
As discussed in Note 1 to the consolidated financial statements, on
July 5, 1995, Smith Corona Corporation filed for reorganization
under Chapter 11 of the Federal Bankruptcy Code. In addition, on
August 18, 1995, SCM Office Supplies, Inc., SCC LI Corporation
(formerly known as "Histacount Corporation") and Hulse Manufacturing
Company, all wholly-owned Nonoperating Subsidiaries of Smith Corona
Corporation, filed Chapter 11 petitions. The accompanying financial
statements do not purport to reflect or provide for the consequences
of the Bankruptcy Proceedings. In particular, such financial
statements do not purport to show (a) as to assets, their realizable
value on a liquidation basis or their availability to satisfy
liabilities; (b) as to prepetition liabilities, the amounts that may
be allowed for claims or contingencies, or the status and priority
thereof; (c) as to stockholder accounts, the effect of any changes
that may be made in the capitalization of the Company; or (d) as to
operations, the effect of any changes that may be made in its
business. The outcome of these matters is not presently
determinable.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern.
As discussed in Note 1 to the consolidated financial statements, the
Company has recently experienced recurring losses from operations,
has an accumulated deficit at June 30, 1995, had difficulty in
meeting its Amended and Restated Revolving Credit Agreement
covenants, required waivers to its Debtor-In-Possession Credit
Agreement covenants and can not presently determine with certainty
the ultimate liability which may result from the filing of claims in
connection with the Bankruptcy Proceedings. Additionally, as
described in Note 8, the Company's Debtor-In-Possession Credit
Agreement expires on June 30, 1996. These circumstances raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans concerning these matters are also
discussed in Note 1. The consolidated financial statements do not
include adjustments that might result from the outcome of the
uncertainties referred to herein and in the preceding paragraph.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Stamford, Connecticut
August 22, 1995
Smith Corona Corporation and Subsidiaries
Consolidated Balance Sheets
</TABLE>
<TABLE>
<CAPTION>
June 30,
(Dollars in thousands) 1995 1994
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $7,003 $6,472
Accounts receivable (net of allowance
for doubtful accounts of $1,484 and
$1,512 for 1995 and 1994, respectively) 37,654 48,210
Inventories 54,335 62,695
Prepaid expenses and other current
assets 9,471 3,716
Deferred income taxes - 10,131
Net assets of discontinued operations - 19,072
Total current assets 108,463 150,296
Property, plant and equipment-net 22,888 36,782
Deferred income taxes 3,406 4,371
Other assets 1,309 2,239
Total $136,066 $193,688
Liabilities and stockholders' equity
Current liabilities:
Bank loans $17,400 $ -
Trade payables 19,807 27,379
Accrued liabilities 35,449 26,935
Income taxes payable 5,791 5,001
Dividends payable - 1,512
Total current liabilities 78,447 60,827
Bank loans - 20,002
Postretirement benefits 12,999 12,650
Pension liability 18,801 20,361
Other long-term liabilities 5,569 4,126
Total liabilities 115,816 117,966
Stockholders' equity:
Common stock- 30,250,000 shares issued
and outstanding 303 303
Additional paid-in capital 44,697 44,697
Retained earnings (accumulated deficit) (24,750) 30,722
Total stockholders' equity 20,250 75,722
Total $136,066 $193,688
</TABLE>
See accompanying notes to consolidated financial statements.
Smith Corona Corporation and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
(Dollars in thousands, For the year ended June 30,
except per share amounts) 1995 1994 1993
<S> <C> <C> <C>
Net sales $196,309 $261,306 $236,846
Cost of goods sold 180,959 204,327 179,355
Gross margin 15,350 56,979 57,491
Selling, administrative and
research expenses 48,532 48,557 56,339
Restructuring costs 13,584 - 16,500
Operating income (loss) (46,766) 8,422 (15,348)
Interest expense 965 708 417
Income (loss) from continuing
operations before income taxes (47,731) 7,714 (15,765)
Income taxes (benefit) 14,514 2,620 (5,521)
Income (loss) from continuing
operations (62,245) 5,094 (10,244)
Discontinued operations (net of
income taxes):
Income from operations 671 2,233 1,222
Gain (loss) on disposal
of discontinued operations 9,127 (2,200) -
Net income (loss) $(52,447) $5,127 $(9,022)
Earnings per common share -
Income (loss) from continuing
operations $(2.05) $.17 $(.34)
Discontinued operations:
Income from operations .02 .07 .04
Gain (loss) on disposal
of discontinued operations .30 (.07) -
Net income (loss) per share $ (1.73) $ .17 $ (.30)
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
Smith Corona Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
For the years ended June 30, 1995, 1994 and 1993
Retained
Additional Earnings
(Dollars in thousands, Common Paid-in (Accumulated
except per share amounts) Stock Capital Deficit) Total
<S> <C> <C> <C> <C>
Balance, June 30, 1992 $303 $44,697 $ 46,717 $91,717
Net loss - - (9,022) (9,022)
Dividends declared
($.20 per share) - - (6,050) (6,050)
Balance, June 30, 1993 303 44,697 31,645 76,645
Net income - - 5,127 5,127
Dividends declared
($.20 per share) - - (6,050) (6,050)
Balance, June 30, 1994 303 44,697 30,722 75,722
Net loss - - (52,447) (52,447)
Dividends declared
($.10 per share) - - (3,025) (3,025)
Balance, June 30, 1995 $303 $44,697 $(24,750) $20,250
</TABLE>
See accompanying notes to consolidated financial statements.
Smith Corona Corporation and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the year ended June 30,
(Dollars in thousands) 1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss) $(52,447) $5,127 $(9,022)
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
continuing operating activities:
Discontinued operations (9,798) (33) (1,222)
Depreciation and amortization 6,689 4,998 6,253
Restructuring costs 13,584 - 16,500
Deferred income taxes 11,096 1,818 (22,675)
Other noncash items 4,512 20 318
Changes in assets and liabilities:
Accounts receivable 10,556 (16,759) 20,496
Inventories 8,360 12,837 (14,155)
Prepaid expenses and other
current assets 139 (1,675) 2,080
Other assets 895 (1,112) 2,029
Trade payables (7,572) 3,804 (9,984)
Accrued liabilities and income
taxes payable (4,280) (651) (4,844)
Postretirement benefits and
pension liability (1,211) (731) 17,257
Other long-term liabilities 1,443 198 730
Net cash provided by (used in)
continuing operations (18,034) 7,841 3,761
Net cash provided by (used in)
discontinued operations 1,370 907 (70)
Net cash provided by (used in)
operating activities (16,664) 8,748 3,691
Cash flows from investing
activities:
Proceeds from sale of
discontinued operations 27,500 - -
Capital expenditures (3,166) (11,359) (4,952)
Net cash provided by (used in)
investing activities 24,334 (11,359) (4,952)
Cash flows from financing
activities:
Bank loans (repayments), net (2,602) 1,333 8,770
Dividends paid (4,537) (6,050) (6,050)
Net cash provided by (used in)
financing activities (7,139) (4,717) 2,720
Increase (decrease) in cash and
cash equivalents 531 (7,328) 1,459
Cash and cash equivalents at
beginning of year 6,472 13,800 12,341
Cash and cash equivalents at
end of year $ 7,003 $6,472 $13,800
Cash paid during the year for:
Interest $ 1,146 $ 842 $ 576
Income taxes $ 2,300 $2,077 $ 3,269
</TABLE>
See accompanying notes to consolidated financial statements.
Smith Corona Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share amounts)
1. Petition for Reorganization Under Chapter 11 and Basis of
Presentation
On July 5, 1995, Smith Corona Corporation filed a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy
Code in the District of Delaware. Prior to August 18, 1995, the
bankruptcy proceedings did not include any of the subsidiaries of
the Company. On August 18, 1995, SCM Office Supplies, Inc., SCC LI
Corporation (formerly known as "Histacount Corporation") and Hulse
Manufacturing Company, all wholly-owned Nonoperating Subsidiaries of
Smith Corona Corporation filed Chapter 11 petitions (collectively
the "Bankruptcy Proceedings"). The Bankruptcy Proceedings primarily
relate to all U.S. assets and operations and do not pertain to Smith
Corona Corporation's international subsidiaries. Condensed
consolidated proforma financial information for the entities
included in the Bankruptcy Proceedings is presented in Note 17.
Since July 5, 1995, the Company has been operating as a debtor-in-
possession. The costs associated with the Bankruptcy Proceedings of
approximately $572 have been categorized as selling, administrative
and research expenses in the accompanying consolidated statements of
operations.
The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles applicable
to a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.
Accordingly, the consolidated financial statements do not reflect
adjustments or provide for the potential consequences of the
Bankruptcy Proceedings of the Company. In particular, the
consolidated financial statements do not purport to show (a) the
realizable value of assets on a liquidation basis or their
availability to satisfy liabilities; (b) prepetition liability
amounts that may be allowed for claims or contingencies or the
status and priority thereof; (c) the effect of any changes that may
be made to the capitalization of the Company; or (d) the effect of
any changes that may be made in the Company's business operations.
The outcome of these matters is not presently determinable. The
Company has recently experienced recurring losses from operations;
has an accumulated deficit at June 30, 1995; had difficulty in
meeting its Amended and Restated Revolving Credit Agreement
covenants and has had to obtain waivers to meet certain of its
Debtor-In-Possession Credit Agreement covenants and cannot presently
determine with certainty the ultimate liability which may result
from the filing of claims in connection with the Bankruptcy
Proceedings. These conditions raise substantial doubt as to the
Company's ability to continue as a going concern.
Due to the Bankruptcy Proceedings, substantially all claims
against the Company, prior to July 5, 1995, (and prior to August 18,
1995 for the three Nonoperating Subsidiaries added to the
proceedings) are subject to the automatic stay provisions under the
Bankruptcy Code while the Company continues business operations as a
debtor-in-possession. Pre-petition claims may arise from the
determination by the Bankruptcy Court of allowed claims for
contingencies and other disputed amounts.
Liabilities recorded by the Company as of June 30, 1995 that
would be subject to compromise under any plan of reorganization
consist of the following:
Amount
Trade payables $11,760
Accrued liabilities 16,207
Income taxes payable 5,634
Postretirement benefits 12,999
Pension liability 18,801
Other long-term liabilities 5,569
Total(1) $70,970
(1) Excludes a net intercompany payable in the amount of $9,076 to
the entities not included in the Bankruptcy Proceedings.
At the Company's request, the Bankruptcy Court established a
bar date of October 31, 1995 for pre-petition claims against the
Company. A bar date is the date by which claims against the Company
must be filed if the claimants wish to receive any distribution in
the Bankruptcy Proceedings. The Company has given notice to all
known actual or potential claimants subject to the bar date of their
need to file a proof of claim with the Bankruptcy Court. The
Company will reconcile claims that differ from the Company's
records, and any differences that cannot be resolved by negotiated
agreement between the Company and the claimant will be resolved by
the Bankruptcy Court. Accordingly, allowed claims may arise which
are not currently reflected in the Company's financial statements
and recorded claims are subject to change. The ultimate amount of
and settlement terms for such liabilities are subject to a plan of
reorganization which is subject to approval by the Bankruptcy Court
and, accordingly, are not presently determinable.
Since the filing date, the Company has initiated preliminary
discussions with the official committee of its unsecured creditors
that was appointed by the U.S. Trustee pursuant to the Bankruptcy
Code. The timing of any filing of a Plan of Reorganization cannot
be predicted.
2. Significant Accounting Policies
Basis of Consolidation: The consolidated financial statements
include the accounts of Smith Corona Corporation and its wholly-
owned subsidiaries (the "Company"). All significant intercompany
accounts and transactions have been eliminated.
Cash Equivalents: All highly liquid investments purchased with a
maturity of three months or less are considered to be cash
equivalents.
Inventories: Inventories are stated at the lower of cost or market.
Cost is determined principally by the first-in, first-out (FIFO)
method.
Property, Plant and Equipment: Property, plant and equipment are
stated at cost. Depreciation is provided on the straight-line basis
at rates based on estimated useful lives. Lives used in computing
depreciation range from two to twelve years for equipment and forty
years for buildings. Leasehold improvements are amortized over the
lease term. At the time properties are disposed, the property and
related accumulated depreciation accounts are relieved of the
applicable amounts and any profit or loss is included in operations.
Maintenance and repairs are charged against operations as
incurred. Expenditures that materially increase capacities or
extend useful lives of property, plant and equipment are
capitalized.
Retirement Plans: Substantially all domestic employees participate
in the Company's retirement plans for salaried and hourly employees.
The cost of United States pension plans is accrued in amounts equal
to the normal cost of current service under the plans together with
amortization of prior service costs. Outside of the United States,
costs are accrued and paid in accordance with local requirements.
Postretirement Plans: The Company provides for the expected cost of
postretirement benefits over the employee's years of active service.
Research and Development: The Company's product development costs
are expensed as incurred. Research and development expense was
$7,218, $7,966 and $10,064 for the years ended June 30, 1995, 1994
and 1993, respectively.
Goodwill: The excess of the allocated acquisition cost over the
fair value of net assets of businesses acquired is included in other
assets and is being amortized by the straight-line method over forty
years.
Foreign Currency: The functional currency of the Company's foreign
operations is deemed to be the United States dollar. Consequently,
all translation gains and losses are included in income.
Forward Foreign Currency Contracts: From time to time, the Company
may enter into forward foreign currency contracts to hedge against
foreign currency fluctuations. Gains and losses on these contracts
were recorded in net income in the period in which the exchange rate
changed. During the years ended June 30, 1995 and 1993, forward
foreign currency contracts were in place to reduce the impact of
foreign currency fluctuations on transactions designated in a
currency other than the U.S. dollar. At June 30, 1995 and 1993,
there were no outstanding forward contracts. There were no such
contracts in effect during Fiscal 1994.
Income Taxes: Deferred income taxes are determined based on the
difference between the financial statement and tax basis of assets
and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.
Earnings Per Share: Earnings per share have been calculated based
upon 30,250,000 shares of common stock outstanding.
Reclassifications: Certain reclassifications have been made to the
prior years' financial statements to conform with the 1995
presentation. In addition, amounts in prior years' financial
statements have been reclassified to reflect continuing operations
(see Note 12).
3. Changes in Accounting Principles
Effective July 1, 1992, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," SFAS
No. 112, "Employers' Accounting for Postemployment Benefits," and
SFAS No. 109, "Accounting for Income Taxes." The sum of the
accounting changes in Fiscal 1993 amounted to $10.
SFAS 106 requires the accrual method of accounting for the
expected costs of postretirement benefits other than pensions during
the years of an employee's service. The cumulative effect of this
accounting change was a decrease to Fiscal 1993 net income of
$3,507, or $.12 per share. In addition, the effect of adopting this
statement in Fiscal 1993, exclusive of the cumulative effect, was a
decrease to net income of $265.
SFAS 112 requires the accrual method of accounting for benefits
to former or inactive employees after employment but before
retirement. In prior years, the expense was recognized when claims
were paid. The cumulative effect of this accounting change in
fiscal year 1993 was a reduction in net income of $183 (less than
$.01 per share).
SFAS 109 requires the liability method of accounting for income
taxes rather than the deferred method previously used. The
cumulative effect of this accounting change was an increase to
fiscal year 1993 net income of $3,700, or $.12 per share.
4. Inventories
A summary of inventories, by major classification, is as
follows:
June 30,
1995 1994
Raw materials and supplies $ 995 $ 1,352
Work-in-process 17,807 27,702
Finished goods 35,533 33,641
Total $54,335 $62,695
5. Property, Plant and Equipment
A summary of property, plant and equipment, by major
classification, is as follows:
June 30,
1995 1994
Land $ 501 $ 1,703
Buildings and improvements 1,245 17,122
Machinery and other equipment 55,716 57,246
Total 57,462 76,071
Accumulated depreciation (34,574) (39,289)
Total $22,888 $36,782
Included in prepaid and other current assets as of June 30,
1995 are fixed assets held for sale with a net book value of $5,894.
6. Accrued Liabilities
Accrued liabilities consist of the following:
June 30,
1995 1994
Accrued restructuring costs $13,268 $4,132
Payroll and related expenses 5,871 7,191
Accrued promotional expenses 7,050 6,471
Other 9,260 9,141
Total $35,449 $26,935
7. Leases
The Company has entered an agreement dated February 28, 1995 to
purchase this property, under a lease option, and concurrently sell
the property to a third party purchaser. The Company anticipates
closing on the transaction in September, 1995. The facility is
subleased by the Company to the third party purchaser.
The Company leases certain facilities, equipment and vehicles
for various periods through 2009 under non-cancelable operating
leases. Rental expense under these operating leases was $6,243,
$6,868 and $6,391 for the years ended June 30, 1995, 1994 and 1993,
respectively.
The future minimum rental commitments for the operating leases
are as follows:
Year Ended Amount
June 30, (In thousands)
1996 $ 4,420
1997 3,340
1998 2,867
1999 1,387
2000 888
Thereafter 2,822
Total $15,724
The Company has entered into an agreement dated February 28,
1995 to purchase warehousing property located in Cortland, New York,
under a lease option, and concurrently sell the property to a third
party purchaser. The Company anticipates closing on the transaction
in October 1995. The facility is subleased by the Company to the
third party purchaser.
Under the Bankruptcy Code, the Company may elect to assume or
reject real estate leases, and other unexpired executory pre-
petition contracts, subject to Bankruptcy Court approval. The
Company cannot presently determine with certainty the ultimate
liability which may result from the filing of claims for all
contracts which may be rejected.
8. Bank Loans
On April 7, 1995, the Company entered into an Amended and
Restated Revolving Credit Agreement (the "Amended and Restated Credit
Agreement") with two banks (the "Lenders"), the use of which was
generally to satisfy working capital requirements. Aggregate
borrowings under the Amended and Restated Credit Agreement amounted
to $1,376,208, $750,548 and $699,950 for Fiscal 1995, 1994 and 1993,
respectively, while aggregate repayments were $1,378,810, $749,215
and $691,180 for Fiscal 1995, 1994 and 1993, respectively. The
Amended and Restated Credit Agreement provided for extensions of
revolving credit loans and letters of credit, limited to a
percentage of eligible receivables and inventories, in an amount not
to exceed $30,000 up through March 30, 1996; the aggregate principal
amount of such lending commitment reduces to an amount not in excess
of $25,000 from March 31, 1996 through the July 1, 1996 termination
date. The Amended and Restated Credit Agreement was secured by a
security interest in the domestic assets of the Company pursuant to
a Security Agreement of even date therewith. Interest was at
variable rates equal to the greater of the prime rate of interest,
the base certificate of deposit rate plus 1.0 percent or the federal
funds effective rate plus .5 percent for any day. As of June 30,
1995, the interest rate on borrowings was 9.0 percent. A fee is
payable quarterly on the commitment.
The Amended and Restated Credit Agreement contained certain
covenants including restrictions on payment of dividends, and
limitations on sale of assets, capital expenditures, incurrence of
other debt, liens or guarantees and making of investments, loans and
advances. The primary financial covenants included not permitting
consolidated tangible net worth at the end of any fiscal quarter to
be (a) less than it was as of March 31, 1995 minus $3,000 plus (b)
80.0 percent of consolidated net income for all full fiscal quarters
subsequent to March 31, 1995, maintaining a ratio of current assets
(other than inventories) to current liabilities (other than loans
outstanding under the Amended and Restated Credit Agreement) of at
least 0.9 to 1.0 and maintaining minimum operating profit levels.
As of June 30, 1995, the Company was in technical default of its
Amended and Restated Credit Agreement, however, the loan was paid in
full in July 1995.
On July 10, 1995, the Company entered into a Debtor-In-
Possession Credit Agreement (the "Debtor-In-Possession Credit
Agreement") with its Lenders which was approved by the United States
Bankruptcy Court for the District of Delaware on August 2, 1995.
The proceeds of the Debtor-In-Possession Credit Agreement were used
to repay the amounts outstanding under the Amended and Restated
Credit Agreement. The Debtor-In-Possession Credit Agreement, as
amended, provides for extensions of revolving credit loans, term
loans and letters of credit, limited to a percentage of eligible
receivables and inventories, in an amount not to exceed $24.0
million through the June 30, 1996 termination date. Interest is 2
percent over the greatest of the Prime Rate, Base CD Rate plus 1
percent or Federal Funds Effective Rate plus .5 percent. Payments
of dividends is prohibited by the terms of the Debtor-In-Possession
Credit Agreement, under which the Company is limited to maximum
monthly amounts of inventory and cash disbursements. Additionally,
the Company is restricted to $500 of capital expenditures in each
six month period ended December 31, 1995 and June 30, 1996.
Management believes that it has adequate flexibility and that such
covenants should not impose undue restrictions on the operations of
the Company during its Bankruptcy Proceedings. The Company is
currently in compliance with the terms of the Debtor-In-Possession
Credit Agreement or has obtained waivers as necessary. The Debtor-
In-Possession Credit Agreement is secured by substantially all of
the Company's assets.
The carrying value of the Company's bank loans as of June 30,
1995 approximates fair value, which was determined based on
transactions reflected under the Debtor-In-Possession Credit
Agreement.
9. Stockholders' Equity
Authorized capital consisted of 90,000,000 shares of common
stock and 10,000,000 shares of preferred stock, both having $0.01
par value per share. As of June 30, 1995 and 1994, there were
30,250,000 shares of common stock and no shares of preferred stock
outstanding.
Under the Company's stock option plan, as amended, 3,900,000
shares of common stock were reserved for issuance to officers and
key employees at June 30, 1995. Options are granted at the fair
market value of the stock at the date of grant. The options become
exercisable beginning three years from and expire ten years after
date of grant.
A summary of the stock option activity is presented as follows:
<TABLE>
<CAPTION>
Price Range Number of Shares
<S> <C> <C>
Outstanding June 30, 1992 $5.63 - 12.50 1,331,500
Granted 4.88 - 7.31 1,020,500
Canceled 6.00 - 12.50 (55,500)(1)
Outstanding June 30, 1993 $4.88 - 12.50 2,296,500
Granted 5.13 - 6.50 528,500
Canceled 5.75 - 12.50 (293,000)(1)
Outstanding June 30, 1994 $4.88 - 12.50 2,532,000
Granted 2.75 - 3.25 684,000
Canceled 3.25 - 12.50 (241,500)(1)
Outstanding June 30, 1995 $2.75 - 12.50 2,974,500
Exercisable June 30, 1995 $2.75 - 12.50 1,669,000
</TABLE>
(1)Cancelations result from employees' termination.
10. Geographic Area Information
The Company operates in one industry segment which includes
design, manufacture and distribution of typewriters, personal word
processors and related accessories. The Company manufactures its
products principally at its facilities located in Mexico and
Singapore and distributes its products through a variety of
distribution channels, domestically and internationally. Transfers
between geographic areas are generally priced to recover cost plus
an appropriate markup for profit. Information regarding the
Company's operations in different geographic locations is shown
below:
<TABLE>
<CAPTION>
For the year ended June 30,
1995 1994 1993
<S> <C> <C> <C>
Net sales to customers:
United States $158,047 $215,539 $200,805
Singapore - 4,950 6,365
Other Foreign 38,262 40,817 29,676
Total $196,309 $261,306 $236,846
Inter-area transfers:
United States $21,108 $22,033 $16,728
Singapore 74,060 72,193 73,210
Other Foreign 9,457 7,398 1,081
Total $104,625 $101,624 $ 91,019
Operating income (loss):
United States $(24,466) $15,939 $(5,483)
Singapore (8,294) 5,422 4,274
Other Foreign (6,701) (7,295) (11,477)
Corporate (7,187) (5,617) (5,270)
Eliminations (118) (27) 2,608
Total $(46,766) $ 8,422 $(15,348)
Identifiable assets:
United States $88,741 $131,356 $137,131
Singapore 21,702 26,250 34,960
Other Foreign 25,623 36,082 18,525
Total $136,066 $193,688 $190,616
</TABLE>
Sales to one of the Company's largest customers, Wal-Mart
Stores, Inc., amounted to 14.0%, 12.2% and 12.3% of consolidated net
sales during 1995, 1994 and 1993, respectively, and was the only
customer responsible for more than 10% of net sales.
11. Pension Plans and Postretirement Benefits
The plans covering salaried employees generally provide pension
benefits that are based upon formulas that reflect all service with
the Company and its predecessors and the employee's compensation
during the employee's highest five consecutive years of service
before retirement. Plans covering hourly employees generally
provide benefits of stated amounts for each year of service. The
Company's funding policy is to make annual contributions in an
amount which is not less than that required by the Internal Revenue
Service regulations.
The net periodic pension cost for the years ended June 30,
1995, 1994 and 1993 is comprised of the following components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost $1,664 $1,979 $1,829
Interest cost 5,398 5,396 5,278
Return on plan assets:
Actual (9,097) 143 (5,863)
Unrecognized (gain) loss 3,395 (5,687) 516
Amortization of deferred
costs and actuarial (gains)
and losses (595) (494) (676)
Pension cost $ 765 $1,337 $1,084
</TABLE>
The assumptions used in the development of these amounts were:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Discount rate 8.00% 8.00% 8.50%
Rates of increase in
compensation levels 5.50% 5.50% 5.75%
Rate of return on
plan assets 9.25% 9.25% 9.25%
</TABLE>
The following tables set forth the funded status and amounts
recognized in the Company's consolidated balance sheets:
<TABLE>
<CAPTION>
June 30, 1995
Over- Under-
Funded Funded
Plans Plans Total
<S> <C> <C> <C>
Actuarial present value
of benefit obligation:
Vested benefit obligation $36,856 $29,246 $66,102
Accumulated benefit obligation $37,611 $29,265 $66,876
Projected benefit obligation $41,592 $29,265 $70,857
Market value of assets
(principally publicly traded
securities) $41,179 26,095 67,274
Funded status 413 3,170 3,583
Unrecognized gains 9,920 5,298 15,218
Net accrued pension liability $10,333 $ 8,468 $18,801
</TABLE>
The total amount of the June 30, 1995 net accrued pension liability
is reflected on the consolidated balance sheets as liabilities subject
to compromise.
<TABLE>
<CAPTION>
June 30, 1994
Over- Under-
Funded Funded
Plans Plans Total
<S> <C> <C> <C>
Actuarial present value of
benefit obligation:
Vested benefit obligation $33,796 $30,898 $64,694
Accumulated benefit obligation $34,783 $31,311 $66,094
Projected benefit obligation $39,727 $31,951 $71,678
Market value of assets
(principally publicly traded
securities) 34,812 26,869 61,681
Funded status 4,915 5,082 9,997
Unrecognized gains 5,207 5,157 10,364
Net accrued pension liability $10,122 $10,239 $20,361
</TABLE>
The Company also has defined contribution savings plans
covering its domestic and certain of its foreign employees, under
which the Company matches a portion of the contributions made by
participating employees. The Company's costs for matching
contributions under savings plans totaled $543, $681 and $819 for
the years ended June 30, 1995, 1994 and 1993, respectively.
The Company has a non-qualified supplemental pension plan
covering certain employees which provides for incremental pension
payments from the Company's funds. The net accrued pension
liability related to the unfunded plan was $1,893 and $1,458 at June
30, 1995 and 1994, respectively. Pension expense for the non-
qualified plan was $683, $450 and $260 in Fiscal 1995, 1994 and
1993, respectively.
The Company also provides health care and life insurance
benefits for certain retired employees. Substantially all of the
Company's domestic employees, and certain employees in foreign
countries, may become eligible for such benefits if they reach a
specified retirement age while working for the Company.
Summary information on the Company's postretirement benefit
plans, which are unfunded, is as follows:
<TABLE>
<CAPTION>
Year ended June 30,
1995 1994
<S> <C> <C>
Financial status of plans:
Accumulated postretirement
benefit obligation (APBO):
Retirees $7,893 $ 6,135
Fully eligible, active
plan participants 2,344 3,142
Other active plan
participants 2,112 2,411
Unrecognized gains 650 962
Accrued postretirement
benefit cost $12,999 $12,650
</TABLE>
The accrued postretirement benefit cost as of June 30, 1995 has
been reflected on the balance sheets as liabilities subject to
compromise.
The components of net periodic postretirement benefit
cost are as follows:
<TABLE>
<CAPTION>
Year ended June 30,
1995 1994
<S> <C> <C>
Service cost, benefits attributed to
employee service during the year $189 $ 202
Interest cost on accumulated
postretirement benefit obligation 884 904
Amortization of gains (55) (17)
Net periodic postretirement benefit
cost $1,018 $1,089
</TABLE>
The discount rate used in determining the APBO was 8.0% in 1995
and 1994. The assumed health care cost trend rate used in measuring
the accumulated postretirement benefit obligation was 11% in 1995
and 1994, declining to an ultimate rate of 5.5% over approximately
sixty years.
If the health care cost trend rate assumptions were increased
by 1%, the APBO as of June 30, 1995 would be increased by 9%. The
effect of this change in health care cost trend rates on net
periodic postretirement benefit cost of 1995 would be an increase of
8%.
12. Discontinued Operations
On November 4, 1994 the Company sold substantially all of the
assets and liabilities of Histacount Corporation, a wholly-owned
subsidiary, for $14,500. The after-tax gain on the sale includes
utilization of a capital tax-loss carry-forward and was recorded in
the Fiscal 1995 statement of operations. On July 5, 1994 the
Company sold substantially all the assets and liabilities of SCM
Office Supplies, Inc., a wholly-owned subsidiary, for $13,000. The
loss on the sale was recorded in the Fiscal 1994 statement of
operations. The sale proceeds of approximately $27,500 were used to
reduce the Company's debt and accounts payable.
Accordingly, the consolidated statements of operations reflect
SCM Office Supplies, Inc. and Histacount Corporation's operating
results as discontinued operations and the balance sheets segregate
the net assets of discontinued operations.
Net assets and summary operating results of discontinued
operations are as follows:
June 30,1994
Current assets $15,665
Non-current assets 10,396
Total liabilities (6,989)
Net assets $19,072
<TABLE>
<CAPTION>
Year ended June 30,
1995 1994 1993
<S> <C> <C> <C>
Net sales $5,774 $85,375 $76,768
Income from operations
before income taxes $1,018 $ 3,388 $1,879
Income taxes 347 1,155 657
Net income from operations 671 2,233 1,222
Gain (loss) on disposal
of assets (net of taxes
of $(196) and $(297), respectively) 9,127 (2,200) -
Net income $9,798 $ 33 $1,222
</TABLE>
13. Income Taxes
The components of income (loss) from continuing operations
before income taxes are as follows:
<TABLE>
<CAPTION>
Year ended June 30,
1995 1994 1993
<S> <C> <C> <C>
United States $(37,798) $2,723 $(18,521)
Foreign (9,933) 4,991 2,756
Total $(47,731) $7,714 $(15,765)
</TABLE>
The components of income tax expense consist of:
<TABLE>
<CAPTION>
Year ended June 30,
1995 1994 1993
<S> <C> <C> <C>
United States:
Current $141 $203 $ 274
Deferred 8,787 1,339 (4,948)
Foreign 2,071 165 934
State 3,666 1,771 (1,124)
Total $14,665 $3,478 $(4,864)
</TABLE>
Income tax expense is included in the financial statements as
follows:
<TABLE>
<CAPTION>
Year ended June 30,
1995 1994 1993
<S> <C> <C> <C>
Continuing operations $14,514 $2,620 $(5,521)
Discontinued operations 151 858 657
Total $14,665 $3,478 $(4,864)
</TABLE>
The components of the net deferred tax assets were as follows:
<TABLE>
<CAPTION>
June 30,
1995 1994
<S> <C> <C>
Deferred tax assets:
Accounts receivable $1,049 $1,226
Inventory 2,311 749
Postretirement benefits
other than pensions 4,969 4,828
Pension 7,187 7,688
Restructuring 2,755 1,580
Other liabilities 8,529 6,959
Net operating loss carryforwards 18,288 12,124
Capital loss carryforwards 7,647 10,955
Miscellaneous 2,304 7
Valuation allowances (50,241) (21,320)
Total deferred tax assets $ 4,798 $24,796
Deferred tax liabilities:
Property, plant and equipment $1,392 $3,240
Miscellaneous - 7,054
Total deferred tax liabilities 1,392 10,294
Net deferred tax assets $ 3,406 $14,502
</TABLE>
The Company recorded a Fiscal 1995 charge to income tax expense
representing establishment of valuation allowances against
substantially all of its domestic deferred income tax assets. The
valuation allowance reflects the Company's assessment that the
Bankruptcy Proceedings of Smith Corona Corporation and ongoing
operating losses have impaired the realization of such net deferred
tax assets.
The provisions for income taxes differ from the amounts
computed by applying the federal income tax statutory rate. The
following is a summary of the reasons for these differences:
<TABLE>
<CAPTION>
Year Ended June 30,
1995 1994 1993
<S> <C> <C> <C>
Income (loss) from continuing
operations before income taxes $(47,731) $ 7,714 $(15,765)
Statutory tax rate 34% 34% 34%
Tax computed at statutory rate (16,229) 2,623 (5,360)
Increase (reduction):
State income taxes,
net of federal benefit (1,685) (1,707) (1,137)
Effect of foreign earnings 1,105 (3,467) (4,719)
Valuation allowance 32,232 15,670 5,650
Other adjustments (909) (10,499) 45
Total $ 14,514 $ 2,620 $ (5,521)
</TABLE>
The Company's Singapore operations had been granted "pioneer
tax status" until February 1994 by the Singapore government and, as
a result, have paid no Singapore taxes on unremitted Singapore
earnings to that date. The impact of the change in status was not
significant in both Fiscal 1995 and Fiscal 1994.
The U.S. income tax returns prior to 1986 have been examined by
the Internal Revenue Service and all matters have been settled. The
Internal Revenue Service is currently examining the U.S. income tax
returns for 1989 through 1994. No matters have arisen as a result
of the examination to date. The New York State Tax authority is
currently examining the Company's 1989 through 1994 New York State
tax returns. As a result of their examination to date, the New York
State tax authority has issued a preliminary notice of deficiency in
the amount of approximately $3,400. The Company intends to contest
the proposed assessment vigorously. The Company does not believe
that the ultimate resolution of this action will have a material
adverse impact on its results of operations or financial position.
14. Commitments and Other Matters
Certain past practices of the Company regarding hazardous
substances and/or hazardous wastes are the subject of investigation
by federal and state regulatory authorities, or are the subject of
lawsuits filed by such authorities. At June 30, 1995 and 1994, the
Company had recorded approximately $4,203 and $3,274, respectively,
related to environmental matters. Because of the uncertainties
associated with assessing environmental matters, the related
ultimate liability is not determinable. However, based on facts
presently known, management does not believe that these
investigations or lawsuits, if resolved adversely to the Company,
would individually or in the aggregate have a material adverse
effect on the Company's financial position or results of operations.
The Company is involved in proceedings with the New York
Department of Environmental Conservation (DEC) and the United States
Environmental Protection Agency regarding the clean-up of a now-
closed manufacturing facility and certain waste disposal sites in
upstate New York. The remedial investigation and feasibility study
of the now-closed manufacturing facility site has been completed.
The feasibility study report has been approved by the DEC and the
record of decision has been finalized. On March 31, 1993, the
Company executed a final signed consent order from the DEC and
remedial actions commenced. Remediation activities at the site have
been delayed as a result of an extension of the public comment
period to address the remediation plan approved by the DEC.
Management believes that the Company has made adequate provision for
the approved remediation activities.
In June 1992, the Company was served with a summons and
complaint in the U.S. District Court, Northern District of New York,
in a private contribution action. The plaintiffs in this action are
Coopers Industries, Inc., Keystone Consolidated Industries, Inc.,
The Monarch Machine Tool Co., Niagara Mohawk Power Corporation and
Overhead Door Corporation. The action, which lists the Company as a
defendant with fourteen other defendants, seeks contribution for
response costs incurred to date, and to be incurred in the future,
for the remediation of a site in Cortland, New York. Management
does not believe it disposed of any hazardous substances at this
site and is vigorously contesting this matter.
The Company filed a complaint on November 4, 1994 against
CoStar Corporation("CoStar") seeking (i) a declaratory judgment that
the Company was not infringing CoStar's trade dress, (ii) damages
for breach of warranty and fraud and (iii) rescission of contracts
induced by such fraud. The Complaint related to envelope printers
purchased by the Company from CoStar and label printers manufactured
by a third party for the Company. CoStar subsequently filed an
answer denying the Company's allegations and asserting counterclaims
alleging that the Company had infringed its label printer's trade
dress, breached the provisions of a confidentiality agreement
between the Company and CoStar, and tortiously injured CoStar's
business reputation. In addition, CoStar filed a related third-
party complaint against DH Technology, Inc. ("DH"). On June 23,
1995, the Company entered into a Settlement Agreement with CoStar
and DH in connection with the lawsuit. Pursuant to the Settlement
Agreement, the Company agreed, among other things, to pay CoStar the
sum of $55,085 on each of June 23, 1995, July 31, 1995, August 31,
1995 and September 29, 1995 and to return certain tooling and
equipment to CoStar, in exchange for, among other things, the
release by CoStar of its claims against the Company. The Company
recorded a $1,300 pretax third quarter charge primarily relating to
the writeoff of inventory and tooling.
On April 18, 1991, an antidumping proceeding was commenced
against the Company at the Department of Commerce (Commerce) and
before the International Trade Commission, concerning portable
electric typewriters imported from Singapore. Subsequently, on June
22, 1993, the Company and Commerce signed a suspension agreement,
suspending the antidumping investigation and calling for the Company
to monitor its international prices. On February 4, 1994, all of
the parties signed a settlement agreement covering the antidumping
investigation and related litigation. Under the terms of the
agreement, the petitioner withdrew its petition against the
Company's Singapore imports and the Company sought revocation of
various antidumping duty orders against typewriters and word
processors from Japan. Pursuant to the agreement, the antidumping
proceedings have been terminated.
On June 8, 1990, the Company filed suit in the United States
District Court for the District of Tennessee against Pelikan, Inc.
alleging patent infringement and false advertising. On February 24,
1992, the Court entered a judgment awarding the Company
approximately $3,120 plus post-judgment interest. Pelikan filed an
appeal, petitioning for a rehearing by the Court of Appeals, and
subsequently offered to pay to the Company a portion of the judgment
aggregating approximately $1,900. The $1,900 portion of the
judgment was reflected in the June 30, 1993 financial statements.
Pelikan's petition for rehearing was subsequently denied and on
August 9, 1993, the Company and Pelikan entered into an agreement
pursuant to which Pelikan agreed to pay $525 to the Company for
fees, expenses and costs incurred in the suit along with the
remaining $1,220 judgment. On August 11, 1993, Pelikan paid the
settlement amount to the Company and satisfied the judgment,
including interest.
The Company is also a defendant or plaintiff in various other
legal actions which have arisen in the ordinary course of its
business. It is the opinion of management, based on advice of
counsel with respect to legal matters, that the ultimate resolution
of these matters and the environmental matters discussed above will
not have a material adverse effect on the Company's financial
position or results of operation.
The Company has severance agreements in place with certain
executive officers and other members of management. Substantially
all the agreements expire on June 30, 1996 and provide for severance
in the event of involuntary termination from the Company. Severance
benefits under these agreements range from one-half year to two
years salary and aggregate approximately $2,500 in the event all
employees under such severance agreements were involuntarily
terminated. In addition, on June 29, 1995, the Company entered into
an agreement with a consulting firm to provide interim management
and financial consulting services to the Company. Under the terms
of the agreement, the consulting firm's President will serve as the
President, Chief Executive Officer and Director of the Company.
This firm will also provide other professional staff as deemed
necessary. Fees for services range from $1.7 to $2.5 per day per
professional which currently aggregates approximately $125 per
month.
15. Restructuring Costs
Over the past few years, the Company has faced intense
competition from foreign producers. On May 8, 1995 the Company
announced a major restructuring plan whereby the Company's
typewriter manufacturing will be relocated from its Singapore and
Batam Island, Indonesia facilities to its Mexico facility. This
action will result in the termination of approximately 1,300 workers
in Singapore and Batam who will be replaced with approximately 600
workers in Mexico. This action is expected to save approximately
$10,000 pretax annually primarily through lower labor costs as well
as the greater utilization of the Mexico facility. The Company
expects to cease production in Singapore and Batam Island, Indonesia
by mid-November 1995, thereafter relocating equipment to Mexico
where typewriter production is expected to commence in the third
quarter of Fiscal 1996. The Company placed its Singapore facility
and the underlying land lease up for sale. The Batam Island
facility lease expires December 26, 1995.
In addition to the relocation of typewriter manufacturing to
Mexico, the Company will also eliminate approximately 180 support
positions within research and development, finance, service,
distribution, selling and marketing areas in both its Cortland, New
York and New Canaan, Connecticut locations. Approximately $10,000
in additional annual pretax savings are expected from elimination of
these support positions. These reductions should be completed by
the end of the first quarter of Fiscal 1996.
The net result of these actions will be to reduce the Company's
May 8, 1995 workforce of approximately 2,500 by approximately 680.
As a result of these actions, the Company recorded a pretax
charge of approximately $14,870 in the fourth quarter of Fiscal
1995, of which approximately $1,877 represents primarily non-cash
machinery and equipment asset write-offs, and the remainder relates
to employee severance. Additionally, certain costs, primarily
relating to the move of machinery and equipment, temporary lease-
back of facilities, and renovations, of approximately $6,000 pretax,
will be recognized as charges to operations as incurred during
fiscal year 1996. The fourth quarter charge is lower than
previously announced as a result of revisions to prior estimates.
The Fiscal 1995 restructuring provision and subsequent activity
is as follows:
<TABLE>
<CAPTION>
Asset
Impair- Other
Severance ments Costs Total
<S> <C> <C> <C> <C>
1995 Provision $12,993 $1,492 $ 385 $14,870
1995 Activity (1) (1,499) - (100) (1,599)
June 30, 1995 balance $11,494 $1,492 $ 285 $13,271
</TABLE>
(1) Represents cash payments, except for the asset impairments,
and other costs which are non-cash items.
In July 1992, in order to maintain its leadership as the low-
cost producer in a highly competitive worldwide business, the Board
of Directors approved and the Company announced a plan to phase out
the Company's manufacturing operations in Cortland, New York and
relocate them to a new facility in Mexico. As a result of this
decision, during Fiscal 1993, the Company provided $16,500 in
restructuring charges, of which approximately $3,000 was non-cash in
nature (see table below).
The Fiscal 1993 restructuring provision and subsequent activity
is as follows:
<TABLE>
<CAPTION>
Asset Asset
Redeployment Impair- Other
Severance Costs ments Costs Total
<S> <C> <C> <C> <C> <C>
1993 Provision $8,300 $3,300 $3,000 $1,900 $16,500
Activity(1) (1,050) (1,150) (621) (1,900) (4,721)
June 30, 1993 balance 7,250 2,150 2,379 - 11,779
Activity (1) (3,945) (2,150) (1,552) - (7,647)
June 30, 1994 balance 3,305 - 827 - 4,132
Activity (1) (1,969) - (827) - (2,796)
Credit Provision (2) (1,286) - - - (1,286)
June 30, 1995 balance$ 50 $ - $ - $ - $ 50
</TABLE>
(1) Represents cash payments, except for the asset impairments,
which are non-cash items
(2) Severance no longer required due to Fiscal 1995
restructuring action.
The severance cost related to approximately 875 employees at
the Cortland facility. Severance benefit arrangements that would be
available to employees whose positions were eliminated were
communicated through a Company memorandum to all Cortland, N.Y.
employees when the restructuring action was adopted and announced in
July 1992. By the end of June 1994 all affected individuals had
been terminated.
The charge for asset redeployment costs consisted primarily of
incremental personnel costs, travel and lodging for 39 employees
responsible for the set-up and establishment of the equipment in the
Mexican facility. The employees responsible for the set-up and
establishment were notified of their termination and subsequent
temporary duty assignment. As a consequence of management's
decision, the value of certain assets which were used in the
Cortland manufacturing process became impaired and such impairment
was included in the restructuring charge. Other costs, which were
expensed as incurred, consisted of incremental costs associated with
the site selection and outside consulting fees.
The relocation plan, originally anticipated to take
approximately one year to complete, was delayed as a consequence of
heavy spring 1993 rainfall in Baja California together with a
reevaluation of lease versus purchase of the facility. By the end
of Fiscal 1994, the Company had essentially completed the
relocation. The annual savings resulting from the restructuring
originally anticipated in 1994 were not realized as cost of sales
continued to reflect the higher Cortland manufacturing labor costs.
The annual savings of approximately $15.0 million was substantially
realized during Fiscal 1995. In Fiscal 1995 a reduction in
restructuring costs of $1,286 was recognized as a further result of
the Singapore restructuring activities.
16. Quarterly Financial Data (Unaudited)(1)
<TABLE>
<CAPTION>
Fiscal Year Ended First Second Third Fourth
June 30, 1995 Quarter Quarter Quarter(4) Quarter(5)
<S> <C> <C> <C> <C>
Net sales $60,114 $63,351 $31,384 $41,460
Gross margin 13,011 13,275 (4,865) (6,071)
Operating income (loss) 1,741 826 (19,042) (30,291)(2)
Income (loss) from
continuing operations 944 324 (12,102) (51,411)
Discontinued operations
(net of income taxes):
Income from operations 270 115 - 286
Gain on disposal of
discontinued operations - 8,722 - 405
Net income (loss) $ 1,214 $9,161 $(12,102) $(50,720)
Earnings per common
share (3):
Income (loss) from
continuing operations $ .03 $ .01 $ (.40) $ (1.69)
Discontinued operations:
Income from operations .01 - - .01
Gain on disposal of
discontinued operations - .29 - .01
Net income (loss) per
share $ .04 $ .30 $ (.40) $ (1.67)
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended First Second Third Fourth
June 30, 1994 Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Net sales $72,217 $74,137 $60,528 $54,424
Gross margin 17,836 14,101 12,367 12,675
Operating income 5,696 1,245 207 1,274
Income from
continuing operations 3,632 708 50 704
Discontinued operations
(net of income taxes):
Income (loss) from
operations 395 836 1,337 (335)
Loss on disposal of
discontinued operations - - - (2,200)
Net income (loss) $ 4,027 $ 1,544 $ 1,387 $(1,831)
Earnings per common
share (3):
Income from
continuing operations $ .12 $ .02 $ .01 $ .02
Discontinued operations:
Income (loss) from
operations .01 .03 .04 (.01)
Loss on disposal of
discontinued
operations - - - (.07)
Net income (loss) per
share $ .13 $ .05 $ .05 $ (.06)
</TABLE>
(1) Amounts have been reclassified, where applicable, to reflect
the discontinued operations of SCM Office Supplies, Inc. and
Histacount Corporation.
(2) Includes restructuring costs of $14,870.
(3) Based on 30,250,000 shares of common stock.
(4) Includes charges of approximately $1,200 and $2,600 for write-
downs of property, plant and equipment and inventory,
respectively.
(5) Includes charges of approximately $3,400 and $5,500 for write-
downs of property, plant and equipment and inventory,
respectively, as well as an income tax charge of approximately
$20,000 relating to the utilization of certain deferred tax
assets and a reserve for substantially all of the remaining
deferred income tax assets.
17. Condensed Consolidated Proforma Financial Information
The following proforma financial information shows the effects
of adoption of Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code," had the
guidelines of such statement been adopted as of June 30, 1995, and
separates the consolidated balance sheets as of June 30, 1995, and
consolidated statements of operations and cash flows for the twelve
months then ended, of those entities that are included in the
Bankruptcy Proceedings and those that are not.
Condensed Proforma Balance Sheets
<TABLE>
<CAPTION>
Non-
Debtor-In Debtor-In Proforma Historical
Possession Possession Elimin- Consol- Consol-
Entities Entities ations idated idated
<S> <C> <C> <C> <C> <C>
Current assets $ 71,393 $ 37,070 $ - $108,463 $108,463
Property, plant
and equipment 12,776 10,112 - 22,888 22,888
Other assets 81,875 16,698 (93,858) 4,715 4,715
Total assets $166,044 $63,880 $(93,858) $136,066 $136,066
Bank loans $ 17,400 $ - $ - $ 17,400 $ 17,400
Other current
liabilities 7,702 19,744 - 27,446 61,047
Intercompany with
affiliates 9,076 (9,076) - - -
Other long-term
liabilities - - - - 37,369
Liabilities subject
to compromise 70,970 - - 70,970 -
Stockholders' equity 60,896 53,212 (93,858) 20,250 20,250
Total liabilities and
stockholders' equity $166,044 $63,880 $(93,858) $136,066 $136,066
</TABLE>
Condensed Proforma Statements of Operations
<TABLE>
<CAPTION>
Non-
Debtor-In Debtor-In Proforma Historical
Possession Possession Elimin- Consol- Consol-
Entities Entities ations idated idated
<S> <C> <C> <C> <C> <C>
Net sales $150,778 $ 45,531 $ - $196,309 $196,309
Net sales to affiliates 21,108 70,343 (91,451) - -
Cost of goods sold 145,508 35,451 - 180,959 180,959
Cost of goods sold to
affiliates 18,905 72,546 (91,451) - -
Gross margin 7,473 7,877 - 15,350 15,350
Selling, administrative
and research expenses 40,465 7,495 - 47,960 48,532
Restructuring costs 5,592 7,992 - 13,584 13,584
Reorganization costs 572 - - 572 -
Operating loss (39,156) (7,610) - (46,766) (46,766)
Dividend income 29,555 - (29,555) - -
Interest expense 965 - - 965 965
Loss from continuing
operations before
income tax (10,566) (7,610) (29,555) (47,731) (47,731)
Income taxes 14,135 379 - 14,514 14,514
Loss from continuing
operations (24,701) (7,989) (29,555) (62,245) (62,245)
Discontinued operations
(net of income taxes):
Income from operations 671 - - 671 671
Gain on disposal of
discontinued operations 9,127 - - 9,127 9,127
Net Loss $(14,903) $ (7,989) $(29,555) $(52,447) $(52,447)
</TABLE>
Condensed Proforma Statements of Cash Flows
<TABLE>
<CAPTION>
Non-
Debtor-In Debtor-In Proforma
Possession Possession Elimin- Consol-
Entities Entities ations idated(1)
<S> <C> <C> <C> <C>
Cash Flows from
operating activities:
Net loss $(14,903) $(7,989) $(29,555) $(52,447)
Adjustments to
reconcile net loss
to net cash used in
continuing operating
activities:
Noncash items and
changes in
operating assets
and liabilities (2,499) 7,357 29,555 34,413
Net cash used in
continuing operations (17,402) (632) - (18,034)
Net cash provided by
discontinued operations 1,370 - - 1,370
Net Cash flow used in
operating activities (16,032) (632) - (16,664)
Cash flows from
investing activities:
Proceeds from sale of
discontinued operations 27,500 - - 27,500
Capital expenditures (2,325) (841) - (3,166)
Net cash provided by
(used in) investing
activities 25,175 (841) - 24,334
Cash flows from
financing activities:
Bank loans
(repayments), net (2,602) - - (2,602)
Dividends paid (4,537) - - (4,537)
Net cash Used in
financing activities (7,139) - - (7,139)
Increase (decrease)
in cash and cash
equivalents 2,004 (1,473) - 531
Cash and cash
equivalents at
beginning of year 1,023 5,449 - 6,472
Cash and cash
equivalents at
end of year $ 3,027 $3,976 $ - $ 7,003
</TABLE>
(1) Historical consolidated cash flows are the same as proforma
consolidated.
18. Subsequent Events
On July 5, 1995, the Company filed a voluntary petition for
reorganization under Title 11, United States Code (the "Bankruptcy
Code") in the United States Bankruptcy Court for the District of
Delaware. On August 18, 1995, the Company filed voluntary
petitions for reorganization under Chapter 11 of the Bankruptcy
Code for three of its wholly-owned but nonoperating subsidiaries,
SCM Office Supplies, Inc., SCC LI Corporation(formerly Histacount
Corporation) and Hulse Manufacturing Company.
An Administrator was appointed on August 2, 1995 for the
Company's wholly-owned subsidiary in Australia. The Administrator
was appointed Liquidator on August 29, 1995. The Company is
currently exploring potential distributor relationships in its
Australian market for the purpose of maintaining its distribution
capacity. The ultimate effect of this event on the consolidated
financial position of the Company has not been determined.
Financial Statement Schedule II
SMITH CORONA CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the years ended June 30, 1995, 1994 and 1993
(In thousands)
<TABLE>
<CAPTION>
Balance
at Charged to Balance at
Beginning Costs and Reductions- End of
of Period Expenses Writeoffs Period
<S> <C> <C> <C> <C>
Year ended June 30, 1995:
Allowance for doubtful
trade receivables $1,512 $ 61 $ 89 $ 1,484
Allowance for inventory
obsolescence and shrinkage $4,037 $9,930 $3,372 $10,595
Year ended June 30, 1994:
Allowance for doubtful
trade receivables $1,342 $ 170 $ - $ 1,512
Allowance for inventory
obsolescence and shrinkage $7,801 $3,021 $6,785 $ 4,037
Year ended June 30, 1993:
Allowance for doubtful
trade receivables $1,561 $ 288 $ 507 $ 1,342
Allowance for inventory
obsolescence and shrinkage $1,448 $8,549 $2,196 $ 7,801
</TABLE>
EXHIBIT INDEX
EXHIBIT #
10.7 SCM Office Supplies, Inc. Salaried Employees' Retirement
Plan as amended and restated as of January 1, 1994.
10.8 Smith Corona Corporation Retirement Savings and Investment
Plan adopted effective July 1, 1989, as amended through January 1, 1994.
10.9 Memorandum dated July 28, 1995 amending the Smith Corona
Corporation Retirement Savings and Investment Plan adopted
effective July 1, 1989, as amended through January 1, 1994.
10.10 Histacount Corporation Retirement Savings and Investment
Plan adopted effective July 1, 1989, as amended through January 1, 1994.
10.12 Smith Corona Corporation Supplemental Executive Retirement
Plan as restated and amended as of July 28, 1989, through November 16, 1993.
10.15 Smith Corona Corporation Short Term Incentive Compensation
Plan.
10.26 Employment Agreement between Smith Corona Corporation and
William D. Henderson, dated as of February 3, 1995.
10.27 Severance Letter between Smith Corona Corporation and G.
Lee Thompson, dated as of February 3, 1995.
10.30 Employment Agreement between Smith Corona Corporation and
Thomas C. DeFazio, dated as of February 3, 1995.
10.32 Smith Corona Corporation Salaried Employees Retirement
Plan, as amended and restated as of January 1, 1994.
10.44 Debtor-in-Possession Credit Agreement dated as of July 10,
1995 among Smith Corona Corporation, the lenders party thereto
and Chemical Bank, as Agent.
10.45 First Amendment to Debtor-In-Possession Credit Agreement
dated as of July 24, 1995.
10.46 Second Amendment to Debtor-In-Possession Credit Agreement
dated as of August 15, 1995.
10.47 Consulting Agreement between Smith Corona Corporation and
R. F. Stengel & Co., Inc., dated June 29, 1995.
10.48 Lease between Smith Corona Corporation and J.M. Murray
Center, Inc., dated February 8, 1995.
10.49 Purchase and Sale Agreement, dated as of February 28, 1995,
between Smith Corona Corporation and J.M. Murray Center.
10.50 Severance Agreement between Smith Corona Corporation and
John A. Cutrone, dated as of June 13, 1994.
10.51 one year extension, effective June 30, 1995, of Severance
Agreement.
10.52 Severance Agreement between Smith Corona Corporation and W.
Michael Driscoll, dated as of June 13, 1994.
10.53 One year extension, effective June 30, 1995, of Severance
Agreement.
10.54 Severance Agreement between Smith Corona Corporation and
John A. Piontkowski, dated as of April 3, 1995.
10.55 Amendment of Severance Letter, effective June 29, 1995.
10.56 Severance Agreement between Smith Corona Corporation and
Jerry L. Diener, dated as of June 1, 1990.
10.57 Six month extension, effective June 30, 1995, of Severance
Agreement.
10.58 Consulting Agreement between Smith Corona Corporation and
Manfred J. Eckhardt, dated as of June 9, 1995.
10.59 Stock Option Agreement between Smith Corona Corporation and
Robert Van Buren, dated as of April 13, 1995.
10.60 Employment Agreement between Smith Corona Corporation and
Robert Van Buren, dated March 28, 1995.
21 Schedule of Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule (Edgar Filing Only)
FOREWORD
Allied Paper Incorporated, a precessor in interest to
SCM Office Supplies, Inc., adopted a pension plan for its
salaried employees at Marion, Indiana entitled "Allied Paper Inc.
Salaried Employees' Retirement Plan --Office Supply Group." This
Plan was amended and restated from time to time thereafter and,
as a result of several corporate transactions, this Plan and the
salaried employees covered thereunder were segregated and
transferred in 1989 to SCM Office Supplies, Inc., a wholly owned
subsidiary of Smith Corona Corporation.
SCM Office Supplies, Inc. further amended and restated
this Plan effective as of January 1, 1989 designed principally to
comply with changes in applicable law, including without
limitation, the Tax Reform Act of 1986, as amended and renamed
this Plan to be "SCM Office Supplies, Inc. Salaried Employees'
Retirement Plan" ("Plan"). Subject to approval from the Internal
Revenue Service and effective as of January 1, 1994, the Plan was
again amended and restated to comply with all applicable laws.
In July 1994, all of the assets of SCM Office Supplies, Inc. were
sold and all Members terminated employment with SCM Office
Supplies, Inc. The Plan now is a "frozen" plan.
Unless otherwise provided herein, those provisions
added or amended to comply with the Tax Reform Act of 1986
required to be effective as of January 1, 1987 or January 1, 1989
shall be effective as of such dates.
Except as otherwise specifically provided herein, the
terms of this restated Plan shall apply to Members with an Hour
of Service on or after January 1, 1994 and who are or become
Members on and after January 1, 1994.
<PAGE>
ARTICLE I
DEFINITIONS
As used herein, unless otherwise defined or required by
the context, the following words and phrases shall have the
meanings indicated. Some of the words and phrases used in the
Plan are not defined in this Article I, but, for convenience are
defined as they are introduced into the text.
1.1 "Accrued Benefit" means, as of any determination
date, the amount computed in accordance with Section 4.1 (Normal
Retirement Benefit) based on the Member's Credited Service,
Average Final Compensation and Social Security Benefit each as of
the determination date.
1.2 "Actuarial Equivalent" means a benefit of
equivalent value when computed on the basis of the following
rates of mortality and interest:
(a) As to mortality, 80% of the rates underlying the
Unisex Pension-1984 Table, adjusted by applying a 3-year age
setback for the Member's spouse, where applicable.
(b) As to interest, 5% per annum compounded annually,
except that for purposes of determining lump sum benefits under
Section 8.6 (Payment of Small Amounts), the interest rate shall
be equal to the rate (or rates) used by the Pension Benefit
Guaranty Corporation for purposes of calculating the present
value of benefits under plans terminating on the first day of the
Plan Year in which the lump sum becomes payable.
1.3 "Actuary" means an individual chosen by the
Company to provide actuarial services for the Plan who is an
enrolled actuary under Subtitle C of Title III of ERISA, or a
firm of actuaries which has on its staff such an actuary.
1.4 "Authorized Leave of Absence" means an absence or
interruption of service approved by the Retirement Committee
under uniform and nondiscriminatory rules and procedures.
Members on leave of absence for service in the Armed Forces of
the United States, however, shall be deemed to have been on an
Authorized Leave of Absence, provided they return to service with
a Participating Company within the required time limitations set
forth in the then applicable laws governing reemployment rights
of persons inducted, or who have enlisted, in the Armed Forces.
1.5 "Average Final Compensation" means the average
Compensation for the 5 consecutive calendar years up to and
including the Member's Retirement Date or his earlier termination
of employment or, if higher, any 5 consecutive calendar years
prior thereto; however, for this purpose Compensation of a Member
who does not have an Hour of Service on or after January 1, 1988
after the Member's Normal Retirement Date shall not be
recognized. If the Member has not received Compensation in 5
full consecutive calendar years, his Average Final Compensation
shall be determined by averaging his Compensation over the period
of his continuous employment immediately prior to his Retirement
Date or earlier termination of employment. If the Member had a
previous period of employment with a Participating Company for
which he is entitled to Credited Service, Compensation during
such period shall be recognized for purposes of determining
Average Final Compensation as if the two periods of employment
were consecutive. "Average Final Compensation" for Members who
retire on and after January 1, 1991 means the average
Compensation for the 5 full calendar years of the 10 calendar
years immediately preceding the Member's Retirement Date or his
earlier termination of employment for which the Member's
Compensation is the highest; provided, however, that in the case
of a Member who does not have an Hour of Service on or after
January 1, 1988 his Compensation after his Normal Retirement Date
shall not be recognized. If the Member has not received
Compensation for 5 full calendar years of the 10 calendar years
immediately preceding the Member's Retirement Date or his earlier
termination of employment, his Average Final Compensation shall
be determined by averaging his Compensation over the full
calendar months of his employment immediately prior to his
Retirement Date or earlier termination of employment. If the
Member had a previous period of employment with a Participating
Company for which he is entitled to Credited Service,
Compensation during such period shall be recognized for purposes
of determining Average Final Compensation.
1.6 "Board" or "Board of Directors" means the Board
of Directors of the Company.
1.7 "Code" means the Internal Revenue Code of 1986,
as amended from time to time, and any predecessor Code, as
appropriate.
1.8 "Company" means SCM Office Supplies, Inc. or any
person, firm, corporation or partnership which may succeed to its
business.
1.9 "Compensation"
(a) In General. "Compensation" means, with respect to
a calendar year, the sum of the amount reported by the
Participating Company to the Internal Revenue Service on Form W-2
as the Member's compensation for such calendar year and the
amount of any "salary deferral contributions" made on such
Member's behalf to the SCM Corporation Retirement Savings and
Investment Plan and to the SCM Office Supplies, Inc. Retirement
Savings and Investment Plan, including any successor plan
thereto, as the case may be, plus any salary reduction amounts in
connection with a plan maintained under section 125 of the Code;
but exclusive of termination or severance pay, prizes, awards,
grievance settlements, overseas cost of living allowances,
relocation allowances, mortgage assistance, executive
perquisites, stock options, and such other extraordinary items of
remuneration as the Retirement Committee shall determine from
time to time pursuant to such uniform and nondiscriminatory rules
as it shall adopt. A Member on an Authorized Leave of Absence
for service in the Armed Forces shall be deemed to have received
Compensation during such period at the same rate he was receiving
immediately prior to the commencement of the leave.
(b) Limitation on Amount.
(1) Accruals for Plan Years Beginning on or After
January 1, 1989 and Before January 1, 1994. In determining
benefit accruals of any Member for any Plan Year beginning on or
after January 1, 1989 and before January 1, 1994, the amount of
Compensation taken into account for any Plan Year shall not
exceed $200,000, or such other amount as shall be determined by
the Secretary of the Treasury under Code section 415(d) to
reflect cost-of-living adjustments. For purposes of applying the
preceding sentence, a Member's Accrued Benefit as of a given date
shall be determined by applying the Compensation limitation in
effect for the Plan Year in which such date occurs to all prior
Plan Years taken into account in determining such Accrued
Benefit.
(2) Accruals for Plan Years Beginning on or After
January 1, 1994. In determining benefit accruals of any Member
for any Plan Year beginning on or after January 1, 1994, the
amount of Compensation taken into account shall not exceed
$150,000, or such other limit as shall be in effect for such Plan
Year, as determined in accordance with section 401(a)(17)(B) of
the Code.
(3) Preservation of Accrued Benefit.
(A) General Rule. The Accrued Benefit of
any Member whose Compensation exceeds the limit in paragraph (1)
or (2) shall not be less than his or her December 31, 1988
Accrued Benefit or his or her December 31, 1993 Accrued Benefit,
whichever is greater. For purposes of preserving the Member's
December 31, 1988 and December 31, 1993 Accrued Benefits, the
method set forth in Treasury regulation section
1.401(a)(4)-13(c)(4)(iii) shall be employed. This method is
described in subparagraphs (B) and (C), below.
<PAGE>
(B) Determination of Accrued Benefit as of a
Date Prior to January 1, 1994. For purposes of determining a
Member's Accrued Benefit as of a given date prior to January 1,
1994, a Member's Accrued Benefit shall be equal to the greater of
(i) and (ii), below, where--
(i) equals the sum of--
(I) the Member's benefit as of
December 31, 1988, determined without regard to the limitation on
Compensation in paragraph (1); plus
(II) the Member's benefit at the
earlier of termination of service or December 31, 1993, based on
Credited Service after December 31, 1988, determined with regard
to the limitation in paragraph (1);
(ii) equals the greater of--
(I) the Member's benefit as of
December 31, 1988, determined without regard to the limitation on
Compensation in paragraph (1); or
(II) the Member's benefit at the
earlier of termination of service or December 31, 1993, based on
all Credited Service, determined with regard to the limitation in
paragraph (1).
(C) Determination of Accrued Benefit as of a
Date on or After January 1, 1994. A Member's Accrued Benefit
determined as of a given date on or after January 1, 1994 shall
be equal to the greater of (i) or (ii) below, where--
(i) equals the sum of--
(I) the Member's benefit as of
December 31, 1993, calculated after applying subparagraph (B),
above, and determined without regard to the limitation on
Compensation in paragraph (2); plus
(II) the Member's benefit at
termination of service, based on Credited Service after
December 31, 1993, determined with regard to the limitation in
paragraph (2);<PAGE>
(ii) equals the greater of--
(I) the Member's benefit as of
December 31, 1993, calculated after applying subparagraph (B),
above, and determined without regard to the limitation on
Compensation in paragraph (2); or
(II) the Member's benefit at
termination of service, based on all Credited Service, determined
with regard to the limitation in paragraph (2).
(4) Compensation of Family Members. In
determining the Compensation of a Member for purposes of the
annual limitation, the rules of Section 414(q)(6) of the Code
shall apply except in applying such rules, the term "family"
shall include only the spouse of the Member and any lineal
descendants of the Member who have not attained age 19 before the
close of the applicable Plan Year.
1.10 "Corporate Group" means the Company, any
Participating Company, and any other company which is related to
the Company as a member of a controlled group of corporations in
accordance with section 414(b) of the Code, or as a trade or
business under common control in accordance with section 414(c)
of the Code, or as an affiliated service group under common
control in accordance with section 414(m) and section 414(o) of
the Code.
1.11 "Credited Service" means, subject to the
following rules and exceptions, a Member's Service as an Eligible
Employee not in excess of 30 years:
(a) Credited Service shall include an Authorized Leave
of Absence, (i) for service in the Armed Forces, (ii) for a
period during which the Member is Totally and Permanently
Disabled to the extent provided in Article VI (Disability
Benefits) and (iii) up to a maximum of 2 years for any other
cause.
(b) Employment with a Participating Company before
such Company adopted the Plan shall be included in Credited
Service if and to the extent the Board so provides in accordance
with Section 17.1 (Adoption of Plan by Subsidiary).
(c) Credited Service shall be measured in full years
with any fraction of a year treated as a full year, except that
for purposes of determining the Accrued Benefit for a Member who
is entitled to a benefit under the provisions of
<PAGE>
Article V (Benefits Upon Termination of Employment),
Credited Service shall be measured in years and months taken to
the nearest month.
(d) To the extent not already credited under this
Section 1.11, Credited Service shall include any period for which
a Member receives severance pay from a Participating Company up
to a maximum of 52 weeks, regardless of whether such severance
pay is received in a lump sum or in periodic installments. For
this purpose, if any Participating Company is sold and the buyers
assume the legal obligation to make severance payments to
Members, Credited Service shall nevertheless include the period
for which a Member receives severance pay up to the maximum of 52
weeks.
(e) Credit Service shall include periods of service
after a Member's Normal Retirement Date if the Member had at
least one Hour of Service on or after January 1, 1988.
1.12 "Deferred Retirement Date" means the first day of
the month coincident with or immediately following the date a
Member actually retires after his Normal Retirement Date pursuant
to the provisions of Section 3.2 (Deferred Retirement Date).
1.13 "Early Retirement Date" means the first day of
the month coincident with or immediately following the date a
Member retires prior to his Normal Retirement Date pursuant to
the provisions of Section 3.3 (Early Retirement Date).
1.14 "Eligible Employee" means an Employee who is
employed on a salaried basis at a division or unit of a
Participating Company with respect to which the Plan has been
made applicable by appropriate action of the Board of Directors,
excluding an individual who is covered by a collective bargaining
agreement between a Participating Company and any union unless
participation by such Employee in the Plan has been agreed to by
the parties to such agreement.
1.15 "Employee" means an individual (but not including
a person acting only as a director or any "leased employee"
within the meaning of section 414(n)(2) of the Code) employed by
the Company or any Participating Company.
1.16 "ERISA" means Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as amended from time to
time.
1.17 "Hour of Service" means each hour for which an
Employee is directly or indirectly compensated, or entitled to be
compensated, by the Company or Participating Company for the
performance of duties or for any other reason, such as vacation,
sickness, holidays, disability, layoff, or leave of absence,
including each hour for which back pay, irrespective of
mitigation of damages has been awarded or agreed to by the
Company or Participating Company. Each such Hour of Service
<PAGE>
shall be credited to the applicable computation period in
accordance with Section 2530.200b-2(b) and (c) of the U.S.
Department of Labor Regulations, which are hereby incorporated by
reference.
1.18 "Investment Manager" means the individual and/or
other entity appointed in accordance with Section 12.3
(Investment Manager) who has acknowledged in writing that he is a
fiduciary with respect to the Plan and who is:
(a) registered as an investment adviser under the
Investment Advisers Act of 1940, or
(b) a bank, as defined in such Act, or
(c) an insurance company qualified to manage, assign
or dispose of assets of pension plans.
1.19 "Member" means an Employee who has become a
Member of the Plan in accordance with the provisions of Article
II (Eligibility and Membership). Each Member shall continue to
be such after he ceases to be an Employee, provided he continues
to be entitled to benefits under the Plan.
1.20 "Normal Retirement Date" means the first day of
the month next following the date on which a Member attains his
65th birthday.
1.21 "Participating Company" means the Company and any
domestic or foreign corporation which is a subsidiary of the
Company and which is designated by the Board as a Participating
Company under the provisions of Article XVII (Adoption of Plan by
Subsidiary).
1.22 "Plan" means the SCM Office Supplies, Inc.
Retirement Plan for Salaried Employees as set forth herein or as
amended from time to time.
1.23 "Plan Year" means the calendar year.
1.24 "Prior Plan" means the Allied Paper Inc. Salaried
Employees' Retirement Plan -- Office Supply Group up to the end
of 1988 and SCM Office Supplies, Inc. Salaried Employees'
Retirement Plan as amended and restated effective as of January
1, 1989.
1.25 "Required Beginning Date" means (a) except as
provided in IRS Notice 89-42, with respect to a Member who
attains age 70-1/2 on or after January 1, 1988 and with respect
to a Member who is a 5% owner (as defined in section 416(i)(1)(B)
of the Code), the April 1 (but not before April 1, 1986) of the
year following the calendar year in which the Member attains 70-
1/2 years of age and (b) with respect to a Member who attained
<PAGE>
age 70-1/2 before January 1, 1988 (other than a 5% owner), the
April 1 of the calendar year following the calendar year in which
the Member actually retires.
1.26 "Retirement Benefit" means a series of monthly
payments which are payable to an individual who is entitled to
receive benefits under the Plan.
1.27 "Retirement Committee" means the committee
appointed in accordance with Section 11.3 (Appointment of the
Retirement Committee).
1.28 "Retirement Date" means the Early Retirement
Date, the Normal Retirement Date or the Deferred Retirement Date,
whichever is applicable.
1.29 "Service" means, subject to the following rules
and exceptions, the duration of an Employee's employment with the
Company:
(a) The Employee's first year of Service is the twelve
month period beginning on his employment commencement date
provided that he accumulates 1,000 or more Hours of Service in
such year or, the first calendar year thereafter in which he
accumulates 1,000 or more Hours of Service; provided that if, as
of the beginning of any such year, the Employee is scheduled to
work 1000 or more Hours of Service during that year, he shall be
credited with 1000 Hours regardless of the actual number of Hours
of Service worked so long as he is an Employee as of the last day
of the year.
(b) Service shall include the period from the date an
Employee quits, retires or is discharged if he returns to
employment with the Company or the Participating Company within
12 months of such quit, retirement or discharge.
(c) Service shall include (i) an Authorized Leave of
Absence, (ii) a period of up to 12 months of absence from
employment for any other reason (except because of quit,
retirement, death or discharge) and (iii) Service recognized
under the Prior Plan.
(d) If an Employee who incurs a "Break in Service" (as
hereinafter defined) prior to his becoming entitled to a benefit
under the Plan is reemployed, his period of Service prior to such
Break in Service shall be disregarded if the duration of such
Break in Service equals or exceeds both 5 years and the number of
years of Service which the Employee had to his credit at the
start of such period. However, if the Break in Service began
prior to January 1, 1985, such prior Service shall also be
disregarded if it had already been lost under the terms of the
Plan in effect prior to<PAGE>
January 1, 1985 or if it would have
been lost had the Member
been reemployed on December 31, 1984 under the terms of the Plan
then in effect.
"Break in Service" means a continuous period of twelve
months or more during which the Employee is not employed by the
Company or other member of the Corporate Group. Except as
provided below, such period begins on the earliest of (i) the
date the Employee retires, quits or is discharged, (ii) the
expiration of an Authorized Leave of Absence, and (iii) one year
after the date on which the Employee was first absent from
employment for any reason other than quit, retirement, discharge
or Authorized Leave of Absence. In the case of a Member who is
entitled to Service for a period in which he receives severance
pay in accordance with (g) of this Section 1.29, a Break in
Service shall not be deemed to have commenced before the end of
the period for which he is credited with such Service. If the
Employee was first absent from employment on or after January 1,
1985 due to the pregnancy of the Employee, birth or adoption of a
child to or by the Employee, or caring for a child immediately
after such birth or adoption, and if such Employee's employment
is not severed by reason of quit, retirement or discharge, a
Break in Service shall not be deemed to have commenced until at
least two years after the leave commenced.
(e) Employment with a Participating Company before
such company became a member of the Corporate Group shall be
included in Service if and to the extent the Board so provides in
accordance with Section 17.1 (Adoption of Plan by Subsidiary).
(f) Service shall be measured in full years with any
fraction of a year treated as a full year, except that for
purposes of determining the eligibility for a benefit under the
provisions of Sections 5.1 (Deferred Vested Benefit), 7.1 (Family
Benefit) and 7.2 (Pre-Retirement Death Benefit for Certain Other
Members), Service shall be measured in full years with a fraction
of a year equal to 6 months or more treated as a full year and a
fraction of a year equal to less than 6 months disregarded.
(g) To the extent not already credited under this
Section 1.29, Service shall include any period for which a Member
receives severance pay from a Participating Company up to a
maximum of 52 weeks, regardless of whether such severance pay is
received in a lump sum or in periodic installments.
<PAGE>
1.30 "Social Security Benefit" means the estimated
annual benefit (based upon actual changes in national average
wages from year to year as determined by the Social Security
Administration) which a Member is or would be entitled to receive
in an unreduced amount (excluding any benefit available on behalf
of a spouse or other dependent) under the Federal Social Security
Act, as amended, and as in effect for persons covered by Social
Security at the date his Credited Service ceases to accrue,
whether or not he applies for such Social Security Benefit, and
even though he may lose part or all of such Social Security
Benefit through delay in applying for it, or by making
application prior to age 65 for a reduced benefit, or by entering
into covered employment, or for any other reason. In estimating
such Social Security benefit no further earnings shall be
anticipated after the date the Member's Credited Service ceases.
Notwithstanding the foregoing, if the Retirement
Committee receives documentation from the Social Security
Administration of the Member's Social Security earnings record,
within such period of time as the Retirement Committee shall
establish from time to time, his Social Security Benefit shall be
determined on the basis of his actual Social Security earnings
record.
1.31 "Trust Fund" means the trust fund established in
accordance with Section 12.1 (Trust Fund), from which the
benefits provided by this Plan will be paid.
1.32 "Trustee" means the corporate trustee and/or
insurance company appointed from time to time by the Board to
administer the Trust Fund in accordance with Section 12.2
(Trustee).
1.33 "Vested Terminated Member" means a Member whose
employment has terminated but who is entitled to deferred
Retirement Benefits in accordance with the provisions of Article
V (Benefits Upon Termination of Employment).
1.34 The use of the masculine pronoun shall include
the feminine and the singular shall include the plural.
<PAGE>
ARTICLE II
ELIGIBILITY AND MEMBERSHIP
2.1 Members on December 31, 1993. Each person who
was a Member of the Plan on December 31, 1993 shall continue as a
Member of the Plan as amended and restated as of January 1, 1994.
2.2 Eligible Employees on and after January 1, 1994.
Any other person who is or becomes an Employee on or after
January 1, 1994 shall become a Member on the latest of (a)
January 1, 1994, (b) the first day of the month coincident with
or next following the completion of his first year of Service and
(c) the date he becomes an Eligible Employee. If an Employee who
has not satisfied the Plan's eligibility requirements incurs a
Break in Service and is subsequently reemployed by a
Participating Company, he shall be considered a new Employee for
eligibility purposes.
2.3 Authorized Leave of Absence. Any person who is
absent from the active employment of a Participating Company on
the date he would otherwise become a Member, by reason of an
Authorized Leave of Absence, shall automatically become a Member
as of the date of his return to active employment, subject to the
provisions of this Article II.
2.4 Transfer to or from Non-Covered Status. If a
Member ceases to meet the definition of Eligible Employee as set
forth in Section 1.14 ("Eligible Employee") but continues in the
employment of the Corporate Group, his Credited Service shall
cease to accrue but he shall continue as a Member and earn
Service in accordance with Section 1.29 ("Service"). If
immediately after his ceasing to be an Eligible Employee such
Member becomes a participant in another qualified pension or
profit sharing plan to which a Participating Company contributes,
(a) his compensation while a participant in such plan shall be
recognized under this Plan for purposes of determining his
Average Final Compensation and his Social Security Benefit, and
(b) the amount of Retirement Benefit to which the Member may be
entitled under this Plan shall be computed under the provisions
of the Plan in effect on his termination of employment with a
Participating Company. If immediately after the Member's ceasing
to be an Eligible Employee he does not become a participant in
another qualified pension or profit sharing plan to which a
Participating Company contributes, such Member's Accrued Benefit
shall not increase until such time as he may again be an Eligible
Employee.
If the status of a person in the employment of a member
of the Corporate Group who does not meet the definition of
Eligible Employee as set forth in Section 1.14 ("Eligible
Employee") is changed so that he does meet such definition, he
shall become a Member in accordance with the provisions of
Section 2.2. If immediately prior to becoming an Eligible
Employee such person was a participant in another qualified
pension or profit sharing plan to which a Participating Company
contributes, and provided that he completes at least one year of
Service as an Eligible Employee, his service rendered and
compensation earned while a participant in such other plan shall
be recognized as Credited Service and Compensation under this
Plan, subject to the reduction as provided in Section 4.4
(Nonduplication of Benefits) and, if applicable, to the
provisions of Section 17.1 (Adoption of Plan by Subsidiary).
<PAGE>
ARTICLE III
RETIREMENT DATE
3.1 Normal Retirement Date. A Member who retires on
his Normal Retirement Date (which is the first day of the month
next following his 65th birthday) shall be entitled to elect to
receive a Retirement Benefit as determined in accordance with
Section 4.1 (Normal Retirement Benefit).
3.2 Deferred Retirement Date. A Member whose
employment is continued beyond his Normal Retirement Date shall
retire on a Deferred Retirement Date and shall be entitled to
elect to receive a Retirement Benefit determined in accordance
with Section 4.2 (Deferred Retirement Benefit).
If a Member continues in employment until his Required
Beginning Date, such date shall be deemed to be his Deferred
Retirement Date for all purposes of the Plan whether or not his
employment continues beyond that date.
3.3 Early Retirement Date. A Member who, on the day
his Service ceases to accrue, has either
(a) attained age 50 and accrued 15 or more years of
Service, or
(b) attained age 60, regardless of the number of years
of Service which he has accrued,
may, by filing a written application at least six months in
advance (or such lesser period as the Retirement Committee may
prescribe from time to time), retire at an Early Retirement Date.
In such case the Member shall be entitled to elect to receive a
Retirement Benefit as determined in accordance with Section 4.3
(Early Retirement Benefit).
3.4 Reemployment of a Retired Member. If a retired
Member is reemployed by a Participating Company his Retirement
Benefit payments, if any, shall be suspended for each month
during the period of such reemployment immediately following a
calendar month in which he is compensated for 8 or more days.
Upon his reemployment, the Member shall become an active Member
as of the date of his reemployment. Upon his subsequent
retirement his Retirement Benefit shall be based on the total of
both periods of Credited Service but shall be appropriately
reduced to reflect benefit payments previously made to him.
<PAGE>
ARTICLE IV
RETIREMENT BENEFITS
4.1 Normal Retirement Benefit. A Member retiring on
his Normal Retirement Date shall be entitled to elect, at or
after his termination of employment, to receive an annual amount
of Retirement Benefit, commencing as of his Normal Retirement
Date or as of any month thereafter but not later than his
Required Beginning Date, equal to the greater of (a) and (b), as
follows:
(a) the product of (i) and (ii), as follows:
(i) the number of his years of Credited Service
(ii) the difference between (A) and (B), as
follows:
(A) 1.5% of such Member's Average Final
Compensation, and
(B) 1/60th of his Social Security Benefit.
(b) $360 multiplied by the number of his years of
Credited Service (but not in excess of 10 years of Credited
Service); provided, however, such benefit shall be reduced in the
case of a Member who works less than the normal work week at his
location. Such reduction shall be made on a pro rata basis
reflecting the Member's average hours worked per week as compared
to the normal work week or 40 hours, whichever is the lesser,
during the period used in determining his Average Final
Compensation.
4.2 Deferred Retirement Benefit. If a Member remains
in employment after his Normal Retirement Date, Retirement
Benefit payments to him shall be postponed until his actual
retirement on his Deferred Retirement Date. The Member shall be
entitled to elect, at or after his termination of employment, to
receive a Retirement Benefit commencing as of his Deferred
Retirement Date or, if later, as of any month thereafter which is
not after his Required Beginning Date. The amount of Retirement
Benefit shall be equal to the amount computed under Section 4.1
but based on the provisions of the Plan in effect on his Deferred
Retirement Date and his Average Final Compensation and Credited
Service at his Deferred Retirement Date.
4.3 Early Retirement Benefit. A Member retiring
prior to his Normal Retirement Date, as provided in Section 3.3
(Early Retirement Date), shall be entitled to elect, at or after
his termination of employment, to receive a Retirement Benefit,
commencing as of his Normal Retirement Date or as of any month
thereafter but not later than his Required Beginning Date, equal
to his Accrued Benefit.
In lieu of such Retirement Benefit commencing on or
after his Normal Retirement Date, the Member shall be entitled to
elect, at or after his termination of employment, to have his
Retirement Benefit commence as of his Early Retirement Date or as
of any month thereafter before his Normal Retirement Date. In
such case the Member's Retirement Benefit shall equal a
percentage of his Accrued Benefit, in accordance with the
following schedule:
Age at Date of Percentage of
Benefit Commencement Accrued Benefit Payable
50 50%
51 54%
52 58%
53 62%
54 66%
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
61 95%
62 100%
63 100%
64 100%
4.4 Nonduplication of Benefits. If a Member is
entitled to any pension or retirement benefits under the Prior
Plan or under any other qualified pension or profit sharing plan
of the Corporate Group as defined herein or under the Prior Plan
(other than the SCM Office Supplies, Inc. Retirement Savings and
Investment Plan), then to the extent such benefit is attributable
to a period of employment included as Credited Service under this
Plan, the amount thereof shall be deducted from the amount of
Retirement Benefit otherwise payable under this Plan with respect
to such period of Credited Service. However, no such deduction
shall be made with respect to that part of such retirement income
which is attributable to contributions made by the Member. If
such other benefit is not paid at the same time and manner as his
Retirement Benefit under this Plan, the deduction shall be made
on an equitable basis as determined by the Retirement Committee.
<PAGE>
ARTICLE V
BENEFITS UPON TERMINATION OF EMPLOYMENT
5.1 Deferred Vested Benefit. In the event of the
termination of employment of a Member, for any reason other than
death or retirement under the Plan, after completion of 5 or more
years of Service, he shall become a Vested Terminated Member and
shall be entitled to elect, at or after his termination of
employment, to receive a Retirement Benefit commencing as of his
Normal Retirement Date or as of any month thereafter but not
later than his Required Beginning Date. The amount of such
Retirement Benefit shall be equal to his Accrued Benefit computed
as of the date of such termination of employment, subject to the
reduction provided under (b) of Section 7.3 (Pre-Benefit
Commencement Option for Vested Terminated Members), if
applicable. In the event of the termination of employment of a
Member, for any reason other than death or retirement under the
Plan, before completion of 5 years of Service, he shall be deemed
to have received an immediate constructive cash-out distribution
of his entire nonvested Accrued Benefit at termination equal to
zero dollars.
5.2 Early Commencement of Vested Benefit. A Vested
Terminated Member who has 15 or more years of Service shall be
entitled to elect, at or after his termination of employment, to
receive a reduced Retirement Benefit, commencing as of the month
next following his attainment of age 50 or as of any month
thereafter before his Normal Retirement Date, which is the
Actuarial Equivalent of his Accrued Benefit.
A Vested Terminated Member who has less than 15 years
of Service shall be entitled to elect, at or after his
termination of employment, to receive a reduced Retirement
Benefit, commencing as of the month next following his attainment
of age 60 or as of any month thereafter before his Normal
Retirement Date, which is the Actuarial Equivalent of his Accrued
Benefit.
5.3 Reemployment of a Vested Terminated Member. If a
Vested Terminated Member is reemployed by a Participating Company
his Retirement Benefit payments, if any, shall be suspended for
each month during the period of such reemployment immediately
following a calendar month in which he is compensated for 8 or
more days. Upon reemployment of the Member, he shall become an
active Member as of the date of his reemployment. Upon his
subsequent termination of employment or retirement his Retirement
Benefit shall be based on the total of both periods of Credited
Service but shall be appropriately reduced to reflect any benefit
payments previously made to him.<PAGE>
ARTICLE VI
DISABILITY BENEFITS
6.1 Eligibility and Amount of Benefit. If a Member
who has 15 or more years of Service shall become Totally and
Permanently Disabled (as hereinafter defined) prior to his Normal
Retirement Date he shall be deemed to be on an Authorized Leave
of Absence and shall continue to accrue Credited Service during
the period prior to his Normal Retirement Date that he remains
Totally and Permanently Disabled. If such Member remains Totally
and Permanently Disabled he shall, upon attaining his Normal
Retirement Date, be entitled to a Retirement Benefit determined
in accordance with the provisions of Section 4.1 (Normal
Retirement Benefit) in effect on his Normal Retirement Date,
except that the calculation of the benefit referred to in
subsection (a) of Section 4.1 shall be made by reference to the
Member's Social Security Benefit as of the date on which he so
became Totally and Permanently Disabled rather than as of his
Normal Retirement Date. In lieu of the Retirement Benefit to
commence as of his Normal Retirement Date, the Member may, at any
time after attaining age 50, elect to retire on an Early
Retirement Date and receive a Retirement Benefit determined in
accordance with Section 4.3 (Early Retirement Benefit) based on
his Credited Service at such date.
For purposes of this Section 6.1, "Totally and
Permanently Disabled" means a physical or mental condition which
renders a Member disabled to the extent he is eligible for and
receiving Social Security disability benefits; provided, however,
that no Member shall be deemed to be Totally and Permanently
Disabled if his incapacity (a) resulted from or consists of
habitual drunkenness or addiction to narcotics, or (b) was
incurred, suffered or occurred while he was engaged in, or
resulted from his having engaged in, a criminal enterprise, or
(c) was intentionally self-inflected or (d) arose out of service
in the Armed Forces of any country.
6.2 Medical Examination; Recovery From Disability.
Any member who is accruing Credited Service pursuant to Section
6.1 may be required by the Retirement Committee to submit from
time to time to medical and physical examination and to submit
evidence of his continued eligibility for Social Security
Disability benefits. In the event that the Member shall refuse
to submit to examination, or if as the result of any such
examination, the Retirement Committee shall determine that the
Member is no longer Totally and Permanently Disabled or if he
fails to submit evidence of his continued eligibility for Social
Security Disability benefits, such Member shall cease to accrue
Credited Service provided in Section 6.1. Unless such Member
<PAGE>
returns to active employment with a Participating Company, he
shall be deemed to have terminated his employment or to have
retired at an Early Retirement Date as of the first day of the
month following the date his Credited Service ceased to accrue.
<PAGE>
ARTICLE VII
DEATH BENEFITS
7.1 Family Benefit. Upon the death, on or after
August 23, 1984, of a Member who has completed 5 or more years of
Service, either while an Employee or after his retirement under
Article III (Retirement Date) but before his Retirement Benefit
commences, his surviving spouse, if any, shall be entitled to a
Retirement Benefit payable for life. The surviving spouse may
elect to have such Retirement Benefit commence as of the month
following the Member's date of death or, if later, as of any
month thereafter which is not after the month in which the Member
would have attained age 62 (or such other date which may be
required by applicable law or regulation).
If the Retirement Benefit commences as of the month
following the Member's date of death, the amount of such
Retirement Benefit shall be equal to the greater of (a) and (b),
as follows:
(a) a $300 annual benefit, or
(b) 100% of the Member's Accrued Benefit, multiplied
by an Early Commencement Percentage based on the Member's age at
his date of death in accordance with the table below and further
reduced to reflect the Actuarial Equivalent charge for the
election of Option (100% continuation) under Section 8.4 (Other
Optional Forms of Benefit), based on the ages of the Member and
his surviving spouse on the earlier of his date of death or his
Normal Retirement Date.
Deceased Employee's Early Commencement
Age at Date of Death Percentage
36 or under 8%
37 11%
38 14%
39 17%
40 20%
41 23%
42 26%
43 29%
Deceased Employee's Early Commencement
Age at Date of Death Percentage
44 32% 32%
45 35%
46 38%
47 41%
48 44%
49 47%
50 50%
51 54%
52 58%
53 62%
54 66%
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
61 95%
62 or over 100%
If the Retirement Benefit commences as of any month
after the month following the Member's date of death, the amount
of survivor benefit shall be recomputed based on the surviving
spouse's age and the age the Member would have been when survivor
benefits commence.
If at any time on or after the Member's death there is
no surviving spouse but there are one or more dependent children
under age 19 or, if students, age 23, the Retirement Benefit
which would have been paid to surviving spouse shall be paid in
equal shares to the dependent children as long as each shall
qualify.
Benefit payments to a dependent child shall cease upon
the earlier of (a) the last day of the month in which such child
ceases to qualify as dependent child, or (b) the last day of the
month preceding the month in which such child dies. The share
payable in respect of any such child shall subsequently increase
by reason of the subsequent cessation of payments in respect of
any other such child.
For the purposes of determining dependency, a child
shall be deemed dependent if the Member of the surviving spouse,
whichever the case may be, provided one-half or more of such
child's support during the year immediately prior to such
Member's or surviving spouse's death. The Retirement Committee
shall determine on a uniform and non-discriminatory basis the
dependency of any person to whom a Retirement Benefit may be
payable under this Section 7.1, and such determination shall be
final and conclusive.
7.2 Pre-Benefit Commencement Survivor Option for
Vested Terminated Members.
(a) In General. Unless revoked as provided herein, if
a Vested Terminated Member who was an Employee on or after August
23, 1984 dies before his Retirement Benefit commences, his
surviving spouse, if any, shall be entitled to a Retirement
Benefit commencing on the earliest date the Vested Terminated
Member's Retirement Benefit could have commenced had he survived,
in accordance with the provisions of Article V (Benefit Upon
Termination of Employment), or as of any month thereafter on or
before the Member's Normal Retirement Date, as the surviving
spouse may elect.
(b) Charge for Coverage. There shall be a charge for
this survivor annuity coverage, based on the period of coverage,
in the form of an adjustment to the amount of Retirement Benefit
otherwise payable to the Vested Terminated Member.
For purposes of determining the charge for this
survivor annuity coverage, the period of coverage shall begin on
the latest of (1) January 1, 1985, (2) the date the Member
terminates employment or (3) the date the Member attains age 35,
and shall end on the date his Retirement Benefit is first
payable; provided, however, that there shall be excluded from the
period of coverage any period during which (1) the Member is
reemployed by a Participating Company, (2) the Member is not
married, or (3) the Member has effectively revoked this coverage
as provided in subsection (d) below.
The adjustment factor for the survivor annuity
coverage shall be determined in accordance with the table below:
Period of Coverage
For each 12 months of coverage
from age 35 through age 44 1/12%
For each 12 months of coverage
from age 45 through age 54 1/4%
For each 12 months of coverage
from age 55 through age 64 1/2%
(c) Amount of Survivor Benefit. The amount of the
Retirement Benefit payable to the surviving spouse shall equal
50% of the Retirement Benefit the Vested Terminated Member would
have received under the automatic joint and survivor option
described in Section 8.3 (Automatic Joint and Survivor Option)
had he survived to the date his Retirement Benefit would have
commenced but without regard to the charge for coverage under
this option that would have been made in accordance with (b)
above.
(d) Election to Revoke the Option. A married Member
may elect, during the election period specified below, to revoke
this survivor annuity coverage, in which case no benefit will be
payable in the event of the Vested Terminated Member's death
before his Retirement Benefit commences.
An election to revoke this coverage shall not take
effect unless the Member's spouse gives written consent on a form
provided by the Retirement Committee for such purpose, which
consent acknowledges the effect of the revocation and is
witnessed by a notary public (or an individual designated by the
Retirement Committee). A spousal consent is irrevocable;
however, any such consent shall apply only to the spouse who gave
the consent. The Retirement Committee, in its sole discretion,
may waive the requirement of consent of the spouse if the
Member establishes to the
Retirement Committee's satisfaction that the spouse cannot be
located or that there are other special circumstances permitted
under Treasury Regulations.
An election to revoke this survivor annuity coverage
may be made at any time within the election period beginning on
the later of (i) the date of the Member's termination of
employment or (ii) January 1, 1985, and ending on the date of the
Vested Terminated Member's death.
A Vested Terminated Member may cancel a revocation of
this survivor annuity coverage at any time during the applicable
election period. There is no limit on the number of times during
the election period that the Member may revoke the coverage or
cancel a revocation.
(e) Explanation. Upon the Vested Terminated Member's
termination of employment (and at such other times as may be
required by applicable law) the Retirement Committee shall
furnish him with a written explanation of (1) the terms and
conditions of the survivor annuity coverage, (2) the Vested
Terminated Member's right to make, and the effect of, an election
to revoke the coverage, (3) the rights of the Vested Terminated
Member's spouse to consent, or refuse to consent, to such
revocation, and (4) the Vested Terminated Member's right to make,
and the effect of, a cancellation of a revocation.
<PAGE>
(f) Claim for Benefit. The surviving spouse must file
a claim for benefits before payment of benefits will commence.
The claim for benefits shall be in such form as the Retirement
Committee shall designate, and shall include certifications as to
the dates of birth of the Member and of such surviving spouse,
the date of marriage to the Member, and such other information
with respect to any prior marriages of the Member as the
Retirement Committee shall deem necessary to determine the
appropriate charge, if any, for the surviving spouse annuity
coverage.
7.3 Death Benefits After Retirement Benefit
Commences. There are no benefits payable under the Plan in the
event of the Member's death after his Retirement Benefit has
commenced unless an option is in effect in accordance with
Article VIII (Time and Form of Benefit Payment).
<PAGE>
ARTICLE VIII
TIME AND FORM OF BENEFIT PAYMENT
8.1 Normal Form of Benefit. Except as otherwise
provided in this Article VIII, Retirement Benefit payments shall
be made monthly as of the last day of each calendar month
commencing as of the date provided under the applicable Plan
section and ceasing with the payment due as of the last day of
the month preceding the month in which the Member's death occurs.
This shall be referred to as the normal form of Retirement
Benefit for an unmarried Member.
8.2 Claim for Benefit.
(a) A Member must file a claim for benefits before
payment of benefits shall commence. The claim for benefits shall
be in writing, in such form as the Retirement Committee shall
designate.
(b) The claim for benefits shall specify the date on
which Retirement Benefit payments are to commence, consistent
with the provisions of the Plan with respect to commencement of
benefits in case of normal, early, or deferred retirement, or for
a Vested Terminated Member, as the case may be.
(c) The claim for benefits shall include a
certification by the Member either (i) that the Member is not
married or (ii) that the Member is married and the name and date
of birth of the individual to whom the Member is married; and
such other information with respect to the Member's marital
history as the Retirement Committee shall deem necessary to
determine the appropriate charge, if any, for survivor annuity
coverage under Section 7.3. If he has not previously done so,
the Member must submit satisfactory proof of his date of birth
and, if he certifies that he is married he must submit
satisfactory proof of the date of his spouse's birth and of their
marriage. The certification as to the Member's marital status
shall be binding upon the Member.
(d) Subject to retroactive payment thereof, any
Retirement Benefit otherwise due under the Plan shall be delayed
until 30 days after the later of whichever of the following is
applicable:
(i) The receipt by the Retirement Committee of
the completed election form,
(ii) The receipt by the Retirement Committee of
satisfactory proof of the Member's date of birth, and the date of
birth of the spouse and the date of marriage of a Member for whom
the automatic joint and survivor option described in Section 8.3
is effective.
8.3 Automatic Joint and Survivor Option.
(a) In General. If a Member who was an Employee on
or after August 23, 1984 and whose Retirement Benefit commences
on or after January 1, 1985 is married on the date his Retirement
Benefit is to commence, unless revoked as provided herein, the
amount of each benefit payment which otherwise would be payable
to the Member shall be reduced and, if the Member's spouse shall
survive him, Retirement Benefit payments shall continue after his
death for the remaining lifetime of his surviving spouse in an
amount equal to 50% of the Member's reduced Retirement Benefit.
The reduction in the Member's Retirement Benefit shall be made on
an Actuarial Equivalent basis. This shall be referred to as the
normal form of Retirement Benefit for a married Member.
(b) Election to Revoke the Automatic Joint and
Survivor Option. A Member may, during the election period
specified below, revoke the automatic joint and survivor option,
in which case Retirement Benefit payments shall be made in the
normal form as provided in Section 8.1 or under such optional
form as the Member may elect in accordance with Section 8.4.
A revocation shall not take effect unless the Member's
spouse gives written consent on a form provided by the Retirement
Committee for such purpose, which consent acknowledges the effect
of the revocation and is witnessed by a notary public (or an
individual designated by the Retirement Committee). A spousal
consent is irrevocable but shall apply only to the spouse who
gave the consent and to the particular form of alternative
payment to which the consent applies. The Retirement Committee
may waive the requirement for consent of the spouse if the Member
establishes to the Retirement Committee's satisfaction that the
spouse cannot be located there is a legal separation, or the
Member proves abandonment as evidenced by a court order, or that
there are other special circumstances permitted under Treasury
Regulations. Notwithstanding the foregoing, no spousal consent
shall be required if the Member elects Option 1 specified in
Section 8.4.
A revocation of the automatic joint and survivor option
may be made at any time within the 90 day period ending on the
date the Member's Retirement Benefit is first payable. A Member
may cancel a revocation of the automatic joint and survivor
option at any time during the election period.
There is no limit on the number of times during the
election period that a Member may revoke the automatic joint and
survivor option or cancel a revocation.
(c) Explanation. Within a reasonable period before
the Member's Retirement Benefit commences the Retirement
Committee shall furnish the Member with a written explanation of
(i) the terms and conditions of the automatic joint and survivor
option and (ii) an estimate, based on the personnel records
maintained by the Participating Company, of the amount of
Retirement Benefit payable both under the automatic option and
under the normal form described in Section 8.1.
At the time that the explanation is furnished to the
Member the election form referred to Section 8.2 will also be
furnished to him. If the Member fails to complete such form and
return it to the Retirement Committee before the date as of which
his Retirement Benefit payments are to commence he shall be
deemed for all purposes of the Plan to have certified that he
elects to be covered under the automatic joint and survivor
option.
(d) Termination of Marriage. The spouse to whom the
Member was married at the date his Retirement Benefit commences
is entitled to the survivor annuity upon the death of the Member
after Retirement Benefits commence, whether or not the Member and
such spouse were married at the date of the Member's death.
8.4 Other Optional Forms of Benefit. In lieu of the
normal form of Retirement Benefit referred to in Section 8.1 and
8.3(a) above, a Member may elect one of the following optional
forms of benefit payment:
Option 1. A Member may elect a reduced Retirement
Benefit payable during his lifetime, with the provisions that
75%, or 100%, of such reduced income shall be continued
thereafter during the remaining lifetime of his spouse. Such
reduced Retirement Benefit shall be the Actuarial Equivalent of
the normal form of benefit specified in Section 8.1. If the
spouse dies prior to the Member's Retirement Benefit commencement
date, any election of this Option 1 shall automatically be deemed
to be revoked.
Option 2. An unmarried Member may elect a reduced
Retirement Benefit payable during his lifetime, with the
provision that either 50%, 75%, or 100% of such reduced income
shall be continued thereafter during the remaining lifetime of
his designated beneficiary. Such Retirement Benefit shall be the
Actuarial Equivalent of the normal form of benefit specified in
Section 8.1. If the designated beneficiary dies prior to the
Member's Retirement Benefit commencement date, any election of
this Option 2 shall automatically be deemed to be revoked.
The availability of the 75% and 100% joint and
survivor option shall be subject to the rules contained in
Proposed Treasury regulation section 1.401(a)(9)-2, Q & A 6(b),
which limits the survivor annuity percentage payable to a
nonspouse beneficiary where the difference in age between the
Member and such beneficiary exceeds 10 years. The percentage
limitation applicable to a nonspouse beneficiary shall be
determined in accordance with the Table set forth in Proposed
Treasury regulation section 1.401(a)(9)-2, Q & A 6(b)(2).
Option 3. A Member who has elected early retirement in
accordance with Section 3.3 (Early Retirement Date) may elect to
receive an Actuarial Equivalent Retirement Benefit providing
larger monthly payments, lieu of the retirement benefit otherwise
payable upon early retirement, until the date his Social Security
payments commence, with a reduction of such Retirement Benefit
payments thereafter, to make available to him, insofar as
practicable, level payments of total retirement income.
Option 4. A Member may elect that even if he has a
spouse at his retirement date or the date his Retirement Benefit
is to commence, if later, his Retirement Benefit shall be paid
for his lifetime only with payment of 60 or 120 monthly
installments guaranteed.
Option 5. A Member may elect that even if he has a
spouse at his retirement date or on the date his Retirement
Benefits are to commence, if later, his Retirement Benefits shall
be paid for his life and will cease with the payment due as of
the last day of the month preceding the month in which the
Member's death occurs.
An election of an optional form of benefit under this
Section 8.4 shall be made on an appropriate form provided by the
Retirement Committee. The Member may change or cancel an option
at any time before his Retirement Benefit is to commence, by
filing the appropriate form with the Retirement Committee.
8.5 Payment of Small Amounts. Notwithstanding the
foregoing provisions of this Article VIII, whenever the lump sum
Actuarial Equivalent of a Retirement Benefit or Survivor Benefit
payable to or with respect to a Member is not in excess of
$3,500.00, the Retirement Committee shall direct that such lump
sum be paid in lieu of the Retirement Benefit or Survivor Benefit
otherwise payable under the Plan.
8.6 Mandatory Distributions. Notwithstanding any
provision in the Plan to the contrary, a Member's Retirement
Benefits shall be distributed, beginning not later than his
Required Beginning Date, in accordance with section 401(a)(9) of
the Code and regulations thereunder, over the life of the Member
(or the lives of the Member and his designated beneficiary) or
the life expectancy of the Member (or the life expectancies of
the Member and his designated beneficiary). Further,
distributions under the Plan shall be made in accordance with
Proposed Treasury regulation section 1.401(a)(9)-2.
<PAGE>
ARTICLE IX
LIMIT ON BENEFITS
9.1 Maximum Annual Benefit. Anything to the contrary
herein notwithstanding and, subject to the provisions below, the
maximum annual amount of a Member's Retirement Benefit shall not
be more than the amount specified in (a) or, if he was a Member
prior to January 1, 1983, the amount specified in (b), if greater
or, if he was a Member after January 1, 1983 and on December 31,
1986, the amount specified in (c), if greater;
(a) the smaller of (i) and (ii) as follows:
(i) $90,000 adjusted for increases in the cost of
living to the extent permitted under section 415(d) of the Code,
and
(ii) 100% of the Member's average compensation
for his high 3 years (within the meaning of section 415(b)(3) of
the Code and the regulations issued thereunder) adjusted for
increases in the cost of living to the extent permitted under
section 415(d) of the Code.
(b) the annual amount of Retirement Benefit payable to
such Member determined under the provisions of the Prior Plan as
in effect on July 1, 1982, based upon his "Benefit Base"
thereunder as of December 31, 1982, but without adjustment for
increases in the cost of living which become effective after July
1, 1982.
(c) The annual amount of Retirement Benefit payable to
such a Member shall be the Benefit accrued as of December 31,
1986.
The maximum annual amount of a Member's Retirement
Benefit is subject to the following:
(1) If the Retirement Benefit is payable in a
form other than the normal form under Section 8.1 (Normal Form of
Benefit), the automatic joint and survivor option under Section
8.3 (Automatic Joint and Survivor Benefit) or Option 1 under
Section 8.4 (Other Optional Forms of Benefit), the maximum amount
of Retirement Benefit shall be adjusted so that it is the
Actuarial Equivalent of life annuity equal in amount to that
determined above.
(2) For the purpose of applying the maximum
benefit, all defined benefit pension plans maintained by members
of the Corporate Group shall be combined.
(3) If a Member in this Plan has also been a
participant in any defined contribution plan maintained by a
member of the Corporate Group, and if, as of the end of the year
in which Retirement Benefits under this Plan are due to commence
to or on account of such Member, his defined contribution plan
fraction, determined, in accordance with section 415(e) of the
Code and related regulations, on the basis of his combined
membership in all such defined contribution plans, shall exceed
two-tenths (.2) then the defined benefit limitation applicable to
such Member under this Plan, prior to any reduction in such
limitation for benefits payable under other defined benefit plans
of the Corporate Group, shall be determined as follows:
(i) by multiplying the amounts in (a)(1)(i)
and (a)(2) by the quantity (but not greater than one (1.0)) equal
to one and one quarter (1.25) multiplied by the excess of one
(1.0) over his defined contribution fraction and
(ii) by multiplying the amount in (a)(1)(ii)
by the quantity (but not greater than one (1.0)) equal to one and
four tenths (1.4) multiplied by the excess of one (1.0) over his
defined contribution fraction.
(4) For purposes of this Article IX, the standard
of control for determining a member of the Corporate Group under
Sections 4.14(b) and 414(c) of the Code shall be deemed to be
"more than 50%" rather than "at least 80%."
9.2 Adjustment to Maximum Annual Benefit. If the
annual amount of a Member's Retirement Benefit begins before the
Member's Social Security Retirement Age (as defined in section
415(b)(8) of the Code), the $90,000 limitation shall be reduced
so that it is the Actuarial Equivalent of the $90,000 limitation
beginning at the Member's Social Security Retirement Age. If the
annual amount of a Member's Retirement Benefit begins after the
Member's Social Security Retirement Age, the $90,000 limitation
shall be increased so that it is the Actuarial Equivalent of the
$90,000 limitation beginning at the Member's Social Security
Retirement Age.
9.3 Reduction for Participation or Service of Less
than 10 Years. If a Member has less than 10 years of Service at
the time he begins to receive Retirement Benefits under the Plan,
the limitations in Sections 9.1 and 9.2 shall be reduced by
multiplying such limitations by an "appropriate fraction." The
"appropriate fraction" in the case of the compensation limitation
shall be (a) the numerator of which is the number of years of
<PAGE>
service (or part thereof) and (b) the denominator of which is 10.
The "appropriate fraction" in the case of the dollar limitation
shall be (a) the numerator of which is the number of years of
participation (or part thereof) and (b) the denominator of which
is 10.
<PAGE>
ARTICLE X
CONTRIBUTIONS TO TRUST FUND
10.1 Company Contribution: Each Participating Company
shall make contributions to the Trust Fund from time to time in
such amounts based on the advice and calculations of the Actuary
taking into account expenses incurred by the Trust Fund, as the
Company shall deem to be necessary to provide Retirement Benefits
in accordance with the Plan under the funding method then in
effect. All contributions shall, when made, be deemed
conditioned upon deductibility under section 404(a)(1) of the
Code.
10.2 Refund of Company Contributions: Any obligation
of the Participating Companies to make contributions to the Trust
Fund hereby is conditioned upon the initial qualification of the
Plan under section 401(a) of the Code, the exempt status of the
Trust Fund under section 501(a) of the Code, and any contribution
hereby is conditioned upon deductibility under section 404(a)(1)
of the Code. If, and to the extent, a deduction is not allowed
for a Participating Company's contributions under the Plan for a
taxable year, an amount equal to the Participating Company's
contributions so disallowed as a deduction for such year shall be
repaid by the Trustee to the Participating Company within one
year after such disallowance, provided the Participating Company
so directs the Trustee.
If a Participating Company's contribution under the
Plan was made by a mistake of fact, such contribution shall be
returned to the Participating Company within one year after it
was made, provided that the Participating Company so directs the
Trustee.
10.3 Member Contributions: No Member shall be
required or permitted to make any contributions to the Plan.
10.4 Forfeitures: Any forfeiture arising under the
Plan shall not be applied to increase the benefits any Member
would otherwise receive under the Plan but shall be applied to
reduce contributions under the Plan.
10.5 Separate Accounting for Certain Participating
Companies: The Board may, in its sole discretion, authorize the
Retirement Committee to maintain separate accounting with respect
to all funds held under the Plan attributable to contributions
made by any Participating Company. Any Participating Company or
group of Participating Companies for which separate accounting of
funds is maintained shall be treated as a "single plan" within
the meaning of section 1.414(1) of the Treasury Department
Regulations.
<PAGE>
ARTICLE XI
ADMINISTRATION OF THE PLAN
11.1 Plan Administrator: The Company shall be the
Plan Administrator except to the extent that:
(a) Authority to administer the Plan has been
delegated to the Retirement Committee in accordance with Sections
1.4 (Authorized Leave of Absence), 1.9 (Compensation), 1.30
(Social Security Benefit), 3.3 (Early Retirement Date), 4.4
(Nonduplication of Benefits), 6.2 (Medical Examination; Recovery
From Disability), 7.1 (Family Benefit), 8.2 (Claim for Benefit),
8.3 (Automatic Joint and Survivor Option), 8.4 (Other Optional
Forms of Benefits), 8.5 (Payment of Small Amounts), 10.5
(Separate Accounting for Certain Participating Companies), 12.4
(Disbursement of Funds), 15.1 (Uniform Administration), 15.2
(Payment Due an Incompetent), 15.3 (Identity of Payee), 15.4
(Non-alienation of Benefits), 15.10 (Uniform and Non-
discriminatory Treatment), 15.12 (Unclaimed Benefits), 17.3
(Allocation of Assets) and the remainder of this Article XI, and
(b) Authority to hold the funds of the Plan has been
delegated to the Trustee in accordance with Section 12.2
(Trustee), and
(c) Authority to direct the investment of the Plan's
funds may be delegated to the Investment Manager in accordance
with Section 12.3 (Investment Manager), and
(d) Authority to act for the Company has been reserved
to the Board of Directors in accordance with Section 11.2 (Board
of Directors).
With respect to all other responsibilities of the Plan
Administrator, the Company shall act through its appropriate
officers and, if applicable, through the appropriate officers of
a Participating Company.
11.2 Board of Directors: With respect to Sections
1.14 (Eligible Employee), 1.21 (Participating Company), 11.3
(Appointment of the Retirement Committee), 11.8 (Personal
Liability), 12.2 (Trustee), 12.3 (Investment Manager), 14.1
(Suspension of Contributions), 14.2 (Discontinuance) and 17.1
(Adoption of Plan by Subsidiary) the Company shall act only by or
pursuant to a resolution of the Board of Directors.
11.3 Appointment of the Retirement Committee: The
Board of Directors or its delegate shall appoint a Retirement
Committee of not less than 3 individuals each of whom shall be an
Employee of a Participating Company. Any member may resign by
written notice to the other members and to the Board of Directors
or be removed by the Board of Directors, at any time. Vacancies
shall be filled by the Board of Directors.
11.4 Compensation, Expenses: The members of the
Retirement Committee shall serve as such without compensation but
all proper expenses incurred by them, the Company or the Trustee
for actuarial, accounting, legal and other professional,
consulting or technical services required for the administration
of the Plan, shall be paid by the Trustee out of the Trust Fund
unless the Company elects to pay any such expenses directly.
11.5 Appointment of Secretary, Agents: The Retirement
Committee may appoint a secretary and one or more assistant
secretaries, none of whom need be a member of the Retirement
Committee; and any of whom may but need not be an Employee. It
may appoint such agents, who need not be members of the
Retirement Committee, as it may deem necessary for the effective
performance of its duties and may delegate to such agents such
powers and duties as the Retirement Committee may deem expedient
or appropriate. The compensation, if any, of such agents shall
be fixed by the Retirement Committee within limits set by the
Company.
The Retirement Committee shall, from time to time,
authorize any one or more of its members to sign documents for
and on behalf of the Retirement Committee. Any action of the
Retirement Committee, including but not by way of limitation,
instruction to the Trustee, shall be evidenced by the signature
of a member who has been so authorized by the Retirement
Committee to sign for it, and the Trustee shall be fully
protected in acting thereon. A certificate of the secretary or
an assistant secretary of the Retirement Committee setting forth
the name of the members thereof shall be sufficient evidence at
all times as to the persons then constituting the Retirement
Committee.
11.6 Retirement Committee Meetings: The Retirement
Committee shall hold meetings upon such notice, at such time and
place as they may determine. The Retirement Committee shall act
by a majority of its members at the time in office and such
action may be taken from time to time by a vote at a meeting or
in writing without a meeting. A majority of the members of the
Retirement Committee at the time in office shall constitute a
quorum for transaction of business.
11.7 Authority and Duties of the Retirement Committee:
The Retirement Committee may from time to time establish rules
for the administration of the Plan. The Retirement Committee
shall have the exclusive right to interpret the Plan and to
decide any matters arising thereunder in connection with the
administration of the Plan. It shall endeavor to act by general
rules so as not to discriminate in favor of any person. Its
decisions and the records of the Retirement Committee shall be
conclusive and binding upon the Company, Members and all other
persons having an interest under the Plan. No member of the
Retirement Committee shall be disqualified from exercising the
powers and discretions herein conferred by reason of the fact
that the exercise of any such power or discretion may affect the
payment of benefits to him under the Plan; however, no member may
vote on a matter relating exclusively to himself.
The Retirement Committee shall keep a record of all of
its proceedings and shall keep or cause to be kept all such
records and other data as may be necessary for the administration
of the Plan.
11.8 Personal Liability: The members of the
Retirement Committee and the officers and directors of the
Company shall be entitled to rely upon all tables, valuations,
certificates and reports furnished by the Actuary, upon all
certificates and reports made by any duly appointed accountant,
and upon all opinions given by any duly appointed legal counsel.
To the extent not contrary to the provisions of ERISA, no member
of the Retirement Committee, officer, director or employee of a
Participating Company shall be personally liable for acts done in
good faith hereunder unless resulting from his own negligence or
willful misconduct. Each such member of the Retirement
Committee, officer and director shall be indemnified by the
Company against expenses (other than amounts paid in settlement
not approved by the Board of Directors) reasonably incurred by
him in connection with any action to which he may be a party by
reason of his responsibilities hereunder, except in relation to
matters as to which he shall be adjudged in such action to be
liable for negligence or misconduct in the performance of his
duty. However, nothing in this Plan shall be deemed to relieve
any person who is a fiduciary under the Plan for purposes of
ERISA from any responsibility or liability which such Act shall
impose upon him.
11.9 Dealings Between the Retirement Committee and
Individual Members: Any notice required to be given to, or any
document required to be filed with, the Retirement Committee will
be properly given or filed if mailed by registered or certified
mail, postage prepaid, or delivered to the Secretary of the
Retirement Committee, [c/o the Director, Human Resources, Smith
Corona Corporation, 65 Locust Avenue, New Canaan, CT 06840,] or
to such other place as the Retirement Committee may hereafter
from time to time designate.
The Retirement Committee shall make available to such
Member for his examination, such of its records as pertain to the
benefits to which such Member shall be entitled under the Plan.
11.10 Claim Procedures: Any person who believes that
he is entitled to benefits under the Plan may file a claim for
such benefits in accordance with Section 8.2 (Claim for
Benefits). Adequate notice shall be provided in writing to any
person whose claim for benefits under the Plan has been wholly or
partially denied. Such notice shall set forth the specific
reasons for such denial and special reference to the pertinent
Plan provisions on which the denial is based. Such notice shall
be written in a manner calculated to be understood by the
claimant and shall afford reasonable opportunity to the claimant
whose claim for benefits has been denied for a full and fair
review by the Retirement Committee of the decision denying the
claim. All determinations by the Retirement Committee regarding
benefit claims shall be final, conclusive and binding on all
interested parties.
11.11 Lawsuits: Every right of action claiming
benefits under the Plan, irrespective of the place where such
action may be brought, shall be barred after the expiration of 3
years from the event giving rise to the claim or, if later, the
date of receipt of the notice of denial of the claim under
Section 11.10 of the Plan.<PAGE>
ARTICLE XII
MANAGEMENT OF THE FUNDS
12.1 Trust Fund: All assets of the Plan shall be held
in trust as a Trust Fund for the exclusive benefit of Members and
their beneficiaries, and, prior to the satisfaction of all
liabilities with respect to them, no part of the corpus or income
shall be used for or diverted to any other purpose. No person
shall have any interest in or right to any part of the Trust
Fund, except to the extent provided in the Plan.
12.2 Trustee: All contributions to the Plan shall be
paid over to a Trustee or Trustees (which may be a corporate
trustee or an insurance company or both) which shall be appointed
from time to time by the Board by appropriate instrument with
such powers in the Trustee as to the control and disbursement of
the funds as the Board shall approve and as shall be in
accordance with the Plan. The Board may remove any Trustee at
any time, upon reasonable notice and upon such removal or upon
the resignation of any Trustee the Board shall designate a
successor Trustee.
12.3 Investment Manager: In accordance with the terms
of the trust instrument, the Board may appoint one or more
Investment Managers (individuals and/or other entities), who may
include the Trustee and who are collectively referred to herein
as the Investment Manager, to direct the investment and
reinvestment of part or all of the Plan's funds, and the Board
may change the appointment of the Investment Manager from time to
time.
12.4 Disbursement of Funds: The funds held by the
Trustee shall be applied, in the manner determined by the
Retirement Committee, to the payment of benefits to such persons
as are entitled thereto in accordance with the Plan.
The Retirement Committee shall determine the manner in
which the funds of the Plan shall be disbursed in accordance with
the Plan, including the form of voucher or warrant to be used in
authorizing disbursements and the qualification of persons
authorized to approve and sign the same and any other matters
incident to the disbursement of such funds. Also, the Retirement
Committee shall from time to time advise the Trustee and the
Investment Manager of the Plan's needs for liquidity with respect
to benefit payments and disbursements.
All charges of the Trustee and of the Investment
Manager shall be paid either directly by the Company or out of
the Trust Fund, as the Company shall elect from time to time.
<PAGE>
ARTICLE XIII
AMENDMENT
13.1 Right to Amend: The Board reserves the right at
any time, and from time to time, to modify or amend in whole or
in part the provisions of the Plan, but no such amendment shall
cause the elimination of any optional benefit payment form or any
reduction in the Accrued Benefit of any Member (except to the
extent permitted under section 412(c)(8) of the Code), and
further provided that no part of the assets of the Trust Fund
shall, by reason of any modification or amendment, be used for or
diverted to, purposes other than for the exclusive benefit of
Members and their beneficiaries, under the Plan including
defraying reasonable expenses of administering the Plan. For
purposes of this Section 13.1, the Retirement Committee, on
behalf of the Board, may adopt any and all amendments to the Plan
which do not substantially increase the cost of the Plan to the
Company. Amendments which substantially increase the cost of the
Plan to the Company must be adopted by the Board.
<PAGE>
ARTICLE XIV
SUSPENSION AND DISCONTINUANCE
14.1 Suspension of Contributions: A Participating
Company may suspend contributions in whole or in part. The
suspension of the Participating Company's contributions shall not
in itself constitute a discontinuance of the Plan so long as the
minimum funding requirements of section 412 of the Code have been
met.
14.2 Discontinuance: The Board will have the right at
any time to terminate this Plan in whole or with respect to any
Participating Company, by delivering to the Trustee its duly
authorized instrument of termination.
Upon partial or complete discontinuance or termination
of the Plan by a Participating Company the Accrued Benefit of
each affected Member of such Participating Company shall become
non-forfeitable to the extent then funded. The Trustee shall
allocate the assets of the Trust Fund for the benefit of each
such Member and beneficiary, in a manner approved by the Internal
Revenue Service in accordance with the provisions of, and
regulations issued pursuant to, Section 4044 of ERISA.
The amounts so allocated in accordance with the above
shall be applied for the benefit of each person either by a cash
payment, by insurance company contract or by the continuance of
the Trust Fund and the payment of Retirement Benefits therefrom
in such amounts as may be provided by the funds so allocated, all
as the Board shall determine. However, in the event that the
assets available for allocation are less than the value of
insured vested benefits, the Pension Benefit Guaranty Corporation
may direct how the allocated amounts are to be applied.
If any of the assets of the Trust Fund remain after the
satisfaction of all liabilities of the Plan, the remaining funds
shall be distributed by the Trustee to the Participating
Companies in a manner prescribed by the Board.
14.3 Merger, Consolidation or Transfer: In the case
of any merger or consolidation with, or transfer of assets or
liabilities to, any other plan after September 2, 1974 each
Member in the Plan would (if the Plan then terminated) receive a
benefit immediately after the merger, consolidation, or transfer
which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation,
or transfer (if the Plan had then terminated).
<PAGE>
ARTICLE XV
MISCELLANEOUS
15.1 Uniform Administration: Whenever, in the
administration of the Plan, any action is required by a
Participating Company or the Retirement Committee, including, but
not by way of limitation, action with respect to eligibility or
classification of Employees, contributions or benefits, such
action shall be uniform in nature as applied to all persons
similarly situated and no such action shall be taken which will
discriminate in favor of Members who are officers or significant
shareholders of a Participating Company or persons whose
principal duties consist of supervising the work of other
employees or highly compensated Members within the meaning of
section 414(q) of the Code.
15.2 Payment Due an Incompetent: If the Retirement
Committee determines that any person to whom a payment is due
hereunder is incompetent by reason of physical or mental
disability, the Retirement Committee shall have power to cause
the payments becoming due to such person to be made to another
for the benefit of the incompetent, without responsibility of the
Retirement Committee or the Trustee to see to the application of
such payment. Payments made in accordance with such power shall
operate as a complete discharge of all obligations on account of
such payment of the Retirement Committee, the Trustee and the
Trust Fund.
15.3 Identity of Payee: The determination of the
Retirement Committee as to the identity of the proper payee of
any benefit under the Plan and the amount of such benefit
properly payable shall be conclusive, and payment in accordance
with such determination shall constitute a complete discharge of
all obligations on account of such benefit.
15.4 Non-alienation of Benefits: Except as may be
required under a qualified domestic relations order as defined in
section 414(p) of the Code, no benefit payable under the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, bankruptcy or charge,
and any such action shall be void and of no effect; nor shall any
such benefit be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of the person
entitled to such benefit. The Retirement Committee shall
establish procedures for the determination of whether a domestic
relations order is a qualified domestic relations order.
If a qualified domestic relations order requires the
distribution of all or part of a Member's benefits under the
Plan, the establishment or acknowledgment of the alternate
payee's right to benefits under the Plan in accordance with the
terms of such qualified domestic relations order shall in all
cases be deemed to be consistent with the terms of the Plan.
15.5 Source of Payments: Retirement Benefits and all
other benefits shall be paid or provided solely from the Trust
Fund and the Participating Companies assume no liability or
responsibility therefor, except to the extent required by law.
15.6 Plan Not a Contract of Employment: Nothing
herein contained shall be deemed to give any Employee or Member
the right to be retained in the employ of a Participating Company
or to interfere with the right of the Participating Company to
discharge any Employee or Member at any time.
15.7 Payment of Retirement Benefits: Unless the
Member elects otherwise and the Plan so permits, Retirement
Benefit payments shall in no event commence later than the 60th
day after the close of the Plan Year in which the latest of the
following events occurs:
(a) the attainment by the Member of age 65,
(b) the 10th anniversary of the year in which the
Member commenced participation in the Prior Plan or Plan, or
(c) the termination of the Member's employment with
the Company or Participating Company, except that, if the amount
of the payment required to commence on the date determined under
the Plan cannot be ascertained by such date, a payment
retroactive to such date may be made no later than 60 days after
the earliest date on which the amount of such payment can be
ascertained under the Plan;
provided, however, that no Retirement Benefit payments shall
commence until the Member has filed a claim for benefits in
accordance with Section 8.2 (Claim for Benefit), and further
provided that notwithstanding any other provision of the Plan to
the contrary, if the Member's Retirement Benefit commences after
the later of (i) his Normal Retirement Date and (ii) his actual
retirement on a Deferred Retirement Date, he shall be entitled to
an additional single payment on the date his Retirement Benefit
commences equal to the sum of the additional payments he would
have received had he elected to have his Retirement Benefit
commence on his Normal Retirement Date (or on his actual Deferred
Retirement Date, if applicable).
15.8 Invalidity of Certain Provisions: If any
provisions of this Plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other
provisions hereof and the Plan shall be construed and enforced as
if such provisions, to the extent invalid or unenforceable, had
not been included.
15.9 Headings: The headings of articles and sections
are included solely for convenience of reference, and, if there
is any conflict between such headings and the text of the Plan,
the text shall control.
15.10 Uniform and Non-Discriminatory Treatment: Any
discretion exercisable hereunder by the Company, a Participating
Company, or the Retirement Committee shall be exercised in a
uniform and non-discriminatory manner.
15.11 Applicable Law: The Plan shall be administered
and interpreted in accordance with the laws of the State of New
York (disregarding the principles of conflicts of law), except to
the extent preempted by Federal law or the law of another
jurisdiction.
15.12 Unclaimed Benefits: In the event that all, or
any portion, of Retirement Benefits or any other benefits payable
to any individual under the Plan, shall, at the expiration of 3
years after it shall be payable, remain unpaid solely by reason
of the inability of the Retirement Committee, after sending a
registered letter, return receipt requested, to the last known
address, and after further diligent and reasonable effort to
ascertain the whereabouts of such payee including utilizing the
services of the Internal Revenue Service to deliver such notice
in accordance with Rev. Proc. 94-22, the amount payable shall be
forfeited and shall be used to reduce the cost of the Plan. In
the event the payee is located subsequent to his benefit being
forfeited, such benefit shall be restored.
<PAGE>
ARTICLE XVI
TREASURY DEPARTMENT LIMITATIONS
16.1 Early Termination: The purpose of this Article
XVI is to conform the Plan to the requirements of section
401(a)(4) of the Code and related regulations.
(a) The provisions of this Section 16.1 shall apply to
"highly compensated employees" and "highly compensated former
employees" within the meaning of section 414(q) of the Code;
provided that in any one year the total number of such employees
subject to the restrictions of this Section 16.1 shall be limited
to the group consisting of the twenty-five highly compensated
employees and highly compensated former employees having the
greatest compensation (the "Top Paid Group").
(b) In the event of the termination of the Plan, the
benefit of any highly compensated employee and any former highly
compensated employee is limited to a benefit that is
nondiscriminatory under section 401(a)(4) of the Code.
(c) If (b) applies, then annual payments to any Member
who is in the Top Paid Group shall be restricted to an amount
equal to the payments that would be made on behalf of such Member
under a single life annuity that is the Actuarial Equivalent of
the Member's accrued benefit and the Member's other benefits, if
any, under the Plan. However the foregoing restriction shall not
apply if either (i) after taking into account payment to or on
behalf of the Member of all benefits payable to or on behalf of
that Member under the Plan, the value of the Plan assets equals
or exceeds 110 percent of the value of "current liabilities", as
defined in section 412(a)(7) of the Code, (ii) the value of the
benefits payable to or on behalf of the Member under the Plan
does not exceed one percent of the value of "current liabilities"
(as defined in section 412(l)(17) of the Code) before
distribution or (iii) the value of the benefits payable to or on
behalf of the Member under the Plan does not exceed $3,500.
(d) In the event that it shall be determined by
statute, court decision or ruling by the Internal Revenue Service
or otherwise that the provisions of this Section 16.1 are no
longer necessary to qualify the Plan under the Code, this Section
16.1 shall thereupon be void without the necessity of further
amendment of the Plan.
(e) The Retirement Committee may adopt and implement
on a uniform basis any administrative procedures authorized by
the Internal Revenue Service, in regulations or other rulings and
announcements, pursuant to which benefit payments otherwise
restricted by this Section 16.1 can be paid into an escrow
account or other acceptable secured deposit arrangement.
(f) The provisions of his Section 16.1 shall be
effective for Plan Years beginning on or after January 1, 1994.
For Plan Years beginning prior to such date, the provisions of
Section 16.1 of the prior Plan document (as amended and restated
as of January 1, 1989) shall apply.<PAGE>
ARTICLE XVII
ADOPTION OF PLAN BY SUBSIDIARY
17.1 Adoption by Subsidiary: Any domestic or foreign
corporation which is a subsidiary of the Company may adopt this
Plan by appropriate action of its board of directors and approval
of the Board of Directors of the Company. In such case the
subsidiary will come within the definition of Participating
Company in Section 1.21 (Participating Company) and its Eligible
Employees shall become Members in accordance with Article II
(Eligibility and Membership). The Board shall determine, at the
time the subsidiary is designated as a Participating Company, the
extent to which service with the subsidiary (both before and
after such subsidiary was acquired by the Company) shall be
included as Service and Credited Service under the Plan.
17.2 Withdrawal by Subsidiary: A subsidiary which has
adopted the Plan as provided in Section 17.1 may subsequently
withdraw from the Plan or terminate the Plan with respect to its
employees by appropriate action of its own board of directors and
timely notification thereof to the Board of Directors of the
Company. If it ceases to be a subsidiary of the Company it shall
so withdraw from the Plan unless the Board of Directors of the
Company approves the continuation of its participation in the
Plan.
In the event that any Participating Company fails to
establish or ceases to maintain the Plan, with respect to its
employees, as a "Qualified Plan" under section 401(a) of the
Internal Revenue Code such Participating Company shall cease to
make contributions hereunder until (a) such time as such Plan is
determined by the Internal Revenue Service to be a "Qualified
Plan" or (b) the Board of Directors determines that such
Participating Company should terminate the Plan with respect to
its employees.
17.3 Allocation of Assets: When a Participating
Company withdraws from the Plan or terminates the Plan with
respect to its employees it shall promptly, by action of its
board of directors, file notice in writing with the Trustee and
shall direct the Trustee to segregate the assets of the Plan
certified by the Retirement Committee to be allocable to its
Members and beneficiaries under the Plan. The Retirement
Committee shall determine the share of the assets so allocable
and shall certify to the Trustee what assets are to be so
segregated, such assets to be used and applied as follows upon
receipt by the Trustee of the written approval of the Board of
Directors to such certification.
(a) In the case of withdrawal from the Plan with
respect to the employees of the subsidiary, the Trustee shall
hold the aforesaid assets as a separate trust for the exclusive
benefit of such employees. From and after the effective date of
such withdrawal the provisions of the Plan shall (pending the
preparation, execution and delivery by the withdrawing company of
an appropriate separate Plan and Trust Agreement) continue to be
effective with respect to such company and its employees as a
separate plan under which such company shall have and succeed to
all the rights, powers and duties of the Company and under which
its board of directors shall have and succeed to all the rights,
powers and duties of the Board of Directors of the Company under
the Plan.
(b) In the case of termination of the Plan with
respect to the employees of a subsidiary, subject to the approval
of the Pension Benefit Guaranty Corporation, the aforesaid assets
shall be used only for the exclusive benefit of such company's
Members and beneficiaries, except that any assets not required to
satisfy all liabilities for such benefits because of erroneous
actuarial computation shall be returned to such company. The
aforesaid assets shall then be distributed in accordance with the
provisions of Article XIV (Suspension and Discontinuance).
<PAGE>
ARTICLE XVIII
TOP-HEAVY PROVISIONS
18.1 Purpose and Limited Application of this Article:
The purpose of this Article XVIII is to conform to the
requirement of section 401(a)(10)(B) of the Code that the Plan
contain provisions (a) which will take effect if it becomes Top-
heavy and (b) which meet the requirements of section 416 of the
Code.
18.2 Additional Definitions: As used in this Article
XVIII, the following words and phrases, in addition to those
defined in Article I shall have the following meanings:
"Key Employee" means a Member who at any time during a
specific Plan Year or any of the four preceding Plan Years is:
(1) an officer of the Company having an annual
compensation greater than 50 percent of the amount in effect
under section 415(c)(1)(A) of the Code for any such Plan Year.
(2) 1 of the 10 Employees having annual
compensation from the Company of more than the limitation in
effect under section 415(c)(1)(A) of the Code and owning (or
considered as owning within the meaning of section 318 of the
Code) the largest interests in the Company,
(3) a 5 percent owner of the Company, or
(4) a 1 percent owner of the Company having an
annual compensation from the Company of more than $150,000.
For purposes of (1), no more than 50 individuals
(or, if lesser, the greater of 3 or 10 percent of the total
number of individuals) shall be treated as officers. For
purposes of (2), if two individuals have the same interest in the
Company, the one having greater annual compensation from the
Company shall be treated as having a larger interest.
Other Criteria for determining whether an
individual is a Key Employee shall be consistent with the
provisions of section 416(i) of the Code and regulations issued
thereunder.
"Beneficiary" means a deceased Member's spouse or
dependent child who is receiving benefits under the Plan.
"Determination Date" means, with respect to a
specific Plan Year, the last day of the preceding Plan Year.
"Present Value of Accrued Benefits" as of a
specific Determination Date means:
(1) the actuarial present value, as of the most
recent Valuation Date which is within the 12-month period ending
on the Determination Date, of a Member's Accrued Benefit or the
benefit payable to the Beneficiary of a deceased Member, plus
(2) the aggregate of amounts paid to such Member
or Beneficiary during the Plan Year ending on the Determination
Date and the four preceding Plan Years, (but excluding amounts
included in the determination of (1)).
The actuarial assumptions used shall include the
interest rate and decremental rates (mortality, termination of
employment, etc.) used in the regular actuarial valuations of the
Plan.
"Valuation Date" means the date within a Plan Year
as of which the Actuary regularly determines the contribution
requirements under the Plan for minimum funding purposes
regardless of whether such a valuation was performed for that
Plan Year.
"Required Aggregation Group" means all plans of
the Corporate Group in which one or more Key Employees
participate and each other plan which enables this Plan to meet
the requirements of section 401(a)(4) or 410 of the Code.
"Permissive Aggregation Group" means each plan
included in the Required Aggregation Group and any other plans of
the Corporate Group if, taking such other plans into account,
such group would continue to meet the requirements of section
401(a)(4) and 410 of the Code.
"Top-Heavy" means with respect to the Plan for a
specific Plan year, that
(1) the Present Value of Accrued Benefits of Key
Employees and their Beneficiaries exceeds 60% of the Present
Value of Accrued Benefits of all Members and Beneficiaries but
excluding amounts for former Key Employees and for Members and
former Members who have not received any compensation from the
Company during the five years ending on the Determination Date,
or
(2) the Plan is part of a Required Aggregation
Group that is a Top-Heavy Group,
unless the plan or such Top-heavy Group is part of a
Permissive Aggregation Group that is not a Top-Heavy Group.
"Top-heavy Group" means, either a Required
Aggregation Group or a Permissive Aggregation Group, for a
specific Plan Year, that meets the definition in section
416(g)(2)(B) of the Code.
18.3 Effect of the Plan's Becoming Top-Heavy: If, for
any Plan Year commencing after 1983, the Plan becomes Top-Heavy,
the following provisions shall automatically become effective
with respect only to each Member who is an Employee:
(a) A member who has completed at least 3 but less
than 10 years of Service and who has not attained age 60, shall
(i) upon his termination of employment other than by death, be
deemed to be a Vested Terminated Member entitled to a Retirement
Benefit under the provisions of Article V (Benefits upon
Termination of Employment), or (ii) upon his termination of
employment by reason of death, be deemed to satisfy the
eligibility requirements of Section 7.2 (Pre-retirement Death
Benefit for Certain Other Members), in which case his surviving
spouse, if any, shall be entitled to a Retirement Benefit under
the provisions of Section 7.2. Such Member's (or spouse's)
Retirement Benefit shall be based on his Accrued Benefit
(including the effect, if any, or paragraph (b) below). If in a
subsequent Plan Year the Plan is not top-heavy this vesting
schedule shall continue to apply with respect to
(1) Members who have completed at least 5 years
of Service as of the end of the latest Plan Year in which the
Plan was Top-heavy, and
(2) the Accrued Benefit as of the end of the
latest Plan Year in which the Plan was Top-heavy for all other
Members who have completed at least 3 years of Service on such
date.
(b) The amount of Accrued Benefit for a Member who is
not a Key Employee shall not be less than 2% of average annual
aggregate compensation (for the 5 consecutive Plan Years
producing the highest such average) for each year of Credited
Service but excluding years in excess of 10 and excluding years
during which the Plan is not Top-heavy. In computing the average
annual aggregate compensation, compensation for years beginning
after the last year for which the Plan was Top-heavy shall be
excluded. If there remain fewer than 5 years the average of such
remaining years shall be used.
(c) For both the calculation of the minimum described
in (b) above and the determination of aggregate compensation,
compensation in excess of the amount determined in accordance
with section 416(d) of the Code shall be excluded with respect to
any Plan Year in which the Plan is Top-heavy.
(d) In applying the maximum benefit limitation set
forth in subparagraph (b)(3)(i) of Article IX, for a Plan Year in
which the Plan is Top-heavy, the term "one (1.00)" shall be
substituted for the term "one and one quarter (1.25)". However,
this substitution shall not result in a reduction in any Member's
Accrued Benefit as of the end of the Plan Year immediately
preceding the Plan Year in which the Plan became Top-heavy.
18.4 Effect of Change in Pertinent Legislation or
Regulation: In the event that Congress should provide by
statute, or the Internal Revenue Service should provide by
regulation or ruling, that such limitations are no longer
necessary for the Plan to meet the requirements of section 401(a)
or other applicable provisions of the Internal Revenue Code then
in effect, such limitations shall become void and shall no longer
apply, without the necessity of further amendment to the Plan.
<PAGE>
ARTICLE XIX
DIRECT ROLLOVER DISTRIBUTIONS
19.1 Purpose and Limited Application of this Article:
The purpose of this Article is to conform to section 401(a)(31)
of the Code. This Article applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the plan
to the contrary that would otherwise limit a distributee's
election under this Article, a distributee may elect, at the time
and in the manner prescribed by the Retirement Committee, to have
any portion of an eligible rollover distribution paid directly to
an eligible retirement plan specified by the distributee in a
direct rollover.
19.2 Definitions
(a) Eligible Rollover Distribution: An eligible
rollover distribution is any distribution of all or any portion
of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period
of ten years or more; any distributee to the extent such
distribution is required under section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(b) Eligible Retirement Plan: An eligible retirement
plan is an individual retirement account described in section
408(a) of the Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified trust described in section
401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, int he case of an eligible
rollover distribution to a surviving spouse, an eligible
retirement plan is an individual retirement account or an
individual retirement annuity.
(c) Distributee: A distributee incudes an employee or
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former
employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in section
414(p) of the Code, are distributees with regard to the interest
of the spouse or former spouse.
(d) Direct Rollover: A direct rollover is a payment
by the Plan to an eligible retirement plan specified by the
distributee.
19.3 Waiver of Distribution Waiting Period: If a
distribution is one to which sections 401(a)(11) and 417
(relating to the provision of joint and survivor annuities) of
the Code do not apply, such distribution may commence less than
30 days after the notice required by section 1.411(a)-11(c) of
the Treasury Regulations is given, provided that:
(a) the Retirement Committee clearly informs the
Member that the Member has a right to a period of at least 30
days after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(b) the Member, after receiving the notice,
affirmatively elects a distribution.<PAGE>
SCM OFFICE SUPPLIES, INC. SALARIED EMPLOYEES'
RETIREMENT PLAN
(As Amended and Restated
as of January 1, 1994)
<PAGE>
TABLE OF CONTENTS
Page
FOREWORD . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 "Accrued Benefit" . . . . . . . . . . . . . . . . . . .1
1.2 "Actuarial Equivalent". . . . . . . . . . . . . . . . .1
1.3 "Actuary" . . . . . . . . . . . . . . . . . . . . . . .1
1.4 "Authorized Leave of Absence" . . . . . . . . . . . . .1
1.5 "Average Final Compensation". . . . . . . . . . . . . .1
1.6 "Board" or "Board of Directors" . . . . . . . . . . . .2
1.7 "Code". . . . . . . . . . . . . . . . . . . . . . . . .2
1.8 "Company" . . . . . . . . . . . . . . . . . . . . . . .2
1.9 "Compensation". . . . . . . . . . . . . . . . . . . . .2
1.10 "Corporate Group" . . . . . . . . . . . . . . . . . . .5
1.11 "Credited Service". . . . . . . . . . . . . . . . . . .5
1.12 "Deferred Retirement Date". . . . . . . . . . . . . . .6
1.13 "Early Retirement Date" . . . . . . . . . . . . . . . .6
1.14 "Eligible Employee" . . . . . . . . . . . . . . . . . .6
1.15 "Employee". . . . . . . . . . . . . . . . . . . . . . .6
1.16 "ERISA" . . . . . . . . . . . . . . . . . . . . . . . .6
1.17 "Hour of Service" . . . . . . . . . . . . . . . . . . .6
1.18 "Investment Manager". . . . . . . . . . . . . . . . . .7
1.19 "Member". . . . . . . . . . . . . . . . . . . . . . . .7
1.20 "Normal Retirement Date". . . . . . . . . . . . . . . .7
1.21 "Participating Company" . . . . . . . . . . . . . . . .7
1.22 "Plan". . . . . . . . . . . . . . . . . . . . . . . . .7
1.23 "Plan Year" . . . . . . . . . . . . . . . . . . . . . .7
1.25 "Required Beginning Date" . . . . . . . . . . . . . . .7
1.26 "Retirement Benefit". . . . . . . . . . . . . . . . . .8
1.27 "Retirement Committee". . . . . . . . . . . . . . . . .8
1.28 "Retirement Date" . . . . . . . . . . . . . . . . . . .8
1.29 "Service" . . . . . . . . . . . . . . . . . . . . . . .8
1.30 "Social Security Benefit" . . . . . . . . . . . . . . 10
1.31 "Trust Fund". . . . . . . . . . . . . . . . . . . . . 10
1.32 "Trustee" . . . . . . . . . . . . . . . . . . . . . . 10
1.33 "Vested Terminated Member". . . . . . . . . . . . . . 10
1.34 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
ELIGIBILITY AND MEMBERSHIP . . . . . . . . . . . . . . . . . . 11
2.1 Members on December 31, 1993. . . . . . . . . . . . . 11
2.2 Eligible Employees on and after January 1,
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Authorized Leave of Absence . . . . . . . . . . . . . 11
2.4 Transfer to or from Non-Covered Status. . . . . . . . 11
<PAGE>
ARTICLE III
RETIREMENT DATE. . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Normal Retirement Date. . . . . . . . . . . . . . . . 13
3.2 Deferred Retirement Date. . . . . . . . . . . . . . . 13
3.3 Early Retirement Date . . . . . . . . . . . . . . . . 13
3.4 Reemployment of a Retired Member. . . . . . . . . . . 13
ARTICLE IV
RETIREMENT BENEFITS. . . . . . . . . . . . . . . . . . . . . . 14
4.1 Normal Retirement Benefit . . . . . . . . . . . . . . 14
4.2 Deferred Retirement Benefit . . . . . . . . . . . . . 14
4.3 Early Retirement Benefit. . . . . . . . . . . . . . . 14
4.4 Nonduplication of Benefits. . . . . . . . . . . . . . 15
ARTICLE V
BENEFITS UPON TERMINATION OF EMPLOYMENT. . . . . . . . . . . . 16
5.1 Deferred Vested Benefit . . . . . . . . . . . . . . . 16
5.2 Early Commencement of Vested Benefit. . . . . . . . . 16
5.3 Reemployment of a Vested Terminated Member. . . . . . 16
ARTICLE VI
DISABILITY BENEFITS. . . . . . . . . . . . . . . . . . . . . . 17
6.1 Eligibility and Amount of Benefit . . . . . . . . . . 17
6.2 Medical Examination; Recovery From Disability . . . . 17
ARTICLE VII
DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Family Benefit. . . . . . . . . . . . . . . .
. . . 19
7.2 Pre-Benefit Commencement Survivor Option for Vested
Terminated Members. . . . . . . . . . . . . . . . 21
7.3 Death Benefits After Retirement Benefit
Commences. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII
TIME AND FORM OF BENEFIT PAYMENT . . . . . . . . . . . . . . . 24
8.1 Normal Form of Benefit. . . . . . . . . . . . . . . . 24
8.2 Claim for Benefit . . . . . . . . . . . . . . . . . . 24
8.3 Automatic Joint and Survivor Option . . . . . . . . . 25
8.4 Other Optional Forms of Benefit . . . . . . . . . . . 26
8.5 Payment of Small Amounts. . . . . . . . . . . . . . 27
8.6 Mandatory Distributions . . . . . . . . . . . . . . . 28
<PAGE>
ARTICLE IX
LIMIT ON BENEFITS. . . . . . . . . . . . . . . . . . . . . . . 29
9.1 Maximum Annual Benefit. . . . . . . . . . . . . . . . 29
9.2 Adjustment to Maximum Annual Benefit. . . . . . . . . 30
9.3 Reduction for Participation or Service of
Less than 10 Years . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X
CONTRIBUTIONS TO TRUST FUND. . . . . . . . . . . . . . . . . . 32
10.1 Company Contribution. . . . . . . . . . . . . . . . . 32
10.2 Refund of Company Contributions . . . . . . . . . . . 32
10.3 Member Contributions. . . . . . . . . . . . . . . . . 32
10.4 Forfeitures . . . . . . . . . . . . . . . . . . . . . 32
10.5 Separate Accounting for Certain Participating
Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XI
ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . 33
11.1 Plan Administrator. . . . . . . . . . . . . . . . . . 33
11.2 Board of Directors. . . . . . . . . . . . . . . . . . 33
11.3 Appointment of the Retirement Committee . . . . . . . 33
11.4 Compensation, Expenses. . . . . . . . . . . . . . . . 34
11.5 Appointment of Secretary, Agents. . . . . . . . . . . 34
11.6 Retirement Committee Meetings . . . . . . . . . . . . 34
11.7 Authority and Duties of the Retirement
Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.8 Personal Liability. . . . . . . . . . . . . . . . . . 35
11.9 Dealings Between the Retirement Committee and
Individual Members . . . . . . . . . . . . . . . . . . . . . . 35
11.10 Claim Procedures . . . . . . . . . . . . . . . . . . 35
11.11 Lawsuits . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XII
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . 37
12.1 Trust Fund. . . . . . . . . . . . . . . . . . . . . . 37
12.2 Trustee . . . . . . . . . . . . . . . . . . . . . . . 37
12.3 Investment Manager. . . . . . . . . . . . . . . . . . 37
12.4 Disbursement of Funds . . . . . . . . . . . . . . . . 37
ARTICLE XIII
AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.1 Right to Amend. . . . . . . . . . . . . . . . . . . . 38
ARTICLE XIV
SUSPENSION AND DISCONTINUANCE. . . . . . . . . . . . . . . . . 39
14.1 Suspension of Contributions . . . . . . . . . . . . . 39
14.2 Discontinuance. . . . . . . . . . . . . . . . . . . . 39
14.3 Merger, Consolidation or Transfer . . . . . . . . . . 39
<PAGE>
ARTICLE XV
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 40
15.1 Uniform Administration. . . . . . . . . . . . . . . . 40
15.2 Payment Due an Incompetent. . . . . . . . . . . . . . 40
15.3 Identity of Payee . . . . . . . . . . . . . . . . . . 40
15.4 Non-alienation of Benefits. . . . . . . . . . . . . . 40
15.5 Source of Payments. . . . . . . . . . . . . . . . . . 41
15.6 Plan Not a Contract of Employment . . . . . . . . . . 41
15.7 Payment of Retirement Benefits. . . . . . . . . . . . 41
15.8 Invalidity of Certain Provisions. . . . . . . . . . . 41
15.9 Headings. . . . . . . . . . . . . . . . . . . . . . . 41
15.10 Uniform and Non-Discriminatory Treatment. . . . . . . 42
15.11 Applicable Law. . . . . . . . . . . . . . . . . . . . 42
15.12 Unclaimed Benefits. . . . . . . . . . . . . . . . . . 42
ARTICLE XVI
TREASURY DEPARTMENT LIMITATIONS. . . . . . . . . . . . . . . . 43
ARTICLE XVII
ADOPTION OF PLAN BY SUBSIDIARY . . . . . . . . . . . . . . . . 45
17.1 Adoption by Subsidiary. . . . . . . . . . . . . . . . 45
17.2 Withdrawal by Subsidiary. . . . . . . . . . . . . . . 45
17.3 Allocation of Assets. . . . . . . . . . . . . . . . . 45
ARTICLE XVIII
TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . 47
18.1 Purpose and Limited Application of this
Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
18.2 Additional Definitions. . . . . . . . . . . . . . . . 47
18.4 Effect of Change in Pertinent Legislation or
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XIX
DIRECT ROLLOVER DISTRIBUTIONS. . . . . . . . . . . . . . . . . 51
19.1 Purpose and Limited Application of this
Article . . . . . . . . . . . . . . . . . . . . . 51
19.2 Definitions . . . . . . . . . . . . . . . . . . . . . 51
19.3 Waiver of Distribution Waiting Period . . . . . . . . 52
Introduction
SCM Corporation adopted the Retirement Savings and
Investment Plan of SCM Corporation effective October 28, 1971 for
the benefit of certain of its employees including employees of
certain of its affiliates ("Prior Plan"). From and after 1985
employees of Smith Corona Corporation, an affiliate of SCM
Corporation, together with the employees of three wholly-owned
subsidiaries of Smith Corona Corporation, namely, Hulse
Manufacturing Company, SCM Office Supplies, Inc. and Histacount
Corporation, participated in the Prior Plan.
In July, 1989, Smith Corona Corporation became a public
company with an offering of a majority of its common stock on the
New York Stock Exchange. Effective as of July 1, 1989, Smith
Corona Corporation and two of its subsidiaries, namely, SCM
Office Supplies, Inc. and Histacount Corporation, each adopted
separate but identical defined contribution plans for their
respective employees entitled respectively, Smith Corona
Corporation Retirement Savings and Investment Plan ("Plan"), SCM
Office Supplies, Inc. Retirement Savings and Investment Plan and
Histacount Corporation Retirement Savings and Investment Plan.
Hulse Manufacturing Company adopted the Plan as a participating
employer. The assets and liabilities of the employees of Smith
Corona Corporation and its subsidiaries were "spun-off" from the
Prior Plan and transferred to the three respective plans. The
"spin-off" was accomplished pursuant to Section 414(l) of the
Internal Revenue Code of 1986, as amended. Effective January 1,
1992, the SCM Office Supplies, Inc. Retirement Savings and
Investment Plan was merged with and into the Plan. The Trustee
for the Plan is Bankers Trust Company under a trust agreement
established as of July 1, 1989.
The principal purpose of the Plan is to provide
employees of participating employers with an opportunity to
acquire common stock of Smith Corona Corporation, to encourage
them to save for retirement by offering matching Employer
Contributions and to provide them with a convenient way to save
for retirement on a regular and tax effective basis.
Provisions of this Plan are only applicable to
employees in the employment of a participating employer and who
have an Hour of Service on or after July 1, 1989. Any employee
who was covered under the Prior Plan who retired or terminated
employment prior to July 1, 1989 shall be entitled to benefits
as determined by the Prior Plan in effect at the retirement or
termination date.
(v)
<PAGE>
ARTICLE I
Definitions
As used herein, unless otherwise defined or required by
the context, the following words and phrases shall have the
meanings indicated. Some of the words and phrases used in the
Plan are not defined in this Article I, but, for convenience are
defined as they are introduced into the text.
1.1 "Account" means a Member's Employee Contributions
Account, Compensation Deferral Contribution Account, Rollover
Contribution Account, and Employer Contribution Account, or any
such account or subaccount thereof, as the context requires.
1.2 "Affiliate" means any company which is related to
the Employer as a member of a controlled group of corporations in
accordance with Section 414(b) of the Code, as a trade or
business under common control in accordance with Section 414(c)
of the Code or members of an affiliated service group as defined
under Section 414(m) of the Code and any other entity required to
be aggregated with the Employer pursuant to Section 414(o) of the
Code.
1.3 "Appropriate Form" means the form prescribed by
the Committee for a particular purpose.
1.4 "Basic Contributions" means Compensation Deferral
Contributions that are eligible for matching by Employer
Contributions in accordance with Section 4.1 (Amount of Employer
Contributions).
1.5 "Basic Contributions Subaccount" means the
separate subaccount in the Compensation Deferral Contribution
Account maintained for a Member to record such Member's share of
the Trust attributable to Basic Contributions.
1.6 "Beneficiary" means the person or persons
designated by the Plan or by a Member under Section 2.5
(Beneficiary Designation) to receive benefits payable under the
Plan as a result of the Member's death.
1.7 "Board" or "Board of Directors" means the Board of
Directors of Smith Corona Corporation.
1.8 "Code" means the Internal Revenue Code of 1986, as
amended from time to time and references to sections thereof
shall be deemed to include any such sections as amended, modified
or renumbered.
1.9 "Committee" means the Benefits Administration
Committee of Smith Corona Corporation appointed in accordance
with Section 10.3 (Appointment of Committee).
1.10 "Compensation" means with respect to a Plan Year,
the sum of the amount reported by the Employer to the Internal
Revenue Service on Form W-2 as the Member's compensation for such
calendar year and the amount of any Compensation Deferral
Contributions made on such Member's behalf to the Plan and the
amount contributed by the Employer pursuant to a salary reduction
agreement which is not included in a Member's gross income under
Section 125 of the Code; but exclusive of termination or
severance pay, prizes, awards, grievance settlements, overseas
cost of living allowances, relocation allowances, mortgage
assistance, executive perquisites, stock options, and such other
extraordinary items or remuneration as the Committee shall
determine from time to time pursuant to such uniform and
nondiscriminatory rules as it shall adopt. For the period of
January 1, 1989 to December 31, 1993 the Compensation of each
Employee taken into account under the Plan for any Plan Year
shall not exceed $200,000 as thereafter adjusted for inflation in
accordance with Section 415(d) of the Code. On and after January
1, 1994 the Compensation of each Employee taken into account
under the Plan for any Plan Year shall not exceed $150,000 as
thereafter adjusted for inflation in accordance with Section
415(d) of the Code. If the Plan determines Compensation for a
Plan Year less than 12 calendar months, then the limitation shall
be equal to the annual compensation limitation determined by
multiplying the limitation by the ratio obtained by dividing the
number of full months in such Plan Year by 12. In determining
the Compensation of a Member for purposes of the annual
limitation, the rules of Section 414(q)(6) of the Code shall
apply except in applying such rules, the term "family" shall
include only the spouse of the Member and any lineal descendants
of the Member who have not attained age 19 before the close of
the applicable Plan Year. If, as a result of the application of
such rules, the annual limitation on Compensation is exceeded,
then the limitation shall be prorated among the affected
individuals in proportion to each such individual's Compensation.
1.11 "Compensation Deferral Contributions" means
contributions made by the Employer pursuant to an election by the
Member to reduce the cash compensation otherwise currently
payable to such Member by an equivalent amount, in accordance
with the provisions of Section 3.1 (Compensation Deferral
Contributions).
1.12 "Compensation Deferral Contributions Account"
means the separate account maintained for a Member to record such
Member's share of the Trust Fund attributable to Compensation
Deferral Contributions made on such Member's behalf.
1.13 "Effective Date" means July 1, 1989.
1.14 "Eligible Employee" means an employee who (i) has
attained age 21 and (ii) has been credited with at least 1,000
Hours of Service during a consecutive twelve-month period,
excluding an individual who is covered by a collective bargaining
agreement between the Employer and any union unless participation
by such employee in the Plan has been agreed to by the parties to
such agreement and also excluding any Employee who is a
nonresident alien with no earned income from the Employer which
constitutes income from sources within the United States. The
computation period for eligibility shall mean the 12 consecutive
month period beginning on an Employee's employment date and
thereafter the Plan Year starting with the Plan Year which
includes the first anniversary of the Employee's employment date.
An Employee who is credited with 1,000 Hours of Service in both
of the foregoing computation periods will be credited with two
years of Service for eligibility purposes.
1.15 "Employee" means a person (but not including a
person acting only as a director) who is employed by the Employer
and excluding any "leased employee" within the meaning of Section
414(n)(2) of the Code.
1.16 "Employee Contributions" means after tax
contributions that were made by a Member under the Prior Plan
prior to January 1, 1989 and were transferred to this Plan.
1.17 "Employee Contributions Account" means the
separate account maintained for a Member to record such Member's
share of the Trust Fund attributable to the Member's Employee
Contributions. The Employee Contributions Account of each Member
will consist of a subaccount for basic Employee Contributions
that were eligible for matching by Employer Contributions and a
subaccount for supplemental Employee contributions that were not
eligible for matching by Employer Contributions.
1.18 "Employer" means Smith Corona Corporation and
with respect to a participating subsidiary who adopts the Plan
pursuant to Section 13.7, such subsidiary, where appropriate.
1.19 "Employer Contributions" means the Employer
contributions made to the Trust Fund pursuant to Article IV
(Employer Contributions).
1.20 "Employer Contribution Account" means the
separate Account maintained for a Member to record such Member's
share of the Trust Fund attributable to Employer Contributions
made on such Member's behalf.
1.21 "Employer Securities" means the common stock of
Smith Corona Corporation.
1.22 "Enrollment Date" means January 1 or July 1 of
any Plan Year or such other time designated by the Committee.
1.23 "Enrollment Period" means the period commencing
on a Enrollment Date and ending on the next following Enrollment
Date.
1.24 "ERISA" means Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as amended from time to
time.
1.25 "Hour of Service" means each hour for which an
Employee is paid, or entitled to payment, or receives earned
income from an Employer or an Affiliate:
(i) for performance of duties;
(ii) on account of a period of time which no
duties were performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness,
jury duty, military duty or authorized Leave of Absence, provided
that, except in the case of an Authorized Leave of Absence, no
more than 501 Hours of Service shall be credited for any single
continuous period during which an Employee performs no duty, and
provided that no Hours of Service shall be credited for periods
of time in respect of which an Employee receives severance pay or
for payments made or due under a plan maintained solely for the
purpose of complying with applicable workers' compensation,
unemployment compensation or disability insurance laws, or for
reimbursement of medical expenses; and
(iii) for which back pay, irrespective of
mitigation of damages, is awarded or agreed to by the Employer;
provided that Hours of Service credited under (i) or (ii) shall
not be credited under (iii).
Hours of Service credited to an Employee for the
performance of duties will be credited to the computation period
in which the duties are performed. The determination of Hours of
Service for reasons other than the performance of duties shall be
calculated and credited in accordance with the provisions of
Labor Department Regulations Section 2530.200b-2(b) and (c), and
Hours of Service shall be credited to the computation periods to
which the award or agreement pertains. Except in the case of an
authorized Leave of Absence, not more than 501 Hours of Service
shall be credited for any continuous period during which an
Employee performs no duty or, in the case of service required to
be credited for payments of back pay awarded or agreed to, for a
period during which an employee did not or would not have
performed duties.
To the extent not credited above, for periods of an
authorized Leave of Absence of an Employee shall be credited with
a number of Hours of Service for each week of such authorized
Leave of Absence equal to the Employee's weekly average number of
Hours of Service scheduled for the six-week period immediately
preceding such authorized Leave of Absence.
1.26 "Initial Enrollment Date" means the earliest date
following the Effective Date set by the Committee for Eligible
Employees to apply to become Members of the Plan.
1.27 "Investment Fund" means the Money Market Fund,
the Equity Index Fund, the Smith Corona Corporation Common Stock
Fund or the Fixed Income Fund, as described in Section 7.1
(Investment of Accounts Other than Employer Contribution
Accounts).
1.28 "Investment Manager" means the individual and/or
other entity appointed in accordance with Section 11.3
(Investment Manager) who has acknowledged in writing that such
individual is a fiduciary with respect to the Plan and who is:
(a) registered as an investment adviser under the
Investment Advisers Act of 1940, or
(b) a bank, as defined in such Act, or
(c) an insurance company qualified to manage,
assign or dispose of assets of pension plans.
1.29 "Leave of Absence" means an absence or
interruption of service approved by the Committee under uniform
and nondiscriminatory rules and procedures. Members on leave of
absence for service in the Armed Forces of the United States,
however, shall be deemed to have been on a Leave of Absence,
provided they return to service with an Employer within the
required time limitations set forth in the then applicable laws
governing reemployment rights of persons inducted, or who have
enlisted, in the Armed Forces of the United States.
1.30 "Maturity Date" means the last day of the second
Plan Year following the Plan Year with respect to which the
contributions were made; provided that the last day of a Plan
year following the Plan Year with respect to which such
contributions are made shall be counted to determine the Maturity
Date only if the Member is an Employee or the employee of an
Affiliate or is on Leave of Absence on such date.
1.31 "Member" means an Eligible Employee who has
become a member of the Plan in accordance with Article II
(Eligibility and Membership). Each Member shall continue to be
such until the later of the date such Member ceases to be an
Eligible Employee or such Member's Accounts have been completely
distributed.
1.32 "Parental Leave" means a period not in excess of
two (2) years commencing after December 31, 1984 during which an
individual is absent from work for any period:
(1) by reason of the pregnancy of the individual,
(2) by reason of the birth of a child of the
individual,
(3) by reason of the placement of a child with
the individual in connection with the adoption of such child by
such individual, or
(4) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
An absence from work shall not be a Parental Leave unless the
Employee furnishes the Plan Administrator such timely information
as may reasonably be required to establish that the absence from
work was for one of the reasons specified in this Section 1.32
and the number of days for which there was such an absence.
Nothing contained herein shall be construed to establish an
Employer policy of treating a Parental Leave as a Leave of
Absence.
1.33 "Plan" means the Smith Corona Corporation
Retirement Savings and Investment Plan as set forth herein or as
amended from time to time.
1.34 "Plan Year" means the calendar year except the
first Plan Year means the period between July 1, 1989 and
December 31, 1989.
1.35 "Prior Plan" means the Retirement Savings and
Investment Plan of SCM Corporation.
1.36 "Required Beginning Date" means April 1 of the
calendar year following the Plan Year in which occurs the date on
which the Member attains the age of 70-1/2 years.
1.37 "Retirement Age" means the date such Member
attains age 65.
1.38 "Rollover Contribution" means an amount which is
transferred from another plan to this Plan, in accordance with
the provisions of Section 2.7 (Rollover Contributions From Other
Plans).
1.39 "Rollover Contribution Account" means the
separate Account maintained for a Member to record such Member's
share of the Trust Fund attributable to any Rollover
Contributions made to the Plan on his behalf.
1.40 "Service" means the period of employment
beginning on the first day the Eligible Employee performs duties
for the Employer or an Affiliate and ending on the day of quit,
retirement, discharge or death, two years after the commencement
of absence on account of Parental Leave, or one year after an
absence for any other reason. All prior periods of employment
with the Employer or an Affiliate, and breaks in employment of
less than one year shall be included in Service. If a break in
employment of not more than two years is on account of Parental
Leave not more than one year of Service shall be credited to an
Eligible Employee for a period of Parental Leave.
1.41 "Specific Involuntary Termination" means a
termination by the Employer without cause following written
notice from the Employer to the Member advising that the Member's
position is being eliminated in the immediate future without
cause or a resignation on account of (i) a material reduction in
position or compensation, or (ii) a required geographic
relocation of more than 50 miles.
1.42 "Supplemental Contributions" means Compensation
Deferral Contributions that are not eligible for matching by
Employer Contributions in accordance with Section 4.1 (Amount of
Employer Contributions).
1.43 "Supplemental Contributions Subaccount" means the
separate subaccount in a Compensation Deferral Contributions
Account maintained to record a Member's share of the Trust Fund
attributable to Supplemental Contributions.
1.44 "Suspense Account" means the separate account
maintained for a Member who had monies credited to such account
pursuant to Section 4.5 (Limitation on Annual Additions),
reflecting the current dollar value of such credit.
1.45 "Total and Permanent Disability" means permanent
incapacity which results in a Member being unable to engage in
regular employment or occupation by reason of any medically
demonstrable physical or mental condition acceptable to the
Committee on a nondiscriminatory basis and which would entitle
the Member to benefits under Employer's long-term disability
plan, if any, or to Social Security disability benefits as
evidenced by a disability award letter. However, no Member shall
be deemed to be disabled if such incapacity (a) resulted from or
consists of habitual drunkenness or addiction to narcotics, or
(b) was incurred, suffered or occurred while the Member was
engaged in, or resulted from having engaged in, a criminal
enterprise, or (c) was intentionally self-inflicted, or (d) arose
out of service in the armed forces of any country.
1.46 "Trustee" means the corporate trustee appointed
from time to time by the Company to administer the Trust Fund in
accordance with Section 11.2 (Trustee).
1.47 "Trust Fund" means the trust fund established in
accordance with Section 11.1 (Trust Fund) from which benefits
provided under this Plan will be paid.
1.48 "Valuation Date" means the last business day of
each calendar month on which the New York Stock Exchange is open
for trading.
1.49 "Use of Masculine Pronoun". The use of the
masculine pronoun shall include the feminine and the singular
shall include the plural.
ARTICLE II
Eligibility and Membership
2.1 Members on the Effective Date. Each person who
was a member of the Prior Plan immediately before the Effective
Date shall continue as a Member of the Plan on the Effective
Date.
2.2 Eligible Employees on and after the Effective
Date. On and after the Effective Date an Eligible Employee may
elect to become a Member on the Initial Enrollment Date or any
Enrollment Date thereafter. Notwithstanding the foregoing, a
former Eligible Employee who is reemployed as an Eligible
Employee following a separation from Service, shall be eligible
to become a Member of the Plan upon reemployment. Such
reemployed Eligible Employee may rejoin the Plan on an Enrollment
Date effective as of the start of first full payroll period after
his re-enrollment. If a former Employee who was credited with at
least 1,000 Hours of Service in an eligibility computation
period, separates from Service prior to attaining age 21 and is
reemployed as an Employee before the greater of (a) a period of
five consecutive twelve-month periods starting with his
separation of Service or (b) the period of Service prior to his
separation, shall be eligible to become a Member of the Plan on
the later of his attainment of age 21 or his reemployment date.
Such reemployed Employee may join the Plan on an Enrollment Date
effective as of the start of the first full payroll period after
his re-enrollment. Each other former Employee who separates from
Service prior to becoming an Eligible Employee, shall be treated
as a new Employee upon reemployment.
2.3 Completion of Appropriate Form. In order to
become a Member on any Enrollment Date, an Eligible Employee must
complete and return the Appropriate Form to the Committee at
least 30 days (or such other period as the Committee may
prescribe) prior to that Enrollment Date.
2.4 Elections Upon Becoming a Member. The Eligible
Employee, in completing the Appropriate Form specified in Section
2.3, shall (i) authorize Employer to reduce current compensation
for Compensation Deferral Contributions pursuant to Section 3.1
(Compensation Deferral Contributions), (ii) make an investment
election from among those options enumerated in Section 7.1
(Investment of Accounts Other Than Employer Contribution
Accounts), and (iii) designate a Beneficiary in accordance with
Section 2.5 (Beneficiary Designation). Any such payroll
authorization, investment election or Beneficiary designation
shall remain in effect until changed by notice to the Committee
on the Appropriate Form, subject to the provisions of the Plan.
2.5 Beneficiary Designation. Each Member shall
designate a Beneficiary on the Appropriate Form provided by the
Committee. The designated Beneficiary may be an individual,
estate or trust; however, if the Member is married at the time of
such Member's death, such Member's surviving spouse shall
automatically be such Member's sole Beneficiary unless the spouse
has consented in writing in accordance with Section 9.9 (Spousal
Consent) to a designation of a different Beneficiary. If more
than one individual or trust is named, the Member shall indicate
the shares and/or precedence of each individual or trust so
named. Any Beneficiary so designated may be changed by the
Member at any time (subject to his spouse's consent, if
applicable) by signing and filing the Appropriate Form with the
Committee.
In the event that no Beneficiary had been designated or
that no designated Beneficiary survives the Member, the following
Beneficiaries (if then living) shall be deemed to have been
designated in the following priority: (1) spouse, (2) children,
including adopted children and stepchildren, in equal shares, (3)
parents, in equal shares, of the Member's surviving parent, if
only one parent survives, and (4) Member's estate.
2.6 Transfers to or from Non-Covered Status. If a
Member ceases to meet the definition of Eligible Employee as set
forth in Section 1.14 (Eligible Employee) but continues to be an
Employee or an employee of an Affiliate, such Member's right to
make or have contributions made on such Member's behalf to the
Plan shall be suspended. If, during the period of suspension, a
Member's employment with the Employer or an Affiliate terminates
for any reason, there shall be a distribution of such Member's
Accounts in accordance with the provisions of Article IX
(Distribution Upon Termination of Employment). If and when the
suspended Member again becomes an Eligible Employee, such Member
may resume having Compensation Deferral Contributions made on
such Member's behalf as of any payroll date thereafter by giving
written notice to the Committee on the Appropriate Form not less
than 30 days (or such other period as the Committee may
prescribe) prior to such payroll date.
If an Employee meets the definition of Eligible
Employee (Section 1.14), the Employee shall be eligible to
participate in the Plan on his Initial Enrollment Date or any
subsequent Enrollment Date.
2.7 Rollover Contributions From Other Plans. An
Eligible Employee or an individual who meets the definition of
Eligible Employee in Section 1.14 except for the age or service
requirements, who is in receipt of a distribution of cash or
Employer Securities which is eligible to be "rolled over" to a
qualified plan in accordance with applicable Code sections may,
in accordance with and subject to such rules and procedures
approved by the Committee, transfer all or part of such
distribution into the Plan; provided, that the transfer is in
conformity with requirements set forth in the Code.
Upon approval by the Committee, the amount transferred
to the Plan shall be deposited in the Trust Fund in cash or in
Employer Securities and shall be credited to a Rollover
Contribution Account. For purposes of this Section, Rollover
Contributions shall include, on and after January 1, 1993,
optional direct transfers of all or a portion of an eligible
rollover distribution as provided for in Section 401(a)(31) of
the Code.
If a Rollover Contribution is made on behalf of an
individual who has not yet become a Member, such individual shall
be deemed a Member upon the establishment of the Rollover
Contribution Account; however, participation in the Plan shall be
limited to the Rollover Contribution Account until the other
requirements for membership under this Article II are fulfilled.
ARTICLE III
Compensation Deferral Contributions
3.1 Compensation Deferral Contributions. Each Member
who is an Eligible Employee may elect to have the Employer make
Compensation Deferral Contributions not to exceed $7,000 per year
(subject to adjustment for inflation in accordance with Section
415(d) of the Code) to the Plan on such Member's behalf to be
credited to such Member's Compensation Deferral Contributions
Accounts, in which case the cash compensation otherwise payable
by the Employer to the Member shall be reduced by an amount equal
to the Compensation Deferral Contributions so made. Subject to
the limitations prescribed in Section 3.4, the amount of
Compensation Deferral Contributions in any payroll period shall
be in whole percentages from 2% to 12% of the Member's
Compensation as the Member shall designate (or such greater or
lesser percentages as the Committee may from time to time
prescribe for the Plan). If the Compensation Deferral
Contributions of a Member exceeds the annual dollar limit of this
Section 3.1 applicable for a Plan Year, the excess amount and the
income, if any, allocable thereto shall be distributed to the
Member not later than the April 15 following the close of the
taxable year of the Member.
3.2 Changes and Suspension of Contributions. Subject
to Section 3.1, Compensation Deferral Contributions made on a
Member's behalf may be increased or decreased by giving 30 days'
written notice to the Committee on the Appropriate Form,
effective the next following Enrollment Date. Compensation
Deferral Contributions may be suspended effective at the
beginning of the next payroll period, by giving 10 days' written
notice to the Committee. A Member who has suspended Compensation
Deferral Contributions may resume having such contributions made
on his or her behalf commencing on any subsequent Enrollment Date
by giving 30 days' written notice to the Committee on the
Appropriate Form.
3.3 Transfer of Contributions to Trustee.
Contributions made under this Article III will be transferred to
the Trustee as soon as reasonably possible following the month in
which the Member's cash compensation is reduced; provided that
all Compensation Deferral Contributions for a Plan Year shall be
transferred to the Trustee not later than 90 days from the date
on which such amounts would otherwise have been paid as
compensation.
3.4 Limitation on Compensation Deferral Contributions.
(a) Notwithstanding the foregoing provisions of this
Article III, the Committee in its sole discretion shall limit the
amount of Compensation Deferral Contributions made on behalf of
each "Highly Compensated Employee" (as defined below) for each
Plan Year to the extent necessary to insure that the
nondiscrimination requirements of Section 401(k) of the Code are
satisfied, to wit that (A) the Deferral Percentage by eligible
Highly Compensated Employees for such Plan Year may not exceed
125 percent of the Deferral Percentage of all other Eligible
Employees, or alternatively, (B) the Deferral Percentage of the
eligible Highly Compensated Employees in excess of that of all
other Eligible Employees may not be more than 2 percentage points
and the Deferral Percentage for eligible Highly Compensated
Employees may not be more than two times the Deferral Percentage
of all other Eligible Employees. If two or more plans which
include a cash or deferred arrangement are considered as one plan
for purposes of Section 401(a)(4) or Section 410(b) of the Code,
the cash or deferred arrangements included in such plans shall be
treated as one arrangement for determining if the
nondiscrimination requirements of Section 401(k) of the Code are
satisfied.
For purposes of this Section 3.4, the term "Deferral
Percentage" means the average of the ratios (calculated
separately for each Eligible Employee) of the Compensation
Deferral Contributions made under the Plan on behalf of each
Eligible Employee for the Plan Year divided by the Eligible
Employee's Compensation for the Plan Year or portion thereof
during which he was a Member. If an eligible Highly Compensated
Employee participates under two or more cash or deferred
arrangements of the Employer or Affiliate, for purposes of
determining the Deferral Percentage with respect to such Highly
Compensated Employee, all such cash or deferred arrangements
shall be treated as one cash or deferred arrangement.
For purposes of this Section 3.4 and Section 4.2, the
term "Highly Compensated Employee" with respect to any Plan Year
means an individual who at any time during the Plan Year or the
immediately preceding Plan Year: (1) was a 5-percent owner of
the Employer (as defined for top-heavy plans under Sec. 416(i) of
the Code); (2) earned more than $75,000 (subject to adjustment at
the same time and in the same manner as under Section 4.15(d) of
the Code) in annual Compensation from the Employer or an
Affiliate; (3) earned more than $50,000 (subject to adjust at the
same time and in the same manner as under Section 415(d) of the
Code) in annual Compensation from the Employer or an Affiliate
and was in the top 20% of Employees ranked by Compensation;
(4) was an officer of the Employer or an Affiliate (no more than
50 officers or, if fewer, the greater of 3 or 10% of all
Employees) and received Compensation in excess of 50% of the
applicable dollar limit on benefits from a defined benefit plan,
but if no officer receives Compensation in excess of such amount,
the highest paid officer for the applicable period shall be a
Highly Compensated Employee. Notwithstanding the above, an
individual, other than one described in clause (1) above, who is
not a Highly Compensated Employee during the immediately
preceding Plan Year will not be considered a Highly Compensated
Employee in the Plan Year unless such individual is one of the
top 100 Employees ranked by Compensation for the Plan Year. If
an Employee is a family member of either an individual described
in clause (1) or a Highly Compensated Employee who is one of the
10 most Highly Compensated Employees ranked by Compensation, then
the family member and such individual shall be aggregated and
treated as a single Employee. For this purpose, the term family
member includes the spouse, lineal ascendants and descendants of
such individual and the spouses of such lineal ascendants and
descendants of such individuals and the spouses of such lineal
ascendants or descendants. A Highly Compensated Employee shall
also include any former Employee who separated from Service in a
Plan Year preceding the current Plan Year and who was a Highly
Compensated Employee in either (i) the Plan Year in which his
separation from Service occurred or (ii) any Plan Year ending on
or after such former Employee's 55th birthday.
(b) The Committee may, in accordance with uniform and
nondiscriminatory rules it establishes from time to time, require
that Members who are among the Highly Compensated Employees for
the Plan Year make Compensation Deferral Contributions elections
following and/or preceding the completion of such elections by
all other Eligible Employees and the Committee may (A) limit the
amount by which each Member who is among the Highly Compensated
Employees may elect to reduce his or her Compensation, and (B)
subject to Section 402(g) of the Code permit each other Eligible
Employee to elect to reduce his or her Compensation within higher
limits than those for Highly Compensated Employees.
(c) In the event that it is determined prior to the
close of any Enrollment Period that the amount of Compensation
Deferral Contributions elected to be made with respect to such
Enrollment Period would cause the limitation contained in Section
3.4(a) to be exceed for the Plan Year in which such Enrollment
Period occurs, the amount of Compensation Deferral Contributions
allowed to be made on behalf of Highly Compensated Employees for
such Enrollment Period shall be reduced. The Highly Compensated
Employees to whom the reduction is applicable, and the amount of
the excess Compensation Deferral Contributions, shall be
determined by reducing the actual deferral ratio of the Highly
Compensated Employee with the highest Deferral Percentage to the
extent required to--
(1) enable the arrangement to satisfy the limitation
set forth in Section 3.4(a); or
(2) cause such Highly Compensated Employee's Deferral
Percentage to equal the ratio of the Highly Compensated Employee
with the next highest Deferral Percentage.
The process described in paragraph (1) or (2) shall be repeated
until the limitation set forth in Section 3.4(a) is satisfied.
For purposes of this process of determining the excess
Compensation Deferral Contributions of affected Highly
Compensated Employees, the family aggregation rules of Section
414(q)(6) of the Code shall be applied to Members who are 5 -
percent owners of the Employer or one of the 10 most Highly
Compensated Employees ranked by Compensation.
(d) If the Committee determines that the limitation
contained in Section 3.4(a) has not been met for any Plan Year,
the Committee may return the excess Compensation Deferral
Contributions of Members who are Highly Compensated Employees
(calculated in the manner set forth in Section 3.4(c)) to such
Members within the 12-month period beginning after the last day
of the Plan Year for which such contributions were made). The
amount of such excess Compensation Deferral Contributions shall
be adjusted to reflect any income or loss allocable to such
excess for the Plan Year and the gap period determined under any
method permitted by Treas. Reg. Section 1.401(k)-1(f)(4)(ii).
(e) For purposes of Section 3.4(b), (c) and (d), the
Employer is permitted to determined whether Members are in the
category of Highly Compensated Employees or other Eligible
Employees based on the Member's Compensation for the immediately
preceding Plan Year or on estimated Compensation for the Current
Plan Year in accordance with uniform and nondiscriminatory rules
whenever information regarding actual Compensation for the Plan
Year is not reasonably available at the time the amount of a
contribution hereunder is determined or limited.
ARTICLE IV
Employer Contributions
4.1 Amount of Employer Contributions. The Employer
shall make contributions to the Plan, with respect to each
payroll period on behalf of each Member who is an Eligible
Employee, equal to 50% (or such greater percentage, not exceeding
100%, as the Board may from time to time authorize) of that
portion of the Member's Compensation Deferral Contributions which
do not exceed 6% (or such other percentage as the Board may from
time to time permit) of Compensation in such payroll period. The
Board of Directors may, in its discretion, temporarily
discontinue Employer Contributions with respect to Member's
Compensation Deferral Contributions (which are Basic
Contributions) for Compensation not yet earned on the date such
Employer Contributions are temporarily discontinued. The Board
of Directors may also, in its discretion, authorize to be made as
of the close of a Plan Year a special Employer Contribution with
respect to some or all Members to be a "qualified nonelective
contribution" as defined in Section 401(m)(4) of the Code and
applicable regulations.
4.2 Limitations on Matching Contributions.
(a) Any other provisions in this Article IV to the
contrary notwithstanding, the Committee shall limit the amount of
matching Employer Contributions to the Plan to insure that the
Contributions Percentage (as hereinafter defined) for eligible
Highly Compensated Employees does not exceed the greater of (1)
125 percent of the Contributions Percentage for all other
Eligible Employees or (2) the lesser of (A) 200 percent of the
Contributions Percentage for all other Eligible Employees or (B)
the Contributions Percentage for such Eligible Employees plus 2
percentage points.
(b) The Contributions Percentage is the average of the
ratios (calculated separately for each Eligible Employee) of:
The Employer Contributions (excluding Compensation Deferral
Contributions and special Employer Contributions which are
qualified nonelective contributions) made under the Plan on
behalf of each Eligible Employee for the Plan Year and all other
matching contributions and employee contributions, if any, made
by the Employer for, on behalf of, the Eligible Employee under
any other qualified plan aggregated as a single plan for purposes
of Section 410(b) of the Code divided by the Eligible Employee's
Compensation for the Plan Year or portion thereof during which he
was a Member. If an eligible Highly Compensated Employee
participates in two or more plans of the Employer or Affiliate to
which either employee contributions or employer matching
contributions are made, all such contributions shall be
aggregated to determine the Contribution Percentage with respect
to such Highly Compensated Employee.
(c) The rules of Treas. Reg. Section 1.401(m)-z shall
apply to determine if the multiple use of the alternative
limitation is exceeded for any Plan Year and if such circumstance
occurs, it must be corrected by one of the methods permitted by
Treas. Reg. Section 1.401(m)-z(c) as to the affected Highly
Compensated Employees.
(d) If the Committee determines that the limitations
contained in this Section 4.2 have not been met for any Plan
Year, the Committee may return the excess amounts to Members who
are Highly Compensated Employees (calculated by using the
leveling method in accordance with Section 401(m)(6)(c) of the
Code and applying to Members who are 5 - percent owners of the
Employer or one of the 10 most Highly Compensated Employees
ranked by Compensation the family aggregation rules of Section
414(q)(6) of the Code) within the 12-month period beginning after
the last day of the Plan Year for which the Employer
Contributions were made. The amount of such excess amounts shall
be adjusted to reflect any income or loss, if any, allocable to
such excess amounts for the Plan Year and the gap period
determined under any method permitted by Treas. Reg. Section
1.401(m)-1(e)(3)(ii).
4.3 Treatment of Forfeitures. Any amounts forfeited
in accordance with Sections 6.4 (Forfeitures) and 13.6 (Unclaimed
Amounts) shall be applied as a credit towards the amount of
Employer Contributions otherwise required under Section 4.1.
However, if pursuant to Section 4.1, Employer Contributions are
temporarily discontinued, for Plan Years following the Plan Year
in which such temporary discontinuance occurs, any such forfeited
amounts in excess of the amounts required to restore forfeited
amounts to the Employer Contribution Accounts of Members who are
reemployed in accordance with Section 6.4 shall be allocated as
of the last day of the Plan Year to Members' Employer
Contribution Accounts in an amount equal to the amount of such
forfeited amounts available for allocation multiplied by a
fraction the numerator of which is the Members' Compensation
Deferral Contributions for the Plan Year not in excess of six
percent of such Member's Compensation and the denominator of
which is the aggregate of all Members' Compensation Deferral
Contributions not in excess of six percent of all such Members'
Compensation.
4.4 Transfer of Contributions to Trustee. Employer
Contributions under this Article IV with respect to each payroll
period shall be paid to the Trustee as soon as practicable after
the close of the month in which such payroll period ends (but in
no event later than 60 days after the last day of such month) and
such Employer Contributions (inclusive of the credit for
forfeitures as provided in Section 4.3) shall be credited as of
the last day of such month to each Member's Employer Contribution
Account.
4.5 Limitation of Annual Additions.
(a) Notwithstanding anything herein to the contrary,
in no event shall the Annual Additions (as hereinafter defined)
with respect to any Member in any Plan Year exceed the Maximum
Annual Addition. A Member's "Maximum Annual Additions" means the
lesser of (i) 25% of the Member's compensation within the meaning
of Section 415(c)(3) of the Code or (ii) $30,000 or, if greater,
one-fourth of the defined benefit dollar limit set forth in
Section 415(b)(1) of the Code in effect for such Plan Year.
(b) For purposes of this Section 4.5 the term "Annual
Additions" means the sum for any Plan year of:
(i) Compensation Deferral Contributions made in
accordance with Section 3.1 (Compensation Deferral
Contributions).
(ii) Employer Contributions including forfeitures
as applied in accordance with Section 4.1 (Amount of Employer
Contributions) and Section 4.3 (Treatment of Forfeitures).
(iii) The amount of annual additions (as defined in
Section 415(c)(2) of the Code) under other plans, if any, of the
Employer or Affiliate including (a) qualified defined
contribution plans, (b) qualified defined benefit plans with
individual medical benefit accounts (as defined in Section 415(l)
of the Code) and (c) welfare benefit plans with post-retirement
medical benefits for key employees (as defined in Section
419A(d)(2) of the Code.
(c) If the Member's Annual Additions exceed the
Maximum Annual Additions limitations in accordance with this
Section 4.5, such amounts shall be handled as provided in Section
4.5(f).
(d) Combined Fraction.
(1) Notwithstanding the foregoing, if a Member is
a participant in any qualified defined benefit plan maintained by
an Employer or an Affiliate, the sum of the "Defined Benefit Plan
Fraction" (as defined below) and the "Defined Contribution Plan
Fraction" (as defined below) for such Member shall not exceed 1.0
(called "Combined Fraction"). If for any Plan Year the Combined
Fraction of a Member exceeds 1.0 after application of provisions
for limitation of benefits under all such qualified defined
benefit plans, the Maximum Annual Additions of such Member shall
be reduced as provided in Section 4.5(c) to the extent necessary
to reduce the Combined Fraction of such Member to 1.0.
(2) The "Defined Benefit Plan Fraction" applicable to
a Member for any Plan Year is a fraction, the numerator of which
is the sum of the Projected Annual Benefit of the Member under
all of the qualified defined benefit plans maintained by the
Employer or an Affiliate (whether or not terminated) in which
such Member participates (determined as of the close of the Plan
Year) and the denominator of which is the lesser of (i) the
product of 1.25 multiplied by the maximum dollar limitation on a
Member's Projected Annual Benefit under Sections 415(b) and (d)
of the Code, or (ii) 140 percent of the Member's highest covered
compensation, including any adjustments under Section 415(b) of
the Code. Notwithstanding the above, if the member was a
participant as of the first day of the first Plan Year after
December 31, 1986, in one or more defined benefit plans
maintained by the Employer or an Affiliate which were in
existence on May 6, 1986, the denominator of the fraction will
not be less than 125 percent of the sum of the annual benefits
under such plans which the Member had accrued as of the close of
the last limitation year beginning before January 1, 1987,
disregarding any changes in the terms and conditions of the plan
after May 5, 1986. The preceding sentence applies only if the
defined benefits plans individually and in the aggregate
satisfied the requirements of Section 415 of the Code for all
limitation years beginning before January 1, 1987.
(3) The "Defined Contribution Plan Fraction"
applicable to a Member for any Plan Year is a fraction, the
numerator of which is the sum of the annual additions to the
Member's Account under all the defined contribution plans
(whether or not terminated) maintained by the Employer or an
Affiliate for the current and all prior Plan Years (including the
annual additions attributable to a Member's nondeductible
employee contributions to all defined benefit plans, whether or
not terminated, maintained by the Employer or an Affiliate, and
the annual additions attributable to all welfare benefit funds,
as defined in Section 419(e) of the Code, and individual medical
accounts, as defined in Section 415(1)(2) of the Code, maintained
by the Employer or an Affiliate), and the denominator of which is
the sum of the maximum aggregate amounts for the current and all
prior Plan Years of Service with the Employer or an Affiliate
(regardless of whether a defined contribution plan was maintained
by the Employer). The maximum aggregate amount in any limitation
year is the lesser of 125 percent of the dollar limitation
determined under Sections 415(b) and (d) of the Code in effect
under Section 415(c)(1)(A) of the Code or 35 percent of the
Member's Compensation for such year.
If the Employee was a participant as of the end of the
first day of the first limitation year beginning after
December 31, 1986, in one or more defined contributions plans
maintained by the Employer which was in existence on May 6, 1986,
the numerator of this fraction will be adjusted if the sum of
this fraction and the defined benefit fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (1) the excess of the sum of
the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of
this fraction. The adjustment is calculated using the fractions
as they would be computed as of the end of the last limitation
year beginning before January 1, 1987, and disregarding any
changes in the terms and conditions of the plan made after May 5,
1986, but using the Section 415 limitation applicable to the
first limitation year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning
before January 1, 1987, shall not be recomputed to treat all
employee contributions as annual additions.
(e) Definitions.
(1) "Highest Average Compensation" means the
average of a Member's high three consecutive Plan Years
(determined as of the close of the Plan Year) of employment with
the Employer (or the actual number of years of employment for
those Members) who are employed for less than three consecutive
years with the Employer).
(2) "Projected Annual Benefit" means the annual
benefit a Member would receive from employer contributions under
a defined benefit plan, adjusted, in the case of any benefit
payable in a form other than a single life annuity or a qualified
joint and survivor annuity, to the actuarial equivalent of a
single life annuity, assuming (i) the Member continues employment
until reaching the plan's normal retirement age (or the Member's
current age, if later), (ii) compensation remains unchanged and
(iii) all other relevant factors used to determine benefits under
the plan remain constant in the future.
(f) In the event that, notwithstanding the foregoing
provisions of this Section 4.5, the limitations with respect to
Annual Additions prescribed hereunder are exceeded with respect
to any Member and such excess arises as a consequence of
reasonable error in estimating a Member's compensation or such
other circumstances as the Secretary of Treasury shall permit,
the Employer Contribution portion including Compensation Deferral
Contributions, if any, of such excess shall be held in a Suspense
Account and, if such Member remains a Member, shall be used to
reduce Employer Contributions for such Member for the succeeding
Plan Years, and, if such Member ceases participating in the Plan,
shall be used to reduce Employer Contributions for all Members in
the Plan Year of cessation and succeeding Plan Years, as
necessary.
(g) For purposes of this Section 4.5, the standard of
control for determining if a company is an Affiliate under
Section 414(b) and 414(c) of the Internal Revenue Code shall be
deemed to be "more than 50%" rather than "at least 30%."
ARTICLE V
Accounts
5.1 Separate Annual Class. A separate annual class
shall be contained under the Plan within the Employer
Contribution Account on behalf of each Member of each Plan Year
ending before January 1, 1989 for accounts attributable to
Employer Contributions for such Plan Year made under the Prior
Plan. Each such separate annual class shall be, and continue to
be separately identified up to its Maturity Date. As of the
Maturity Date of each separate annual class the balance to the
credit of the Member then held in such separate annual class
shall be transferred into the general Employer Contribution
Account.
5.2 Maintenance of Accounts. For each Member the
Committee shall, where applicable, maintain a separate
Compensation Deferral Contributions Account (with a Basic
Contributions Subaccount and a Supplemental Contributions
Subaccount), an Employer Contribution Account and a Rollover
Contribution Account. For Employee Contributions made prior to
January 1, 1989 which were not Compensation Deferral Contribution
Accounts the Committee shall continue to maintain a separate
Employee Contributions Account consisting of the Basic Employee
Contributions Subaccount and the Supplemental Employee
Contributions Subaccount under the Prior Plan.
5.3 Valuations. As of each Valuation Date, the
Committee shall cause to be adjusted the Employee Contributions
Account, if any, (including each subaccount thereunder), the
Compensation Deferral Contributions Account (including each
subaccount thereunder) the Employer Contribution Account
(including each remaining annual class thereunder, if any) and
the Rollover Contribution Account for each Member to reflect his
share of contributions (including for this purpose contributions
made after such Valuation Date but credited as of such Valuation
Date), amounts of principal and interest paid to the Plan with
respect to a loan made to such Member pursuant to Section 8.5,
withdrawals, distributions, forfeitures, income, expenses payable
from the Trust Fund and any increase or decrease in the value of
Trust Fund assets since the preceding Valuation Date. Each
separate account maintained for each loan made to a Member
pursuant to Section 8.5 shall be valued as of each Valuation Date
by adjusting the balance of the loan for the payment principal
thereunder.
ARTICLE VI
Vesting of Accounts
6.1 Employer Contribution Account. A Member's
interest in each separate annual class in his Employer
Contribution Account shall become 100% vested on the Maturity
Date of such separate annual class, provided he has not
terminated employment with the Company or an Affiliate prior to
such date. For this purpose, a Member's employment shall not be
considered terminated during a Leave of Absence. Prior to its
Maturity Date, a Member's interest in each separate annual class
shall be 0% vested, except upon completion of five years of
Service or as is otherwise provided in Section 6.3.
Effective for Plan Years commencing after December 31,
1988, annual class vesting, except the vesting of Employer
Contributions made under the Prior Plan before January 1, 1989,
is abolished and in place thereof a Member's entire Employer
Contribution Account (including unvested annual class
contributions made under the Prior Plan before January 1, 1989)
shall be vested when the Member has completed at least five years
of Service. However, nothing herein provided shall be construed
to delay the vesting of a separate annual class contribution made
under the Prior Plan before January 1, 1989 to the Employer
Contribution Account of a Member who has completed less than five
years of Service.
If a Member separates from Service before completing
five years of Service, such Member shall be deemed to have
received an immediate constructive cash-out distribution of his
entire nonvested Employer Contribution Account at separation
equal to zero dollars.
6.2 Other Accounts. Interests in Rollover
Contribution Accounts, Employee Contributions Accounts and
Compensation Deferral Contributions Accounts shall be fully
vested at all times.
6.3 Earlier Vesting in Employer Contribution Account.
Notwithstanding the foregoing, a Member's interest in his
Employer Contribution Account or in the separate annual classes,
if any, which have not reached their Maturity Date shall be fully
vested (i) on the date of termination of employment by reason of
death, Total and Permanent Disability, or Specific Involuntary
Termination (ii) when and if this Plan shall at any time be
terminated for any reason, (iii) upon the complete discontinuance
of contributions by the Employer hereunder, (iv) upon partial
termination of this Plan if such Member is a member affected by
such partial termination or (v) on the date a Member reaches
Retirement Age.
6.4 Forfeitures. A Member's Employer Contribution
Account which is not vested in accordance with this Article VI at
the time of Member's separation from Service shall be forfeited
as of the last day of the Plan Year in which the Member has a
separation from Service. However, if a Member who has separated
from Service is reemployed before the end of a period of five
consecutive Plan Years beginning with the Plan Year in which the
Member has a separation from Service and during which the Member
is not an Employee on the last day of each Plan Year, any
forfeited amounts shall be restored to the Member's Employer
Contribution Account without the necessity of the re-employed
Member to repay the previous distribution. For purposes of the
preceding sentence, any Plan Year in which a Member is absent
from work on the last day of the Plan Year by reason of a
Parental Leave shall not be counted as one of the Plan Years in
such a period of five consecutive Plan Years and the Plan Year
immediately following a Plan Year in which such Member is absent
from work on the last day of the Plan Year by reason of Parental
Leave shall be deemed to be consecutive.
Amounts required to be restored to the Employer Contri-
bution Accounts of a Member shall be reinstated, to the extent
not contributed by an Employer, out of amounts forfeited under
this Section 6.4 or Section 13.6 (Unclaimed Amounts) for the Plan
Year.
A Member who separates from Service shall have his
prior Service restored for purposes of vesting when he is
reemployed as an Employee if (a) he was vested when he separated
from Service or (b) he was not vested when he separated from
Service, but is reemployed as an Employee before the greater of
(i) a period of five consecutive 12-month periods starting with
his separation from Service or (ii) the period of Service prior
to his separation.
ARTICLE VII
Investment of Accounts
7.1 Investment of Accounts Other Than Employer Contri-
bution Accounts.
Upon becoming a Member, the Member shall direct that
Compensation Deferral Contributions and Rollover Contributions be
invested in any one or more of the following Investment Funds in
increments of at least 25%:
(a) The Money Market Fund, which is invested in open-
ended demand master notes of companies with minimum debt
rating of AA or better, certificates of deposit, time deposits,
commercial paper, collateralized repurchase agreements, treasury
bills, savings bank deposits and other cash balance instruments
(other than "Employer Securities") selected by the Trustee.
(b) The Equity Index Fund, which is invested primarily
in a portfolio of common stocks (other than "Employer Securities"
or securities of the Trustee)
constructed and maintained by the Trustee with the objective
of providing investment results which approximate the overall
performance of the common stocks included in the Standard &
Poor's 500 Composite Stock Index.
(c) The Smith Corona Corporation Common Stock Fund,
which is invested exclusively in Employer Securities.
(d) The Fixed Income Fund, which is invested in group
annuity contracts or other suitable investment medium selected by
the Trustee. This fund provides a fixed rate of return over a
period of not less than six months. Though not guaranteed, the
anticipated rate of return is projected prior to the commencement
of the following six month period.
The Employer, Committee or Trustee doesn't guarantee
the rate of return on any of the Investment Funds. The actual
rates of return will vary with the investment performance of the
Investment Fund(s) chosen by Members.
7.2 Redirection of Future Contributions. A Member's
investment direction under Section 7.1 may be changed once each
calendar quarter. To make an investment direction change, the
Member must give written notice to the Committee on the
Appropriate Form on or before, but not later than, the 26th day
of the month and the change will be effective as of the first day
of the month following the timely submission of the Appropriate
Form. Such a change in direction shall be as to future
Compensation Deferral Contributions only and shall not be
effective as to amounts previously contributed or invested. The
Appropriate Form, once submitted to the Committee, may not be
revoked.
7.3 Reinvestment of Prior Contributions.
(a) A Member may, by giving written notice to the
Committee on the Appropriate Form, on or before, but not later
than, the 26th day of a month, direct that 25%, 50%, 75% or 100%
of the total value in any Investment Fund of the Member's
Rollover Contribution Account, if any, Employee Contributions
Account, if any, and Compensation Deferral Contributions Account
be transferred from such Investment Fund to any other Investment
Fund (in increments of at least 25%) once each calendar quarter.
The value of any Account or portion thereof to be reinvested
shall be determined on the Valuation Date of the month of
transfer which shall be the month in which a timely submission of
the Appropriate Form is made. The Appropriate Form, once
submitted to the Committee, may not be revoked.
(b) The Committee may, in its sole discretion,
impose, at any time or from time to time, such restrictions on
the transfers of monies from one Investment Fund to another as it
deems necessary or appropriate.
7.4 Investment of Employer Contributions Accounts.
(a) Employer Contributions shall be invested initially
exclusively in Employer Securities through Smith Corona
Corporation Common Stock Fund.
(b) A Member, regardless of his vested status, who has
attained age 55 or more may, by giving written notice to the
Committee on the Appropriate Form, no later than the 15th day of
a month, direct that 25%, 50%, 75% or 100% of the total value of
his Employer Contributions Account invested in the Money Market
Fund (Fund A), the Equity Index Fund (Fund B), the Smith Corona
Corporation Common Stock Fund (Fund C) or the Fixed Income Fund
(Fund D) to be transferred from such Fund to any other Investment
Fund (in increments of at least 25%) once each calendar year.
The value of the Employer Contribution Account or portion thereof
to be reinvested shall be determined on the Valuation Date of the
month of transfer which, shall be the month in which a timely
submission of the Appropriate Form is made.
7.5 Statements of Accounts. Each Member shall be fur-
nished a quarterly statement of accounts. A like statement shall
be furnished to a Member upon any distribution being made under
the Plan.
7.6 Crediting of Contribution Accounts. Interests in
each of the Investment Funds shall be credited to each Member's
Accounts as units of value determined separately for each
Investment Fund, as follows:
(a) the initial value of a unit in each Investment
Fund shall be one dollar,
(b) the unit of value of each Investment Fund shall be
redetermined on each Valuation Date by dividing the then fair
market value of all of the assets of such Investment Fund by the
number of units therein then outstanding. Amounts held as a
result of forfeiture shall not be included in the value of the
Smith Corona Corporation Common Stock Fund in determining the
unit of value; and
(c) current Compensation Deferral Contributions,
Employer Contributions and Rollover Contributions will be
credited to the Member's Accounts as units of value, the number
of which is determined by dividing the dollar amount of the
contribution by the then current unit of value.
If a Suspense Account credited in accordance with
Section 4.5(f) is in existence on a Valuation Date, the number of
units of value in the Suspense Account shall be adjusted as of
each Valuation Date so that such an account does not participate
in the Trust's investment gains or losses. To the extent a
Member's Compensation Deferral Contributions Account is invested
pursuant to Section 8.5 in a loan to the Member, the Member's
Accounts shall be credited and charged directly with income,
gains, losses and expenses attributable to such loan as of each
Valuation Date and the value of such Account will be adjusted
through the date of a distribution to reflect the value of such
direct investments on the distribution date. The Member's loan
principal and interest payments (i) shall be credited to the
Member's Compensation Deferral Contributions Account or Employee
Contributions Account, as appropriate, as units of value, the
number of which is determined as of the Valuation Date coinciding
with or next following the date of such payment by dividing the
dollar amount of the payment by the then current unit of value
and (ii) shall be invested in accordance with the Member's
investment directions for future Compensation Deferral Contri-
butions pursuant to Section 7.2.
7.7 Correction of Error. In the event of an error in
the adjustment of a Member's Account, the Committee, in its sole
discretion, may correct such error by either crediting or
charging the adjustment required to make such correction to or
against forfeitures for the Plan Year or to or against income as
an expense of the Trust for the Plan Year in which the correction
is made, or if the Employer contributes an amount to correct any
such error, from such amount. Except as provided in this
Section, the Accounts of other Members shall not be readjusted on
account of such error.
ARTICLE VIII
Withdrawals and Loans During Employment
8.1 Withdrawal Options.
(a) Age 59-1/2. After a Member's attainment of age
59-1/2, a Member may make, in any twelve-month period, one
withdrawal of all or any portion of the value of the Member's
Compensation Deferral Contributions Account, Employee
Contributions Account, if any, Rollover Contribution Account, if
any, and the vested portion of his Employer Contribution Account
by filing the Appropriate Form with the Committee. Such a
withdrawal can be made for any reason. Unless waived by the
Committee, withdrawal by a Member who is married must be
consented to in writing by the Member's spouse.
(b) Hardships. In the event of Hardship (as defined
in Section 8.2), a Member may, by filing the Appropriate Form
with the Committee, elect to withdraw all or such portion of the
Member's Rollover Contribution Account, if any, as is needed on
account of such Hardship. Also, in the event of Hardship, a
Member who (i) has not yet attained age 59-1/2, (ii) has
withdrawn all funds to the maximum extent permitted under the
Plan, and (iii) is not eligible to make a loan under Section 8.5
may, by filing the Appropriate Form with the Committee, elect to
withdraw all or such portion of the Member's Compensation
Deferral Contributions Account (excluding earnings and
appreciation after December 31, 1988 attributable thereto) as is
needed on account of such Hardships. Unless waived by the
Committee, a hardship withdrawal by a Member who is married must
be consented to in writing by the Member's spouse.
(c) Employee Contributions Account. A Member may
withdraw, once in any twelve-month period, all or any portion of
the Member's Employee Contributions Account, if any, (excluding
earnings or appreciation attributable thereto) by filing the
Appropriate Form with the Committee. Such a withdrawal can be
made for any reason. Unless waived by the Committee, withdrawal
from a Member's Employee Contributions Account by a Member who is
married must be consented to in writing by the Member's spouse.
(d) No Other Withdrawals. Prior to a Member's
employment termination, no other withdrawals from the Member's
Account may be made.
8.2 Hardship Withdrawals.
(a) Frequency. Hardship withdrawals for any reason
other than payment of tuition and related educational fees may be
made only once in any twelve-month period.
(b) Verification of Need. Each request for a hardship
withdrawal must be accompanied by a statement signed by the
Member attesting that the financial need cannot be relieved,
(i) Through reimbursement or compensation by
insurance or otherwise,
(ii) By liquidation of the Member's assets
(including those assets of the Member's spouse and minor children
that are reasonably available to the Member) to the extent such
liquidation will not itself cause immediate and heavy financial
need,
(iii) By ceasing Compensation Deferral
Contributions under the Plan, or
(iv) By other distribution or nontaxable (at the
time of the loan) loans from any plan maintained by the Employer
or any other employer, or by borrowing from commercial sources on
reasonable commercial terms.
In the absence of contrary knowledge, the Committee
shall be entitled to rely on the Member's statement of need
without inquiry into the Member's financial circumstances or the
veracity of such statement.
(c) Determination of Hardship.
A withdrawal will be deemed to be a hardship
withdrawal if made on account of:
(i) Medical expenses incurred by the Member, the
Member's spouse, or any dependent of the Member,
(ii) Purchase (excluding mortgage payments) of a
principal residence for the Member,
(iii) Payment of tuition and related educational
fees for the next 12 months of post-secondary education for the
Member, the Member's spouse or any dependent of the Member.
(iv) The need to prevent the eviction of the
Member from the Member's principal residence or foreclosure on
the mortgage of the Member's principal residence,
(v) Such other immediate and heavy financial need
as the Commissioner of Internal Revenue may from time to
time publish by revenue rulings, notices and other documents
of general applicability, or
(vi) Any other immediate and heavy financial need
as determined on the basis of all relevant facts and
circumstances by the Committee in an objective and
nondiscriminatory manner in accordance with the requirements of
the Code and the applicable regulations and in accordance with
the following standards and principles:
(A) the need shall be due to an extra-
ordinary emergency,
(B) the need shall be heavy,
(C) the need shall be immediate,
(D) the need shall be for reasons of
hardship as commonly understood such as financial expenses and
not for entertainment or pleasure, and
(E) the need shall not fail to qualify as
immediate and heavy merely because such need was reasonably
foreseeable or voluntarily incurred.
8.3 Values. All withdrawals under Section 8.1 shall
be based on the values of Accounts as of the Valuation Date
coinciding with or next following the filing of the Appropriate
Form or the date of approval of the application by the Committee,
if later. Any withdrawal from an Account (or Subaccount thereof)
under Section 8.1 shall be charged proportionately against each
Investment Fund described in Article VII (Investment of Accounts)
in which such Account (or Subaccount thereof) is invested.
8.4 Payment of Withdrawals. Any amount withdrawn
under Section 8.1 shall be paid to a Member in a lump sum in
cash, as soon as practicable after the Valuation Date as of which
the withdrawal election is effective except that any withdrawal
other than for Hardship which involves Employer Securities shall
include whole numbers of Employer Securities unless the Member
requests otherwise and the Committee approves such request.
8.5 Loans. A Member may borrow for any purpose either
from his Compensation Deferral Contributions Account or from his
Employee Contributions Account (but not both and loans from
different accounts may not be outstanding at the same time) once
in any three-year period an amount which shall be not less than
$1,000 nor more than 50% of the account in question (but not in
excess of $50,000).
For the purposes of the foregoing, the highest
outstanding balance of an existing loan (from the Plan and any
other qualified plans of the Employer or Affiliate) during the
one year period ending on the day before the date of the loan
shall be aggregated with any additional funds being borrowed in
order to calculate a Member's borrowing limit. Transactions for
additional funds shall be booked and documented at the then
current interest rates as a new loan in the aggregate sum of the
balance of the old loan and the newly borrowed money and the old
loan shall be canceled.
All loans shall be made pursuant to such other
procedures and terms as shall be adopted by the Committee,
subject to the following:
(a) A loan shall be repayable within five years from
the date of borrowing upon such terms as determined by the
Committee; provided, however, that if the proceeds of such loan
were applied toward the acquisition of any dwelling unit used as
a principal residence of the Member, the term of such loan may
exceed five years as determined by the Committee.
The Committee may in its absolute discretion grant such
loan in accordance with such uniform and nondiscriminatory rules
as it may from time to time establish. Any such loan shall be
made at a then prevailing commercial rate of interest for similar
credits and on such terms of repayment (in level amortized
payments not less frequent than monthly) and subject to such
rules and restrictions as the Committee shall determine, provided
that any such loans shall be available to all Members on a
reasonably equivalent basis. The Committee may require repayment
of a loan by payroll deduction and repayments will be invested in
accordance with the investment direction in effect for such
Member.
All Member loans shall be secured by 50% of the balance
of the account from which the loan is made and shall be charged
proportionately against the Investment Fund in which the funds
borrowed are invested. To the extent a loan is unpaid, it shall
be deducted from the amount payable to such Member or such
Member's beneficiary at the time of distribution of the entire
Account. Any loan made to a married Member under this Section
8.5 shall be made by a check payable jointly to the Member and
the Member's spouse unless the spouse has consented in writing in
accordance with Section 9.9 (Spousal Consent) to the payment of
the proceeds of such loan to the Member alone. If a married
Member who has elected an annuity form of distribution under
Section 9.3 applies for a loan under this Section 8.5, the
Member's spouse must consent in writing to the loan in accordance
with Section 9.9;
(b) In the event that a Member fails to repay a loan
according to its terms and foreclosure occurs, the Plan may
foreclose on the portion of the Member's Account for which a
distributable event has occurred. In the event of foreclosure, a
distributable event shall be deemed to occur immediately
following the next Valuation Date for any portion of a Member's
Compensation Deferral Contributions Account or Employee
Contributions Account, if any, with respect to which the Member
or the Member's Beneficiary would be permitted in accordance with
Sections 8.1 or 9.1 to elect an immediate distribution;
(c) The note representing the loan (and other loans to
the same Member) will be segregated in a separate fund held by
the Trustee as a separate earmarked investment solely for the
Account of the Member. A Member's payments to the Trust of
principal and interest on a note held in such a segregated fund
shall be invested by the Trustee as elected by the Member in
accordance with the Member's investment directions for future
Compensation Deferral Contributions in accordance with Section
7.2, as soon as reasonably practical.
(d) Loan applications may be obtained from the
Committee at any time by any Member. Completed applications may
be submitted to the Committee or its designee at any time.
8.6 Loan Proceeds Value. All loans under Section 8.5
shall be based on the values of Accounts as of the Valuation Date
coinciding with or next following the date of approval of the
loan application by the Committee. The loan proceeds from an
Account (or Subaccount thereof) under Section 8.5 shall be
charged proportionately against each Investment Fund described in
Article VII (Investment of Accounts) in which such Account (or
Subaccount thereof) is invested.
ARTICLE IX
Distribution
9.1 Amount of Distribution. The Member or the
Member's Beneficiary, as the case may be, shall be entitled to
receive a distribution of the vested value of the Member's
Account upon:
(a) the Member's termination of employment, death or
Total and Permanent Disability, or
(b) termination of the Plan without establishment of a
successor plan, or
(c) the disposition of substantially all of the assets
of the Employer to an acquiring corporation which continues the
employment of the Member.
(d) the disposition by the Employer of its interest in
subsidiary participating in the Plan to an acquiring corporation
which continues the employment of the Member.
The vested value of the Member's Account shall be
determined in accordance with Article VI (Vesting of Accounts) as
of the Valuation Date coinciding with or next following such
event except that, in the case of the Member's Total and
Permanent Disability, the vested value of the Member's Account
shall be determined as of the Valuation Date coinciding with or
next following the date the Committee determines that the Member
has a Total and Permanent Disability. If a Member dies prior to
commencement of the distribution of the vested value of his
Account, distribution shall be paid to the Member's Beneficiary
(a) if payment is to be made in lump sum as a normal form of
distribution under Section 9.2, the entire distribution must be
paid within five years after the Member's death or (b) if payment
is to be made in an alternative form of distribution under
Section 9.3, the installments or annuity must commence within one
year of the Member's death if the Beneficiary is other than the
Member's surviving spouse or no earlier than the Member's
Required Beginning Date if the Beneficiary is the Member's
surviving spouse and be payable over a period not to exceed the
Beneficiary's life or a period not in excess of the Beneficiary's
life expectancy. If a Member dies after the distribution of his
benefits has commenced, the remaining portion of his distribution
will be distributed to the Member's Beneficiary at least as
rapidly as under the method of distribution being used at the
date of Member's death.
9.2 Normal Form of Distribution. Unless otherwise elected
in accordance with Section 9.3 and subject to Section 9.7,
distributions shall be made by the Trustee as soon as practicable
after the Valuation Date coinciding with or next following the event
giving rise to the distribution in a single lump sum in cash except
that (a) unless the Member elects otherwise Employer Securities held
in the Member's Accounts shall be distributed in kind and (b) in the
discretion of the Committee, a note with respect to a Member's loan
from such Member's Compensation Deferral Account or Employee
Contributions Account may be distributed in kind. If the amount
distributable from the Member's Accounts is in excess of $3,500, the
Member's consent to such immediate distribution shall be required, but
a distribution of up to $3,500 shall not require such consent. In the
absence of such consent where required, the amount otherwise
distributable to the Member shall remain in the Member's Accounts
until the Valuation Date coinciding with or next following the date on
which the Member reaches age 70 or his death, if earlier, when,
without the necessity of any consent (other than spousal consent under
Section 9.9, if applicable), his entire interest in the Plan shall be
distributed. A Member who has terminated employment and declined to
consent to an immediate distribution may, prior to attaining age 70,
elect to receive the distribution of his entire interest in the Plan
as of the Valuation Date immediately following the filing of such
election. In addition, the Committee may, in its discretion, approve
a request filed by such a Member seeking a partial distribution from
his Accounts provided the Member is also receiving, or has received, a
retirement benefit from a defined benefit qualified plan sponsored by
his Employer. A partial distribution request (1) must be for a
minimum of $1,000, (2) cannot be approved if the Member's balance in
his Accounts will fall below $3,500 as a result of such partial
distribution and (3) may not be filed more than once in any calendar
year. While a Member's Accounts remain in the Plan after his
termination of employment, such Member shall have the right to
transfer the investment of his Account pursuant to the terms of
Sections 7.3 and 7.4 of the Plan. However, such a Member may not
borrow from his Accounts under Section 8.5 of the Plan.
9.3 Alternate Form of Distribution. A Member (or a
Member's Beneficiary in the event of the Member's death) may request
to have the value of the Member's Accounts distributed in a manner
other than in accordance with Section 9.2.
Such alternate form of payment shall be limited to the form
described in Section 9.8 (Annuities) or periodic installments
commencing as soon as practicable after the Member's death or at such
other time as the Member or the Member's Beneficiary, as the case may
be, shall elect in accordance with the Plan over a fixed period not to
exceed the lesser of ten years or the life expectancy of the Member or
Beneficiary as applicable, at the time payments commence. Payment of
any interest in the Smith Corona Corporation Common Stock Fund in a
Member's Accounts, if any, to which the Member has a non-forfeitable
interest may be made in cash solely for the purpose of effecting such
an alternate form of distribution.
9.4 Identity of Payee. The determination of the Committee
as to the identity of the proper payee of any benefit under the Plan
and the amount of such benefit properly payable shall be conclusive,
and payment in accordance with such determination shall constitute a
complete discharge of all obligations on account of such benefit.
9.5 Non-alienation of Benefits.
(a) No benefit payable at any time under this Plan shall be
subject in any manner to alienation, sale, transfer, assignment,
pledge, attachment, or other legal processes, or encumbrance of any
kind. Any attempt to alienate, sell, transfer, assign, pledge or
otherwise encumber any such benefits, whether currently or thereafter
payable, shall be void. No benefit, nor any fund which may be
established for the payment of such benefits, shall, in any manner, be
liable for or subject to the debts or liabilities including bankruptcy
of any person entitled to such benefits. If any person shall attempt
to, or shall alienate, sell, transfer, assign, pledge or otherwise
encumber benefits to which such person may become entitled under this
Plan.
(b) Notwithstanding Section 9.5(a), the Trustee
(i) shall comply with an order entered on or after
January 1, 1985, determined by the Committee to be a Qualified
Domestic Relations Order as provided in Section 9.6,
(ii) shall comply with a domestic relations order
entered before January 1, 1985, if benefits are already being
paid under such order, and
(iii) may treat an order entered before January 1,
1985, as a Qualified Domestic Relations Order even if it does not
meet the requirements of Section 9.6.
9.6 Qualified Domestic Relations Order.
(a) "Qualified Domestic Relations Order" means any
judgment, decree, or order (including approval of a property
settlement agreement):
(i) which is made pursuant to a state domestic
relations law (including a community property law),
(ii) which relates to the provision of child
support, alimony payments, or marital property rights to a
spouse, former spouse, child, or other dependent of a Member,
(iii) which creates or recognizes the existence of
an alternate payee's right to receive all or a portion of the
Member's Accounts under the Plan, and
(iv) with respect to which the requirements of
paragraphs (b) and (c) are met.
(b) A domestic relations order can be a Qualified
Domestic Relations Order only if such order clearly specifies:
(i) the name and the last known mailing address,
if any, of the Member and the name and mailing address or each
alternate payee covered by the order,
(ii) the amount or percentage of the Member's
Accounts to be paid by the Plan to each such alternate payee, or
the manner in which such amount or percentage is to be
determined,
(iii) the number of payments or period to which
such order applies, and
(iv) each Plan to which such order applies.
(c) A domestic relations order can be a Qualified Do-
mestic Relations Order only if such order does not:
(i) require the Plan to provide any type or form
of benefit, or any option not otherwise provided under the Plan,
(ii) require the Plan to provide increased
benefits (determined on the basis of actuarial value), or
(iii) require the payment of benefits to an
alternate payee which are required to be paid to another
alternate payee under another order previously determined to be a
Qualified Domestic Relations Order.
(d) In the case of any payment before a Member has had
a termination of employment, a domestic relations order shall not
be treated as failing to meet the requirements of Section
9.6(b)(i) solely because such order requires that payment of
benefits be made to an alternate payee:
(i) on the earlier of (a) the date on which the
Member is entitled to a distribution under the Plan, (b) the
later of (I) the date the Member attains age 50 or (II) the
earliest date on which the Member could begin receiving benefits
under the Plan if the Member separated from Service or (c) upon
application of the alternate payee within a specified period of
time after entry of the domestic relations order as provided in
such order,
(ii) as if the Member had retired on the date on
which such payment is to begin under such order (but taking into
account only the present value of the benefits actually accrued
and not taking into account the present value of any Employer
subsidy for early retirement), and
(iii) in any form in which such benefits may be
paid under the Plan to the Member (other than in the form of a
Qualified Joint and Survivor Annuity with respect to the
alternate payee and his or her subsequent spouse).
(e) To the extent provided in any Qualified Domestic
Relations Order, the former spouse of a Member shall be treated
as the surviving spouse of such Member for purposes of being the
Beneficiary of 100% of the Member's vested Account and providing
for a valid consent in accordance with Section 9.9.
9.7 Commencement of Benefits. Unless a Member elects
otherwise, the payment of benefits under the Plan shall begin no
later than the 60th day after the latest of the close of the Plan
Year in which:
(a) the Member attains his Retirement Age;
(b) the 10th anniversary of the date the Member's
participation in the Plan occurs;
(c) the Member's employment with the Employer or an
Affiliate is terminated;
provided that no benefits shall be distributed unless the Member
has filed a claim for benefits until the Valuation Date
immediately proceeding the Required Beginning Date and further
provided that all benefits shall be distributed to the Member no
later than the Member's Required Beginning Date.
9.8 Annuities. Subject to subsections (a) and (b)
hereof, if the form of distribution is to be an annuity contract,
it may be in such form and with such provisions as the Member or
the Member's Beneficiary, as the case may be, may elect which are
available for purchase from an insurance company including, but
not limited to, a full cash refund life annuity, an annuity with
income for life or an annuity with income for a period certain
(payable at least annually). Such distribution is to be provided
through the purchase from an insurance company and distribution
from the Trust Fund of a nontransferable annuity contract;
provided the benefit under such annuity contract cannot be paid
to anyone other than the Member prior to the Member's death, and
if a joint and survivor annuity is provided, unless such joint
annuitant shall be the Member's spouse, the actuarial value of
the Member's benefits, as of the date benefit payments commence,
shall be more than 50 percent (50%) of the Member's vested
Accounts.
(a) Limitations on Participant Elections.
Notwithstanding any elections of an annuity form of payment made
by a Member, benefit payments shall be made over a period not in
excess of the life of the Member or the lives of the Member and
the Member's Beneficiary or the Member's life expectancy or the
joint and last survivor life expectancy of the Member and the
Member's Beneficiary and otherwise meet the requirements of
Section 401(a)(9) of the Code.
(b) Qualified Joint and Survivor Annuities. Not-
withstanding the foregoing provisions of this Section 9.8, in the
case of a Member who has elected to receive an annuity form of
benefit, distribution shall be in the form of a Qualified Joint
and Survivor Annuity, unless the Member with the Member's
spouse's consent as provided in Section 9.9 elects to receive a
different form of annuity. The term "Qualified Joint and
Survivor Annuity" means an annuity payable to the Member for life
and, if the Member's spouse survives the Member, a survivor an-
nuity payable to the spouse for life in an amount equal to 50
percent (50%) of the annuity payable to the Member.
If the Member who has elected to receive an annuity
form of benefit is not married, subject to Section 9.6 (Qualified
Domestic Relations Order), the annuity shall be paid in the form
of a single life annuity unless the Member waives the single life
annuity. The amount of the benefits payable under a Qualified
Joint and Survivor Annuity shall be the amount which can be
purchased from an insurance company with the Member's Accounts.
(c) A Member who elects to receive benefits in the
form of a life annuity and to whom benefits would be payable in
the form of a Qualified Joint and Survivor Annuity pursuant to
this Section 9.8 shall have the right to waive a Qualified Joint
and Survivor Annuity (such waiver shall be consented to by the
Member's spouse in writing in accordance with Section 9.9) by
delivering written notice to the Committee, at any time within
the 90-day period prior to the annuity starting date, to receive
a different form of annuity. If a Member elects to receive bene-
fits in the form of an annuity, the Committee shall within a
reasonable period of time (no less than 30 days and no more than
90 days before the annuity starting date) provide the Member, by
personal delivery or first class mail, with a written explanation
of:
(1) the terms and conditions of the Qualified
Joint and Survivor Annuity;
(2) the Member's right to make, and the effect
of, an election to waive the Qualified Joint and Survivor
Annuity;
(3) the rights of the Member's spouse to consent
to the Member's election to waive the Qualified Joint and
Survivor Annuity and the effect of consenting to such waiver; and
(4) the Member's right to make, and the effect
of, a revocation of an election to waive the Qualified Joint and
Survivor Annuity.
Any election made by a Member pursuant to Sections
9.8(b) and 9.8(c) may be revoked by such Member by delivering
written notice to the Committee at any time prior to the Member's
annuity starting date and, once revoked, may be made again at any
time by delivering written notice to the Committee prior to the
Member's annuity starting date.
9.9 Spousal Consent. A valid spousal consent to the
Member's naming of a Beneficiary other than the Member's spouse
or to the Member's waiver of a Qualified Joint and Survivor
Annuity as defined in Section 9.8(b) shall be designated:
(a) in a writing acknowledging the effect of the
consent;
(b) witnessed by a notary public or Plan
representative; and
(c) effective only for the spouse who exercises the
consent;
provided that, notwithstanding the provisions of this Article IX,
the consent of a Member's spouse shall not be required if it is
established to the satisfaction of the Plan Administrator that
such consent may not be obtained because there is no spouse,
because the spouse cannot be located, there is a legal
separation, the Member proves abandonment by his spouse as
evidenced by a court order or because of such other circumstances
as the Secretary of the Treasury may by regulations prescribe.
9.10 Lump Sum Payment without Election. Notwith-
standing any other provision of this Article IX, if a Member or a
Beneficiary is entitled to a distribution and if the vested value
of a Member's Account or the vested value of the Beneficiary's
share of the Member's Account before benefits are paid or
commence to be paid hereunder does not exceed $3,500, the
Committee may in accordance with uniform and nondiscriminatory
rules direct the immediate distribution of such benefit to the
person entitled thereto regardless of any election or consent of
the Member, the Member's spouse or other Beneficiary.
9.11 Direct Rollover Election. Notwithstanding any
provision of the Plan to the contrary, if, on or after January 1,
1993, (i) a Member, (ii) a Beneficiary who is a Member's spouse,
or (iii) a Member's spouse or former spouse who is an alternate
payee under a qualified domestic relations order becomes entitled
to a Plan distribution which qualifies as an eligible rollover
distribution as defined in Section 402(c)(4) of the Code, such
individual may elect to have all or a portion of such
distribution transferred directly to a designated eligible
retirement plan as defined in Section 402(c)(8)(B) of the Code,
provided that such retirement plan to which such transfer is to
be made accepts such transfer. The Committee may establish
reasonable rules and procedures regarding direct rollover
distributions permitted hereunder.
ARTICLE X
Administration of the Plan
10.1 Plan Administrator. The Committee shall be the
Plan Administrator:
(a) The Committee shall administer, enforce and
interpret the Plan and the trust agreement established hereunder
and shall have the powers necessary thereto, including, but not
by way of limitation, the powers to exercise its responsibilities
in accordance with Sections 1.3 (Appropriate Form), 1.10
(Compensation), 1.22 (Enrollment Date), 1.29 (Leave of Absence),
1.45 (Total and Permanent Disability), Article II (Eligibility
and Membership), 3.1 (Compensation Deferral Contributions), 3.2
(Changes and Suspension of Contributions), 3.4 (Limitation on
Compensation Deferral Contributions), 5.2 (Maintenance of
Accounts), 5.3 (Valuations), Article VII (Investment of
Accounts), Article VIII (Withdrawals and Loans During
Employment), 11.6 (Disbursement of Funds), Article XIII
(Miscellaneous), and the remainder of this Article X, and
(b) Authority to hold the funds of the Plan shall be
delegated to the Trustee in accordance with Section 11.2
(Trustee), and
(c) Authority to direct the investment of the Plan's
funds shall be delegated to an Investment Manager in accordance
with Section 11.3 (Investment Manager).
With respect to all other responsibilities of the Plan
Administrator the Committee shall act through its duly authorized
officers and agents.
10.2 Board of Directors. With respect to Sections 4.1
(Amount of Employer Contributions), 10.8 (Personal Liability) and
12.2 (Suspension or Termination) the Employer shall act only by
or pursuant to a resolution of the Board of Directors.
10.3 Appointment of the Committee. The Committee
shall be the Benefits Administration Committee of Smith Corona
Corporation.
10.4 Compensation Expenses. All proper expenses
incurred by the Committee, the Employer or the Trustee for
accounting, legal and other professional, consulting or technical
services required for the administration of the Plan, shall be
paid by the Trustee out of the Trust Fund unless paid voluntarily
by the Employer.
10.5 Committee Actions, Agents. The Committee may
appoint such agents, who need not be members of the Committee, as
it may deem necessary for the effective performance of its duties
and may delegate to such agents such powers and duties as the
Committee may deem expedient or appropriate.
Any action of the Committee, including but not by way
of limitation, instructions to the Trustee, shall be evidenced by
the signature of a member who has been so authorized by the
Committee to sign for it, and the Trustee shall be fully
protected in acting thereon. A certificate of the secretary or
an assistant secretary of the Committee setting forth the name of
the members thereof shall be sufficient evidence at all times as
to the persons then constituting the Committee.
10.6 Committee Meetings. The Committee shall hold
meetings upon such notice, at such time and place as they may
determine. The Committee shall act by a majority of its members
at the time in office and such action may be taken from time to
time by a vote at a meeting or in writing without a meeting. A
majority of the members of the Committee at the time in office
shall constitute a quorum for transaction of business.
10.7 Authority and Duties of the Committee. The
Committee may from time to time establish rules for the
administration of the Plan. The Committee shall have the
exclusive right to interpret the Plan and to decide any matters
arising thereunder in connection with the administration of the
Plan. It shall endeavor to act by general rules so as not to
discriminate in favor of any person. Its decisions and the
records of the Committee shall be conclusive and binding upon the
Employer, Members and all other persons having an interest under
the Plan. No member of the Committee shall be disqualified from
exercising the powers and discretions herein conferred by reason
of the fact that the exercise of any such power or discretion may
affect the payment of benefits to such member under the Plan;
however, no member may vote on a matter relating exclusively to
such member. To the extent that it is administratively feasible,
the period of notice required for Members' elections to commence,
change or suspend contributions hereunder or to make or change
investment elections for either future contributions or existing
accounts may be relaxed, reduced or eliminated by the Committee
in accordance with uniform and non-discriminatory rules.
The Committee shall keep or cause to be kept all
records and other data as may be necessary for the administration
of the Plan.
10.8 Personal Liability. To the extent not contrary
to the provisions of ERISA, no member of the Committee, officer,
director or employee of an Employer shall be personally liable
for acts done in good faith hereunder unless resulting from such
member's own negligence or willful misconduct. Each such member
of the Committee, officer and director shall be indemnified by
the Employer against expenses reasonably incurred by such member
in connection with any action to which he may be a party by
reason of such member's responsibilities hereunder, except in
relation to matters as to which such member shall be adjudged in
such action to be liable for negligence or misconduct in the
performance of such member's duty. However, nothing in this Plan
shall be deemed to relieve any person who is a fiduciary under
the Plan for purposes of ERISA from any responsibility or
liability which such statute shall impose upon such member.
10.9 Dealings between the Committee and Individual
Members. Any notice required to be given to, or any document
required to be filed with, the Committee will be properly given
or filed if mailed by registered or certified mail, postage
prepaid, or delivered to the Chairman of the Benefits
Administration Committee, c/o Smith Corona Corporation, 65 Locust
Avenue, New Canaan, CT 06840, or to such other place as the
Committee may hereafter from time to time designate.
The Committee shall make available to such Member for
examination upon reasonable request in advance, such of its
records as pertain to the benefits to which such Member shall be
entitled under the Plan.
10.10 Information To Be Supplied by the Employer. The
Employer shall provide the Committee or its delegate with such
information as it shall from time to time need in the discharge
of its duties.
10.11 Records. The regularly kept records of the
Committee and the Employer shall be conclusive evidence of the
Service of an Employee, the Employee's Compensation, age, marital
status, status as an Employee, and all other matters contained
therein applicable to this Plan; provided that an Employee may
request a correction in the record of age or any other disputed
fact at any time prior to retirement. Such correction shall be
made if within 90 days after such request the Employee furnishes
the Committee in support thereof documentary proof of age or the
other disputed fact satisfactory to the Committee.
10.12 Fiduciary Capacity. Any person or group of
persons may serve in more than one fiduciary capacity with
respect to the Plan.
10.13 Fiduciary Responsibility. If a Plan fiduciary
acts in accordance with ERISA, Title I, Subtitle 8, Part 4,
(a) in determining that a Member's spouse has con-
sented to the naming of a Beneficiary other than the spouse or
that the consent of the Member's spouse may not be obtained
because there is no spouse, the spouse cannot be located or other
circumstances prescribed by the Secretary of the Treasury by
regulations, then to the extent of payments made pursuant to such
consent, revocation or determination, the Plan and its fiduci-
aries shall have no further liability; or
(b) in treating a domestic relations order as being
(or not being) a Qualified Domestic Relations Order, or, during
any period in which the issue of whether a domestic relations
order is a Qualified Domestic Relations Order is being determined
(by the Committee, by a court of competent jurisdiction, or
otherwise), in segregating
in a separate account in the Plan or in an escrow account the
amounts which would have been payable to the alternate payee
during such period if the order had been determined to be a
Qualified Domestic Relations Order in paying the amounts
segregated or held in escrow by the person entitled thereto if
within 18 months the domestic relations order (or a modification
thereof) is determined to be a Qualified Domestic Relations
Order, in paying such amounts to the person entitled thereto if
there had been no order if within 18 months the domestic
relations order is determined not to be qualified or if the issue
is not resolved within 18 months and in prospectively applying a
domestic relations order which is determined to be qualified
after the close of the 18 month period, then the obligation of
the Plan and its fiduciaries or the Member and each alternate
payee shall be discharged to the extent of any payment made
pursuant to such acts.
10.14 Claim Procedure.
(a) Each Member or Beneficiary ("Claimant") may submit
application for benefits ("Claim") to the Committee (or to such
other person as may be designated by the Committee) in writing in
such form as is provided or
approved by the Committee. A Claimant shall have no right to
seek review of a denial of benefits, or to bring any action in
any court to enforce a Claim prior to filing a Claim and
exhausting all rights to review in accordance with this Section.
When a Claim has been filed properly, such Claim shall
be evaluated and the Claimant shall be notified of the approval
or the denial of the Claim within ninety (90) days after the
receipt of such Claim unless special circumstances require an
extension of time for processing the claim. If such an extension
of time for processing is required, written notice of the
extension shall be furnished to the Claimant prior to the
termination of the initial ninety (90) day period, which notice
shall specify the special circumstances requiring an extension
and the date by which a final decision will be reached (which
date shall not be later than one hundred and eighty (180) days
after the date on which the Claim was filed). Claimant shall be
given a written notice in which the Claimant shall be advised as
to whether the Claim is granted or denied, in whole or in part.
If a Claim is denied, in whole or in part, the notice shall
contain (1) the specific reasons for the denial, (2) references
to pertinent Plan provisions upon which the denial is based, (3)
a description of any additional material or information necessary
to perfect the Claim and an explanation of why such material or
information is necessary, and (4) the Claimant's rights to seek
review of the denial.
(b) If a Claim is denied, in whole or in part, the
Claimant shall have the right to (i) request that the Committee
(or such other person as shall be designated in writing by the
Committee) review the denial, (ii) review pertinent documents,
and (iii) submit issues and comments in writing, provided that
the Claimant files a written request for review with the
Committee within sixty (60) days after the date on which the
Claimant received written notification of the denial. Within
sixty (60) days after a request for review is received, the
review shall be made and the Claimant shall be advised in writing
of the decision on review, unless special circumstances require
an extension of time for processing the review, in which case the
Claimant shall be given a written notification within such
initial sixty (60) day period specifying the reasons for the
extension and when such review shall be completed (within one
hundred and twenty (120) days after the date on which the request
for review was filed). The decision on review shall be forwarded
to the Claimant in writing and shall include specific reasons for
the decision and references to Plan provisions upon which the
decision is based. A decision on review shall be final and
binding on all persons for all purposes. If a Claimant shall
fail to file a request for review in accordance with the
procedures herein outlined, such Claimant shall have no rights to
review and shall have no right to bring action in any court and
the denial of the Claim shall become final and binding on all
persons for all purposes.
10.15 Lawsuits. Any lawsuit involving a Claim brought
by a Claimant must be commenced before the expiration of three
(3) years from the event giving rise to the Claim or, if later,
the date of receipt of notice of claim denial under Section
10.14(b). If such suit, no matter what jurisdiction it is
brought in, is not commenced within such time limit, it shall be
barred.
ARTICLE XI
Operation of the Trust Fund
11.1 Trust Fund. All assets of the Plan shall be held
in trust as a Trust Fund for the exclusive benefit of Members and
their Beneficiaries, and no part of the corpus or income shall be
used for or diverted to any other purpose. No person shall have
any interest in or right to any part of the Trust Fund, except to
the extent provided in the Plan.
11.2 Trustee. All contributions to the Plan shall be
paid to a Trustee or Trustees which shall be appointed from time
to time by the Board of Directors or the Employer by appropriate
instrument with such powers in the Trustee as to control and
disbursement of the funds as the Employer shall approve and as
shall be in accordance with the Plan. The Employer may remove
any Trustee at any time, upon reasonable notice and upon such
removal or upon the resignation of any Trustee the Employer shall
designate a successor Trustee.
11.3 Investment Manager. In accordance with the terms
of the trust agreement, the Board of Directors or the Employer
may appoint one or more Investment Managers (individuals and/or
other entities), who may include the Trustee and who are
collectively referred to herein as the Investment Manager, to
direct the investment and reinvestment of part or all of the
Plan's funds that are not invested in Employer Securities. The
Employer may change the appointment of the Investment Manager
from time to time.
11.4 Purchase and Holding of Securities. As soon as
convenient after receiving contributions, the Trustee shall:
(a) in the case of contributions to be invested in
Employer Securities, purchase at fair market value such
securities in the open market or otherwise, and register and hold
such securities in the name of the Trustee or its nominee;
(b) in the case of contributions to the Equity Index
or Money Market Funds, purchase securities in the open market or
otherwise, for the Equity Index Fund or the Money Market Fund as
the Trustee deems advisable, and register such stock and
securities in the name of the Trustee or its nominee;
(c) in the case of contributions to the Fixed Income
Fund, make payments to the issuer of the group annuity
contract or other investment medium which provides a fixed
rate of return on investments.
11.5 Voting of Employer Securities. For shareholders'
meetings Members shall be furnished proxy material and a form
instructing the Trustee for voting of the Employer Securities
represented by units credited to their Accounts, and the Trustee
shall vote or otherwise exercise shareholder rights with respect
to such Employer Securities as instructed. The Trustee shall
hold such instructions in confidence and shall not divulge them
to anyone (except on a need to know basis), including, but not
limited to, the Employer, its officers or employees. Shares for
which no instructions are received shall be voted by the Trustee
in the same proportion as those shares for which instructions
have been received. With respect to the exercise of
shareholder's rights to sell or retain the Employer Securities
represented by units credited to a Member's Accounts in
extraordinary instances involving an unusual price and terms and
conditions for such securities such as a tender offer, the
Trustee shall act in accordance with the Committee's
instructions.
11.6 Disbursement of Funds. The funds held by the
Trustee shall be applied, in the manner determined by the
Committee, to the payment of benefits to such persons as are
entitled thereto in accordance with the Plan.
The Committee shall determine the manner in which the
funds of the Plan shall be disbursed in accordance with the Plan,
including the form of voucher or warrant to be used in
authorizing disbursements and the qualification of persons
authorized to approve and sign the same and any other matters
incident to the disbursement of such funds.
All charges of the record keeper, of the Trustee and of
the Investment Manager shall be paid by the Trust unless paid by
the Employer.
11.7 Exclusive Benefit of Members. All contributions
under the Plan shall be paid to the Trustee and deposited in the
Trust Fund and shall be held, managed and distributed solely in
the interest of the Members and Beneficiaries for the exclusive
purpose of (1) providing benefits to Members and Beneficiaries
and (2) defraying reasonable administrative expenses of the Plan
and the Trust, to the extent such expenses are not paid by the
Employer provided that:
(a) if the Plan is denied initial qualification under
Section 401(a) of the Code, contributions conditioned upon the
continued qualification of the Plan shall be returned to the
Employer making such contributions within one year of the denial
of qualification;
(b) if, and to the extent, deduction for a
contribution under Section 404 of the Code is disallowed,
contributions conditioned upon deductibility shall be returned to
the Employer within one year after the disallowance of the
deduction; and
(c) if, and to the extent, contribution is made
through mistake of fact, such contribution shall be returned to
the Employer within one year of the payment of the contribution.
For purposes of subsection (b) of this Section 11.7, all Employer
Contributions shall be deemed conditioned upon deductibility
under Section 404 of the Code when made.
ARTICLE XII
Amendment, Termination and Merger
12.1 Right to Amend. The Employer reserves the right
at any time, and from time to time, to modify or amend in whole
or in part the provisions of the Plan, but no such amendment
shall divest any Member of any amount previously credited to a
Member's Accounts or, except to the extent permitted by the
Secretary of the Treasury by regulation, shall eliminate with
respect to a Member's Account balance at the time of such
amendment an optional form of benefit, and further provided that
no part of the assets of the Trust Fund shall, by reason of any
modification or amendment, be used for or diverted to, purposes
other than for the exclusive benefit of Members and their
Beneficiaries, under the Plan. Any amendment or modification of
the Plan may be made by the Board of Directors of the Employer or
its delegate such as the Committee, except that any amendment
which substantially increases the cost of the Plan to the
Employer must be approved by the Board of Directors.
12.2 Suspension or Termination. The Employer may at
any time temporarily suspend Employer Contributions and
Compensation Deferral Contributions in whole or in part. Such
suspension of Employer Contributions and/or Compensation Deferral
Contributions shall not, in itself, constitute a Plan
termination. The Employer may at any time completely discontinue
contributions or terminate the Plan by filing with the Committee
a certified copy of the resolution of its board of directors
authorizing such action.
If the Plan is terminated, no further contributions
shall be made by the Employer and subject to Section 9.1 and
Section 401(k)(10) of the Code, the Account of each Member shall
be applied for the Member's (or the Member's Beneficiary's)
benefit by payment in cash or in kind. Alternatively, if the
Plan is frozen, no further contributions shall be made by the
Employer but the Plan shall continue in full force and effect and
the Trust Fund shall continue in accordance with the trust
instrument until all funds in the Trust are distributed in
accordance with the Plan.
12.3 Merger, Consolidation or Transfer. In the case
of any merger, or consolidation with, or transfer of assets or
liabilities to any other plan, each Member in the Plan would (if
the Plan then terminated) receive a benefit immediately after the
merger, consolidation, or transfer which is equal to or greater
than the benefit such Member would have been entitled to receive
immediately before the merger consolidation, or transfer (if the
Plan had then terminated).
ARTICLE XIII
Miscellaneous
13.1 Uniform Administration. Whenever, in the
administration of the Plan, any action is required by the
Employer or the Committee, including, but not by way of
limitation, action with respect to eligibility or classification
of employees, contributions or benefits, such action shall be
uniform in nature as applied to all persons similarly situated
and no such action shall be taken which will discriminate in
favor of Members who are officers or significant shareholders or
Highly Compensated Employees of the Employer or persons whose
principal duties consist of supervising the work of other
Employees.
13.2 Payment Due an Incompetent. If the Committee
determines that any person to whom a payment is due hereunder is
incompetent by reason of physical or mental disability, the
Committee shall have power to cause the payments becoming due to
such person to be made to another for the benefit of the
incompetent, without responsibility of the Committee or the
Trustee to see to the application of such payment. Payments made
in accordance with such power shall operate as a complete
discharge of all obligations on account of such payment of the
Committee, the Trustee and the Trust Fund. The Committee shall
not be under any responsibility to assure that any such payment
is used for the benefit of the person to whom it was due.
13.3 Source of Payments. All benefits under the Plan
shall be paid or provided solely from the Trust Fund and the
Employer assumes no liability or responsibility therefor, except
to the extent required by law.
13.4 Plan Not a Contract of Employment. Nothing
herein contained shall be deemed to give any Employee, Eligible
Employee or Member the right to be retained in the employ of the
Employer or to interfere with the right of the Employer to
discharge any Employee, Eligible Employee or Member at any time
for any reason.
13.5 Applicable Law. Except to the extent governed by
Federal law, including ERISA, the Plan shall be administered and
interpreted in accordance with the laws of the State of New York
(other than the principles of conflicts of laws of such State).
13.6 Unclaimed Amounts. It shall be the duty and re-
sponsibility of a Member or a Beneficiary to keep the Committee
apprised of such Member's whereabouts and of such Member's
current mailing address. Unclaimed amounts shall consist of the
amounts of the Accounts of a retired, deceased or terminated
Member which cannot be distributed because of the Committee's
inability, after a reasonable search, to locate a Member or a
Member's Beneficiary within a period of two (2) years after the
payment of benefits becomes due. Unclaimed amounts for a Plan
Year shall be forfeitures for the Plan Year in which such two-
year period shall end. Such Forfeitures shall be treated as
provided in Section 4.3
If an unclaimed amount is subsequently properly claimed
by the Member or the Member's Beneficiary ("Reclaimed Amount")
and unless the Employer, in its discretion, makes a contribution
to the Plan for such year in an amount sufficient to pay such
Reclaimed Amount to the extent that the Reclaimed Amount
originated as an unclaimed amount, it shall be charged against
forfeitures for the Plan Year and, to the extent such forfeitures
are not sufficient, shall charged against income as an expense of
the Trust Fund.
13.7 Adoption of Plan by Subsidiary. Any corporation
of which the Employer owns directly or indirectly at least 50% of
the outstanding common stock may adopt the Plan as to its
eligible employees with the consent of the Board of Directors of
the Employer. Likewise, any such subsidiary which maintains a
qualified plan with a qualified cash or deferred arrangement may,
with the consent of the Board of Directors of the Employer, merge
such plan with and into the Plan.
ARTICLE XIV
Top Heavy Provisions
14.1 Application. The definitions in Section 14.2
shall apply under this Article XIV and the special rules in
Section 14.3 shall apply in accordance with Code Section 416,
notwithstanding any other provisions of the Plan, for any Plan
Year in which the Plan is a Top Heavy Plan and for such other
Plan Years as may be specified herein. This Article XIV shall
have no effect on the amount of, or eligibility for, benefits
under the Plan of a Member unless and until the Plan becomes a
Top Heavy Plan.
14.2 Special Top Heavy Definitions. The following
special definitions shall apply under this Article XIV.
(a) "Aggregate Employer Contributions" means the sum
of all Employer Contributions including forfeitures under this
Plan allocated for a Member to the Plan and employer
contributions and forfeitures allocated for the Member to all
Related Defined Contribution Plans in the Aggregation Group;
provided, however, that for Plan Years beginning before
January 1, 1985, Compensation Deferral Contributions under this
Plan and employer contributions attributable to compensation
reduction or similar arrangement under Related Defined
Contribution Plans shall not be included in Aggregate Employer
Contributions.
(b) "Aggregation Group" means the group of plans in a
Mandatory Aggregation Group, if any, that includes the Plan,
unless inclusion of Related Plans in the Permissive Aggregation
Group in the Aggregation Group would prevent the Plan from being
a Top Heavy Plan, in which case "Aggregation Group" means the
group of plans consisting of the Plan and each other Related Plan
in a Permissive Aggregation Group with the Plan.
(1) "Mandatory Aggregation Group" means each plan
(considering the Plan and Related Plans) that, during the Plan
Year that contains the Determination Date or any of the four
preceding Plan Years,
(A) had a Member who was a Key Employee, or
(B) was necessary to be considered with a
plan in which a Key Employee participated in order to enable the
plan in which the Key Employee participated to meet the require-
ments of Section 401(a)(4) and Section 410(b) of the Code.
If the Plan is not described in (A) or (B)
above, it shall not be part of a Mandatory Aggregation Group.
(2) "Permissive Aggregation Group" means the
group of plans consisting of (A) the plans, if any, in a
Mandatory Aggregation Group with the Plan, and (B) any other
Related Plan, that, when considered as a part of the Aggregation
Group, does not cause the Aggregation Group to fail to satisfy
the requirements of Section 401(a)(4) and Section 410(b) of the
Code. A Related Plan in (B) of the preceding sentence may
include a simplified employee pension plan, as defined in Code
Section 408(k), and a collectively bargained plan, if, when
considered as a part of the Aggregation Group, such plan does not
cause the Aggregation Group to fail to satisfy the requirements
of Section 401(a)(4) and Section 410(b) of the Code considering,
if the plan is a multiemployer plan as described in Code Section
414(f) or a multiple employer plan as described in Code Section
413(c), benefits under the plan only to the extent provided to
Employees of the employer because of service with the Employer,
and, if the plan is a simplified employee pension plan, only the
employer's contribution to the plan.
(c) "Determination Date" means, with respect to a Plan
Year, the last day of the preceding Plan Year or, in the case of
the first Plan Year, the last day of such Plan Year. If the Plan
is aggregated with other plans in the Aggregation Group, the
Determination Date for each other plan shall be, with respect to
any Plan Year, the Determination Date for each such other plan
which falls in the same calendar year as the Determination Date
for the Plan.
(d) "Key Employee" means, for the Plan Year containing
the Determination Date, any person or the beneficiary of any
person who is an Employee or former Employee of an Employer or an
Affiliate as determined under Code Section 416(i) and who, at any
time during the Plan Year containing the Determination Date or
any of the four (4) preceding Plan Years (the "Measurement
Period") is a person described in paragraph (1), (2), (3) or (4),
subject to paragraph (5).
(1) An officer of the Employer or an Affiliate
who in any Measurement Period is an officer during the Plan Year
and has annual Compensation for the Plan Year in an amount
greater than fifty percent (50%) of the amount in effect under
Section 415(b)(1)(A) of the Code for the calendar year in which
such Plan Year ends ($30,000 in 1989 adjusted in subsequent years
as determined in accordance with regulations prescribed by the
Secretary of the Treasury or his delegate pursuant to the
provisions of Section 415(d) of the Code).
No more than a total of fifty (50) persons (or, if
lesser, the greater of three (3) persons or ten percent (10%) of
all persons or beneficiaries of persons who are Employees or
former Employees) shall be treated as Key Employees under this
paragraph (1) for any Measurement Period. In the case of an
Employer or an Affiliate which is not a corporation (I) in any
Measurement Period, in the case of a Plan Year beginning on or
before February 28, 1985, no persons shall be treated as Key
Employees under this paragraph (1); and (II) in any Measurement
Period, in the case of a Plan Year beginning after February 28,
1985, the term "officer" as used in this subsection (d) shall
include administrative executives as described in Treas. Reg.
Section 1.416-1(T-13).
(2) One (1) of the ten (10) persons who, during a
Plan Year in the Measurement Period:
(A) have annual Compensation from the
Employer or Affiliate for such Plan Year greater than the amount
in effect under Section 415(c)(1)(A) of the Code for the calendar
year in which such Plan Year ends ($30,000 in 1984, adjusted in
subsequent years as determined in accordance with regulations
prescribed by the Secretary of the Treasury or his delegate
pursuant to the provisions of Section 415(d) of the Code); and
(B) own (or are considered as owning within
the meaning of Code Section 318) in such Plan Year, the largest
percentage interests in the Employer or Affiliate, in such Plan
Year, provided that no person shall be treated as a Key Employee
under this paragraph unless he owns more than one-half of one
percent (0.5%) interest in the Employer or Affiliate.
No more than a total of ten (10) persons or
beneficiaries of persons who are Employees or former Employees
shall be treated as Key Employees under this paragraph (2) for
any Measurement Period.
(3) A person who, for a Plan Year in the
Measurement Period, is a more than five percent (5%) owner (or is
considered as owning more than five percent (5%) within the
meaning of Code Section 318) of the Employer or Affiliate.
(4) A person who, for a Plan Year in the
Measurement Period, is a more than one percent (1%) owner (or is
considered as owning more than one percent (1%) within the
meaning of Code Section 318) of the Employer or an Affiliate and
has an annual Compensation for such Plan Year of more than
$150,000.
(5) If the number of persons who meet the
requirements to be treated as Key Employees under paragraph (1)
or (2) exceed the limitation on the number of Key Employees to be
counted under paragraph (1) or (2), those persons with the
highest annual Compensation in a Plan Year in the Measurement
Period for which the requirements are met and who are within the
limitation on the number of Key Employees will be treated as Key
Employees.
If the requirements of paragraph (1) or (2) are met by
a person in more than one (1) Plan Year in the Measurement
Period, each person will be counted only once under paragraph (1)
or (2):
(C) under paragraph (1), the Plan Year in
the Measurement Period in which a person who was an officer and
had the highest annual Compensation shall be used to determine
whether the person will be treated as a Key Employee under the
preceding sentence;
(D) under paragraph (2), the Plan Year in
the Measurement Period in which the ownership percentage interest
is the greatest shall be used to determine whether the person
will be treated as a Key Employee under the preceding sentence.
Notwithstanding the above provisions of paragraph (5),
a person may be counted in determining the limitation under both
paragraphs (1) and (2). In determining the sum of the Present
Value of Accrued Benefits for Key Employees under subsection (f)
of this Section, the Present Value of Accrued Benefits for any
person shall be counted only once. For purposes of determining
ownership in the Employer or Affiliate under paragraphs (2), (3)
and (4), the aggregation rules of Sections 414(b), (c) and (m) of
the Code shall not apply.
(e) "Non-Key Employee" means for the Plan Year
containing the Determination Date a person or the beneficiary of
a person who had an account balance in the Plan or an account
balance in any Related Plan in the Aggregation Group during the
Plan Year containing the Determination Date or any of the four
(4) preceding Plan Years and who is not a Key Employee.
(f) "Present Value of Accrued Benefits" means, for any
Plan Year, an amount equal to the sum of (1), (2) and (3) for
each person, who in the Plan Year containing the Determination
Date, was a Key Employee or a Non-Key Employee.
(1) Subject to (4) below, the value of a Member's
Accounts under the Plan (including his Compensation Deferral
Contributions) and each Related Defined Contribution Plan in the
Aggregation Group, determined as of the Valuation Date coincident
with or immediately preceding the Determination Date, adjusted
for contributions due as of the Determination Date, as follows:
(A) in the case of a plan not subject to the
minimum funding requirements of Section 412 of the Code, by
including the amount of any contributions actually made after the
Valuation Date but on or before the Determination Date, and, in
the first plan year of a plan, by including contributions made
after the Determination Date that are allocated as of a date in
that first plan year; and
(B) in the case of a plan that is subject to
the minimum funding requirements, by including the amount of any
contributions that would be allocated as of a date not later than
the Determination Date, plus adjustments to those amounts as
required under applicable rulings, even though those amounts are
not yet required to be contributed or allocated (e.g., because
they have been waived) and by including the amount of any
contributions actually made (or due to be made) after the
Valuation Date but before the expiration of the extended payment
period in Section 412(c)(10) of the Code.
For purposes of this paragraph (1), the Valuation Date is
the most recent Valuation Date within a 12-month period ending on
the Determination Date.
(2) Subject to (4) below, the sum of the
actuarial present values of a person's accrued benefits under
each Related Defined Benefit Plan in the Aggregation Group,
expressed as a benefit commencing at normal retirement date (or
the person's attained age, if later) determined based on the
following actuarial assumptions:
(A) Interest rate of 5% compounded; and
(B) 80% of the rates underlying the 1984
Unisex Pension Mortality Table, adjusted by applying a 3-year age
setback for the Member's spouse, where applicable;
and determined in accordance with Code Section 416(g).
The present value of an accrued benefit for any person
who is employed by an Employer maintaining a plan on the
Determination Date is determined as of the most recent valuation
date which is within a 12-month period ending on the Deter-
mination Date, provided however that:
(C) for the first plan year of the plan, the
present value for an Employee is determined as if the Employee
had a termination of employment (1) on the Determination Date or
(2) on such Valuation Date but taking into account the estimated
accrued benefits as of the Determination Date; and
(D) for the second and subsequent plan years of
the plan, the accrued benefit taken into account for an employee
is not less than the accrued benefit taken into account for the
first plan year unless the difference is attributable to using an
estimate of the accrued benefit as of the Determination Date for
the first plan year and using the actual accrued benefit as of
the Determination for the second plan year.
For purposes of this paragraph (2), the Valuation Date
is the valuation date used by the plan for computing plan costs
for minimum funding, regardless of whether a valuation is
performed that year.
If the plan provides for a nonproportional subsidy as
described in Treasury Regulations Section 1.416-1(T-26), the
present value of accrued benefits shall be determined by taking
into account the value of nonproportional subsidized early
retirement benefits and nonproportional subsidized benefit
options.
(3) Subject to (4) below, the aggregate value of
amounts distributed from the Plan and each Related Plan in the
Aggregation Group during the Plan Year that includes the
Determination Date or any of the four preceding Plan Years
including amounts distributed under a termination plan which, if
it had not been terminated, would have been in the Aggregation
Group.
(4) The following rules shall apply in determining the
Present Value of Accrued Benefits:
(A) Amounts attributable to qualified voluntary
employee contributions, as defined in Section 219(e) of the Code,
shall be excluded;
(B) In computing the Present Value of Accrued
Benefits with respect to rollovers or plan-to-plan transfers, the
following rules shall be applied to determine whether amounts
which have been distributed during the five (5) year period
ending on the Determination Date from or accepted into this Plan
or any plan in the Aggregation Group shall be included in
determining the Present Value of Accrued Benefits:
(i) Unrelated Transfers accepted into the
Plan or any plan in the Aggregation Group after December 31, 1983
shall not be included.
(ii) Unrelated Transfers accepted on or
before December 31, 1983 and all Related Transfers accepted at
any time into the Plan or any plan in the Aggregation Group shall
be included.
(iii) Unrelated Transfers made from the Plan
or any plan in the Aggregation Group shall be included.
(iv) Related Transfers made from the Plan or
any plan in the Aggregation Group shall not be included by the
transferror plan (but shall be counted by the accepting plan).
The accrued benefit of any individual who has not
performed services for an Employer maintaining the Plan (or a
business with which the Employer is an Affiliate) at any time
during the five (5) year period ending on the Determination Date
shall be excluded in computing the Present Value of Accrued
Benefits.
(g) "Related Plan" means any other defined benefit
plan or a defined contribution plan (as defined in Section 415(k)
of the Code) maintained by an Employer or other Affiliate,
respectively called a "Related Defined Benefit Plan" and a
"Related Defined Contribution Plan".
(h) "Related Transfer" means a rollover or a plan-
to-plan transfer which is either not initiated by the Employee or is
made between plans each of which is maintained by an Employer or
an Affiliate.
(i) A "Top Heavy Aggregation Group" means the
Aggregation Group in any Plan Year for which, as of the
Determination Date, the sum of the Present Values of Accrued
Benefits for Key Employees under all plans in the Aggregation
Group exceeds sixty percent (60%) of the sum of the Present
Values of Accrued Benefits for all Employees under all plans in
the Aggregation Group; provided that, for purposes of determining
the sum of Present Values of Accrued Benefits for all Employees,
there shall be excluded the Present Values of Accrued Benefits of
any Non-Key Employee who was a Key Employee for any Plan Year
preceding the Plan Year that contains the Determination Date.
For purposes of applying the special rules herein with respect to
a Super Top Heavy Plan, a Top Heavy Aggregation Group will also
constitute a "Super Top Heavy Aggregation Group" if in any Plan
Year as of the Determination Date, the sum of the Present Values
of Accrued Benefits for Key Employees under all plans in the
Aggregation Group exceeds ninety percent (90%) of the sum of the
Present Values of Accrued Benefits for all employees under all
plans in the Aggregation Group.
(j) "Top Heavy Plan" means the Plan in any Plan Year
in which it is a member of a Top Heavy Aggregation Group,
including a Top Heavy Aggregation Group consisting solely of the
Plan. For purposes of applying the rules herein with respect to
a Super Top Heavy Plan, a Top Heavy Plan will also constitute a
"Super Top Heavy Plan" if the Plan in any Plan Year is a member
of a Super Top Heavy Aggregation Group consisting solely of the
Plan.
(k) "Unrelated Transfer" means a rollover or a plan-
to-plan transfer which is initiated by the Employee and (a) made
from a plan maintained by an Affiliate to a plan maintained by an
Employer which is not an Affiliate or (b) made to a plan
maintained by an Affiliate from a plan maintained by an Employer
which is not an Affiliate.
14.3 Special Top Heavy Provisions. For each Plan Year
in which the Plan is a Top Heavy Plan, the following rules shall
apply, except that the special provisions of this Section 14.3
shall not apply with respect to any Employee who is covered by a
collective bargaining agreement between Employee representatives
and one or more Employers unless participation by such Employee
in the Plan has been agreed to by the parties to such agreement.
(a) Minimum Employer Contributions.
(1) In any Plan Year in which the Plan is a Top
Heavy Plan, the Employer shall make additional Employer
Contributions to the Plan as necessary for each Member who is
employed on the last day of the Plan Year and who is a Non-Key
Employee to bring the amount of each Member's Aggregate Employer
Contributions for the Plan Year up to at least three percent (3%)
of each Member's Compensation, or if the Plan is not required to
be included in an aggregation group in order to permit a defined
benefit plan in the Aggregation Group to satisfy the requirements
of Section 401(a)(4) or Section 410(b) of the Code, such lesser
amount as is equal to the largest percentage of a Key Employee's
Compensation (as limited in accordance with Section 14.3(c))
allocated to the Key Employee as Aggregate Employer
Contributions. Compensation Deferral Contributions may not be
treated as Employer Contributions for purposes of satisfying the
Non-Key Employee's minimum contribution requirement set forth in
this subparagraph (1).
(2) Notwithstanding Section 14.3(a)(1), if there
is a Related Defined Benefit Plan in the Aggregation Group, if a
Non-Key Employee participates in both the Plan and a Related
Defined Benefit Plan and
(A) if the Related Defined Benefit Plan
provides the minimum benefit required under Code Section
416(c)(1) for the Non-Key Employee, then no minimum Employer
Contribution shall be required under this Section 14.3(a),
(B) if the Related Defined Benefit Plan does
not provide the minimum benefit required under Code Section
416(c)(1) for the Non-Key Employee, then the minimum Aggregate
Employer Contribution under this Section 14.3(a) shall be five
percent (5%) of such Non-Key Employee's Compensation.
(3) For purposes of determining whether a Non-Key
Employee is a Member entitled to have minimum Employee
Contributions made for such Member, a Non-Key Employee will be
treated as a Member even if he is not otherwise a Member (or
accrues no benefit) under the Plan because:
(A) such Member has failed to complete the
requisite number of Hours of Service (if any) after becoming a
Member in the Plan,
(B) such Member is excluded from
participation in the Plan (or accrues no benefit) merely because
his Compensation is less than a stated amount, or
(C) such Member is excluded from parti-
cipation in the Plan (or accrues no benefit) merely
because of a failure to make mandatory employee contributions or,
if the Plan is a Plan described in Section 401(k) of the Code,
because of a failure to make elective (401(k)) contributions.
(b) Vesting. For each Plan Year and for each Plan
Year thereafter, in which the Plan is a Top Heavy Plan, the
vesting schedule under the Plan shall be three (3) year cliff
vesting under which each Member shall be zero percent vested in
the Employer Contribution Account until such Member has three (3)
years of Service (including Service prior to when the Plan is a
Top-Heavy Plan) after which a Member shall be 100% vested in such
Account; provided that this vesting schedule shall not apply to
the accrued benefit of any Member who does not have an Hour of
Service in or after a Plan Year in which the Plan is Top Heavy.
(c) Compensation. For each Plan Year in which the
Plan is a Top Heavy Plan, Compensation taken into account under
the Plan shall not exceed $200,000 (as at 1984, adjusted in
subsequent years for the cost of living adjustments determined in
accordance with regulations prescribed by the Secretary of the
Treasury or his delegate pursuant to the provisions of Section
416(d)(2) of the Code).
(d) Top Heavy Limitations.
(1) In computing the limitations under Section
4.5 hereof, if the Plan is a Top Heavy Plan and is not a Super
Top Heavy Plan, the special rules of Section 416(h) of the Code
shall be applied in accordance with applicable regulations and
rulings so that
(A) in determining the denominator of the
Defined Contribution Plan Fraction and the Defined Benefit Plan
Fraction, at each place at which "1.25" would have been used,
"1.00" shall be substituted and
(B) in determining the numerator of the
transition fraction described in Section 415(e)(6)(B) of the Code
by substituting $41,500 for $51,875
unless the special requirements of Section 416(h)(2) of the
Internal Revenue Code have been satisfied.
(2) In computing the limitations under Section
4.5 thereof, if the Plan is a Super Top Heavy Plan, the special
rules of Section 416(h) of the Code shall be applied in
accordance with applicable regulations and rulings so that
(A) in determining the denominator of the
Defined Contribution Plan Fraction and the Defined Benefit Plan
Fraction, at each place at which "1.25" would have been used,
"1.00" shall be substituted and
(B) in determining the numerator of the
transitional fraction described in Section 415(e)(6)(B) of the
Code, $41,500 shall be substituted for $51,875.
(e) Transition Rule for a Top Heavy Plan. Notwith-
standing the provisions of Sections 14.3(d), for each Plan Year
in which the Plan is a Top Heavy Plan and in which the Plan does
not meet the special requirements of Section 416(h)(2) of the
Code in order to use 1.25 in the denominator of the Defined
Contribution Plan Fraction and the Defined Benefit Plan Fraction,
if an Employee was a participant in one or more defined benefit
plans and in one or more defined contribution plans maintained by
an Employer or an Affiliate before the plans became Top Heavy
Plans and if such Member's Combined Fraction exceeds 1.00 because
of accruals and additions that were made before the plans became
Top Heavy Plans, a factor equal to the lesser of 1.25 or such
lesser amount (but not less than 1.00) as shall be needed to make
the Employee's Combined Fraction equal to 1.00 shall be used in
the denominator of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction if there are no further
accruals or annual additions under any Top Heavy Plans until the
Member's Combined Fraction is not greater than 1.00 when a factor
of 1.00 is used in the denominators of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction. Any
provisions herein to the contrary notwithstanding, if the Plan is
a Top Heavy Plan and the Plan does not meet the special re-
quirements of Section 416(h)(2) of the Code, in order to use 1.25
in the denominator of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction, there shall be no further
Annual Additions for a Member whose Combined Fraction is greater
than 1.00 when a factor of 1.00 is used in the denominator of the
Defined Benefit Plan Fraction Plan and the Defined Contribution
Plan Fraction, until such time as the Member's Combined Fraction
is not greater than 1.00.
(f) Transition Rule for a Super Top Heavy Plan.
Notwithstanding the provisions of Sections 14.3(d) and 14.3(e),
for each Plan Year in which the Plan is a Super Top Heavy Plan,
(1) if an Employee was a participant in one or more defined
benefit plans and in one or more defined contribution plans
maintained by an Employer or an Affiliate before the plans became
Super Top Heavy Plans, and (2) if such Member's Combined Fraction
exceeds 1.00 because of accruals and additions that were made
before the plans became Super top Heavy Plans the Combined
Fraction as then computed did not exceed 1.00, then a factor
equal to the lesser of 1.25 or such lesser amount (but not less
than 1.00) as shall be needed to make the Employee's Combined
Fraction equal to 1.00 shall be used in the denominator of the
Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction if there are no further accruals or Annual Additions
under any Super Top Heavy Plans until the Member's Combined
Fraction is not greater than 1.00 when a factor of 1.00 is used
in the denominators of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction. Any provisions herein to the
contrary notwithstanding, if the Plan is a Super Top Heavy Plan,
there shall be no further Annual Additions for a Member whose
Combined Fraction is greater than 1.00 when a factor of 1.00 is
used in the denominator of the Defined Benefit Plan Fraction and
the Defined Contribution Plan Fraction until the Member's
Combined Fraction is not greater than 1.00.
(g) Terminated Plan. If the Plan becomes a Top Heavy
Plan after it has formally been terminated, has
ceased crediting for benefit accruals and vesting and had been or
is distributing all plan assets to Members and their
beneficiaries as soon as administratively feasible, or if a
terminated plan has distributed all benefits of Members and their
beneficiaries, the provisions of Section 14.3 shall not apply to
the Plan.
(h) Frozen Plans. If the Plan becomes a Top Heavy
Plan after contributions have ceased under the Plan but all
assets have not been distributed to Members or their
beneficiaries, the provisions of Section 14.3 shall apply to the
Plan.
14.4 Effect of Change in Applicable Legislation or
Regulation. In the event that Congress should provide by statute
or the Secretary of the Treasury should provide by regulation a
ruling, that the provisions of this Article XIV are no longer
necessary for the Plan to meet the requirements of Section 401(a)
or other applicable provisions of the Code, such limitations
shall become void and shall no longer apply, without the
necessity of further amendment to the Plan.
<PAGE>
__________________________________________________________
SMITH CORONA CORPORATION
RETIREMENT SAVINGS AND INVESTMENT PLAN
Adopted Effective July 1, 1989
Amended and Restated Effective January 1, 1992
As Amended through January 1, 1994
__________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Account". . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Affiliate". . . . . . . . . . . . . . . . . . . . . 1
1.3 "Appropriate Form" . . . . . . . . . . . . . . . . . 1
1.4 "Basic Contributions". . . . . . . . . . . . . . . . 1
1.5 "Basic Contributions Subaccount" . . . . . . . . . . 1
1.6 "Beneficiary". . . . . . . . . . . . . . . . . . . . 1
1.7 "Board" or "Board of Directors". . . . . . . . . . . 1
1.8 "Code" . . . . . . . . . . . . . . . . . . . . . . . 1
1.9 "Committee". . . . . . . . . . . . . . . . . . . . . 1
1.10 "Compensation" . . . . . . . . . . . . . . . . . . . 2
1.11 "Compensation Deferral Contributions". . . . . . . . 2
1.12 "Compensation Deferral Contributions Account". . . . 2
1.13 "Effective Date" . . . . . . . . . . . . . . . . . . 2
1.14 "Eligible Employee". . . . . . . . . . . . . . . . . 2
1.15 "Employee" . . . . . . . . . . . . . . . . . . . . . 3
1.16 "Employee Contributions" . . . . . . . . . . . . . . 3
1.17 "Employee Contributions Account" . . . . . . . . . . 3
1.18 "Employer" . . . . . . . . . . . . . . . . . . . . . 3
1.19 "Employer Contributions" . . . . . . . . . . . . . . 3
1.20 "Employer Contribution Account". . . . . . . . . . . 3
1.21 "Employer Securities". . . . . . . . . . . . . . . . 3
1.22 "Enrollment Date". . . . . . . . . . . . . . . . . . 3
1.23 "Enrollment Period". . . . . . . . . . . . . . . . . 3
1.24 "ERISA". . . . . . . . . . . . . . . . . . . . . . . 3
1.25 "Hour of Service". . . . . . . . . . . . . . . . . . 4
1.26 "Initial Enrollment Date". . . . . . . . . . . . . . 4
1.27 "Investment Fund". . . . . . . . . . . . . . . . . . 4
1.28 "Investment Manager" . . . . . . . . . . . . . . . . 5
1.29 "Leave of Absence" . . . . . . . . . . . . . . . . . 5
1.30 "Maturity Date". . . . . . . . . . . . . . . . . . . 5
1.31 "Member" . . . . . . . . . . . . . . . . . . . . . . 5
1.32 "Parental Leave" . . . . . . . . . . . . . . . . . . 5
1.33 "Plan" . . . . . . . . . . . . . . . . . . . . . . . 6
1.34 "Plan Year". . . . . . . . . . . . . . . . . . . . . 6
1.35 "Prior Plan" . . . . . . . . . . . . . . . . . . . . 6
1.36 "Required Beginning Date". . . . . . . . . . . . . . 6
1.37 "Retirement Age" . . . . . . . . . . . . . . . . . . 6
1.38 "Rollover Contribution". . . . . . . . . . . . . . . 6
1.39 "Rollover Contribution Account". . . . . . . . . . . 6
1.40 "Service". . . . . . . . . . . . . . . . . . . . . . 6
1.41 "Specific Involuntary Termination" . . . . . . . . . 6
1.42 "Supplemental Contributions" . . . . . . . . . . . . 7
1.43 "Supplemental Contributions Subaccount". . . . . . . 7
1.44 "Suspense Account" . . . . . . . . . . . . . . . . . 7
1.45 "Total and Permanent Disability" . . . . . . . . . . 7
1.46 "Trustee". . . . . . . . . . . . . . . . . . . . . . 7
1.47 "Trust Fund" . . . . . . . . . . . . . . . . . . . . 7
1.48 "Valuation Date" . . . . . . . . . . . . . . . . . . 7
1.49 "Use of Masculine Pronoun".. . . . . . . . . . . . . 7
ARTICLE II
Eligibility and Membership
2.1 Members on the Effective Date . . . . . . . . . . . . 8
2.2 Eligible Employees on and after the Effective Date. . 8
2.3 Completion of Appropriate Form. . . . . . . . . . . . 8
2.4 Elections Upon Becoming a Member. . . . . . . . . . . 8
2.5 Beneficiary Designation . . . . . . . . . . . . . . . 8
2.6 Transfers to or from Non-Covered Status . . . . . . . 9
2.7 Rollover Contributions From Other Plans . . . . . . . 9
ARTICLE III
Compensation Deferral Contributions
3.1 Compensation Deferral Contributions . . . . . . . . 10
3.2 Changes and Suspension of Contributions . . . . . . 10
3.3 Transfer of Contributions to Trustee. . . . . . . . 11
3.4 Limitation on Compensation Deferral Contributions . 11
ARTICLE IV
Employer Contributions
4.1 Amount of Employer Contributions. . . . . . . . . . 13
4.2 Limitations on Matching Contributions . . . . . . . 14
4.3 Treatment of Forfeitures. . . . . . . . . . . . . . 15
4.4 Transfer of Contributions to Trustee. . . . . . . . 15
4.5 Limitation of Annual Additions. . . . . . . . . . . 15
ARTICLE V
Accounts
5.1 Separate Annual Class . . . . . . . . . . . . . . . 18
5.2 Maintenance of Accounts . . . . . . . . . . . . . . 19
5.3 Valuations. . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI
Vesting of Accounts
6.1 Employer Contribution Account . . . . . . . . . . . 19
6.2 Other Accounts. . . . . . . . . . . . . . . . . . . 20
6.3 Earlier Vesting in Employer Contribution Account. . 20
6.4 Forfeitures . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII
Investment of Accounts
7.1 Investment of Accounts Other Than Employer Contri-
bution Accounts . . . . . . . . . . . . . . . . . . 21
7.2 Redirection of Future Contributions . . . . . . . . 22
7.3 Reinvestment of Prior Contributions . . . . . . . . 22
7.4 Investment of Employer Contributions Accounts . . . 22
7.5 Statements of Accounts. . . . . . . . . . . . . . . 23
7.6 Crediting of Contribution Accounts. . . . . . . . . 23
7.7 Correction of Error . . . . . . . . . . . . . . . . 23
ARTICLE VIII
Withdrawals and Loans During Employment
8.1 Withdrawal Options. . . . . . . . . . . . . . . . . 24
8.2 Hardship Withdrawals. . . . . . . . . . . . . . . . 25
8.3 Values. . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Payment of Withdrawals. . . . . . . . . . . . . . . 26
8.5 Loans . . . . . . . . . . . . . . . . . . . . . . . 26
8.6 Loan Proceeds Value . . . . . . . . . . . . . . . . 28
ARTICLE IX
Distribution
9.1 Amount of Distribution. . . . . . . . . . . . . . . 28
9.2 Normal Form of Distribution . . . . . . . . . . . . 29
9.3 Alternate Form of Distribution. . . . . . . . . . . 30
9.4 Identity of Payee . . . . . . . . . . . . . . . . . 30
9.5 Non-alienation of Benefits. . . . . . . . . . . . . 30
9.6 Qualified Domestic Relations Order. . . . . . . . . 31
9.7 Commencement of Benefits. . . . . . . . . . . . . . 32
9.8 Annuities . . . . . . . . . . . . . . . . . . . . . 33
9.9 Spousal Consent . . . . . . . . . . . . . . . . . . 34
9.10 Lump Sum Payment without Election . . . . . . . . . 34
9.11 Direct Rollover Election. . . . . . . . . . . . . . 35
ARTICLE X
Administration of the Plan
10.1 Plan Administrator . . . . . . . . . . . . . . . . 35
10.2 Board of Directors . . . . . . . . . . . . . . . . 36
10.3 Appointment of the Committee . . . . . . . . . . . 36
10.4 Compensation Expenses. . . . . . . . . . . . . . . 36
10.5 Committee Actions, Agents. . . . . . . . . . . . . 36
10.6 Committee Meetings . . . . . . . . . . . . . . . . 36
10.7 Authority and Duties of the Committee. . . . . . . 36
10.8 Personal Liability . . . . . . . . . . . . . . . . 37
10.9 Dealings between the Committee and Individual
Members . . . . . . . . . . . . . . . . . . . . . 37
10.10 Information To Be Supplied by the Employer . . . . 37
10.11 Records. . . . . . . . . . . . . . . . . . . . . . 37
10.12 Fiduciary Capacity . . . . . . . . . . . . . . . . 38
10.13 Fiduciary Responsibility . . . . . . . . . . . . . 38
10.14 Claim Procedure. . . . . . . . . . . . . . . . . . 38
10.15 Lawsuits . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XI
Operation of the Trust Fund
11.1 Trust Fund . . . . . . . . . . . . . . . . . . . . 40
11.2 Trustee. . . . . . . . . . . . . . . . . . . . . . 40
11.3 Investment Manager . . . . . . . . . . . . . . . . 40
11.4 Purchase and Holding of Securities . . . . . . . . 40
11.5 Voting of Employer Securities. . . . . . . . . . . 40
11.6 Disbursement of Funds. . . . . . . . . . . . . . . 41
11.7 Exclusive Benefit of Members . . . . . . . . . . . 41
ARTICLE XII
Amendment, Termination and Merger
12.1 Right to Amend . . . . . . . . . . . . . . . . . . 42
12.2 Suspension or Termination. . . . . . . . . . . . . 42
12.3 Merger, Consolidation or Transfer. . . . . . . . . 43
ARTICLE XIII
Miscellaneous
13.1 Uniform Administration . . . . . . . . . . . . . . 43
13.2 Payment Due an Incompetent . . . . . . . . . . . . 43
13.3 Source of Payments . . . . . . . . . . . . . . . . 43
13.4 Plan Not a Contract of Employment. . . . . . . . . 43
13.5 Applicable Law . . . . . . . . . . . . . . . . . . 43
13.6 Unclaimed Amounts. . . . . . . . . . . . . . . . . 44
13.7 Adoption of Plan by Subsidiary . . . . . . . . . . 44
ARTICLE XIV
Top Heavy Provisions
14.1 Application. . . . . . . . . . . . . . . . . . . . 44
14.2 Special Top Heavy Definitions. . . . . . . . . . . 44
14.3 Special Top Heavy Provisions . . . . . . . . . . . 51
14.4 Effect of Change in Applicable Legislation or
Regulation. . . . . . . . . . . . . . . . . . . . 55
SMITH CORONA CORPORATION
RETIREMENT SAVINGS AND INVESTMENT PLAN
AMENDMENT
WHEREAS, Smith Corona Corporation ("Company") has
adopted the Smith Corona Corporation Retirement Savings and
Investment Plan ("Plan"), effective July 1, 1989 and amended
and restated effective January 1, 1992, for the benefit of its
eligible employees and beneficiaries; and
WHEREAS, the Company has delegated to the Benefits
Administration Committee the right to adopt any amendment to
the Plan other than any amendment which substantially
increases the cost of the Plan to the Company; and
WHEREAS, the Company wishes to amend the Plan to
provide for the designation of an Investment Manager to
determine whether it is prudent to continue to permit
investment in Employer Securities under the Plan in the event
of the Company's bankruptcy.
NOW, THEREFORE, the Plan be, and it hereby is,
amended as follows:
1. Section 11.3 of the Plan is amended to add the
following sentences at the end thereof to read:
"In the event of the Employer's
bankruptcy, the Employer may designate an Investment Manager
to determine whether, under all relevant circumstances, it is
prudent to continue to permit Plan assets to be invested in
Employer Securities. Pending such a determination, all
Employer Contributions not already invested in Employer
Securities under Section 7.4(a) may, at the direction of the
Committee, be temporarily invested by the Trustee in the Money
Market Fund maintained by the Trustee."
IN WITNESS WHEREOF, under the authority of the
Board of Directors of the Company, this amendment to the Plan
has been executed as of the _______ day of July, 1995.
Benefits Administration Committee
By:__________________________________
David P. Verostko, Member
By:__________________________________
John A. Piontkowski, Member
ARTICLE I
Definitions
As used herein, unless otherwise defined or required by
the context, the following words and phrases shall have the
meanings indicated. Some of the words and phrases used in the
Plan are not defined in this Article I, but, for convenience are
defined as they are introduced into the text.
1.1 "Account" means a Member's Employee Contributions
Account, Compensation Deferral Contribution Account, Rollover
Contribution Account, and Employer Contribution Account, or any
such account or subaccount thereof, as the context requires.
1.2 "Affiliate" means any company which is related to
the Employer as a member of a controlled group of corporations in
accordance with Section 414(b) of the Code, as a trade or
business under common control in accordance with Section 414(c)
of the Code or members of an affiliated service group as defined
under Section 414(m) of the Code and any other entity required to
be aggregated with the Employer pursuant to Section 414(o) of the
Code.
1.3 "Appropriate Form" means the form prescribed by
the Committee for a particular purpose.
1.4 "Basic Contributions" means Compensation Deferral
Contributions that are eligible for matching by Employer
Contributions in accordance with Section 4.1 (Amount of Employer
Contributions).
1.5 "Basic Contributions Subaccount" means the
separate subaccount in the Compensation Deferral Contribution
Account maintained for a Member to record such Member's share of
the Trust attributable to Basic Contributions.
1.6 "Beneficiary" means the person or persons
designated by the Plan or by a Member under Section 2.5
(Beneficiary Designation) to receive benefits payable under the
Plan as a result of the Member's death.
1.7 "Board" or "Board of Directors" means the Board of
Directors of the Employer.
1.8 "Code" means the Internal Revenue Code of 1986, as
amended from time to time and references to sections thereof
shall be deemed to include any such sections as amended, modified
or renumbered.
1.9 "Committee" means the Benefits Administration
Committee of Smith Corona Corporation appointed in accordance
with Section 10.3 (Appointment of Committee).
1.10 "Compensation" means with respect to a Plan Year,
the sum of the amount reported by the Employer to the Internal
Revenue Service on Form W-2 as the Member's compensation for such
calendar year and the amount of any Compensation Deferral
Contributions made on such Member's behalf to the Plan and the
amount contributed by the Employer pursuant to a salary reduction
agreement which is not included in a Member's gross income under
Section 125 of the Code; but exclusive of termination or
severance pay, prizes, awards, grievance settlements, overseas
cost of living allowances, relocation allowances, mortgage
assistance, executive perquisites, stock options, and such other
extraordinary items or remuneration as the Committee shall
determine from time to time pursuant to such uniform and
nondiscriminatory rules as it shall adopt. For the period of
January 1, 1989 to December 31, 1993 the Compensation of each
Employee taken into account under the Plan for any Plan Year
shall not exceed $200,000 as thereafter adjusted for inflation in
accordance with Section 415(d) of the Code. On and after January
1, 1994 the Compensation of each Employee taken into account
under the Plan for any Plan Year shall not exceed $150,000 as
thereafter adjusted for inflation in accordance with Section
415(d) of the Code. If the Plan determines Compensation for a
Plan Year less than 12 calendar months, then the limitation shall
be equal to the annual compensation limitation determined by
multiplying the limitation by the ratio obtained by dividing the
number of full months in such Plan Year by 12. In determining
the Compensation of a Member for purposes of the annual
limitation, the rules of Section 414(q)(6) of the Code shall
apply except in applying such rules, the term "family" shall
include only the spouse of the Member and any lineal descendants
of the Member who have not attained age 19 before the close of
the applicable Plan Year. If, as a result of the application of
such rules, the annual limitation on Compensation is exceeded,
then the limitation shall be prorated among the affected
individuals in proportion to each such individual's Compensation.
1.11 "Compensation Deferral Contributions" means
contributions made by the Employer pursuant to an election by the
Member to reduce the cash compensation otherwise currently
payable to such Member by an equivalent amount, in accordance
with the provisions of Section 3.1 (Compensation Deferral
Contributions).
1.12 "Compensation Deferral Contributions Account"
means the separate account maintained for a Member to record such
Member's share of the Trust Fund attributable to Compensation
Deferral Contributions made on such Member's behalf.
1.13 "Effective Date" means July 1, 1989.
1.14 "Eligible Employee" means an employee who (i) has
attained age 21 and (ii) has been credited with at least 1,000
Hours of Service during a consecutive twelve-month period,
excluding an individual who is covered by a collective bargaining
agreement between the Employer and any union unless participation
by such employee in the Plan has been agreed to by the parties to
such agreement and also excluding any Employee who is a
nonresident alien with no earned income from the Employer which
constitutes income from sources within the United States. The
computation period for eligibility shall mean the 12 consecutive
month period beginning on an Employee's employment date and
thereafter the Plan Year starting with the Plan Year which
includes the first anniversary of the Employee's employment date.
An Employee who is credited with 1,000 Hours of Service in both
of the foregoing computation periods will be credited with two
years of Service for eligibility purposes.
1.15 "Employee" means a person (but not including a
person acting only as a director) who is employed by the Employer
and excluding any "leased employee" within the meaning of Section
414(n)(2) of the Code.
1.16 "Employee Contributions" means after tax
contributions that were made by a Member under the Prior Plan
prior to January 1, 1989 and were transferred to this Plan.
1.17 "Employee Contributions Account" means the
separate account maintained for a Member to record such Member's
share of the Trust Fund attributable to the Member's Employee
Contributions. The Employee Contributions Account of each Member
will consist of a subaccount for basic Employee Contributions
that were eligible for matching by Employer Contributions and a
subaccount for supplemental Employee contributions that were not
eligible for matching by Employer Contributions.
1.18 "Employer" means Histacount Corporation.
1.19 "Employer Contributions" means the Employer
contributions made to the Trust Fund pursuant to Article IV
(Employer Contributions).
1.20 "Employer Contribution Account" means the
separate Account maintained for a Member to record such Member's
share of the Trust Fund attributable to Employer Contributions
made on such Member's behalf.
1.21 "Employer Securities" means the common stock of
Smith Corona Corporation.
1.22 "Enrollment Date" means January 1 or July 1 of
any Plan Year or such other time designated by the Committee.
1.23 "Enrollment Period" means the period commencing
on a Enrollment Date and ending on the next following Enrollment
Date.
1.24 "ERISA" means Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as amended from time to
time.
1.25 "Hour of Service" means each hour for which an
Employee is paid, or entitled to payment, or receives earned
income from an Employer or an Affiliate:
(i) for performance of duties;
(ii) on account of a period of time which no
duties were performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness,
jury duty, military duty or authorized Leave of Absence, provided
that, except in the case of an Authorized Leave of Absence, no
more than 501 Hours of Service shall be credited for any single
continuous period during which an Employee performs no duty, and
provided that no Hours of Service shall be credited for periods
of time in respect of which an Employee receives severance pay or
for payments made or due under a plan maintained solely for the
purpose of complying with applicable workers' compensation,
unemployment compensation or disability insurance laws, or for
reimbursement of medical expenses; and
(iii) for which back pay, irrespective of
mitigation of damages, is awarded or agreed to by the Employer;
provided that Hours of Service credited under (i) or (ii) shall
not be credited under (iii).
Hours of Service credited to an Employee for the
performance of duties will be credited to the computation period
in which the duties are performed. The determination of Hours of
Service for reasons other than the performance of duties shall be
calculated and credited in accordance with the provisions of
Labor Department Regulations Section 2530.200b-2(b) and (c), and
Hours of Service shall be credited to the computation periods to
which the award or agreement pertains. Except in the case of an
authorized Leave of Absence, not more than 501 Hours of Service
shall be credited for any continuous period during which an
Employee performs no duty or, in the case of service required to
be credited for payments of back pay awarded or agreed to, for a
period during which an employee did not or would not have
performed duties.
To the extent not credited above, for periods of an
authorized Leave of Absence of an Employee shall be credited with
a number of Hours of Service for each week of such authorized
Leave of Absence equal to the Employee's weekly average number of
Hours of Service scheduled for the six-week period immediately
preceding such authorized Leave of Absence.
1.26 "Initial Enrollment Date" means the earliest date
following the Effective Date set by the Committee for Eligible
Employees to apply to become Members of the Plan.
1.27 "Investment Fund" means the Money Market Fund,
the Equity Index Fund, the Smith Corona Corporation Common Stock
Fund or the Fixed Income Fund, as described in Section 7.1
(Investment of Accounts Other than Employer Contribution
Accounts).
1.28 "Investment Manager" means the individual and/or
other entity appointed in accordance with Section 11.3
(Investment Manager) who has acknowledged in writing that such
individual is a fiduciary with respect to the Plan and who is:
(a) registered as an investment adviser under the
Investment Advisers Act of 1940, or
(b) a bank, as defined in such Act, or
(c) an insurance company qualified to manage,
assign or dispose of assets of pension plans.
1.29 "Leave of Absence" means an absence or
interruption of service approved by the Committee under uniform
and nondiscriminatory rules and procedures. Members on leave of
absence for service in the Armed Forces of the United States,
however, shall be deemed to have been on a Leave of Absence,
provided they return to service with an Employer within the
required time limitations set forth in the then applicable laws
governing reemployment rights of persons inducted, or who have
enlisted, in the Armed Forces of the United States.
1.30 "Maturity Date" means the last day of the second
Plan Year following the Plan Year with respect to which the
contributions were made; provided that the last day of a Plan
year following the Plan Year with respect to which such
contributions are made shall be counted to determine the Maturity
Date only if the Member is an Employee or the employee of an
Affiliate or is on Leave of Absence on such date.
1.31 "Member" means an Eligible Employee who has
become a member of the Plan in accordance with Article II
(Eligibility and Membership). Each Member shall continue to be
such until the later of the date such Member ceases to be an
Eligible Employee or such Member's Accounts have been completely
distributed.
1.32 "Parental Leave" means a period not in excess of
two (2) years commencing after December 31, 1984 during which an
individual is absent from work for any period:
(1) by reason of the pregnancy of the individual,
(2) by reason of the birth of a child of the
individual,
(3) by reason of the placement of a child with
the individual in connection with the adoption of such child by
such individual, or
(4) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
An absence from work shall not be a Parental Leave unless the
Employee furnishes the Plan Administrator such timely information
as may reasonably be required to establish that the absence from
work was for one of the reasons specified in this Section 1.32
and the number of days for which there was such an absence.
Nothing contained herein shall be construed to establish an
Employer policy of treating a Parental Leave as a Leave of
Absence.
1.33 "Plan" means the Smith Corona Corporation
Retirement Savings and Investment Plan as set forth herein or as
amended from time to time.
1.34 "Plan Year" means the calendar year except the
first Plan Year means the period between July 1, 1989 and
December 31, 1989.
1.35 "Prior Plan" means the Retirement Savings and
Investment Plan of SCM Corporation.
1.36 "Required Beginning Date" means April 1 of the
calendar year following the Plan Year in which occurs the date on
which the Member attains the age of 70-1/2 years.
1.37 "Retirement Age" means the date such Member
attains age 65.
1.38 "Rollover Contribution" means an amount which is
transferred from another plan to this Plan, in accordance with
the provisions of Section 2.7 (Rollover Contributions From Other
Plans).
1.39 "Rollover Contribution Account" means the
separate Account maintained for a Member to record such Member's
share of the Trust Fund attributable to any Rollover
Contributions made to the Plan on his behalf.
1.40 "Service" means the period of employment
beginning on the first day the Eligible Employee performs duties
for the Employer or an Affiliate and ending on the day of quit,
retirement, discharge or death, two years after the commencement
of absence on account of Parental Leave, or one year after an
absence for any other reason. All prior periods of employment
with the Employer or an Affiliate, and breaks in employment of
less than one year shall be included in Service. If a break in
employment of not more than two years is on account of Parental
Leave not more than one year of Service shall be credited to an
Eligible Employee for a period of Parental Leave.
1.41 "Specific Involuntary Termination" means a
termination by the Employer without cause following written
notice from the Employer to the Member advising that the Member's
position is being eliminated in the immediate future without
cause or a resignation on account of (i) a material reduction in
position or compensation, or (ii) a required geographic
relocation of more than 50 miles.
1.42 "Supplemental Contributions" means Compensation
Deferral Contributions that are not eligible for matching by
Employer Contributions in accordance with Section 4.1 (Amount of
Employer Contributions).
1.43 "Supplemental Contributions Subaccount" means the
separate subaccount in a Compensation Deferral Contributions
Account maintained to record a Member's share of the Trust Fund
attributable to Supplemental Contributions.
1.44 "Suspense Account" means the separate account
maintained for a Member who had monies credited to such account
pursuant to Section 4.5 (Limitation on Annual Additions),
reflecting the current dollar value of such credit.
1.45 "Total and Permanent Disability" means permanent
incapacity which results in a Member being unable to engage in
regular employment or occupation by reason of any medically
demonstrable physical or mental condition acceptable to the
Committee on a nondiscriminatory basis and which would entitle
the Member to benefits under Employer's long-term disability
plan, if any, or to Social Security disability benefits as
evidenced by a disability award letter. However, no Member shall
be deemed to be disabled if such incapacity (a) resulted from or
consists of habitual drunkenness or addiction to narcotics, or
(b) was incurred, suffered or occurred while the Member was
engaged in, or resulted from having engaged in, a criminal
enterprise, or (c) was intentionally self-inflicted, or (d) arose
out of service in the armed forces of any country.
1.46 "Trustee" means the corporate trustee appointed
from time to time by the Company to administer the Trust Fund in
accordance with Section 11.2 (Trustee).
1.47 "Trust Fund" means the trust fund established in
accordance with Section 11.1 (Trust Fund) from which benefits
provided under this Plan will be paid.
1.48 "Valuation Date" means the last business day of
each calendar month on which the New York Stock Exchange is open
for trading.
1.49 "Use of Masculine Pronoun". The use of the
masculine pronoun shall include the feminine and the singular
shall include the plural.
ARTICLE II
Eligibility and Membership
2.1 Members on the Effective Date. Each person who
was a member of the Prior Plan immediately before the Effective
Date shall continue as a Member of the Plan on the Effective
Date.
2.2 Eligible Employees on and after the Effective
Date. On and after the Effective Date an Eligible Employee may
elect to become a Member on the Initial Enrollment Date or any
Enrollment Date thereafter. Notwithstanding the foregoing, a
former Eligible Employee who is reemployed as an Eligible
Employee following a separation from Service, shall be eligible
to become a Member of the Plan upon reemployment. Such
reemployed Eligible Employee may rejoin the Plan on an Enrollment
Date effective as of the start of first full payroll period after
his re-enrollment. If a former Employee who was credited with at
least 1,000 Hours of Service in an eligibility computation
period, separates from Service prior to attaining age 21 and is
reemployed as an Employee before the greater of (a) a period of
five consecutive twelve-month periods starting with his
separation of Service or (b) the period of Service prior to his
separation, shall be eligible to become a Member of the Plan on
the later of his attainment of age 21 or his reemployment date.
Such reemployed Employee may join the Plan on an Enrollment Date
effective as of the start of the first full payroll period after
his re-enrollment. Each other former Employee who separates from
Service prior to becoming an Eligible Employee, shall be treated
as a new Employee upon reemployment.
2.3 Completion of Appropriate Form. In order to
become a Member on any Enrollment Date, an Eligible Employee must
complete and return the Appropriate Form to the Committee at
least 30 days (or such other period as the Committee may
prescribe) prior to that Enrollment Date.
2.4 Elections Upon Becoming a Member. The Eligible
Employee, in completing the Appropriate Form specified in Section
2.3, shall (i) authorize Employer to reduce current compensation
for Compensation Deferral Contributions pursuant to Section 3.1
(Compensation Deferral Contributions), (ii) make an investment
election from among those options enumerated in Section 7.1
(Investment of Accounts Other Than Employer Contribution
Accounts), and (iii) designate a Beneficiary in accordance with
Section 2.5 (Beneficiary Designation). Any such payroll
authorization, investment election or Beneficiary designation
shall remain in effect until changed by notice to the Committee
on the Appropriate Form, subject to the provisions of the Plan.
2.5 Beneficiary Designation. Each Member shall
designate a Beneficiary on the Appropriate Form provided by the
Committee. The designated Beneficiary may be an individual,
estate or trust; however, if the Member is married at the time of
such Member's death, such Member's surviving spouse shall
automatically be such Member's sole Beneficiary unless the spouse
has consented in writing in accordance with Section 9.9 (Spousal
Consent) to a designation of a different Beneficiary. If more
than one individual or trust is named, the Member shall indicate
the shares and/or precedence of each individual or trust so
named. Any Beneficiary so designated may be changed by the
Member at any time (subject to his spouse's consent, if
applicable) by signing and filing the Appropriate Form with the
Committee.
In the event that no Beneficiary had been designated or
that no designated Beneficiary survives the Member, the following
Beneficiaries (if then living) shall be deemed to have been
designated in the following priority: (1) spouse, (2) children,
including adopted children and stepchildren, in equal shares, (3)
parents, in equal shares, of the Member's surviving parent, if
only one parent survives, and (4) Member's estate.
2.6 Transfers to or from Non-Covered Status. If a
Member ceases to meet the definition of Eligible Employee as set
forth in Section 1.14 (Eligible Employee) but continues to be an
Employee or an employee of an Affiliate, such Member's right to
make or have contributions made on such Member's behalf to the
Plan shall be suspended. If, during the period of suspension, a
Member's employment with the Employer or an Affiliate terminates
for any reason, there shall be a distribution of such Member's
Accounts in accordance with the provisions of Article IX
(Distribution Upon Termination of Employment). If and when the
suspended Member again becomes an Eligible Employee, such Member
may resume having Compensation Deferral Contributions made on
such Member's behalf as of any payroll date thereafter by giving
written notice to the Committee on the Appropriate Form not less
than 30 days (or such other period as the Committee may
prescribe) prior to such payroll date.
If an Employee meets the definition of Eligible
Employee (Section 1.14), the Employee shall be eligible to
participate in the Plan on his Initial Enrollment Date or any
subsequent Enrollment Date.
2.7 Rollover Contributions From Other Plans. An
Eligible Employee or an individual who meets the definition of
Eligible Employee in Section 1.14 except for the age or service
requirements, who is in receipt of a distribution of cash or
Employer Securities which is eligible to be "rolled over" to a
qualified plan in accordance with applicable Code sections may,
in accordance with and subject to such rules and procedures
approved by the Committee, transfer all or part of such
distribution into the Plan; provided, that the transfer is in
conformity with requirements set forth in the Code.
Upon approval by the Committee, the amount transferred
to the Plan shall be deposited in the Trust Fund in cash or in
Employer Securities and shall be credited to a Rollover
Contribution Account. For purposes of this Section, Rollover
Contributions shall include, on and after January 1, 1993,
optional direct transfers of all or a portion of an eligible
rollover distribution as provided for in Section 401(a)(31) of
the Code.
If a Rollover Contribution is made on behalf of an
individual who has not yet become a Member, such individual shall
be deemed a Member upon the establishment of the Rollover
Contribution Account; however, participation in the Plan shall be
limited to the Rollover Contribution Account until the other
requirements for membership under this Article II are fulfilled.
ARTICLE III
Compensation Deferral Contributions
3.1 Compensation Deferral Contributions. Each Member
who is an Eligible Employee may elect to have the Employer make
Compensation Deferral Contributions not to exceed $7,000 per year
(subject to adjustment for inflation in accordance with Section
415(d) of the Code) to the Plan on such Member's behalf to be
credited to such Member's Compensation Deferral Contributions
Accounts, in which case the cash compensation otherwise payable
by the Employer to the Member shall be reduced by an amount equal
to the Compensation Deferral Contributions so made. Subject to
the limitations prescribed in Section 3.4, the amount of
Compensation Deferral Contributions in any payroll period shall
be in whole percentages from 2% to 12% of the Member's
Compensation as the Member shall designate (or such greater or
lesser percentages as the Committee may from time to time
prescribe for the Plan). If the Compensation Deferral
Contributions of a Member exceeds the annual dollar limit of this
Section 3.1 applicable for a Plan Year, the excess amount and the
income, if any, allocable thereto shall be distributed to the
Member not later than the April 15 following the close of the
taxable year of the Member.
3.2 Changes and Suspension of Contributions. Subject
to Section 3.1, Compensation Deferral Contributions made on a
Member's behalf may be increased or decreased by giving 30 days'
written notice to the Committee on the Appropriate Form,
effective the next following Enrollment Date. Compensation
Deferral Contributions may be suspended effective at the
beginning of the next payroll period, by giving 10 days' written
notice to the Committee. A Member who has suspended Compensation
Deferral Contributions may resume having such contributions made
on his or her behalf commencing on any subsequent Enrollment Date
by giving 30 days' written notice to the Committee on the
Appropriate Form.
3.3 Transfer of Contributions to Trustee.
Contributions made under this Article III will be transferred to
the Trustee as soon as reasonably possible following the month in
which the Member's cash compensation is reduced; provided that
all Compensation Deferral Contributions for a Plan Year shall be
transferred to the Trustee not later than 90 days from the date
on which such amounts would otherwise have been paid as
compensation.
3.4 Limitation on Compensation Deferral Contributions.
(a) Notwithstanding the foregoing provisions of this
Article III, the Committee in its sole discretion shall limit the
amount of Compensation Deferral Contributions made on behalf of
each "Highly Compensated Employee" (as defined below) for each
Plan Year to the extent necessary to insure that the
nondiscrimination requirements of Section 401(k) of the Code are
satisfied, to wit that (A) the Deferral Percentage by eligible
Highly Compensated Employees for such Plan Year may not exceed
125 percent of the Deferral Percentage of all other Eligible
Employees, or alternatively, (B) the Deferral Percentage of the
eligible Highly Compensated Employees in excess of that of all
other Eligible Employees may not be more than 2 percentage points
and the Deferral Percentage for eligible Highly Compensated
Employees may not be more than two times the Deferral Percentage
of all other Eligible Employees. If two or more plans which
include a cash or deferred arrangement are considered as one plan
for purposes of Section 401(a)(4) or Section 410(b) of the Code,
the cash or deferred arrangements included in such plans shall be
treated as one arrangement for determining if the
nondiscrimination requirements of Section 401(k) of the Code are
satisfied.
For purposes of this Section 3.4, the term "Deferral
Percentage" means the average of the ratios (calculated
separately for each Eligible Employee) of the Compensation
Deferral Contributions made under the Plan on behalf of each
Eligible Employee for the Plan Year divided by the Eligible
Employee's Compensation for the Plan Year or portion thereof
during which he was a Member. If an eligible Highly Compensated
Employee participates under two or more cash or deferred
arrangements of the Employer or Affiliate, for purposes of
determining the Deferral Percentage with respect to such Highly
Compensated Employee, all such cash or deferred arrangements
shall be treated as one cash or deferred arrangement.
For purposes of this Section 3.4 and Section 4.2, the
term "Highly Compensated Employee" with respect to any Plan Year
means an individual who at any time during the Plan Year or the
immediately preceding Plan Year: (1) was a 5-percent owner of
the Employer (as defined for top-heavy plans under Sec. 416(i) of
the Code); (2) earned more than $75,000 (subject to adjustment at
the same time and in the same manner as under Section 4.15(d) of
the Code) in annual Compensation from the Employer or an
Affiliate; (3) earned more than $50,000 (subject to adjust at the
same time and in the same manner as under Section 415(d) of the
Code) in annual Compensation from the Employer or an Affiliate
and was in the top 20% of Employees ranked by Compensation;
(4) was an officer of the Employer or an Affiliate (no more than
50 officers or, if fewer, the greater of 3 or 10% of all
Employees) and received Compensation in excess of 50% of the
applicable dollar limit on benefits from a defined benefit plan,
but if no officer receives Compensation in excess of such amount,
the highest paid officer for the applicable period shall be a
Highly Compensated Employee. Notwithstanding the above, an
individual, other than one described in clause (1) above, who is
not a Highly Compensated Employee during the immediately
preceding Plan Year will not be considered a Highly Compensated
Employee in the Plan Year unless such individual is one of the
top 100 Employees ranked by Compensation for the Plan Year. If
an Employee is a family member of either an individual described
in clause (1) or a Highly Compensated Employee who is one of the
10 most Highly Compensated Employees ranked by Compensation, then
the family member and such individual shall be aggregated and
treated as a single Employee. For this purpose, the term family
member includes the spouse, lineal ascendants and descendants of
such individual and the spouses of such lineal ascendants and
descendants of such individuals and the spouses of such lineal
ascendants or descendants. A Highly Compensated Employee shall
also include any former Employee who separated from Service in a
Plan Year preceding the current Plan Year and who was a Highly
Compensated Employee in either (i) the Plan Year in which his
separation from Service occurred or (ii) any Plan Year ending on
or after such former Employee's 55th birthday.
(b) The Committee may, in accordance with uniform and
nondiscriminatory rules it establishes from time to time, require
that Members who are among the Highly Compensated Employees for
the Plan Year make Compensation Deferral Contributions elections
following and/or preceding the completion of such elections by
all other Eligible Employees and the Committee may (A) limit the
amount by which each Member who is among the Highly Compensated
Employees may elect to reduce his or her Compensation, and (B)
subject to Section 402(g) of the Code permit each other Eligible
Employee to elect to reduce his or her Compensation within higher
limits than those for Highly Compensated Employees.
(c) In the event that it is determined prior to the
close of any Enrollment Period that the amount of Compensation
Deferral Contributions elected to be made with respect to such
Enrollment Period would cause the limitation contained in Section
3.4(a) to be exceed for the Plan Year in which such Enrollment
Period occurs, the amount of Compensation Deferral Contributions
allowed to be made on behalf of Highly Compensated Employees for
such Enrollment Period shall be reduced. The Highly Compensated
Employees to whom the reduction is applicable, and the amount of
the excess Compensation Deferral Contributions, shall be
determined by reducing the actual deferral ratio of the Highly
Compensated Employee with the highest Deferral Percentage to the
extent required to--
(1) enable the arrangement to satisfy the limitation
set forth in Section 3.4(a); or
(2) cause such Highly Compensated Employee's Deferral
Percentage to equal the ratio of the Highly Compensated Employee
with the next highest Deferral Percentage.
The process described in paragraph (1) or (2) shall be repeated
until the limitation set forth in Section 3.4(a) is satisfied.
For purposes of this process of determining the excess
Compensation Deferral Contributions of affected Highly
Compensated Employees, the family aggregation rules of Section
414(q)(6) of the Code shall be applied to Members who are 5 -
percent owners of the Employer or one of the 10 most Highly
Compensated Employees ranked by Compensation.
(d) If the Committee determines that the limitation
contained in Section 3.4(a) has not been met for any Plan Year,
the Committee may return the excess Compensation Deferral
Contributions of Members who are Highly Compensated Employees
(calculated in the manner set forth in Section 3.4(c)) to such
Members within the 12-month period beginning after the last day
of the Plan Year for which such contributions were made). The
amount of such excess Compensation Deferral Contributions shall
be adjusted to reflect any income or loss allocable to such
excess for the Plan Year and the gap period determined under any
method permitted by Treas. Reg. Section 1.401(k)-1(f)(4)(ii).
(e) For purposes of Section 3.4(b), (c) and (d), the
Employer is permitted to determined whether Members are in the
category of Highly Compensated Employees or other Eligible
Employees based on the Member's Compensation for the immediately
preceding Plan Year or on estimated Compensation for the Current
Plan Year in accordance with uniform and nondiscriminatory rules
whenever information regarding actual Compensation for the Plan
Year is not reasonably available at the time the amount of a
contribution hereunder is determined or limited.
ARTICLE IV
Employer Contributions
4.1 Amount of Employer Contributions. The Employer
shall make contributions to the Plan, with respect to each
payroll period on behalf of each Member who is an Eligible
Employee, equal to 50% (or such greater percentage, not exceeding
100%, as the Board may from time to time authorize) of that
portion of the Member's Compensation Deferral Contributions which
do not exceed 6% (or such other percentage as the Board may from
time to time permit) of Compensation in such payroll period. The
Board of Directors may, in its discretion, temporarily
discontinue Employer Contributions with respect to Member's
Compensation Deferral Contributions (which are Basic
Contributions) for Compensation not yet earned on the date such
Employer Contributions are temporarily discontinued. The Board
of Directors may also, in its discretion, authorize to be made as
of the close of a Plan Year a special Employer Contribution with
respect to some or all Members to be a "qualified nonelective
contribution" as defined in Section 401(m)(4) of the Code and
applicable regulations.
4.2 Limitations on Matching Contributions.
(a) Any other provisions in this Article IV to the
contrary notwithstanding, the Committee shall limit the amount of
matching Employer Contributions to the Plan to insure that the
Contributions Percentage (as hereinafter defined) for eligible
Highly Compensated Employees does not exceed the greater of (1)
125 percent of the Contributions Percentage for all other
Eligible Employees or (2) the lesser of (A) 200 percent of the
Contributions Percentage for all other Eligible Employees or (B)
the Contributions Percentage for such Eligible Employees plus 2
percentage points.
(b) The Contributions Percentage is the average of the
ratios (calculated separately for each Eligible Employee) of:
The Employer Contributions (excluding Compensation Deferral
Contributions and special Employer Contributions which are
qualified nonelective contributions) made under the Plan on
behalf of each Eligible Employee for the Plan Year and all other
matching contributions and employee contributions, if any, made
by the Employer for, on behalf of, the Eligible Employee under
any other qualified plan aggregated as a single plan for purposes
of Section 410(b) of the Code divided by the Eligible Employee's
Compensation for the Plan Year or portion thereof during which he
was a Member. If an eligible Highly Compensated Employee
participates in two or more plans of the Employer or Affiliate to
which either employee contributions or employer matching
contributions are made, all such contributions shall be
aggregated to determine the Contribution Percentage with respect
to such Highly Compensated Employee.
(c) The rules of Treas. Reg. Section 1.401(m)-z shall
apply to determine if the multiple use of the alternative
limitation is exceeded for any Plan Year and if such circumstance
occurs, it must be corrected by one of the methods permitted by
Treas. Reg. Section 1.401(m)-z(c) as to the affected Highly
Compensated Employees.
(d) If the Committee determines that the limitations
contained in this Section 4.2 have not been met for any Plan
Year, the Committee may return the excess amounts to Members who
are Highly Compensated Employees (calculated by using the
leveling method in accordance with Section 401(m)(6)(c) of the
Code and applying to Members who are 5 - percent owners of the
Employer or one of the 10 most Highly Compensated Employees
ranked by Compensation the family aggregation rules of Section
414(q)(6) of the Code) within the 12-month period beginning after
the last day of the Plan Year for which the Employer
Contributions were made. The amount of such excess amounts shall
be adjusted to reflect any income or loss, if any, allocable to
such excess amounts for the Plan Year and the gap period
determined under any method permitted by Treas. Reg. Section
1.401(m)-1(e)(3)(ii).
4.3 Treatment of Forfeitures. Any amounts forfeited
in accordance with Sections 6.4 (Forfeitures) and 13.6 (Unclaimed
Amounts) shall be applied as a credit towards the amount of
Employer Contributions otherwise required under Section 4.1.
However, if pursuant to Section 4.1, Employer Contributions are
temporarily discontinued, for Plan Years following the Plan Year
in which such temporary discontinuance occurs, any such forfeited
amounts in excess of the amounts required to restore forfeited
amounts to the Employer Contribution Accounts of Members who are
reemployed in accordance with Section 6.4 shall be allocated as
of the last day of the Plan Year to Members' Employer
Contribution Accounts in an amount equal to the amount of such
forfeited amounts available for allocation multiplied by a
fraction the numerator of which is the Members' Compensation
Deferral Contributions for the Plan Year not in excess of six
percent of such Member's Compensation and the denominator of
which is the aggregate of all Members' Compensation Deferral
Contributions not in excess of six percent of all such Members'
Compensation.
4.4 Transfer of Contributions to Trustee. Employer
Contributions under this Article IV with respect to each payroll
period shall be paid to the Trustee as soon as practicable after
the close of the month in which such payroll period ends (but in
no event later than 60 days after the last day of such month) and
such Employer Contributions (inclusive of the credit for
forfeitures as provided in Section 4.3) shall be credited as of
the last day of such month to each Member's Employer Contribution
Account.
4.5 Limitation of Annual Additions.
(a) Notwithstanding anything herein to the contrary,
in no event shall the Annual Additions (as hereinafter defined)
with respect to any Member in any Plan Year exceed the Maximum
Annual Addition. A Member's "Maximum Annual Additions" means the
lesser of (i) 25% of the Member's compensation within the meaning
of Section 415(c)(3) of the Code or (ii) $30,000 or, if greater,
one-fourth of the defined benefit dollar limit set forth in
Section 415(b)(1) of the Code in effect for such Plan Year.
(b) For purposes of this Section 4.5 the term "Annual
Additions" means the sum for any Plan year of:
(i) Compensation Deferral Contributions made in
accordance with Section 3.1 (Compensation Deferral
Contributions).
(ii) Employer Contributions including forfeitures
as applied in accordance with Section 4.1 (Amount of Employer
Contributions) and Section 4.3 (Treatment of Forfeitures).
(iii) The amount of annual additions (as defined in
Section 415(c)(2) of the Code) under other plans, if any, of the
Employer or Affiliate including (a) qualified defined
contribution plans, (b) qualified defined benefit plans with
individual medical benefit accounts (as defined in Section 415(l)
of the Code) and (c) welfare benefit plans with post-retirement
medical benefits for key employees (as defined in Section
419A(d)(2) of the Code.
(c) If the Member's Annual Additions exceed the
Maximum Annual Additions limitations in accordance with this
Section 4.5, such amounts shall be handled as provided in Section
4.5(f).
(d) Combined Fraction.
(1) Notwithstanding the foregoing, if a Member is
a participant in any qualified defined benefit plan maintained by
an Employer or an Affiliate, the sum of the "Defined Benefit Plan
Fraction" (as defined below) and the "Defined Contribution Plan
Fraction" (as defined below) for such Member shall not exceed 1.0
(called "Combined Fraction"). If for any Plan Year the Combined
Fraction of a Member exceeds 1.0 after application of provisions
for limitation of benefits under all such qualified defined
benefit plans, the Maximum Annual Additions of such Member shall
be reduced as provided in Section 4.5(c) to the extent necessary
to reduce the Combined Fraction of such Member to 1.0.
(2) The "Defined Benefit Plan Fraction" applicable to
a Member for any Plan Year is a fraction, the numerator of which
is the sum of the Projected Annual Benefit of the Member under
all of the qualified defined benefit plans maintained by the
Employer or an Affiliate (whether or not terminated) in which
such Member participates (determined as of the close of the Plan
Year) and the denominator of which is the lesser of (i) the
product of 1.25 multiplied by the maximum dollar limitation on a
Member's Projected Annual Benefit under Sections 415(b) and (d)
of the Code, or (ii) 140 percent of the Member's highest covered
compensation, including any adjustments under Section 415(b) of
the Code. Notwithstanding the above, if the member was a
participant as of the first day of the first Plan Year after
December 31, 1986, in one or more defined benefit plans
maintained by the Employer or an Affiliate which were in
existence on May 6, 1986, the denominator of the fraction will
not be less than 125 percent of the sum of the annual benefits
under such plans which the Member had accrued as of the close of
the last limitation year beginning before January 1, 1987,
disregarding any changes in the terms and conditions of the plan
after May 5, 1986. The preceding sentence applies only if the
defined benefits plans individually and in the aggregate
satisfied the requirements of Section 415 of the Code for all
limitation years beginning before January 1, 1987.
(3) The "Defined Contribution Plan Fraction"
applicable to a Member for any Plan Year is a fraction, the
numerator of which is the sum of the annual additions to the
Member's Account under all the defined contribution plans
(whether or not terminated) maintained by the Employer or an
Affiliate for the current and all prior Plan Years (including the
annual additions attributable to a Member's nondeductible
employee contributions to all defined benefit plans, whether or
not terminated, maintained by the Employer or an Affiliate, and
the annual additions attributable to all welfare benefit funds,
as defined in Section 419(e) of the Code, and individual medical
accounts, as defined in Section 415(1)(2) of the Code, maintained
by the Employer or an Affiliate), and the denominator of which is
the sum of the maximum aggregate amounts for the current and all
prior Plan Years of Service with the Employer or an Affiliate
(regardless of whether a defined contribution plan was maintained
by the Employer). The maximum aggregate amount in any limitation
year is the lesser of 125 percent of the dollar limitation
determined under Sections 415(b) and (d) of the Code in effect
under Section 415(c)(1)(A) of the Code or 35 percent of the
Member's Compensation for such year.
If the Employee was a participant as of the end of the
first day of the first limitation year beginning after
December 31, 1986, in one or more defined contributions plans
maintained by the Employer which was in existence on May 6, 1986,
the numerator of this fraction will be adjusted if the sum of
this fraction and the defined benefit fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (1) the excess of the sum of
the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of
this fraction. The adjustment is calculated using the fractions
as they would be computed as of the end of the last limitation
year beginning before January 1, 1987, and disregarding any
changes in the terms and conditions of the plan made after May 5,
1986, but using the Section 415 limitation applicable to the
first limitation year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning
before January 1, 1987, shall not be recomputed to treat all
employee contributions as annual additions.
(e) Definitions.
(1) "Highest Average Compensation" means the
average of a Member's high three consecutive Plan Years
(determined as of the close of the Plan Year) of employment with
the Employer (or the actual number of years of employment for
those Members) who are employed for less than three consecutive
years with the Employer).
(2) "Projected Annual Benefit" means the annual
benefit a Member would receive from employer contributions under
a defined benefit plan, adjusted, in the case of any benefit
payable in a form other than a single life annuity or a qualified
joint and survivor annuity, to the actuarial equivalent of a
single life annuity, assuming (i) the Member continues employment
until reaching the plan's normal retirement age (or the Member's
current age, if later), (ii) compensation remains unchanged and
(iii) all other relevant factors used to determine benefits under
the plan remain constant in the future.
(f) In the event that, notwithstanding the foregoing
provisions of this Section 4.5, the limitations with respect to
Annual Additions prescribed hereunder are exceeded with respect
to any Member and such excess arises as a consequence of
reasonable error in estimating a Member's compensation or such
other circumstances as the Secretary of Treasury shall permit,
the Employer Contribution portion including Compensation Deferral
Contributions, if any, of such excess shall be held in a Suspense
Account and, if such Member remains a Member, shall be used to
reduce Employer Contributions for such Member for the succeeding
Plan Years, and, if such Member ceases participating in the Plan,
shall be used to reduce Employer Contributions for all Members in
the Plan Year of cessation and succeeding Plan Years, as
necessary.
(g) For purposes of this Section 4.5, the standard of
control for determining if a company is an Affiliate under
Section 414(b) and 414(c) of the Internal Revenue Code shall be
deemed to be "more than 50%" rather than "at least 30%."
ARTICLE V
Accounts
5.1 Separate Annual Class. A separate annual class
shall be contained under the Plan within the Employer
Contribution Account on behalf of each Member of each Plan Year
ending before January 1, 1989 for accounts attributable to
Employer Contributions for such Plan Year made under the Prior
Plan. Each such separate annual class shall be, and continue to
be separately identified up to its Maturity Date. As of the
Maturity Date of each separate annual class the balance to the
credit of the Member then held in such separate annual class
shall be transferred into the general Employer Contribution
Account.
5.2 Maintenance of Accounts. For each Member the
Committee shall, where applicable, maintain a separate
Compensation Deferral Contributions Account (with a Basic
Contributions Subaccount and a Supplemental Contributions
Subaccount), an Employer Contribution Account and a Rollover
Contribution Account. For Employee Contributions made prior to
January 1, 1989 which were not Compensation Deferral Contribution
Accounts the Committee shall continue to maintain a separate
Employee Contributions Account consisting of the Basic Employee
Contributions Subaccount and the Supplemental Employee
Contributions Subaccount under the Prior Plan.
5.3 Valuations. As of each Valuation Date, the
Committee shall cause to be adjusted the Employee Contributions
Account, if any, (including each subaccount thereunder), the
Compensation Deferral Contributions Account (including each
subaccount thereunder) the Employer Contribution Account
(including each remaining annual class thereunder, if any) and
the Rollover Contribution Account for each Member to reflect his
share of contributions (including for this purpose contributions
made after such Valuation Date but credited as of such Valuation
Date), amounts of principal and interest paid to the Plan with
respect to a loan made to such Member pursuant to Section 8.5,
withdrawals, distributions, forfeitures, income, expenses payable
from the Trust Fund and any increase or decrease in the value of
Trust Fund assets since the preceding Valuation Date. Each
separate account maintained for each loan made to a Member
pursuant to Section 8.5 shall be valued as of each Valuation Date
by adjusting the balance of the loan for the payment principal
thereunder.
ARTICLE VI
Vesting of Accounts
6.1 Employer Contribution Account. A Member's
interest in each separate annual class in his Employer
Contribution Account shall become 100% vested on the Maturity
Date of such separate annual class, provided he has not
terminated employment with the Company or an Affiliate prior to
such date. For this purpose, a Member's employment shall not be
considered terminated during a Leave of Absence. Prior to its
Maturity Date, a Member's interest in each separate annual class
shall be 0% vested, except upon completion of five years of
Service or as is otherwise provided in Section 6.3.
Effective for Plan Years commencing after December 31,
1988, annual class vesting, except the vesting of Employer
Contributions made under the Prior Plan before January 1, 1989,
is abolished and in place thereof a Member's entire Employer
Contribution Account (including unvested annual class
contributions made under the Prior Plan before January 1, 1989)
shall be vested when the Member has completed at least five years
of Service. However, nothing herein provided shall be construed
to delay the vesting of a separate annual class contribution made
under the Prior Plan before January 1, 1989 to the Employer
Contribution Account of a Member who has completed less than five
years of Service.
If a Member separates from Service before completing
five years of Service, such Member shall be deemed to have
received an immediate constructive cash-out distribution of his
entire nonvested Employer Contribution Account at separation
equal to zero dollars.
6.2 Other Accounts. Interests in Rollover
Contribution Accounts, Employee Contributions Accounts and
Compensation Deferral Contributions Accounts shall be fully
vested at all times.
6.3 Earlier Vesting in Employer Contribution Account.
Notwithstanding the foregoing, a Member's interest in his
Employer Contribution Account or in the separate annual classes,
if any, which have not reached their Maturity Date shall be fully
vested (i) on the date of termination of employment by reason of
death, Total and Permanent Disability, or Specific Involuntary
Termination (ii) when and if this Plan shall at any time be
terminated for any reason, (iii) upon the complete discontinuance
of contributions by the Employer hereunder, (iv) upon partial
termination of this Plan if such Member is a member affected by
such partial termination or (v) on the date a Member reaches
Retirement Age.
6.4 Forfeitures. A Member's Employer Contribution
Account which is not vested in accordance with this Article VI at
the time of Member's separation from Service shall be forfeited
as of the last day of the Plan Year in which the Member has a
separation from Service. However, if a Member who has separated
from Service is reemployed before the end of a period of five
consecutive Plan Years beginning with the Plan Year in which the
Member has a separation from Service and during which the Member
is not an Employee on the last day of each Plan Year, any
forfeited amounts shall be restored to the Member's Employer
Contribution Account without the necessity of the re-employed
Member to repay the previous distribution. For purposes of the
preceding sentence, any Plan Year in which a Member is absent
from work on the last day of the Plan Year by reason of a
Parental Leave shall not be counted as one of the Plan Years in
such a period of five consecutive Plan Years and the Plan Year
immediately following a Plan Year in which such Member is absent
from work on the last day of the Plan Year by reason of Parental
Leave shall be deemed to be consecutive.
Amounts required to be restored to the Employer Contri-
bution Accounts of a Member shall be reinstated, to the extent
not contributed by an Employer, out of amounts forfeited under
this Section 6.4 or Section 13.6 (Unclaimed Amounts) for the Plan
Year.
A Member who separates from Service shall have his
prior Service restored for purposes of vesting when he is
reemployed as an Employee if (a) he was vested when he separated
from Service or (b) he was not vested when he separated from
Service, but is reemployed as an Employee before the greater of
(i) a period of five consecutive 12-month periods starting with
his separation from Service or (ii) the period of Service prior
to his separation.
ARTICLE VII
Investment of Accounts
7.1 Investment of Accounts Other Than Employer Contri-
bution Accounts.
Upon becoming a Member, the Member shall direct that
Compensation Deferral Contributions and Rollover Contributions be
invested in any one or more of the following Investment Funds in
increments of at least 25%:
(a) The Money Market Fund, which is invested in open-
ended demand master notes of companies with minimum debt
rating of AA or better, certificates of deposit, time deposits,
commercial paper, collateralized repurchase agreements, treasury
bills, savings bank deposits and other cash balance instruments
(other than "Employer Securities") selected by the Trustee.
(b) The Equity Index Fund, which is invested primarily
in a portfolio of common stocks (other than "Employer Securities"
or securities of the Trustee)
constructed and maintained by the Trustee with the objective
of providing investment results which approximate the overall
performance of the common stocks included in the Standard &
Poor's 500 Composite Stock Index.
(c) The Smith Corona Corporation Common Stock Fund,
which is invested exclusively in Employer Securities.
(d) The Fixed Income Fund, which is invested in group
annuity contracts or other suitable investment medium selected by
the Trustee. This fund provides a fixed rate of return over a
period of not less than six months. Though not guaranteed, the
anticipated rate of return is projected prior to the commencement
of the following six month period.
The Employer, Committee or Trustee doesn't guarantee
the rate of return on any of the Investment Funds. The actual
rates of return will vary with the investment performance of the
Investment Fund(s) chosen by Members.
7.2 Redirection of Future Contributions. A Member's
investment direction under Section 7.1 may be changed once each
calendar quarter. To make an investment direction change, the
Member must give written notice to the Committee on the
Appropriate Form on or before, but not later than, the 26th day
of the month and the change will be effective as of the first day
of the month following the timely submission of the Appropriate
Form. Such a change in direction shall be as to future
Compensation Deferral Contributions only and shall not be
effective as to amounts previously contributed or invested. The
Appropriate Form, once submitted to the Committee, may not be
revoked.
7.3 Reinvestment of Prior Contributions.
(a) A Member may, by giving written notice to the
Committee on the Appropriate Form, on or before, but not later
than, the 26th day of a month, direct that 25%, 50%, 75% or 100%
of the total value in any Investment Fund of the Member's
Rollover Contribution Account, if any, Employee Contributions
Account, if any, and Compensation Deferral Contributions Account
be transferred from such Investment Fund to any other Investment
Fund (in increments of at least 25%) once each calendar quarter.
The value of any Account or portion thereof to be reinvested
shall be determined on the Valuation Date of the month of
transfer which shall be the month in which a timely submission of
the Appropriate Form is made. The Appropriate Form, once
submitted to the Committee, may not be revoked.
(b) The Committee may, in its sole discretion,
impose, at any time or from time to time, such restrictions on
the transfers of monies from one Investment Fund to another as it
deems necessary or appropriate.
7.4 Investment of Employer Contributions Accounts.
(a) Employer Contributions shall be invested initially
exclusively in Employer Securities through Smith Corona
Corporation Common Stock Fund.
(b) A Member, regardless of his vested status, who has
attained age 55 or more may, by giving written notice to the
Committee on the Appropriate Form, no later than the 15th day of
a month, direct that 25%, 50%, 75% or 100% of the total value of
his Employer Contributions Account invested in the Money Market
Fund (Fund A), the Equity Index Fund (Fund B), the Smith Corona
Corporation Common Stock Fund (Fund C) or the Fixed Income Fund
(Fund D) to be transferred from such Fund to any other Investment
Fund (in increments of at least 25%) once each calendar year.
The value of the Employer Contribution Account or portion thereof
to be reinvested shall be determined on the Valuation Date of the
month of transfer which, shall be the month in which a timely
submission of the Appropriate Form is made.
7.5 Statements of Accounts. Each Member shall be fur-
nished a quarterly statement of accounts. A like statement shall
be furnished to a Member upon any distribution being made under
the Plan.
7.6 Crediting of Contribution Accounts. Interests in
each of the Investment Funds shall be credited to each Member's
Accounts as units of value determined separately for each
Investment Fund, as follows:
(a) the initial value of a unit in each Investment
Fund shall be one dollar,
(b) the unit of value of each Investment Fund shall be
redetermined on each Valuation Date by dividing the then fair
market value of all of the assets of such Investment Fund by the
number of units therein then outstanding. Amounts held as a
result of forfeiture shall not be included in the value of the
Smith Corona Corporation Common Stock Fund in determining the
unit of value; and
(c) current Compensation Deferral Contributions,
Employer Contributions and Rollover Contributions will be
credited to the Member's Accounts as units of value, the number
of which is determined by dividing the dollar amount of the
contribution by the then current unit of value.
If a Suspense Account credited in accordance with
Section 4.5(f) is in existence on a Valuation Date, the number of
units of value in the Suspense Account shall be adjusted as of
each Valuation Date so that such an account does not participate
in the Trust's investment gains or losses. To the extent a
Member's Compensation Deferral Contributions Account is invested
pursuant to Section 8.5 in a loan to the Member, the Member's
Accounts shall be credited and charged directly with income,
gains, losses and expenses attributable to such loan as of each
Valuation Date and the value of such Account will be adjusted
through the date of a distribution to reflect the value of such
direct investments on the distribution date. The Member's loan
principal and interest payments (i) shall be credited to the
Member's Compensation Deferral Contributions Account or Employee
Contributions Account, as appropriate, as units of value, the
number of which is determined as of the Valuation Date coinciding
with or next following the date of such payment by dividing the
dollar amount of the payment by the then current unit of value
and (ii) shall be invested in accordance with the Member's
investment directions for future Compensation Deferral Contri-
butions pursuant to Section 7.2.
7.7 Correction of Error. In the event of an error in
the adjustment of a Member's Account, the Committee, in its sole
discretion, may correct such error by either crediting or
charging the adjustment required to make such correction to or
against forfeitures for the Plan Year or to or against income as
an expense of the Trust for the Plan Year in which the correction
is made, or if the Employer contributes an amount to correct any
such error, from such amount. Except as provided in this
Section, the Accounts of other Members shall not be readjusted on
account of such error.
ARTICLE VIII
Withdrawals and Loans During Employment
8.1 Withdrawal Options.
(a) Age 59-1/2. After a Member's attainment of age
59-1/2, a Member may make, in any twelve-month period, one
withdrawal of all or any portion of the value of the Member's
Compensation Deferral Contributions Account, Employee
Contributions Account, if any, Rollover Contribution Account, if
any, and the vested portion of his Employer Contribution Account
by filing the Appropriate Form with the Committee. Such a
withdrawal can be made for any reason. Unless waived by the
Committee, withdrawal by a Member who is married must be
consented to in writing by the Member's spouse.
(b) Hardships. In the event of Hardship (as defined
in Section 8.2), a Member may, by filing the Appropriate Form
with the Committee, elect to withdraw all or such portion of the
Member's Rollover Contribution Account, if any, as is needed on
account of such Hardship. Also, in the event of Hardship, a
Member who (i) has not yet attained age 59-1/2, (ii) has
withdrawn all funds to the maximum extent permitted under the
Plan, and (iii) is not eligible to make a loan under Section 8.5
may, by filing the Appropriate Form with the Committee, elect to
withdraw all or such portion of the Member's Compensation
Deferral Contributions Account (excluding earnings and
appreciation after December 31, 1988 attributable thereto) as is
needed on account of such Hardships. Unless waived by the
Committee, a hardship withdrawal by a Member who is married must
be consented to in writing by the Member's spouse.
(c) Employee Contributions Account. A Member may
withdraw, once in any twelve-month period, all or any portion of
the Member's Employee Contributions Account, if any, (excluding
earnings or appreciation attributable thereto) by filing the
Appropriate Form with the Committee. Such a withdrawal can be
made for any reason. Unless waived by the Committee, withdrawal
from a Member's Employee Contributions Account by a Member who is
married must be consented to in writing by the Member's spouse.
(d) No Other Withdrawals. Prior to a Member's
employment termination, no other withdrawals from the Member's
Account may be made.
8.2 Hardship Withdrawals.
(a) Frequency. Hardship withdrawals for any reason
other than payment of tuition and related educational fees may be
made only once in any twelve-month period.
(b) Verification of Need. Each request for a hardship
withdrawal must be accompanied by a statement signed by the
Member attesting that the financial need cannot be relieved,
(i) Through reimbursement or compensation by
insurance or otherwise,
(ii) By liquidation of the Member's assets
(including those assets of the Member's spouse and minor children
that are reasonably available to the Member) to the extent such
liquidation will not itself cause immediate and heavy financial
need,
(iii) By ceasing Compensation Deferral
Contributions under the Plan, or
(iv) By other distribution or nontaxable (at the
time of the loan) loans from any plan maintained by the Employer
or any other employer, or by borrowing from commercial sources on
reasonable commercial terms.
In the absence of contrary knowledge, the Committee
shall be entitled to rely on the Member's statement of need
without inquiry into the Member's financial circumstances or the
veracity of such statement.
(c) Determination of Hardship.
A withdrawal will be deemed to be a hardship
withdrawal if made on account of:
(i) Medical expenses incurred by the Member, the
Member's spouse, or any dependent of the Member,
(ii) Purchase (excluding mortgage payments) of a
principal residence for the Member,
(iii) Payment of tuition and related educational
fees for the next 12 months of post-secondary education for the
Member, the Member's spouse or any dependent of the Member.
(iv) The need to prevent the eviction of the
Member from the Member's principal residence or foreclosure on
the mortgage of the Member's principal residence,
(v) Such other immediate and heavy financial need
as the Commissioner of Internal Revenue may from time to time
publish by revenue rulings, notices and other documents of
general applicability, or
(vi) Any other immediate and heavy financial need
as determined on the basis of all relevant facts and
circumstances by the Committee in an objective and
nondiscriminatory manner in accordance with the requirements of
the Code and the applicable regulations and in accordance with
the following standards and principles:
(A) the need shall be due to an extra-
ordinary emergency,
(B) the need shall be heavy,
(C) the need shall be immediate,
(D) the need shall be for reasons of
hardship as commonly understood such as financial expenses and
not for entertainment or pleasure, and
(E) the need shall not fail to qualify as
immediate and heavy merely because such need was reasonably
foreseeable or voluntarily incurred.
8.3 Values. All withdrawals under Section 8.1 shall
be based on the values of Accounts as of the Valuation Date
coinciding with or next following the filing of the Appropriate
Form or the date of approval of the application by the Committee,
if later. Any withdrawal from an Account (or Subaccount thereof)
under Section 8.1 shall be charged proportionately against each
Investment Fund described in Article VII (Investment of Accounts)
in which such Account (or Subaccount thereof) is invested.
8.4 Payment of Withdrawals. Any amount withdrawn
under Section 8.1 shall be paid to a Member in a lump sum in
cash, as soon as practicable after the Valuation Date as of which
the withdrawal election is effective except that any withdrawal
other than for Hardship which involves Employer Securities shall
include whole numbers of Employer Securities unless the Member
requests otherwise and the Committee approves such request.
8.5 Loans. A Member may borrow for any purpose either
from his Compensation Deferral Contributions Account or from his
Employee Contributions Account (but not both and loans from
different accounts may not be outstanding at the same time) once
in any three-year period an amount which shall be not less than
$1,000 nor more than 50% of the account in question (but not in
excess of $50,000).
For the purposes of the foregoing, the highest
outstanding balance of an existing loan (from the Plan and any
other qualified plans of the Employer or Affiliate) during the
one year period ending on the day before the date of the loan
shall be aggregated with any additional funds being borrowed in
order to calculate a Member's borrowing limit. Transactions for
additional funds shall be booked and documented at the then
current interest rates as a new loan in the aggregate sum of the
balance of the old loan and the newly borrowed money and the old
loan shall be canceled.
All loans shall be made pursuant to such other
procedures and terms as shall be adopted by the Committee,
subject to the following:
(a) A loan shall be repayable within five years from
the date of borrowing upon such terms as determined by the
Committee; provided, however, that if the proceeds of such loan
were applied toward the acquisition of any dwelling unit used as
a principal residence of the Member, the term of such loan may
exceed five years as determined by the Committee.
The Committee may in its absolute discretion grant such
loan in accordance with such uniform and nondiscriminatory rules
as it may from time to time establish. Any such loan shall be
made at a then prevailing commercial rate of interest for similar
credits and on such terms of repayment (in level amortized
payments not less frequent than monthly) and subject to such
rules and restrictions as the Committee shall determine, provided
that any such loans shall be available to all Members on a
reasonably equivalent basis. The Committee may require repayment
of a loan by payroll deduction and repayments will be invested in
accordance with the investment direction in effect for such
Member.
All Member loans shall be secured by 50% of the balance
of the account from which the loan is made and shall be charged
proportionately against the Investment Fund in which the funds
borrowed are invested. To the extent a loan is unpaid, it shall
be deducted from the amount payable to such Member or such
Member's beneficiary at the time of distribution of the entire
Account. Any loan made to a married Member under this Section
8.5 shall be made by a check payable jointly to the Member and
the Member's spouse unless the spouse has consented in writing in
accordance with Section 9.9 (Spousal Consent) to the payment of
the proceeds of such loan to the Member alone. If a married
Member who has elected an annuity form of distribution under
Section 9.3 applies for a loan under this Section 8.5, the
Member's spouse must consent in writing to the loan in accordance
with Section 9.9;
(b) In the event that a Member fails to repay a loan
according to its terms and foreclosure occurs, the Plan may
foreclose on the portion of the Member's Account for which a
distributable event has occurred. In the event of foreclosure, a
distributable event shall be deemed to occur immediately
following the next Valuation Date for any portion of a Member's
Compensation Deferral Contributions Account or Employee
Contributions Account, if any, with respect to which the Member
or the Member's Beneficiary would be permitted in accordance with
Sections 8.1 or 9.1 to elect an immediate distribution;
(c) The note representing the loan (and other loans to
the same Member) will be segregated in a separate fund held by
the Trustee as a separate earmarked investment solely for the
Account of the Member. A Member's payments to the Trust of
principal and interest on a note held in such a segregated fund
shall be invested by the Trustee as elected by the Member in
accordance with the Member's investment directions for future
Compensation Deferral Contributions in accordance with Section
7.2, as soon as reasonably practical.
(d) Loan applications may be obtained from the
Committee at any time by any Member. Completed applications may
be submitted to the Committee or its designee at any time.
ARTICLE IX
Distribution
9.1 Amount of Distribution. The Member or the
Member's Beneficiary, as the case may be, shall be entitled to
receive a distribution of the vested value of the Member's
Account upon:
(a) the Member's termination of employment, death or
Total and Permanent Disability, or
(b) termination of the Plan without establishment of a
successor plan, or
(c) the disposition of substantially all of the assets
of the Employer to an acquiring corporation which continues the
employment of the Member.
(d) the disposition by the Employer of its interest in
subsidiary participating in the Plan to an acquiring corporation
which continues the employment of the Member.
The vested value of the Member's Account shall be
determined in accordance with Article VI (Vesting of Accounts) as
of the Valuation Date coinciding with or next following such
event except that, in the case of the Member's Total and
Permanent Disability, the vested value of the Member's Account
shall be determined as of the Valuation Date coinciding with or
next following the date the Committee determines that the Member
has a Total and Permanent Disability. If a Member dies prior to
commencement of the distribution of the vested value of his
Account, distribution shall be paid to the Member's Beneficiary
(a) if payment is to be made in lump sum as a normal form of
distribution under Section 9.2, the entire distribution must be
paid within five years after the Member's death or (b) if payment
is to be made in an alternative form of distribution under
Section 9.3, the installments or annuity must commence within one
year of the Member's death if the Beneficiary is other than the
Member's surviving spouse or no earlier than the Member's
Required Beginning Date if the Beneficiary is the Member's
surviving spouse and be payable over a period not to exceed the
Beneficiary's life or a period not in excess of the Beneficiary's
life expectancy. If a Member dies after the distribution of his
benefits has commenced, the remaining portion of his distribution
will be distributed to the Member's Beneficiary at least as
rapidly as under the method of distribution being used at the
date of Member's death.
9.2 Normal Form of Distribution. Unless otherwise elected
in accordance with Section 9.3 and subject to Section 9.7,
distributions shall be made by the Trustee as soon as practicable
after the Valuation Date coinciding with or next following the event
giving rise to the distribution in a single lump sum in cash except
that (a) unless the Member elects otherwise Employer Securities held
in the Member's Accounts shall be distributed in kind and (b) in the
discretion of the Committee, a note with respect to a Member's loan
from such Member's Compensation Deferral Account or Employee
Contributions Account may be distributed in kind. If the amount
distributable from the Member's Accounts is in excess of $3,500, the
Member's consent to such immediate distribution shall be required, but
a distribution of up to $3,500 shall not require such consent. In the
absence of such consent where required, the amount otherwise
distributable to the Member shall remain in the Member's Accounts
until the Valuation Date coinciding with or next following the date on
which the Member reaches age 70 or his death, if earlier, when,
without the necessity of any consent (other than spousal consent under
Section 9.9, if applicable), his entire interest in the Plan shall be
distributed. A Member who has terminated employment and declined to
consent to an immediate distribution may, prior to attaining age 70,
elect to receive the distribution of his entire interest in the Plan
as of the Valuation Date immediately following the filing of such
election. In addition, the Committee may, in its discretion, approve
a request filed by such a Member seeking a partial distribution from
his Accounts provided the Member is also receiving, or has received, a
retirement benefit from a defined benefit qualified plan sponsored by
his Employer. A partial distribution request (1) must be for a
minimum of $1,000, (2) cannot be approved if the Member's balance in
his Accounts will fall below $3,500 as a result of such partial
distribution and (3) may not be filed more than once in any calendar
year. While a Member's Accounts remain in the Plan after his
termination of employment, such Member shall have the right to
transfer the investment of his Account pursuant to the terms of
Sections 7.3 and 7.4 of the Plan. However, such a Member may not
borrow from his Accounts under Section 8.5 of the Plan.
9.3 Alternate Form of Distribution. A Member (or a
Member's Beneficiary in the event of the Member's death) may request
to have the value of the Member's Accounts distributed in a manner
other than in accordance with Section 9.2.
Such alternate form of payment shall be limited to the form
described in Section 9.8 (Annuities) or periodic installments
commencing as soon as practicable after the Member's death or at such
other time as the Member or the Member's Beneficiary, as the case may
be, shall elect in accordance with the Plan over a fixed period not to
exceed the lesser of ten years or the life expectancy of the Member or
Beneficiary as applicable, at the time payments commence. Payment of
any interest in the Smith Corona Corporation Common Stock Fund in a
Member's Accounts, if any, to which the Member has a non-forfeitable
interest may be made in cash solely for the purpose of effecting such
an alternate form of distribution.
9.4 Identity of Payee. The determination of the Committee
as to the identity of the proper payee of any benefit under the Plan
and the amount of such benefit properly payable shall be conclusive,
and payment in accordance with such determination shall constitute a
complete discharge of all obligations on account of such benefit.
9.5 Non-alienation of Benefits.
(a) No benefit payable at any time under this Plan shall be
subject in any manner to alienation, sale, transfer, assignment,
pledge, attachment, or other legal processes, or encumbrance of any
kind. Any attempt to alienate, sell, transfer, assign, pledge or
otherwise encumber any such benefits, whether currently or thereafter
payable, shall be void. No benefit, nor any fund which may be
established for the payment of such benefits, shall, in any manner, be
liable for or subject to the debts or liabilities including bankruptcy
of any person entitled to such benefits. If any person shall attempt
to, or shall alienate, sell, transfer, assign, pledge or otherwise
encumber benefits to which such person may become entitled under this
Plan.
(b) Notwithstanding Section 9.5(a), the Trustee
(i) shall comply with an order entered on or after
January 1, 1985, determined by the Committee to be a Qualified
Domestic Relations Order as provided in Section 9.6,
(ii) shall comply with a domestic relations order
entered before January 1, 1985, if benefits are already being
paid under such order, and
(iii) may treat an order entered before January 1,
1985, as a Qualified Domestic Relations Order even if it does not
meet the requirements of Section 9.6.
9.6 Qualified Domestic Relations Order.
(a) "Qualified Domestic Relations Order" means any
judgment, decree, or order (including approval of a property
settlement agreement):
(i) which is made pursuant to a state domestic
relations law (including a community property law),
(ii) which relates to the provision of child
support, alimony payments, or marital property rights to a
spouse, former spouse, child, or other dependent of a Member,
(iii) which creates or recognizes the existence of
an alternate payee's right to receive all or a portion of the
Member's Accounts under the Plan, and
(iv) with respect to which the requirements of
paragraphs (b) and (c) are met.
(b) A domestic relations order can be a Qualified
Domestic Relations Order only if such order clearly specifies:
(i) the name and the last known mailing address,
if any, of the Member and the name and mailing address or each
alternate payee covered by the order,
(ii) the amount or percentage of the Member's
Accounts to be paid by the Plan to each such alternate payee, or
the manner in which such amount or percentage is to be
determined,
(iii) the number of payments or period to which
such order applies, and
(iv) each Plan to which such order applies.
(c) A domestic relations order can be a Qualified Do-
mestic Relations Order only if such order does not:
(i) require the Plan to provide any type or form
of benefit, or any option not otherwise provided under the Plan,
(ii) require the Plan to provide increased
benefits (determined on the basis of actuarial value), or
(iii) require the payment of benefits to an
alternate payee which are required to be paid to another
alternate payee under another order previously determined to be a
Qualified Domestic Relations Order.
(d) In the case of any payment before a Member has had
a termination of employment, a domestic relations order shall not
be treated as failing to meet the requirements of Section
9.6(b)(i) solely because such order requires that payment of
benefits be made to an alternate payee:
(i) on the earlier of (a) the date on which the
Member is entitled to a distribution under the Plan, (b) the
later of (I) the date the Member attains age 50 or (II) the
earliest date on which the Member could begin receiving benefits
under the Plan if the Member separated from Service or (c) upon
application of the alternate payee within a specified period of
time after entry of the domestic relations order as provided in
such order,
(ii) as if the Member had retired on the date on
which such payment is to begin under such order (but taking into
account only the present value of the benefits actually accrued
and not taking into account the present value of any Employer
subsidy for early retirement), and
(iii) in any form in which such benefits may be
paid under the Plan to the Member (other than in the form of a
Qualified Joint and Survivor Annuity with respect to the
alternate payee and his or her subsequent spouse).
(e) To the extent provided in any Qualified Domestic
Relations Order, the former spouse of a Member shall be treated
as the surviving spouse of such Member for purposes of being the
Beneficiary of 100% of the Member's vested Account and providing
for a valid consent in accordance with Section 9.9.
9.7 Commencement of Benefits. Unless a Member elects
otherwise, the payment of benefits under the Plan shall begin no
later than the 60th day after the latest of the close of the Plan
Year in which:
(a) the Member attains his Retirement Age;
(b) the 10th anniversary of the date the Member's
participation in the Plan occurs;
(c) the Member's employment with the Employer or an
Affiliate is terminated;
provided that no benefits shall be distributed unless the Member
has filed a claim for benefits until the Valuation Date
immediately proceeding the Required Beginning Date and further
provided that all benefits shall be distributed to the Member no
later than the Member's Required Beginning Date.
9.8 Annuities. Subject to subsections (a) and (b)
hereof, if the form of distribution is to be an annuity contract,
it may be in such form and with such provisions as the Member or
the Member's Beneficiary, as the case may be, may elect which are
available for purchase from an insurance company including, but
not limited to, a full cash refund life annuity, an annuity with
income for life or an annuity with income for a period certain
(payable at least annually). Such distribution is to be provided
through the purchase from an insurance company and distribution
from the Trust Fund of a nontransferable annuity contract;
provided the benefit under such annuity contract cannot be paid
to anyone other than the Member prior to the Member's death, and
if a joint and survivor annuity is provided, unless such joint
annuitant shall be the Member's spouse, the actuarial value of
the Member's benefits, as of the date benefit payments commence,
shall be more than 50 percent (50%) of the Member's vested
Accounts.
(a) Limitations on Participant Elections.
Notwithstanding any elections of an annuity form of payment made
by a Member, benefit payments shall be made over a period not in
excess of the life of the Member or the lives of the Member and
the Member's Beneficiary or the Member's life expectancy or the
joint and last survivor life expectancy of the Member and the
Member's Beneficiary and otherwise meet the requirements of
Section 401(a)(9) of the Code.
(b) Qualified Joint and Survivor Annuities. Not-
withstanding the foregoing provisions of this Section 9.8, in the
case of a Member who has elected to receive an annuity form of
benefit, distribution shall be in the form of a Qualified Joint
and Survivor Annuity, unless the Member with the Member's
spouse's consent as provided in Section 9.9 elects to receive a
different form of annuity. The term "Qualified Joint and
Survivor Annuity" means an annuity payable to the Member for life
and, if the Member's spouse survives the Member, a survivor an-
nuity payable to the spouse for life in an amount equal to 50
percent (50%) of the annuity payable to the Member.
If the Member who has elected to receive an annuity
form of benefit is not married, subject to Section 9.6 (Qualified
Domestic Relations Order), the annuity shall be paid in the form
of a single life annuity unless the Member waives the single life
annuity. The amount of the benefits payable under a Qualified
Joint and Survivor Annuity shall be the amount which can be
purchased from an insurance company with the Member's Accounts.
(c) A Member who elects to receive benefits in the
form of a life annuity and to whom benefits would be payable in
the form of a Qualified Joint and Survivor Annuity pursuant to
this Section 9.8 shall have the right to waive a Qualified Joint
and Survivor Annuity (such waiver shall be consented to by the
Member's spouse in writing in accordance with Section 9.9) by
delivering written notice to the Committee, at any time within
the 90-day period prior to the annuity starting date, to receive
a different form of annuity. If a Member elects to receive bene-
fits in the form of an annuity, the Committee shall within a
reasonable period of time (no less than 30 days and no more than
90 days before the annuity starting date) provide the Member, by
personal delivery or first class mail, with a written explanation
of:
(1) the terms and conditions of the Qualified
Joint and Survivor Annuity;
(2) the Member's right to make, and the effect
of, an election to waive the Qualified Joint and Survivor
Annuity;
(3) the rights of the Member's spouse to consent
to the Member's election to waive the Qualified Joint and
Survivor Annuity and the effect of consenting to such waiver; and
(4) the Member's right to make, and the effect
of, a revocation of an election to waive the Qualified Joint and
Survivor Annuity.
Any election made by a Member pursuant to Sections
9.8(b) and 9.8(c) may be revoked by such Member by delivering
written notice to the Committee at any time prior to the Member's
annuity starting date and, once revoked, may be made again at any
time by delivering written notice to the Committee prior to the
Member's annuity starting date.
9.9 Spousal Consent. A valid spousal consent to the
Member's naming of a Beneficiary other than the Member's spouse
or to the Member's waiver of a Qualified Joint and Survivor
Annuity as defined in Section 9.8(b) shall be designated:
(a) in a writing acknowledging the effect of the
consent;
(b) witnessed by a notary public or Plan
representative; and
(c) effective only for the spouse who exercises the
consent;
provided that, notwithstanding the provisions of this Article IX,
the consent of a Member's spouse shall not be required if it is
established to the satisfaction of the Plan Administrator that
such consent may not be obtained because there is no spouse,
because the spouse cannot be located, there is a legal
separation, the Member proves abandonment by his spouse as
evidenced by a court order or because of such other circumstances
as the Secretary of the Treasury may by regulations prescribe.
9.10 Lump Sum Payment without Election. Notwith-
standing any other provision of this Article IX, if a Member or a
Beneficiary is entitled to a distribution and if the vested value
of a Member's Account or the vested value of the Beneficiary's
share of the Member's Account before benefits are paid or
commence to be paid hereunder does not exceed $3,500, the
Committee may in accordance with uniform and nondiscriminatory
rules direct the immediate distribution of such benefit to the
person entitled thereto regardless of any election or consent of
the Member, the Member's spouse or other Beneficiary.
9.11 Direct Rollover Election. Notwithstanding any
provision of the Plan to the contrary, if, on or after January 1,
1993, (i) a Member, (ii) a Beneficiary who is a Member's spouse,
or (iii) a Member's spouse or former spouse who is an alternate
payee under a qualified domestic relations order becomes entitled
to a Plan distribution which qualifies as an eligible rollover
distribution as defined in Section 402(c)(4) of the Code, such
individual may elect to have all or a portion of such
distribution transferred directly to a designated eligible
retirement plan as defined in Section 402(c)(8)(B) of the Code,
provided that such retirement plan to which such transfer is to
be made accepts such transfer. The Committee may establish
reasonable rules and procedures regarding direct rollover
distributions permitted hereunder.
ARTICLE X
Administration of the Plan
10.1 Plan Administrator. The Committee shall be the
Plan Administrator:
(a) The Committee shall administer, enforce and
interpret the Plan and the trust agreement established hereunder
and shall have the powers necessary thereto, including, but not
by way of limitation, the powers to exercise its responsibilities
in accordance with Sections 1.3 (Appropriate Form), 1.10
(Compensation), 1.22 (Enrollment Date), 1.29 (Leave of Absence),
1.45 (Total and Permanent Disability), Article II (Eligibility
and Membership), 3.1 (Compensation Deferral Contributions), 3.2
(Changes and Suspension of Contributions), 3.4 (Limitation on
Compensation Deferral Contributions), 5.2 (Maintenance of
Accounts), 5.3 (Valuations), Article VII (Investment of
Accounts), Article VIII (Withdrawals and Loans During
Employment), 11.6 (Disbursement of Funds), Article XIII
(Miscellaneous), and the remainder of this Article X, and
(b) Authority to hold the funds of the Plan shall be
delegated to the Trustee in accordance with Section 11.2
(Trustee), and
(c) Authority to direct the investment of the Plan's
funds shall be delegated to an Investment Manager in accordance
with Section 11.3 (Investment Manager).
With respect to all other responsibilities of the Plan
Administrator the Committee shall act through its duly authorized
officers and agents.
10.2 Board of Directors. With respect to Sections 4.1
(Amount of Employer Contributions), 10.8 (Personal Liability) and
12.2 (Suspension or Termination) the Employer shall act only by
or pursuant to a resolution of the Board of Directors.
10.3 Appointment of the Committee. The Committee
shall be the Benefits Administration Committee of Smith Corona
Corporation.
10.4 Compensation Expenses. All proper expenses
incurred by the Committee, the Employer or the Trustee for
accounting, legal and other professional, consulting or technical
services required for the administration of the Plan, shall be
paid by the Trustee out of the Trust Fund unless paid voluntarily
by the Employer.
10.5 Committee Actions, Agents. The Committee may
appoint such agents, who need not be members of the Committee, as
it may deem necessary for the effective performance of its duties
and may delegate to such agents such powers and duties as the
Committee may deem expedient or appropriate.
Any action of the Committee, including but not by way
of limitation, instructions to the Trustee, shall be evidenced by
the signature of a member who has been so authorized by the
Committee to sign for it, and the Trustee shall be fully
protected in acting thereon. A certificate of the secretary or
an assistant secretary of the Committee setting forth the name of
the members thereof shall be sufficient evidence at all times as
to the persons then constituting the Committee.
10.6 Committee Meetings. The Committee shall hold
meetings upon such notice, at such time and place as they may
determine. The Committee shall act by a majority of its members
at the time in office and such action may be taken from time to
time by a vote at a meeting or in writing without a meeting. A
majority of the members of the Committee at the time in office
shall constitute a quorum for transaction of business.
10.7 Authority and Duties of the Committee. The
Committee may from time to time establish rules for the
administration of the Plan. The Committee shall have the
exclusive right to interpret the Plan and to decide any matters
arising thereunder in connection with the administration of the
Plan. It shall endeavor to act by general rules so as not to
discriminate in favor of any person. Its decisions and the
records of the Committee shall be conclusive and binding upon the
Employer, Members and all other persons having an interest under
the Plan. No member of the Committee shall be disqualified from
exercising the powers and discretions herein conferred by reason
of the fact that the exercise of any such power or discretion may
affect the payment of benefits to such member under the Plan;
however, no member may vote on a matter relating exclusively to
such member. To the extent that it is administratively feasible,
the period of notice required for Members' elections to commence,
change or suspend contributions hereunder or to make or change
investment elections for either future contributions or existing
accounts may be relaxed, reduced or eliminated by the Committee
in accordance with uniform and non-discriminatory rules.
The Committee shall keep or cause to be kept all
records and other data as may be necessary for the administration
of the Plan.
10.8 Personal Liability. To the extent not contrary
to the provisions of ERISA, no member of the Committee, officer,
director or employee of an Employer shall be personally liable
for acts done in good faith hereunder unless resulting from such
member's own negligence or willful misconduct. Each such member
of the Committee, officer and director shall be indemnified by
the Employer against expenses reasonably incurred by such member
in connection with any action to which he may be a party by
reason of such member's responsibilities hereunder, except in
relation to matters as to which such member shall be adjudged in
such action to be liable for negligence or misconduct in the
performance of such member's duty. However, nothing in this Plan
shall be deemed to relieve any person who is a fiduciary under
the Plan for purposes of ERISA from any responsibility or
liability which such statute shall impose upon such member.
10.9 Dealings between the Committee and Individual
Members. Any notice required to be given to, or any document
required to be filed with, the Committee will be properly given
or filed if mailed by registered or certified mail, postage
prepaid, or delivered to the Chairman of the Benefits
Administration Committee, c/o Smith Corona Corporation, 65 Locust
Avenue, New Canaan, CT 06840, or to such other place as the
Committee may hereafter from time to time designate.
The Committee shall make available to such Member for
examination upon reasonable request in advance, such of its
records as pertain to the benefits to which such Member shall be
entitled under the Plan.
10.10 Information To Be Supplied by the Employer. The
Employer shall provide the Committee or its delegate with such
information as it shall from time to time need in the discharge
of its duties.
10.11 Records. The regularly kept records of the
Committee and the Employer shall be conclusive evidence of the
Service of an Employee, the Employee's Compensation, age, marital
status, status as an Employee, and all other matters contained
therein applicable to this Plan; provided that an Employee may
request a correction in the record of age or any other disputed
fact at any time prior to retirement. Such correction shall be
made if within 90 days after such request the Employee furnishes
the Committee in support thereof documentary proof of age or the
other disputed fact satisfactory to the Committee.
10.12 Fiduciary Capacity. Any person or group of
persons may serve in more than one fiduciary capacity with
respect to the Plan.
10.13 Fiduciary Responsibility. If a Plan fiduciary
acts in accordance with ERISA, Title I, Subtitle 8, Part 4,
(a) in determining that a Member's spouse has con-
sented to the naming of a Beneficiary other than the spouse or
that the consent of the Member's spouse may not be obtained
because there is no spouse, the spouse cannot be located or other
circumstances prescribed by the Secretary of the Treasury by
regulations, then to the extent of payments made pursuant to such
consent, revocation or determination, the Plan and its fiduci-
aries shall have no further liability; or
(b) in treating a domestic relations order as being
(or not being) a Qualified Domestic Relations Order, or, during
any period in which the issue of whether a domestic relations
order is a Qualified Domestic Relations Order is being determined
(by the Committee, by a court of competent jurisdiction, or
otherwise), in segregating
in a separate account in the Plan or in an escrow account the
amounts which would have been payable to the alternate payee
during such period if the order had been determined to be a
Qualified Domestic Relations Order in paying the amounts
segregated or held in escrow by the person entitled thereto if
within 18 months the domestic relations order (or a modification
thereof) is determined to be a Qualified Domestic Relations
Order, in paying such amounts to the person entitled thereto if
there had been no order if within 18 months the domestic
relations order is determined not to be qualified or if the issue
is not resolved within 18 months and in prospectively applying a
domestic relations order which is determined to be qualified
after the close of the 18 month period, then the obligation of
the Plan and its fiduciaries or the Member and each alternate
payee shall be discharged to the extent of any payment made
pursuant to such acts.
10.14 Claim Procedure.
(a) Each Member or Beneficiary ("Claimant") may submit
application for benefits ("Claim") to the Committee (or to such
other person as may be designated by the Committee) in writing in
such form as is provided or
approved by the Committee. A Claimant shall have no right to
seek review of a denial of benefits, or to bring any action in
any court to enforce a Claim prior to filing a Claim and
exhausting all rights to review in accordance with this Section.
When a Claim has been filed properly, such Claim shall
be evaluated and the Claimant shall be notified of the approval
or the denial of the Claim within ninety (90) days after the
receipt of such Claim unless special circumstances require an
extension of time for processing the claim. If such an extension
of time for processing is required, written notice of the
extension shall be furnished to the Claimant prior to the
termination of the initial ninety (90) day period, which notice
shall specify the special circumstances requiring an extension
and the date by which a final decision will be reached (which
date shall not be later than one hundred and eighty (180) days
after the date on which the Claim was filed). Claimant shall be
given a written notice in which the Claimant shall be advised as
to whether the Claim is granted or denied, in whole or in part.
If a Claim is denied, in whole or in part, the notice shall
contain (1) the specific reasons for the denial, (2) references
to pertinent Plan provisions upon which the denial is based, (3)
a description of any additional material or information necessary
to perfect the Claim and an explanation of why such material or
information is necessary, and (4) the Claimant's rights to seek
review of the denial.
(b) If a Claim is denied, in whole or in part, the
Claimant shall have the right to (i) request that the Committee
(or such other person as shall be designated in writing by the
Committee) review the denial, (ii) review pertinent documents,
and (iii) submit issues and comments in writing, provided that
the Claimant files a written request for review with the
Committee within sixty (60) days after the date on which the
Claimant received written notification of the denial. Within
sixty (60) days after a request for review is received, the
review shall be made and the Claimant shall be advised in writing
of the decision on review, unless special circumstances require
an extension of time for processing the review, in which case the
Claimant shall be given a written notification within such
initial sixty (60) day period specifying the reasons for the
extension and when such review shall be completed (within one
hundred and twenty (120) days after the date on which the request
for review was filed). The decision on review shall be forwarded
to the Claimant in writing and shall include specific reasons for
the decision and references to Plan provisions upon which the
decision is based. A decision on review shall be final and
binding on all persons for all purposes. If a Claimant shall
fail to file a request for review in accordance with the
procedures herein outlined, such Claimant shall have no rights to
review and shall have no right to bring action in any court and
the denial of the Claim shall become final and binding on all
persons for all purposes.
ARTICLE XI
Operation of the Trust Fund
11.1 Trust Fund. All assets of the Plan shall be held
in trust as a Trust Fund for the exclusive benefit of Members and
their Beneficiaries, and no part of the corpus or income shall be
used for or diverted to any other purpose. No person shall have
any interest in or right to any part of the Trust Fund, except to
the extent provided in the Plan.
11.2 Trustee. All contributions to the Plan shall be
paid to a Trustee or Trustees which shall be appointed from time
to time by the Board of Directors or the Employer by appropriate
instrument with such powers in the Trustee as to control and
disbursement of the funds as the Employer shall approve and as
shall be in accordance with the Plan. The Employer may remove
any Trustee at any time, upon reasonable notice and upon such
removal or upon the resignation of any Trustee the Employer shall
designate a successor Trustee.
11.3 Investment Manager. In accordance with the terms
of the trust agreement, the Board of Directors or the Employer
may appoint one or more Investment Managers (individuals and/or
other entities), who may include the Trustee and who are
collectively referred to herein as the Investment Manager, to
direct the investment and reinvestment of part or all of the
Plan's funds that are not invested in Employer Securities. The
Employer may change the appointment of the Investment Manager
from time to time.
11.4 Purchase and Holding of Securities. As soon as
convenient after receiving contributions, the Trustee shall:
(a) in the case of contributions to be invested in
Employer Securities, purchase at fair market value such
securities in the open market or otherwise, and register and hold
such securities in the name of the Trustee or its nominee;
(b) in the case of contributions to the Equity Index
or Money Market Funds, purchase securities in the open market or
otherwise, for the Equity Index Fund or the Money Market Fund as
the Trustee deems advisable, and register such stock and
securities in the name of the Trustee or its nominee;
(c) in the case of contributions to the Fixed Income
Fund, make payments to the issuer of the group annuity contract
or other investment medium which provides a fixed rate of return
on investments.
11.5 Voting of Employer Securities. For shareholders'
meetings Members shall be furnished proxy material and a form
instructing the Trustee for voting of the Employer Securities
represented by units credited to their Accounts, and the Trustee
shall vote or otherwise exercise shareholder rights with respect
to such Employer Securities as instructed. The Trustee shall
hold such instructions in confidence and shall not divulge them
to anyone (except on a need to know basis), including, but not
limited to, the Employer, its officers or employees. Shares for
which no instructions are received shall be voted by the Trustee
in the same proportion as those shares for which instructions
have been received. With respect to the exercise of
shareholder's rights to sell or retain the Employer Securities
represented by units credited to a Member's Accounts in
extraordinary instances involving an unusual price and terms and
conditions for such securities such as a tender offer, the
Trustee shall act in accordance with the Committee's
instructions.
11.6 Disbursement of Funds. The funds held by the
Trustee shall be applied, in the manner determined by the
Committee, to the payment of benefits to such persons as are
entitled thereto in accordance with the Plan.
The Committee shall determine the manner in which the
funds of the Plan shall be disbursed in accordance with the Plan,
including the form of voucher or warrant to be used in
authorizing disbursements and the qualification of persons
authorized to approve and sign the same and any other matters
incident to the disbursement of such funds.
All charges of the record keeper, of the Trustee and of
the Investment Manager shall be paid by the Trust unless paid by
the Employer.
11.7 Exclusive Benefit of Members. All contributions
under the Plan shall be paid to the Trustee and deposited in the
Trust Fund and shall be held, managed and distributed solely in
the interest of the Members and Beneficiaries for the exclusive
purpose of (1) providing benefits to Members and Beneficiaries
and (2) defraying reasonable administrative expenses of the Plan
and the Trust, to the extent such expenses are not paid by the
Employer provided that:
(a) if the Plan is denied initial qualification under
Section 401(a) of the Code, contributions conditioned upon the
continued qualification of the Plan shall be returned to the
Employer making such contributions within one year of the denial
of qualification;
(b) if, and to the extent, deduction for a
contribution under Section 404 of the Code is disallowed,
contributions conditioned upon deductibility shall be returned to
the Employer within one year after the disallowance of the
deduction; and
(c) if, and to the extent, contribution is made
through mistake of fact, such contribution shall be returned to
the Employer within one year of the payment of the contribution.
For purposes of subsection (b) of this Section 11.7, all Employer
Contributions shall be deemed conditioned upon deductibility
under Section 404 of the Code when made.
ARTICLE XII
Amendment, Termination and Merger
12.1 Right to Amend. The Employer reserves the right
at any time, and from time to time, to modify or amend in whole
or in part the provisions of the Plan, but no such amendment
shall divest any Member of any amount previously credited to a
Member's Accounts or, except to the extent permitted by the
Secretary of the Treasury by regulation, shall eliminate with
respect to a Member's Account balance at the time of such
amendment an optional form of benefit, and further provided that
no part of the assets of the Trust Fund shall, by reason of any
modification or amendment, be used for or diverted to, purposes
other than for the exclusive benefit of Members and their
Beneficiaries, under the Plan. Any amendment or modification of
the Plan may be made by the Board of Directors of the Employer or
its delegate such as the Committee, except that any amendment
which substantially increases the cost of the Plan to the
Employer must be approved by the Board of Directors.
12.2 Suspension or Termination. The Employer may at
any time temporarily suspend Employer Contributions and
Compensation Deferral Contributions in whole or in part. Such
suspension of Employer Contributions and/or Compensation Deferral
Contributions shall not, in itself, constitute a Plan
termination. The Employer may at any time completely discontinue
contributions or terminate the Plan by filing with the Committee
a certified copy of the resolution of its board of directors
authorizing such action.
If the Plan is terminated, no further contributions
shall be made by the Employer and subject to Section 9.1 and
Section 401(k)(10) of the Code, the Account of each Member shall
be applied for the Member's (or the Member's Beneficiary's)
benefit by payment in cash or in kind. Alternatively, if the
Plan is frozen, no further contributions shall be made by the
Employer but the Plan shall continue in full force and effect and
the Trust Fund shall continue in accordance with the trust
instrument until all funds in the Trust are distributed in
accordance with the Plan.
12.3 Merger, Consolidation or Transfer. In the case
of any merger, or consolidation with, or transfer of assets or
liabilities to any other plan, each Member in the Plan would (if
the Plan then terminated) receive a benefit immediately after the
merger, consolidation, or transfer which is equal to or greater
than the benefit such Member would have been entitled to receive
immediately before the merger consolidation, or transfer (if the
Plan had then terminated).
ARTICLE XIII
Miscellaneous
13.1 Uniform Administration. Whenever, in the
administration of the Plan, any action is required by the
Employer or the Committee, including, but not by way of
limitation, action with respect to eligibility or classification
of employees, contributions or benefits, such action shall be
uniform in nature as applied to all persons similarly situated
and no such action shall be taken which will discriminate in
favor of Members who are officers or significant shareholders or
Highly Compensated Employees of the Employer or persons whose
principal duties consist of supervising the work of other
Employees.
13.2 Payment Due an Incompetent. If the Committee
determines that any person to whom a payment is due hereunder is
incompetent by reason of physical or mental disability, the
Committee shall have power to cause the payments becoming due to
such person to be made to another for the benefit of the
incompetent, without responsibility of the Committee or the
Trustee to see to the application of such payment. Payments made
in accordance with such power shall operate as a complete
discharge of all obligations on account of such payment of the
Committee, the Trustee and the Trust Fund. The Committee shall
not be under any responsibility to assure that any such payment
is used for the benefit of the person to whom it was due.
13.3 Source of Payments. All benefits under the Plan
shall be paid or provided solely from the Trust Fund and the
Employer assumes no liability or responsibility therefor, except
to the extent required by law.
13.4 Plan Not a Contract of Employment. Nothing
herein contained shall be deemed to give any Employee, Eligible
Employee or Member the right to be retained in the employ of the
Employer or to interfere with the right of the Employer to
discharge any Employee, Eligible Employee or Member at any time
for any reason.
13.5 Applicable Law. Except to the extent governed by
Federal law, including ERISA, the Plan shall be administered and
interpreted in accordance with the laws of the State of New York
(other than the principles of conflicts of laws of such State).
13.6 Unclaimed Amounts. It shall be the duty and re-
sponsibility of a Member or a Beneficiary to keep the Committee
apprised of such Member's whereabouts and of such Member's
current mailing address. Unclaimed amounts shall consist of the
amounts of the Accounts of a retired, deceased or terminated
Member which cannot be distributed because of the Committee's
inability, after a reasonable search, to locate a Member or a
Member's Beneficiary within a period of two (2) years after the
payment of benefits becomes due. Unclaimed amounts for a Plan
Year shall be forfeitures for the Plan Year in which such two-
year period shall end. Such Forfeitures shall be treated as
provided in Section 4.3
If an unclaimed amount is subsequently properly claimed
by the Member or the Member's Beneficiary ("Reclaimed Amount")
and unless the Employer, in its discretion, makes a contribution
to the Plan for such year in an amount sufficient to pay such
Reclaimed Amount to the extent that the Reclaimed Amount
originated as an unclaimed amount, it shall be charged against
forfeitures for the Plan Year and, to the extent such forfeitures
are not sufficient, shall charged against income as an expense of
the Trust Fund.
ARTICLE XIV
Top Heavy Provisions
14.1 Application. The definitions in Section 14.2
shall apply under this Article XIV and the special rules in
Section 14.3 shall apply in accordance with Code Section 416,
notwithstanding any other provisions of the Plan, for any Plan
Year in which the Plan is a Top Heavy Plan and for such other
Plan Years as may be specified herein. This Article XIV shall
have no effect on the amount of, or eligibility for, benefits
under the Plan of a Member unless and until the Plan becomes a
Top Heavy Plan.
14.2 Special Top Heavy Definitions. The following
special definitions shall apply under this Article XIV.
(a) "Aggregate Employer Contributions" means the sum
of all Employer Contributions including forfeitures under this
Plan allocated for a Member to the Plan and employer
contributions and forfeitures allocated for the Member to all
Related Defined Contribution Plans in the Aggregation Group;
provided, however, that for Plan Years beginning before
January 1, 1985, Compensation Deferral Contributions under this
Plan and employer contributions attributable to compensation
reduction or similar arrangement under Related Defined
Contribution Plans shall not be included in Aggregate Employer
Contributions.
(b) "Aggregation Group" means the group of plans in a
Mandatory Aggregation Group, if any, that includes the Plan,
unless inclusion of Related Plans in the Permissive Aggregation
Group in the Aggregation Group would prevent the Plan from being
a Top Heavy Plan, in which case "Aggregation Group" means the
group of plans consisting of the Plan and each other Related Plan
in a Permissive Aggregation Group with the Plan.
(1) "Mandatory Aggregation Group" means each plan
(considering the Plan and Related Plans) that, during the Plan
Year that contains the Determination Date or any of the four
preceding Plan Years,
(A) had a Member who was a Key Employee, or
(B) was necessary to be considered with a
plan in which a Key Employee participated in order to enable the
plan in which the Key Employee participated to meet the require-
ments of Section 401(a)(4) and Section 410(b) of the Code.
If the Plan is not described in (A) or (B)
above, it shall not be part of a Mandatory Aggregation Group.
(2) "Permissive Aggregation Group" means the
group of plans consisting of (A) the plans, if any, in a
Mandatory Aggregation Group with the Plan, and (B) any other
Related Plan, that, when considered as a part of the Aggregation
Group, does not cause the Aggregation Group to fail to satisfy
the requirements of Section 401(a)(4) and Section 410(b) of the
Code. A Related Plan in (B) of the preceding sentence may
include a simplified employee pension plan, as defined in Code
Section 408(k), and a collectively bargained plan, if, when
considered as a part of the Aggregation Group, such plan does not
cause the Aggregation Group to fail to satisfy the requirements
of Section 401(a)(4) and Section 410(b) of the Code considering,
if the plan is a multiemployer plan as described in Code Section
414(f) or a multiple employer plan as described in Code Section
413(c), benefits under the plan only to the extent provided to
Employees of the employer because of service with the Employer,
and, if the plan is a simplified employee pension plan, only the
employer's contribution to the plan.
(c) "Determination Date" means, with respect to a Plan
Year, the last day of the preceding Plan Year or, in the case of
the first Plan Year, the last day of such Plan Year. If the Plan
is aggregated with other plans in the Aggregation Group, the
Determination Date for each other plan shall be, with respect to
any Plan Year, the Determination Date for each such other plan
which falls in the same calendar year as the Determination Date
for the Plan.
(d) "Key Employee" means, for the Plan Year containing
the Determination Date, any person or the beneficiary of any
person who is an Employee or former Employee of an Employer or an
Affiliate as determined under Code Section 416(i) and who, at any
time during the Plan Year containing the Determination Date or
any of the four (4) preceding Plan Years (the "Measurement
Period") is a person described in paragraph (1), (2), (3) or (4),
subject to paragraph (5).
(1) An officer of the Employer or an Affiliate
who in any Measurement Period is an officer during the Plan Year
and has annual Compensation for the Plan Year in an amount
greater than fifty percent (50%) of the amount in effect under
Section 415(b)(1)(A) of the Code for the calendar year in which
such Plan Year ends ($30,000 in 1989 adjusted in subsequent years
as determined in accordance with regulations prescribed by the
Secretary of the Treasury or his delegate pursuant to the
provisions of Section 415(d) of the Code).
No more than a total of fifty (50) persons (or, if
lesser, the greater of three (3) persons or ten percent (10%) of
all persons or beneficiaries of persons who are Employees or
former Employees) shall be treated as Key Employees under this
paragraph (1) for any Measurement Period. In the case of an
Employer or an Affiliate which is not a corporation (I) in any
Measurement Period, in the case of a Plan Year beginning on or
before February 28, 1985, no persons shall be treated as Key
Employees under this paragraph (1); and (II) in any Measurement
Period, in the case of a Plan Year beginning after February 28,
1985, the term "officer" as used in this subsection (d) shall
include administrative executives as described in Treas. Reg.
Section 1.416-1(T-13).
(2) One (1) of the ten (10) persons who, during a
Plan Year in the Measurement Period:
(A) have annual Compensation from the
Employer or Affiliate for such Plan Year greater than the amount
in effect under Section 415(c)(1)(A) of the Code for the calendar
year in which such Plan Year ends ($30,000 in 1984, adjusted in
subsequent years as determined in accordance with regulations
prescribed by the Secretary of the Treasury or his delegate
pursuant to the provisions of Section 415(d) of the Code); and
(B) own (or are considered as owning within
the meaning of Code Section 318) in such Plan Year, the largest
percentage interests in the Employer or Affiliate, in such Plan
Year, provided that no person shall be treated as a Key Employee
under this paragraph unless he owns more than one-half of one
percent (0.5%) interest in the Employer or Affiliate.
No more than a total of ten (10) persons or
beneficiaries of persons who are Employees or former Employees
shall be treated as Key Employees under this paragraph (2) for
any Measurement Period.
(3) A person who, for a Plan Year in the
Measurement Period, is a more than five percent (5%) owner (or is
considered as owning more than five percent (5%) within the
meaning of Code Section 318) of the Employer or Affiliate.
(4) A person who, for a Plan Year in the
Measurement Period, is a more than one percent (1%) owner (or is
considered as owning more than one percent (1%) within the
meaning of Code Section 318) of the Employer or an Affiliate and
has an annual Compensation for such Plan Year of more than
$150,000.
(5) If the number of persons who meet the
requirements to be treated as Key Employees under paragraph (1)
or (2) exceed the limitation on the number of Key Employees to be
counted under paragraph (1) or (2), those persons with the
highest annual Compensation in a Plan Year in the Measurement
Period for which the requirements are met and who are within the
limitation on the number of Key Employees will be treated as Key
Employees.
If the requirements of paragraph (1) or (2) are met by
a person in more than one (1) Plan Year in the Measurement
Period, each person will be counted only once under paragraph (1)
or (2):
(C) under paragraph (1), the Plan Year in
the Measurement Period in which a person who was an officer and
had the highest annual Compensation shall be used to determine
whether the person will be treated as a Key Employee under the
preceding sentence;
(D) under paragraph (2), the Plan Year in
the Measurement Period in which the ownership percentage interest
is the greatest shall be used to determine whether the person
will be treated as a Key Employee under the preceding sentence.
Notwithstanding the above provisions of paragraph (5),
a person may be counted in determining the limitation under both
paragraphs (1) and (2). In determining the sum of the Present
Value of Accrued Benefits for Key Employees under subsection (f)
of this Section, the Present Value of Accrued Benefits for any
person shall be counted only once. For purposes of determining
ownership in the Employer or Affiliate under paragraphs (2), (3)
and (4), the aggregation rules of Sections 414(b), (c) and (m) of
the Code shall not apply.
(e) "Non-Key Employee" means for the Plan Year
containing the Determination Date a person or the beneficiary of
a person who had an account balance in the Plan or an account
balance in any Related Plan in the Aggregation Group during the
Plan Year containing the Determination Date or any of the four
(4) preceding Plan Years and who is not a Key Employee.
(f) "Present Value of Accrued Benefits" means, for any
Plan Year, an amount equal to the sum of (1), (2) and (3) for
each person, who in the Plan Year containing the Determination
Date, was a Key Employee or a Non-Key Employee.
(1) Subject to (4) below, the value of a Member's
Accounts under the Plan (including his Compensation Deferral
Contributions) and each Related Defined Contribution Plan in the
Aggregation Group, determined as of the Valuation Date coincident
with or immediately preceding the Determination Date, adjusted
for contributions due as of the Determination Date, as follows:
(A) in the case of a plan not subject to the
minimum funding requirements of Section 412 of the Code, by
including the amount of any contributions actually made after the
Valuation Date but on or before the Determination Date, and, in
the first plan year of a plan, by including contributions made
after the Determination Date that are allocated as of a date in
that first plan year; and
(B) in the case of a plan that is subject to
the minimum funding requirements, by including the amount of any
contributions that would be allocated as of a date not later than
the Determination Date, plus adjustments to those amounts as
required under applicable rulings, even though those amounts are
not yet required to be contributed or allocated (e.g., because
they have been waived) and by including the amount of any
contributions actually made (or due to be made) after the
Valuation Date but before the expiration of the extended payment
period in Section 412(c)(10) of the Code.
For purposes of this paragraph (1), the Valuation Date is
the most recent Valuation Date within a 12-month period ending on
the Determination Date.
(2) Subject to (4) below, the sum of the
actuarial present values of a person's accrued benefits under
each Related Defined Benefit Plan in the Aggregation Group,
expressed as a benefit commencing at normal retirement date (or
the person's attained age, if later) determined based on the
following actuarial assumptions:
(A) Interest rate of 5% compounded; and
(B) 80% of the rates underlying the 1984
Unisex Pension Mortality Table, adjusted by applying a 3-year age
setback for the Member's spouse, where applicable;
and determined in accordance with Code Section 416(g).
The present value of an accrued benefit for any person
who is employed by an Employer maintaining a plan on the
Determination Date is determined as of the most recent valuation
date which is within a 12-month period ending on the Deter-
mination Date, provided however that:
(C) for the first plan year of the plan, the
present value for an Employee is determined as if the Employee
had a termination of employment (1) on the Determination Date or
(2) on such Valuation Date but taking into account the estimated
accrued benefits as of the Determination Date; and
(D) for the second and subsequent plan years of
the plan, the accrued benefit taken into account for an employee
is not less than the accrued benefit taken into account for the
first plan year unless the difference is attributable to using an
estimate of the accrued benefit as of the Determination Date for
the first plan year and using the actual accrued benefit as of
the Determination for the second plan year.
For purposes of this paragraph (2), the Valuation Date
is the valuation date used by the plan for computing plan costs
for minimum funding, regardless of whether a valuation is
performed that year.
If the plan provides for a nonproportional subsidy as
described in Treasury Regulations Section 1.416-1(T-26), the
present value of accrued benefits shall be determined by taking
into account the value of nonproportional subsidized early
retirement benefits and nonproportional subsidized benefit
options.
(3) Subject to (4) below, the aggregate value of
amounts distributed from the Plan and each Related Plan in the
Aggregation Group during the Plan Year that includes the
Determination Date or any of the four preceding Plan Years
including amounts distributed under a termination plan which, if
it had not been terminated, would have been in the Aggregation
Group.
(4) The following rules shall apply in determining the
Present Value of Accrued Benefits:
(A) Amounts attributable to qualified voluntary
employee contributions, as defined in Section 219(e) of the Code,
shall be excluded;
(B) In computing the Present Value of Accrued
Benefits with respect to rollovers or plan-to-plan transfers, the
following rules shall be applied to determine whether amounts
which have been distributed during the five (5) year period
ending on the Determination Date from or accepted into this Plan
or any plan in the Aggregation Group shall be included in
determining the Present Value of Accrued Benefits:
(i) Unrelated Transfers accepted into the
Plan or any plan in the Aggregation Group after December 31, 1983
shall not be included.
(ii) Unrelated Transfers accepted on or
before December 31, 1983 and all Related Transfers accepted at
any time into the Plan or any plan in the Aggregation Group shall
be included.
(iii) Unrelated Transfers made from the Plan
or any plan in the Aggregation Group shall be included.
(iv) Related Transfers made from the Plan or
any plan in the Aggregation Group shall not be included by the
transferror plan (but shall be counted by the accepting plan).
The accrued benefit of any individual who has not
performed services for an Employer maintaining the Plan (or a
business with which the Employer is an Affiliate) at any time
during the five (5) year period ending on the Determination Date
shall be excluded in computing the Present Value of Accrued
Benefits.
(g) "Related Plan" means any other defined benefit
plan or a defined contribution plan (as defined in Section 415(k)
of the Code) maintained by an Employer or other Affiliate,
respectively called a "Related Defined Benefit Plan" and a
"Related Defined Contribution Plan".
(h) "Related Transfer" means a rollover or a plan-
to-plan transfer which is either not initiated by the Employee or is
made between plans each of which is maintained by an Employer or
an Affiliate.
(i) A "Top Heavy Aggregation Group" means the
Aggregation Group in any Plan Year for which, as of the
Determination Date, the sum of the Present Values of Accrued
Benefits for Key Employees under all plans in the Aggregation
Group exceeds sixty percent (60%) of the sum of the Present
Values of Accrued Benefits for all Employees under all plans in
the Aggregation Group; provided that, for purposes of determining
the sum of Present Values of Accrued Benefits for all Employees,
there shall be excluded the Present Values of Accrued Benefits of
any Non-Key Employee who was a Key Employee for any Plan Year
preceding the Plan Year that contains the Determination Date.
For purposes of applying the special rules herein with respect to
a Super Top Heavy Plan, a Top Heavy Aggregation Group will also
constitute a "Super Top Heavy Aggregation Group" if in any Plan
Year as of the Determination Date, the sum of the Present Values
of Accrued Benefits for Key Employees under all plans in the
Aggregation Group exceeds ninety percent (90%) of the sum of the
Present Values of Accrued Benefits for all employees under all
plans in the Aggregation Group.
(j) "Top Heavy Plan" means the Plan in any Plan Year
in which it is a member of a Top Heavy Aggregation Group,
including a Top Heavy Aggregation Group consisting solely of the
Plan. For purposes of applying the rules herein with respect to
a Super Top Heavy Plan, a Top Heavy Plan will also constitute a
"Super Top Heavy Plan" if the Plan in any Plan Year is a member
of a Super Top Heavy Aggregation Group consisting solely of the
Plan.
(k) "Unrelated Transfer" means a rollover or a plan-
to-plan transfer which is initiated by the Employee and (a) made
from a plan maintained by an Affiliate to a plan maintained by an
Employer which is not an Affiliate or (b) made to a plan
maintained by an Affiliate from a plan maintained by an Employer
which is not an Affiliate.
14.3 Special Top Heavy Provisions. For each Plan Year
in which the Plan is a Top Heavy Plan, the following rules shall
apply, except that the special provisions of this Section 14.3
shall not apply with respect to any Employee who is covered by a
collective bargaining agreement between Employee representatives
and one or more Employers unless participation by such Employee
in the Plan has been agreed to by the parties to such agreement.
(a) Minimum Employer Contributions.
(1) In any Plan Year in which the Plan is a Top
Heavy Plan, the Employer shall make additional Employer
Contributions to the Plan as necessary for each Member who is
employed on the last day of the Plan Year and who is a Non-Key
Employee to bring the amount of each Member's Aggregate Employer
Contributions for the Plan Year up to at least three percent (3%)
of each Member's Compensation, or if the Plan is not required to
be included in an aggregation group in order to permit a defined
benefit plan in the Aggregation Group to satisfy the requirements
of Section 401(a)(4) or Section 410(b) of the Code, such lesser
amount as is equal to the largest percentage of a Key Employee's
Compensation (as limited in accordance with Section 14.3(c))
allocated to the Key Employee as Aggregate Employer
Contributions. Compensation Deferral Contributions may not be
treated as Employer Contributions for purposes of satisfying the
Non-Key Employee's minimum contribution requirement set forth in
this subparagraph (1).
(2) Notwithstanding Section 14.3(a)(1), if there
is a Related Defined Benefit Plan in the Aggregation Group, if a
Non-Key Employee participates in both the Plan and a Related
Defined Benefit Plan and
(A) if the Related Defined Benefit Plan
provides the minimum benefit required under Code Section
416(c)(1) for the Non-Key Employee, then no minimum Employer
Contribution shall be required under this Section 14.3(a),
(B) if the Related Defined Benefit Plan does
not provide the minimum benefit required under Code Section
416(c)(1) for the Non-Key Employee, then the minimum Aggregate
Employer Contribution under this Section 14.3(a) shall be five
percent (5%) of such Non-Key Employee's Compensation.
(3) For purposes of determining whether a Non-Key
Employee is a Member entitled to have minimum Employee
Contributions made for such Member, a Non-Key Employee will be
treated as a Member even if he is not otherwise a Member (or
accrues no benefit) under the Plan because:
(A) such Member has failed to complete the
requisite number of Hours of Service (if any) after becoming a
Member in the Plan,
(B) such Member is excluded from
participation in the Plan (or accrues no benefit) merely because
his Compensation is less than a stated amount, or
(C) such Member is excluded from parti-
cipation in the Plan (or accrues no benefit) merely
because of a failure to make mandatory employee contributions or,
if the Plan is a Plan described in Section 401(k) of the Code,
because of a failure to make elective (401(k)) contributions.
(b) Vesting. For each Plan Year and for each Plan
Year thereafter, in which the Plan is a Top Heavy Plan, the
vesting schedule under the Plan shall be three (3) year cliff
vesting under which each Member shall be zero percent vested in
the Employer Contribution Account until such Member has three (3)
years of Service (including Service prior to when the Plan is a
Top-Heavy Plan) after which a Member shall be 100% vested in such
Account; provided that this vesting schedule shall not apply to
the accrued benefit of any Member who does not have an Hour of
Service in or after a Plan Year in which the Plan is Top Heavy.
(c) Compensation. For each Plan Year in which the
Plan is a Top Heavy Plan, Compensation taken into account under
the Plan shall not exceed $200,000 (as at 1984, adjusted in
subsequent years for the cost of living adjustments determined in
accordance with regulations prescribed by the Secretary of the
Treasury or his delegate pursuant to the provisions of Section
416(d)(2) of the Code).
(d) Top Heavy Limitations.
(1) In computing the limitations under Section
4.5 hereof, if the Plan is a Top Heavy Plan and is not a Super
Top Heavy Plan, the special rules of Section 416(h) of the Code
shall be applied in accordance with applicable regulations and
rulings so that
(A) in determining the denominator of the
Defined Contribution Plan Fraction and the Defined Benefit Plan
Fraction, at each place at which "1.25" would have been used,
"1.00" shall be substituted and
(B) in determining the numerator of the
transition fraction described in Section 415(e)(6)(B) of the Code
by substituting $41,500 for $51,875
unless the special requirements of Section 416(h)(2) of the
Internal Revenue Code have been satisfied.
(2) In computing the limitations under Section
4.5 thereof, if the Plan is a Super Top Heavy Plan, the special
rules of Section 416(h) of the Code shall be applied in
accordance with applicable regulations and rulings so that
(A) in determining the denominator of the
Defined Contribution Plan Fraction and the Defined Benefit Plan
Fraction, at each place at which "1.25" would have been used,
"1.00" shall be substituted and
(B) in determining the numerator of the
transitional fraction described in Section 415(e)(6)(B) of the
Code, $41,500 shall be substituted for $51,875.
(e) Transition Rule for a Top Heavy Plan. Notwith-
standing the provisions of Sections 14.3(d), for each Plan Year
in which the Plan is a Top Heavy Plan and in which the Plan does
not meet the special requirements of Section 416(h)(2) of the
Code in order to use 1.25 in the denominator of the Defined
Contribution Plan Fraction and the Defined Benefit Plan Fraction,
if an Employee was a participant in one or more defined benefit
plans and in one or more defined contribution plans maintained by
an Employer or an Affiliate before the plans became Top Heavy
Plans and if such Member's Combined Fraction exceeds 1.00 because
of accruals and additions that were made before the plans became
Top Heavy Plans, a factor equal to the lesser of 1.25 or such
lesser amount (but not less than 1.00) as shall be needed to make
the Employee's Combined Fraction equal to 1.00 shall be used in
the denominator of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction if there are no further
accruals or annual additions under any Top Heavy Plans until the
Member's Combined Fraction is not greater than 1.00 when a factor
of 1.00 is used in the denominators of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction. Any
provisions herein to the contrary notwithstanding, if the Plan is
a Top Heavy Plan and the Plan does not meet the special re-
quirements of Section 416(h)(2) of the Code, in order to use 1.25
in the denominator of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction, there shall be no further
Annual Additions for a Member whose Combined Fraction is greater
than 1.00 when a factor of 1.00 is used in the denominator of the
Defined Benefit Plan Fraction Plan and the Defined Contribution
Plan Fraction, until such time as the Member's Combined Fraction
is not greater than 1.00.
(f) Transition Rule for a Super Top Heavy Plan.
Notwithstanding the provisions of Sections 14.3(d) and 14.3(e),
for each Plan Year in which the Plan is a Super Top Heavy Plan,
(1) if an Employee was a participant in one or more defined
benefit plans and in one or more defined contribution plans
maintained by an Employer or an Affiliate before the plans became
Super Top Heavy Plans, and (2) if such Member's Combined Fraction
exceeds 1.00 because of accruals and additions that were made
before the plans became Super top Heavy Plans the Combined
Fraction as then computed did not exceed 1.00, then a factor
equal to the lesser of 1.25 or such lesser amount (but not less
than 1.00) as shall be needed to make the Employee's Combined
Fraction equal to 1.00 shall be used in the denominator of the
Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction if there are no further accruals or Annual Additions
under any Super Top Heavy Plans until the Member's Combined
Fraction is not greater than 1.00 when a factor of 1.00 is used
in the denominators of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction. Any provisions herein to the
contrary notwithstanding, if the Plan is a Super Top Heavy Plan,
there shall be no further Annual Additions for a Member whose
Combined Fraction is greater than 1.00 when a factor of 1.00 is
used in the denominator of the Defined Benefit Plan Fraction and
the Defined Contribution Plan Fraction until the Member's
Combined Fraction is not greater than 1.00.
(g) Terminated Plan. If the Plan becomes a Top Heavy
Plan after it has formally been terminated, has
ceased crediting for benefit accruals and vesting and had been or
is distributing all plan assets to Members and their
beneficiaries as soon as administratively feasible, or if a
terminated plan has distributed all benefits of Members and their
beneficiaries, the provisions of Section 14.3 shall not apply to
the Plan.
(h) Frozen Plans. If the Plan becomes a Top Heavy
Plan after contributions have ceased under the Plan but all
assets have not been distributed to Members or their
beneficiaries, the provisions of Section 14.3 shall apply to the
Plan.
14.4 Effect of Change in Applicable Legislation or
Regulation. In the event that Congress should provide by statute
or the Secretary of the Treasury should provide by regulation a
ruling, that the provisions of this Article XIV are no longer
necessary for the Plan to meet the requirements of Section 401(a)
or other applicable provisions of the Code, such limitations
shall become void and shall no longer apply, without the
necessity of further amendment to the Plan.
<PAGE>
__________________________________________________________
HISTACOUNT CORPORATION
RETIREMENT SAVINGS AND INVESTMENT PLAN
Adopted Effective July 1, 1989
As Amended through January 1, 1994
__________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Account". . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Affiliate". . . . . . . . . . . . . . . . . . . . . 1
1.3 "Appropriate Form" . . . . . . . . . . . . . . . . . 1
1.4 "Basic Contributions". . . . . . . . . . . . . . . . 1
1.5 "Basic Contributions Subaccount" . . . . . . . . . . 1
1.6 "Beneficiary". . . . . . . . . . . . . . . . . . . . 1
1.7 "Board" or "Board of Directors". . . . . . . . . . . 1
1.8 "Code" . . . . . . . . . . . . . . . . . . . . . . . 1
1.9 "Committee". . . . . . . . . . . . . . . . . . . . . 1
1.10 "Compensation" . . . . . . . . . . . . . . . . . . . 2
1.11 "Compensation Deferral Contributions". . . . . . . . 2
1.12 "Compensation Deferral Contributions Account". . . . 2
1.13 "Effective Date" . . . . . . . . . . . . . . . . . . 2
1.14 "Eligible Employee". . . . . . . . . . . . . . . . . 3
1.15 "Employee" . . . . . . . . . . . . . . . . . . . . . 3
1.16 "Employee Contributions" . . . . . . . . . . . . . . 3
1.17 "Employee Contributions Account" . . . . . . . . . . 3
1.18 "Employer" . . . . . . . . . . . . . . . . . . . . . 3
1.19 "Employer Contributions" . . . . . . . . . . . . . . 3
1.20 "Employer Contribution Account". . . . . . . . . . . 3
1.21 "Employer Securities". . . . . . . . . . . . . . . . 3
1.22 "Enrollment Date". . . . . . . . . . . . . . . . . . 3
1.23 "Enrollment Period". . . . . . . . . . . . . . . . . 3
1.24 "ERISA". . . . . . . . . . . . . . . . . . . . . . . 4
1.25 "Hour of Service". . . . . . . . . . . . . . . . . . 4
1.26 "Initial Enrollment Date". . . . . . . . . . . . . . 4
1.27 "Investment Fund". . . . . . . . . . . . . . . . . . 5
1.28 "Investment Manager" . . . . . . . . . . . . . . . . 5
1.29 "Leave of Absence" . . . . . . . . . . . . . . . . . 5
1.30 "Maturity Date". . . . . . . . . . . . . . . . . . . 5
1.31 "Member" . . . . . . . . . . . . . . . . . . . . . . 5
1.32 "Parental Leave" . . . . . . . . . . . . . . . . . . 5
1.33 "Plan" . . . . . . . . . . . . . . . . . . . . . . . 6
1.34 "Plan Year". . . . . . . . . . . . . . . . . . . . . 6
1.35 "Prior Plan" . . . . . . . . . . . . . . . . . . . . 6
1.36 "Required Beginning Date". . . . . . . . . . . . . . 6
1.37 "Retirement Age" . . . . . . . . . . . . . . . . . . 6
1.38 "Rollover Contribution". . . . . . . . . . . . . . . 6
1.39 "Rollover Contribution Account". . . . . . . . . . . 6
1.40 "Service". . . . . . . . . . . . . . . . . . . . . . 6
1.41 "Specific Involuntary Termination" . . . . . . . . . 7
1.42 "Supplemental Contributions" . . . . . . . . . . . . 7
1.43 "Supplemental Contributions Subaccount". . . . . . . 7
1.44 "Suspense Account" . . . . . . . . . . . . . . . . . 7
1.45 "Total and Permanent Disability" . . . . . . . . . . 7
1.46 "Trustee". . . . . . . . . . . . . . . . . . . . . . 7
1.47 "Trust Fund" . . . . . . . . . . . . . . . . . . . . 7
1.48 "Valuation Date" . . . . . . . . . . . . . . . . . . 7
1.49 "Use of Masculine Pronoun".. . . . . . . . . . . . . 8
ARTICLE II
Eligibility and Membership
2.1 Members on the Effective Date. . . . . . . . . . . . 8
2.2 Eligible Employees on and after the Effective
Date. . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Completion of Appropriate Form . . . . . . . . . . . 8
2.4 Elections Upon Becoming a Member . . . . . . . . . . 8
2.5 Beneficiary Designation. . . . . . . . . . . . . . . 9
2.6 Transfers to or from Non-Covered Status. . . . . . . 9
2.7 Rollover Contributions From Other Plans. . . . . . . 9
ARTICLE III
Compensation Deferral Contributions
3.1 Compensation Deferral Contributions. . . . . . . . 10
3.2 Changes and Suspension of Contributions. . . . . . 10
3.3 Transfer of Contributions to Trustee . . . . . . . 11
3.4 Limitation on Compensation Deferral
Contributions . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
Employer Contributions
4.1 Amount of Employer Contributions. . . . . . . . . . 13
4.2 Limitations on Matching Contributions . . . . . . . 14
4.3 Treatment of Forfeitures. . . . . . . . . . . . . . 15
4.4 Transfer of Contributions to Trustee. . . . . . . . 15
4.5 Limitation of Annual Additions. . . . . . . . . . . 15
ARTICLE V
Accounts
5.1 Separate Annual Class . . . . . . . . . . . . . . . 18
5.2 Maintenance of Accounts . . . . . . . . . . . . . . 19
5.3 Valuations. . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI
Vesting of Accounts
6.1 Employer Contribution Account. . . . . . . . . . . 19
6.2 Other Accounts . . . . . . . . . . . . . . . . . . 20
6.3 Earlier Vesting in Employer Contribution Account . 20
6.4 Forfeitures. . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII
Investment of Accounts
7.1 Investment of Accounts Other Than Employer
Contribution Accounts . . . . . . . . . . . . . . 21
7.2 Redirection of Future Contributions. . . . . . . . 22
7.3 Reinvestment of Prior Contributions. . . . . . . . 22
7.4 Investment of Employer Contributions Accounts. . . 22
7.5 Statements of Accounts . . . . . . . . . . . . . . 23
7.6 Crediting of Contribution Accounts . . . . . . . . 23
7.7 Correction of Error. . . . . . . . . . . . . . . . 23
ARTICLE VIII
Withdrawals and Loans During Employment
8.1 Withdrawal Options . . . . . . . . . . . . . . . . 24
8.2 Hardship Withdrawals . . . . . . . . . . . . . . . 25
8.3 Values . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Payment of Withdrawals . . . . . . . . . . . . . . 26
8.5 Loans. . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IX
Distribution
9.1 Amount of Distribution . . . . . . . . . . . . . . 28
9.2 Normal Form of Distribution. . . . . . . . . . . . 29
9.3 Alternate Form of Distribution . . . . . . . . . . 30
9.4 Identity of Payee. . . . . . . . . . . . . . . . . 30
9.5 Non-alienation of Benefits . . . . . . . . . . . . 30
9.6 Qualified Domestic Relations Order . . . . . . . . 31
9.7 Commencement of Benefits . . . . . . . . . . . . . 32
9.8 Annuities. . . . . . . . . . . . . . . . . . . . . 32
9.9 Spousal Consent. . . . . . . . . . . . . . . . . . 34
9.10 Lump Sum Payment without Election. . . . . . . . . 34
9.11 Direct Rollover Election . . . . . . . . . . . . . 35
ARTICLE X
Administration of the Plan
10.1 Plan Administrator. . . . . . . . . . . . . . . . 35
10.2 Board of Directors. . . . . . . . . . . . . . . . 35
10.3 Appointment of the Committee. . . . . . . . . . . 36
10.4 Compensation Expenses . . . . . . . . . . . . . . 36
10.5 Committee Actions, Agents . . . . . . . . . . . . 36
10.6 Committee Meetings. . . . . . . . . . . . . . . . 36
10.7 Authority and Duties of the Committee . . . . . . 36
10.8 Personal Liability. . . . . . . . . . . . . . . . 37
10.9 Dealings between the Committee and Individual
Members. . . . . . . . . . . . . . . . . . . . . 37
10.10 Information To Be Supplied by the Employer. . . . 37
10.11 Records . . . . . . . . . . . . . . . . . . . . . 37
10.12 Fiduciary Capacity. . . . . . . . . . . . . . . . 38
10.13 Fiduciary Responsibility. . . . . . . . . . . . . 38
10.14 Claim Procedure . . . . . . . . . . . . . . . . . 38
ARTICLE XI
Operation of the Trust Fund
11.1 Trust Fund . . . . . . . . . . . . . . . . . . . . 39
11.2 Trustee. . . . . . . . . . . . . . . . . . . . . . 40
11.3 Investment Manager . . . . . . . . . . . . . . . . 40
11.4 Purchase and Holding of Securities . . . . . . . . 40
11.5 Voting of Employer Securities. . . . . . . . . . . 40
11.6 Disbursement of Funds. . . . . . . . . . . . . . . 41
11.7 Exclusive Benefit of Members . . . . . . . . . . . 41
ARTICLE XII
Amendment, Termination and Merger
12.1 Right to Amend . . . . . . . . . . . . . . . . . . 42
12.2 Suspension or Termination. . . . . . . . . . . . . 42
12.3 Merger, Consolidation or Transfer. . . . . . . . . 42
ARTICLE XIII
Miscellaneous
13.1 Uniform Administration . . . . . . . . . . . . . . 43
13.2 Payment Due an Incompetent . . . . . . . . . . . . 43
13.3 Source of Payments . . . . . . . . . . . . . . . . 43
13.4 Plan Not a Contract of Employment. . . . . . . . . 43
13.5 Applicable Law . . . . . . . . . . . . . . . . . . 43
13.6 Unclaimed Amounts. . . . . . . . . . . . . . . . . 43
ARTICLE XIV
Top Heavy Provisions
14.1 Application. . . . . . . . . . . . . . . . . . . . 44
14.2 Special Top Heavy Definitions. . . . . . . . . . . 44
14.3 Special Top Heavy Provisions . . . . . . . . . . . 51
14.4 Effect of Change in Applicable Legislation or
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 54
<PAGE>
Introduction
SCM Corporation adopted the Retirement Savings and
Investment Plan of SCM Corporation effective October 28, 1971 for
the benefit of certain of its employees and the plan was amended
from time to time thereafter ("Prior Plan"). Effective July 1,
1989 Histacount Corporation adopted the Histacount Corporation
Retirement Savings and Investment Plan as reflected herein
("Plan"). Members in the Prior Plan automatically became
eligible to participate in the Plan as of its effective date and
the accounts of such Members were transferred from the Prior Plan
to the Trust formed under the Plan.
The principal purpose of the Plan is to provide
Employees with an opportunity to acquire common stock of Smith
Corona Corporation, to encourage them to save for retirement by
offering Employer Matching Contributions and to provide them with
a convenient way to save on a regular and tax effective basis.
Provisions of this Plan are only applicable to
Employees in the employment of Histacount Corporation on and
after July 1, 1989. Any Employee who was covered under the Prior
Plan who retired or terminated employment prior to July 1, 1989
shall be entitled to benefits as determined by the Prior Plan in
effect at the retirement or termination date. As of November 4,
1994, all of the assets of Histacount Corporation were sold.
SMITH CORONA CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Restated and Amended as of
July 28, 1989
Amended through November 16, 1993<PAGE>
INTRODUCTION
On July 25, 1983 the SCM Corporation Full Benefit
Retirement Plan for Salaried Employees was adopted. The purpose
of the Plan was to provide eligible employees the full retirement
benefit to which they would be entitled under the SCM Corporation
Retirement Plan for Salaried Employees but for the maximum
benefit limitations under Section 415 of the Internal Revenue
Code.
Effective July 1, 1985 the SCM Corporation Full Benefit
Retirement Plan for Salaried Employees was renamed the SCM
Corporation Supplemental Executive Retirement Plan and was
amended in its entirety to change the plan from an excess plan to
a supplemental retirement program and to apply it to, amongst
others, eligible executives of Smith Corona Corporation.
As of July 28, 1989, Smith Corona Corporation became a
public company with an offering of its common stock on the New
York Stock Exchange. After such offering, the SCM Corporation
Supplemental Executive Retirement Plan was split so that an
identical Supplemental Executive Retirement Plan covering only
eligible executives of Smith Corona Corporation was assumed by
Smith Corona Corporation. Such plan was renamed the Smith Corona
Corporation Supplemental Executive Retirement Plan and has been
amended and restated in its entirety to read as set forth herein.
It is intended that the Plan, as amended, be a
nonqualified, unfunded, deferred compensation plan for "a select
group of management or highly compensated employees" as that term
is used in the Employee Retirement Income Security Act of 1974,
as amended, ("ERISA").
The purpose of the Plan is to supplement other sources
of retirement income in order to provide a total objective
benefit for retiring executives or beneficiaries of deceased
executives.
<PAGE>
SECTION 1
DEFINITIONS
The following words and phrases as used herein have the
following meanings unless a different meaning is plainly required
by the context:
1.1 "Average Final Compensation" means the highest average
annual Compensation for any 3 calendar years in the final 10
years of employment with the Company or, if greater, the average
annual Compensation for the 36 month period immediately preceding
his Retirement Date.
1.2 "Board of Directors" means the board of directors
of Smith Corona Corporation.
1.3 "Change of Control" means (1) a reorganization,
consolidation, or merger of the Company with or into another
entity, (2) a sale, transfer or lease of substantially all of the
Company's property or (3) the acquisition by an entity or group
not affiliated with Hanson Plc or the Company, of 20% or more of
the outstanding shares of common stock of the Company unless
Hanson Plc also owns 20% or more of the outstanding shares of
common stock of the Company on and after such acquisition.
1.4 "Company" means Smith Corona Corporation, any
predecessor thereto or any subsidiary or affiliate thereof, and
any person, firm, corporation or partnership which may succeed to
its business.
1.5 "Compensation" means, with respect to any period,
the sum of the amount reported by the Company to the Internal
Revenue Service as the Participant's compensation for such period
and the amount of any "salary deferral contributions" made on
such Participant's behalf to the Smith Corona Corporation
Retirement Savings and Investment Plan; but exclusive of
termination or severance pay, prizes, awards, grievance
settlements, overseas cost of living allowances, relocation
allowances, mortgage assistance, executive perquisites, stock
options, stock awards, distributions under the Smith Corona
Corporation Supplemental Performance Plan, and such other
extraordinary items of remuneration as the Plan Administrator
shall determine from time to time.
1.6 "Committee" means the Compensation and Benefits
Committee of the Board of Directors.
1.7 "Credited Service" means a Participant's period
(or periods) of employment with the Company (including employment
with SCM Corporation and with an entity prior to being acquired
by SCM Corporation, if approved by the Board of Directors),
subject to a maximum of 30 years. However, a Participant who
upon his retirement or death meets the eligibility requirements
for a benefit under Section 3 (Retirement Date) or Section 6
(Death Benefits), shall be deemed to have no less than 5 years of
Credited Service for purposes of determining the amount of
benefit payable under the Plan. Credited Service shall be
computed in years with any fraction of a year treated as a full
year.
1.8 "Deferred Retirement Date" means the first day of
the month coincident with or immediately following the date a
Participant actually retires after his Normal Retirement Date
pursuant to the provisions of Section 3.2 (Deferred Retirement
Date).
1.9 "Early Retirement Date" means the first day of the
month coincident with or immediately following the date a
Participant retires prior to his Normal Retirement Date pursuant
to the provisions of Section 3.3 (Early Retirement Date).
1.10 "Executive" means an employee of the Company who
is either an officer of the Company (including any subsidiary) or
a member of senior management of a division of the Company.
1.11 "Normal Retirement Date" means the first day of
the month next following the date on which a Participant attains
his 65th birthday.
1.12 "Participant" means any Executive or former
Executive who is included in the Plan as provided in Section 2
(Participation).
1.13 "Pension Offset" means the annual amount of
pension that a Participant is entitled to receive, in the form of
a straight life annuity commencing at age 65, from the Smith
Corona Retirement Plan or from any other tax-qualified pension or
profit sharing plan of the Company or a division or subsidiary of
the Company (other than the Smith Corona Retirement Savings and
Investment Plan).
However, the portion of such benefit, if any, which is
attributable to his own contributions shall be excluded. If the
benefit is payable on a basis other than a straight life annuity
commencing at age 65, the Plan Administrator shall adjust such
benefit on an actuarial basis.
1.14 "Plan" means the Smith Corona Corporation
Supplemental Executive Retirement Plan, as amended from time to
time.
1.15 "Plan Administrator" means the Compensation and
Benefits Committee except as to matters pertaining solely to a
member of such Committee in which case it means the Board of
Directors.
1.16 "Retirement Date" means the Early Retirement Date,
the Normal Retirement Date or the Deferred Retirement Date,
whichever is applicable.
1.17 "Social Security Benefit" means the estimated
annual benefit which a Participant is or would be entitled to
receive at age 65 under the Federal Social Security Act, as
amended, and as in effect for persons covered by Social Security
at the date his Credited Service ceases to accrue, whether or not
he applies for such Social Security Benefit, and even though he
may lose part or all of such Social Security Benefit through
delay in applying for it, or by making application prior to age
65 for a reduced benefit, or by entering into covered employment,
or for any other reason. In estimating such Social Security
benefit no further earnings shall be anticipated after the date
the Participant's Credited Service ceases.
1.18 "Social Security Offset" means 1/60 of the
Participant's Social Security Benefit, multiplied by his years of
Credited Service.
1.19 "Smith Corona Retirement Plan" means the Smith
Corona Corporation Salaried Employees' Retirement Plan, as
amended from time to time.
1.20 The masculine pronoun wherever used shall include
the feminine pronoun and the singular, the plural.
<PAGE>
SECTION 2
PARTICIPATION
2.1 Participation. The Plan Administrator shall
select the Executives who are to be eligible to become
Participants in the Plan.
2.2 Continuation of Participation. An Executive who
has become a Participant in accordance with Section 2.1 shall
continue as a Participant as long as he continues in the
employment of the Company and thereafter as long as he is
entitled to benefits under the Plan.
<PAGE>
SECTION 3
RETIREMENT DATE
3.1 Normal Retirement Date. A Participant who retires
on his Normal Retirement Date (which is the first day of the
month next following his 65th birthday) shall be entitled to a
benefit as determined in accordance with Section 4.1 (Normal
Retirement Benefit).
3.2 Deferred Retirement Date. A Participant whose
employment with the Company continues beyond his Normal
Retirement Date shall retire on a Deferred Retirement Date and
shall be entitled to a benefit in accordance with Section 4.2
(Deferred Retirement Benefit).
3.3 Early Retirement Date. Only with the consent of
the Plan Administrator which can be withheld for any reason, a
Participant who has not attained age 62, but who has either (a)
attained age 50 and accrued 15 or more years of Credited Service
or (b) attained age 60 and accrued 1 or more years of Credited
Service, may retire at an Early Retirement Date. If such consent
is required and given, the Participant shall be entitled to a
benefit as determined in accordance with Section 4.3 ("Early
Retirement Benefit").
<PAGE>
SECTION 4
RETIREMENT BENEFITS
4.1 Normal Retirement Benefit. The annual amount of benefit for
a Participant retiring on his Normal Retirement Date shall be
equal to (a) minus (b), as follows:
(a) A percentage of his Average Final Compensation
based on years of Credited Service, as follows:
Years of Credited Service Percentage
Less than 5 0%
5 - 10 12.5%+2.5% for each year over 5
10 - 19 25%+1.5% for each year over 10
20 - 29 40%+1.0% for each year over 20
30 or more 50%
(b) The sum of his Pension Offset and Social Security
Offset.
4.2 Deferred Retirement Benefit. If a Participant is
employed after his Normal Retirement Date and is entitled to a
benefit in accordance with Section 3.2 (Deferred Retirement
Date), benefit payments to him shall be postponed until his
actual retirement on his Deferred Retirement Date. At his
Deferred Retirement Date, the Participant shall be entitled to
the benefit computed under Section 4.1 based upon his years of
Credited Service as of his Deferred Retirement Date.
4.3 Early Retirement Benefit. A Participant retiring
prior to his Normal Retirement Date, as provided in Section 3.3
(Early Retirement Date), shall be entitled to receive a benefit,
commencing on his Normal Retirement Date, equal to the amount
computed under Section 4.1 based on his Average Final
Compensation, Credited Service, Pension Offset and Social
Security Offset each determined on his Early Retirement Date.
In lieu of such benefit commencing on his Normal
Retirement Date, the Participant may elect to have his benefit
commence on his Early Retirement Date. In such case the
Participant's benefit shall equal a percentage of the benefit
payable on his Normal Retirement Date, in accordance with the
following schedule:
Age at Date Percentage of
Benefit Commencement Benefit Payable
50 50%
51 54%
52 58%
53 62%
Age at Date Percentage of
Benefit Commencement Benefit Payable
54 66%
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
61 95%
62 100%
63 100%
64 100%
4.4 Adjusted Age and Credited Service. The Plan
Administrator may, in its sole discretion, determine an Adjusted
Credited Service and/or an Adjusted Age for the Participant. The
Adjusted Credited Service may be 1, 2, 3, 4 or 5 years more than
the actual Credited Service (subject to the 30 year maximum on
Credited Service). The Adjusted Age may be 1, 2, 3, 4 or 5 years
more than his actual age.
In determining the amount of pension in accordance with
Section 4 a Participant's Adjusted Age and Adjusted Credited
Service shall be used as if they were his actual age and Credited
Service.
4.5 Change of Control. Notwithstanding any other Plan
provision to the contrary, if the Company incurs a Change of
Control, the Plan benefit formula in Section 4.1 shall
automatically be modified to be (a) minus (b), as follows:
(a) A percentage of his Average Final Compensation
based on years of Credited Service, as follows:
Years of Credited Service Percentage
1 - 5 2.5% for each year
5 - 10 12.5%+2.5% for each year over 5
10 - 19 25%+1.5% for each year over 10
20 - 29 40%+1.0% for each year over 20
30 or more 50%
(b) The sum of his Pension Offset and Social Security
Offset.<PAGE>
SECTION 5
DISABILITY BENEFITS
5.1 Eligibility and Amount of Benefit. If a
Participant who has 15 or more years of Credited Service shall
become Totally and Permanently Disabled (as hereinafter defined)
prior to his Normal Retirement Date he shall continue to accrue
Credited Service during the period prior to his Normal Retirement
Date that he remains Totally and Permanently Disabled. If such
Participant remains Totally and Permanently Disabled he shall,
upon attaining his Normal Retirement Date, be entitled to a
benefit determined in accordance with the provisions of Section
4.1 (Normal Retirement Benefit), except that in the calculation
of his Social Security Offset his Social Security Benefit shall
be calculated as of the date on which he became Totally and
Permanently Disabled. In lieu of the benefit to commence at his
Normal Retirement Date, the Participant may, at any time after
attaining age 50, elect to retire on an Early Retirement Date and
receive a benefit determined in accordance with Section 4.2
(Early Retirement Benefit) based on his Credited Service at such
date.
For purposes of this Section 5.1, "Totally and
Permanently Disabled" means a physical or mental condition which
renders a Participant disabled to the extent he is eligible for
and receiving Social Security Disability benefits; provided,
however, that no Member shall be deemed to be Totally and
Permanently Disabled if his incapacity (a) resulted from or
consists of habitual drunkenness or addiction to narcotics, or
(b) was incurred, suffered or occurred while he was engaged in,
or resulted from his having engaged in, a criminal enterprise, or
(c) was intentionally self-inflicted, or (d) arose out of service
in the Armed Forces of any country.
5.2 Medical Examination; Recovery From Disability.
Any Participant who is accruing Credited Service pursuant to
Section 5.1 may be required by the Plan Administrator to submit
from time to time to medical and physical examination and to
submit evidence of his continued eligibility for Social Security
Disability benefits. In the event that the Participant shall
refuse to submit to examination, or if as the result of any such
examination, the Plan Administrator shall determine that the
Participant is no longer Totally and Permanently Disabled or if
he fails to submit evidence of his continued eligibility for
Social Security Disability benefits, such Participant shall cease
to accrue Credited Service as provided in Section 5.1. Unless
such Participant returns to active employment with the Company
within such time period as the Plan Administrator shall specify,
he shall be deemed to have terminated his employment or to have
retired at an Early Retirement Date as of the first day of the
month following the date his Credited Service ceased to accrue.
<PAGE>
SECTION 6
DEATH BENEFITS
6.1 Prior to Retirement. Upon the death of a Participant,
either while an employee or after his retirement at an Early
Retirement Date but before his benefit commences, his surviving
spouse, if any, shall be entitled to a benefit commencing on the
first day of the month following the Participant's date of death
and continuing thereafter for the lifetime of the surviving
spouse. The amount of the benefit payable to the surviving
spouse shall be equal to the benefit determined under Section 4.1
(Normal Retirement Benefit), based on his Average Final
Compensation, Credited Service, Pension Offset and Social
Security Offset each determined as of his date of death,
multiplied by an Early Commencement Percentage based on the
Participant's age at his date of death in accordance with the
table below and further reduced to reflect the actuarial
equivalent charge for the election of a 100% joint and survivor
option under the Smith Corona Retirement Plan.
Deceased Employee's Early Commencement
Age at Date of Death Percentage
35 or under 5%
36 8%
37 11%
38 14%
39 17%
40 20%
41 23%
42 26%
43 29%
44 32%
45 35%
46 38%
47 41%
48 44%
49 47%
51 54%
52 58%
53 62%
54 66%
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
Deceased Employee's Early Commencement
Age at Date of Death Percentage
50 50%
61 95%
62 or over 100%
If at any time on or after the Participant's death
there is no surviving spouse but there are one or more dependent
children under age 19 or, if students age 23, the benefit which
would have been paid to a surviving spouse shall be paid in equal
shares to the dependent children as long as each shall qualify.
Benefit payments to a dependent child shall cease upon
the earlier of (a) the last day of the month in which such child
ceases to qualify as a dependent child, or (b) the last day of
the month preceding the month in which such child dies. The
share payable in respect of any such child shall subsequently
increase by reason of the subsequent cessation of payments in
respect of any other such child.
For the purposes of determining dependency, a child
shall be deemed dependent if the Participant, or the surviving
spouse, whichever the case may be, provided one-half or more of
such child's support during the year immediately prior to such
Participant's or surviving spouse's death. The Plan
Administrator shall determine on a uniform and nondiscriminatory
basis the dependency of any person to whom a benefit may be
payable under this Section 6.1, and such determination shall be
final and conclusive.
6.2 After Retirement. There are no benefits payable
under the Plan in the event of the Participant's death after his
retirement benefit has commenced unless an option is in effect in
accordance with Section 8.2 (Optional Forms of Benefit).
<PAGE>
SECTION 7
IN EVENT OF TERMINATION OF EMPLOYMENT
7.1 Termination Prior to Retirement. If a Participant's
employment with the Company ceases for any reason and he is not
eligible for a benefit under the provisions of Section 3
(Retirement Date), Section 5 (Disability Benefits) or Section 6
(Death Benefits), no benefits shall become payable to him or with
respect to him.
7.2 Termination After Eligibility for Retirement. A
Participant whose employment with the Company ceases for any
reason other than death, dishonesty or gross misconduct and who
is eligible to retire under the provisions of Section 3
(Retirement Date), shall be deemed to have retired or to have
been retired by the Company and shall be entitled to the
appropriate benefits. If a Participant eligible to retire under
Section 3 is found by the Plan Administrator to have terminated
employment with the Company on account of dishonesty or gross
misconduct, he shall not be entitled to any benefits under the
Plan.
<PAGE>
SECTION 8
TIME AND FORM OF BENEFIT PAYMENT
8.1 Normal Form of Benefit. Except as otherwise provided in
Section 8.2, the retirement benefit shall be payable as a monthly
annuity as of the last day of each calendar month for the life of
the Participant with benefits ceasing with the payment due as of
the last day of the month preceding the month in which the
Participant's death occurs.
8.2 Optional Forms of Benefit. If a Participant is
entitled to a benefit from the Smith Corona Retirement Plan, his
benefit under this Plan shall be paid in the same form as the
Smith Corona Retirement Plan benefit is payable. If such form of
payment is other than a straight life annuity, the amount of
pension otherwise payable under this Plan shall be adjusted in
the same manner that his benefit is to be adjusted under the
Smith Corona Retirement Plan.
8.3 Forfeiture of Benefits. Any Plan provision to the
contrary notwithstanding, any benefit paid or payable to a
Participant shall be subject to forfeiture in the event it is
determined by the Plan Administrator that the Participant either
(i) engaged in fraud, dishonesty, embezzlement or similar conduct
while employed by the Company, (ii) commits or is involved in any
action after his employment termination which significantly harms
the Company's reputation or (iii) within five years of his
employment termination, is engaged as a business owner, employee
or consultant in any activity which is in competition with any
line of Company business existing as of the date of employment
termination. If the Plan Administrator finds a violation of
clause (iii) above, it may, in its sole discretion, furnish
notice to the Participant that benefits, if any, paid under the
Plan must be returned to the Company and/or that the benefits
payable under the Plan are being suspended and will be forfeited
unless the Participant discontinues the competitive activity
within 30 days of the date such notice is given to the
Participant.
<PAGE>
SECTION 9
PROVISION OF BENEFITS
9.1 Participant Contributions. Participants shall make no
contributions under the Plan.
9.2 Funding. The Company reserves the right to make
provision for benefit payments through the purchase of insurance
contracts or other funds held as part of the general assets of
the Company or in a trust the assets of which are specifically
designated for this purpose. Neither a Participant nor any other
person entitled to benefits under the Plan shall be deemed to
have any legal or equitable property interest in any specific
asset of the Company. To the extent that any person acquires any
right to receive Plan benefits, such right shall merely be a
contractual obligation of the Company which shall be no greater
than the rights of any general unsecured creditor of the Company.
<PAGE>
SECTION 10
ADMINISTRATION OF THE PLAN
10.1 Plan Administrator. The Committee shall be the Plan
Administrator, except with respect to any matter relating
exclusively to a member of the Committee in which case the Board
of Directors shall serve as the Plan Administrator.
10.2 Powers and Duties of the Plan Administrator. The
Plan Administrator, in addition to all the powers and duties
specified in the various provisions of the Plan, shall have the
exclusive right to interpret the Plan and to decide any matter
arising in connection with the administration of the Plan.
<PAGE>
SECTION 11
MISCELLANEOUS
11.1 Prohibition Against Encumbrance. Except in the case of a
court order which meets the requirements of a "qualified domestic
relations order" as defined in Section 414(p) of the Internal
Revenue Code of 1986, or otherwise required by law, no benefit
under the Plan shall be alienated, assigned, disposed of, or in
any manner encumbered while in the possession and control of the
Company. For purposes of applying a qualified domestic relations
order to the Plan, the Plan shall be deemed a qualified plan
subject to the Internal Revenue Code and the Company's Vice
President - Human Resources, on behalf of the Plan Administrator,
shall determine whether a court order meets the applicable
requirements of the Internal Revenue Code. If the interest of
any Participant of Participant's beneficiary would, but for this
Section 11.1, cease in whole or in part to be enjoyed by such
individual, then the Plan Administrator, in its sole discretion,
shall direct the disposition of such interest. The Plan
Administrator may direct that the funds constituting such
interest be held for further distribution or it may expend from
such funds amounts for the maintenance and support of the
Participant, his spouse, children or other dependents as, in the
Plan Administrators' sole discretion, it deems fit and proper.
11.2 Rights of Employees. Neither the adoption of the
Plan nor its operation shall in any way affect the right and
power of the Company to dismiss or otherwise terminate the
employment of or change the terms of employment or amount of
compensation of any Executive at any time for any reason.
11.3 Liability Limitations. The Company shall be
solely responsible for the payment of Plan benefits and no member
of the Compensation and Benefits Committee or any officer,
director, employee or agent of the Company shall be liable for
such benefits. Unless otherwise required by law, no such person
shall be liable for any action or failure to act, except where
such act or omission was willful or intentional.
11.4 Claims Procedure. Any claimant whose claim
involves eligibility, participation or benefits which is denied
shall be entitled to appeal such decision to the Plan
Administrator who shall be the named fiduciary for the review of
denied claims under Section 503(2) of ERISA. All claim decisions
shall be final and binding on all interested parties.
11.5 Governing Law. Except to the extent the Plan may
be subject to the provision of ERISA, the Plan shall be construed
and enforced according to the laws of the State of New York
(other than the principles of conflicts of laws).
<PAGE>
SECTION 12
AMENDMENT OR TERMINATION OF THE PLAN
12.1 Amendment. The Board of Directors reserves the right at
any time and from time to time, to modify or amend in whole or in
part any or all of the provisions of the Plan but no such
amendment shall adversely affect any Participant's or
Participant's beneficiary's rights to benefits accrued under the
Plan prior to the effective date of the amendment.
12.2 Termination. The Board of Directors shall have
the right to terminate the Plan at any time provided that such
action shall not adversely affect any Participant's or
Participant's beneficiary's rights to benefits accrued under the
Plan prior to such action.
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1
DEFINITIONS
1.1 "Average Final Compensation" . . . . . . . . . . 2
1.2 "Board of Directors" . . . . . . . . . . . . . . 2
1.3 "Change of Control". . . . . . . . . . . . . . . 2
1.4 "Company". . . . . . . . . . . . . . . . . . . . 2
1.5 "Compensation" . . . . . . . . . . . . . . . . . 2
1.6 "Committee". . . . . . . . . . . . . . . . . . . 2
1.7 "Credited Service" . . . . . . . . . . . . . . . 3
1.8 "Deferred Retirement Date" . . . . . . . . . . . 3
1.9 "Early Retirement Date". . . . . . . . . . . . . 3
1.10 "Executive". . . . . . . . . . . . . . . . . . . 3
1.11 "Normal Retirement Date" . . . . . . . . . . . . 3
1.12 "Participant". . . . . . . . . . . . . . . . . . 3
1.13 "Pension Offset" . . . . . . . . . . . . . . . . 3
1.14 "Plan" . . . . . . . . . . . . . . . . . . . . . 4
1.15 "Plan Administrator" . . . . . . . . . . . . . . 4
1.16 "Retirement Date". . . . . . . . . . . . . . . . 4
1.17 "Social Security Benefit". . . . . . . . . . . . 4
1.18 "Social Security Offset" . . . . . . . . . . . . 4
1.19 "Smith Corona Retirement Plan" . . . . . . . . . 4
SECTION 2
PARTICIPATION
2.1 Participation. . . . . . . . . . . . . . . . . . 5
2.2 Continuation of Participation. . . . . . . . . . 5
SECTION 3
RETIREMENT DATE
3.1 Normal Retirement Date . . . . . . . . . . . . . 6
3.2 Deferred Retirement Date . . . . . . . . . . . . 6
3.3 Early Retirement Date. . . . . . . . . . . . . . 6
SECTION 4
RETIREMENT BENEFITS
4.1 Normal Retirement Benefit. . . . . . . . . . . . 7
4.2 Deferred Retirement Benefit. . . . . . . . . . . 7
4.3 Early Retirement Benefit . . . . . . . . . . . . 7
4.4 Adjusted Age and Credited Service. . . . . . . . 8
4.5 Change of Control. . . . . . . . . . . . . . . . 8
SECTION 5
DISABILITY BENEFITS
5.2 Medical Examination; Recovery From Disability. 10
SECTION 6
DEATH BENEFITS
6.1 Prior to Retirement. . . . . . . . . . . . . . . 12
6.2 After Retirement . . . . . . . . . . . . . . . . 13
SECTION 7
IN EVENT OF TERMINATION OF EMPLOYMENT
7.1 Termination Prior to Retirement. . . . . . . . . 14
7.2 Termination After Eligibility for
Retirement . . . . . . . . . . . . . . . . . . . 14
SECTION 8
TIME AND FORM OF BENEFIT PAYMENT
8.1 Normal Form of Benefit . . . . . . . . . . . . . 15
8.2 Optional Forms of Benefit. . . . . . . . . . . . 15
SECTION 9
PROVISION OF BENEFITS
9.1 Participant Contributions. . . . . . . . . . . . 16
9.2 Funding. . . . . . . . . . . . . . . . . . . . . 16
SECTION 10
ADMINISTRATION OF THE PLAN
10.1 Plan Administrator. . . . . . . . . . . . . . . 17
10.2 Powers and Duties of the Plan
Administrator . . . . . . . . . . . . . . . . . 17
SECTION 11
MISCELLANEOUS
11.1 Prohibition Against Encumbrance . . . . . . . . 18
11.2 Rights of Employees . . . . . . . . . . . . . . 18
11.3 Liability Limitations . . . . . . . . . . . . . 18
11.4 Claims Procedure. . . . . . . . . . . . . . . . 18
11.5 Governing Law . . . . . . . . . . . . . . . . . 19
SECTION 12
AMENDMENT OR TERMINATION OF THE PLAN
12.1 Amendment . . . . . . . . . . . . . . . . . . . 20
12.2 Termination . . . . . . . . . . . . . . . . . . 20
SMITH CORONA CORPORATION
SHORT TERM INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of the Short Term Incentive
Compensation Plan ("Plan") is to provide motivation and rewards,
on an annual basis, to key management employees of Smith Corona
Corporation ("Company") and its subsidiaries for the achievement
of assigned financial targets or results which achievement will
enhance the growth and success of the Company. The Plan is also
designed to attract and retain able management employees and to
ensure their best efforts and loyalty.
2. Administration. The Plan shall be administered by
the Compensation and Benefits Committee of the Board of Directors
("Committee") which shall have the full power and authority to
construe, interpret and administer the Plan. All decisions,
actions or interpretations of the Committee shall be final,
conclusive and binding upon all interested parties.
3. Eligibility. Participants in the Plan for any
fiscal year of the Company shall be limited to key management
employees of the Company and its subsidiaries holding positions
of responsibility which enable them to contribute significantly
to the success of the Company, or a subsidiary including an
operating division or unit of any such corporation. Participants
shall be recommended initially by appropriate senior management
and endorsed by the Chairman of the Board and Chief Operating
Officer. Final approval of participants shall be made by the
Committee on or before the beginning of the fiscal year. The
Committee may specify that participation approval will continue
in effect until changed by it, in which event the Committee shall
not be required to approve such participation each fiscal year.
The Committee may approve participation of key management
employees (such as newly hired or recently promoted management
employees) during a fiscal year as of the first day of any
specified month and such participant shall be eligible for a pro-
rata award for such fiscal year. Participants shall be informed
of their participation, their participation level, the method for
determining their awards and all other appropriate matters
relating to the Plan.
4. Participation Level and Method for Determining
Awards. The level of participation (such as percentage of annual
salary) of each participant and the method or formula for
determining the amount of annual incentive compensation award
(such as attainment of planned or assigned targets in operating
income and return on capital employed) shall be determined by the
Committee and may be changed from time to time.
5. Payment of Awards. Payment of annual incentive
compensation awards shall be made to participants in a single
lump sum cash amount as soon as practical after the end of the
fiscal year and after the amounts payable have been computed
under the supervision of the Chief Financial Officer, verified by
the Company's independent certified public accountants and
authorized by the Committee. Any tax imposed on Plan awards
shall be the sole responsibility of the participant and the
company or subsidiary shall deduct from Plan awards any
applicable federal (including FICA), state or local taxes
required to be withheld.
6. Forfeiture of Awards. A participant shall forfeit
all entitlement to an award for any fiscal year if such
participant (a) is discharged for cause at any time prior to
receipt of the award or (b) resigns voluntarily or gives notice
thereof prior to the end of the fiscal year. In the sole
discretion of the Committee, a participant whose employment
terminates prior to the end of the fiscal year for any other
reason (such as death, disability or retirement) may be
considered for a pro-rata award for such fiscal year.
7. Beneficiary Designation. Each participant may
file with the Company a written designation of one or more
persons (including a trust) as a beneficiary who shall be
entitled to receive the amount, if any, payable upon death under
the Plan. A participant may, from time to time, revoke or change
such beneficiary designation by filing a new designation. The
last such designation received by the Company shall be
controlling. In the absence of such a beneficiary designation,
the person designated as beneficiary by the participant under his
or her employer's group term life insurance coverage shall be
deemed the designated beneficiary under the Plan. If all
designated beneficiaries predecease the participant, payment, if
any, shall be made to the participant's estate.
8. Effect on Other Benefits. For purposes of any
welfare or retirement plan offered to the participant by the
Company or its subsidiary, Plan awards shall be considered as
compensation in the year it is paid to the participant.
9. Rights of Employees. Neither the adoption of the
Plan nor Plan participation shall confer on a participant any
right to continued participation or in any way affect the right
and power of the Company or its subsidiary to terminate the
employment of or change the terms of employment or the amount of
compensation of any participant at any time for any reason.
10. Liability Limitations. The Company shall be
solely responsible for payment of Plan awards and no member of
the Committee or any officer, director, employee or agent of the
Company shall be personally liable for such awards or for any
action or failure to act. To the extent that any participant or
beneficiary acquires a right to receive a Plan award, such right
shall merely be a contractual obligation of the Company and such
participant or beneficiary shall be an unsecured creditor of the
Company until paid.
11. Prohibition Against Encumbrance. Plan awards
shall not be subject, in any manner, to participation,
alienation, assignment, sale, transfer, pledge or encumbrance
and, prior to the time an award is payable, any such award shall
not be liable in any manner for, or subject to, the debts,
contracts, liabilities or torts of a participant.
12. Amendment or Termination. The Board of Directors
shall have the right to amend or terminate the Plan at any time
without prior notice to participants provided, however, that no
such amendment or termination may adversely affect any
participant's or beneficiary's right to an award payable prior to
such action.
SMITH CORONA CORPORATION
65 LOCUST AVENUE
NEW CANAAN, CONNECTICUT 06840
February 3, 1995
PERSONAL AND CONFIDENTIAL
Mr. William D. Henderson
36 Edgewater Common
Westport, CT 06880
Dear Mr. Henderson:
This letter will confirm the terms and conditions of
your Employment Agreement (the "Agreement") with Smith
Corona Corporation ("SCO").
1. You will be employed as the President and
Chief Operating Officer of SCO, reporting to me.
2. Your compensation in such capacity will be:
(a) A base salary at the initial annual rate
of $250,000. You will be reviewed periodically.
(b) You will participate in the SCO Short-
Term Incentive Compensation Program. Your maximum bonus
percentage will be sixty percent (60%) of your base salary.
3. You will be eligible for consideration of
grants of SCO share options when other officers are
considered, usually annually; upon commencement of your
employment, you received 145,000 share options based on the
average share price on the day of the grant. All options
will be exercisable in accordance with the SCO Corporation
1990 Stock Option Plan, as amended from time to time.
(a) In the event that (i) the Board of
Directors of SCO terminates your employment for reasons
other than Cause, or (ii) you terminate your employment
within the ninety (90) day period commencing on the ninety-
first (91st) day following the first occurrence of an event
of Good Reason (a "Good Reason Termination"), you shall be
free to seek and accept employment elsewhere, but you shall
nonetheless be paid your base salary, plus fringe benefits
as set forth in Paragraph 4 below, for the balance of this
Agreement, but not less than twenty four (24) months. "Good
Reason" is defined herein to mean reduction in your base
compensation or in your incentive compensation target
opportunities, substantial curtailment of your status or
responsibilities, or your forced relocation of more than 35
miles (whether or not any other executives are required to
relocate), and "Cause" shall mean a material breach of, or
willful misconduct in, the performance of your duties as an
employee of SCO; employment by a firm not affiliated with
SCO while you are employed by SCO; theft, embezzlement,
bribery or other act of comparable dishonesty or disloyalty
or breach of trust against SCO; or the conviction of a
felony. The fact that SCO ceases to be publicly held, in
and of itself, shall not be deemed "substantial curtailment
of your status or responsibilities" within the meaning of
this Agreement. Moreover, this continuation of salary will
not be applicable if you obtain employment, or enter into
any personal service arrangement, which would result in your
providing services that would relate directly or indirectly
to the business of providing equipment and/or supplies for
the small office/home market on behalf of a competitor of
SCO or its successor or if your employment terminates by
reason of your death, permanent disability or your voluntary
retirement or resignation other than a Good Reason
Termination.
(b) If your employment should terminate for
a reason entitling you to salary continuation under Section
3(a) above following a Change-in-Control (defined below),
the twenty-four (24) months referenced in Section 3(a)
above, will be changed to "2.9 years". For purposes of this
Section 3(b), "Change-in-Control" of SCO shall be deemed to
have occurred if (a) any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) excluding HM
Holdings Inc. and/or any entity controlling, under common
control with or controlled by HM Holdings, Inc. is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of SCO representing 51% or more of the combined
voting power of SCO's then outstanding securities; or (b) if
at any time a majority of the members of the board have been
elected or designated by any "person" (including, without
limitation, any persons or entities affiliated with such
person but excluding without limitation, HM Holdings Inc.
and/or any entity controlling, under common control or
controlled by HM Holdings Inc.).
(c) Notwithstanding anything in the
foregoing to the contrary, if any of the payments provided
for in this Agreement, together with any other payments
which you have the right to receive from SCO or any
corporation which is a member of an "affiliated group" (as
defined in Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which SCO is a member, would
constitute a "parachute payment" (as defined in Section
280(g)(2) of the Code), the payments to be made pursuant to
this Agreement shall be reduced to the largest amount as
will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code;
provided, however, that the determination as to whether any
reduction in the payments under this Agreement pursuant to
this provision is necessary shall be made by SCO in good
faith.
4. You will be entitled to receive the following
fringe benefits:
(a) Term life insurance coverage equal to
two times your annual base salary.
(b) A company car in accordance with the SCO
policy, or a car allowance of $575/month plus the IRS
allowance for business mileage.
(c) Participation in the SCO Salaried
Employees' Pension Plan (the "Salaried Plan"). Upon your
termination of employment for any reason including death,
you (or your beneficiaries) will be entitled to receive
pension benefits under Salaried Plan in accordance with the
provisions of that Plan. For the purpose of service and
credited service under such Plan, service attributable to
the severance period shall be counted only for the period
for which you would have received severance in accordance
with the terms of such Plan.
(d) Participation in the SCO Supplemental
Executive Retirement Plan. The period of any salary
continuation under Paragraph 3(a) or (b) above shall not
count as Credited Service under the SCO Supplemental
Executive Retirement Plan.
(e) Participation in the Executive Medical
Program.
(f) Participation in the SCO disability
plan.
5. SCO will provide you with assistance in the
securing of a bridge loan, if needed.
6. If your employment should terminate for a
reason entitling you to salary continuation under Section
3(a) above, SCO will provide you, at its sole cost and
expense up to a maximum of $20,000, with outplacement
assistance at a firm selected by SCO. At your option and in
lieu of SCO's obligations to provide you with outplacement
assistance, SCO will pay you $12,000 as soon as practicable
after you make such an election and communicate your
election to SCO.
7. When you retire (that is, when your employment
is terminated at a time when you are eligible for benefits
under the Salaried Plan) you will receive payment directly
from SCO calculated as follows:
An amount equal to the amount, if any, that would
be payable to you under the Salaried Plan based on your
combined service with Hanson Industries (9 years, 1 month)
and SCO (from 7/2/90 to termination); less
(i) the amount actually payable to you
under the Salaried Plan based upon your Credited Service
with SCO (from 7/2/90 to termination, including, if any, the
severance period referred to in 4.(c) above), and less
(ii) the amount, or the actuarial
equivalent for retirement before age 60, that would be
payable to you under the Hanson Industries Corporate
Retirement Plan based on your age at retirement from SCO,
and less
(iii) the amount, if any payable to you
under the SCO Supplemental Retirement Plan based upon your
Credited Service with SCO (from 7/2/90 to termination).
It is understood that the amount payable under this
arrangement may, at the option of SCO, be paid to you as a
lump sum based on the Pension Benefit Guaranty Corporation
interest rate in effect at your retirement date and the
mortality table referred to in the Salaried Plan.
8. The terms of this Agreement shall expire on
June 30, 1995 and may be renewed for subsequent one-year
periods at the discretion of the Board of Directors.
9. This Agreement, upon your acceptance in the
space provided below, shall be a binding contract to be
governed by and construed in accordance with the laws of the
state of Connecticut and it shall supersede and replace all
prior agreements and understandings between the parties.
10. The parties hereto hereby agree that the
calculations of Deloitte & Touche LLP attached hereto as
Exhibit A and made a part hereof, setting forth change in
control calculations as of March 1, 1995 and as of December
1, 1994, are a true and correct estimate of such figures as
of such dates. Each party affirms that such party is not
presently aware of any other facts or circumstances which
would render the figures on Exhibit A incorrect.
As the terms described in this letter exceed
normal SCO policy regarding employee separation, it is
understood that this Agreement sets forth the entire
agreement between SCO and you relating to your employment;
that your acceptance of these arrangements is a compromise
and settlement of any and all claims which you may have
against SCO; and that you release SCO from any liability
other than that to which SCO has agreed above.
Very truly yours,
SMITH CORONA CORPORATION
By:_/s/G. Lee Thompson_____
G. Lee Thompson
Chairman and Chief
Executive Officer
I accept and agree to the
foregoing terms and conditions.
__________________________
William D. Henderson
______________________
Date
SMITH CORONA CORPORATION
65 LOCUST AVENUE
NEW CANAAN, CONNECTICUT 06840
February 3, 1995
PERSONAL AND CONFIDENTIAL
Mr. G. Lee Thompson
27 Bank Street
New Canaan, CT 06840
Dear Mr. Thompson:
In order to assure the continuity of your contribution
to Smith Corona Corporation (the "Company"), the Company
will provide you with the following severance benefits in
the event that your employment with the Company is
terminated as described herein:
1. Following your Involuntary Termination of
Employment (as hereinafter defined) with the Company, before
or after a Change-in-Control (as hereinafter defined), the
Company shall pay you an amount equal to your annual rate of
base pay in effect on the date of cessation of employment
(the "Termination Date") for a period of 2.99 years
following such termination of employment with the Company
("Severance Pay"). Such Severance Pay shall be paid to you
in accordance with the established pay periods for salaried
employees of the Company in effect from time to time. For
purposes hereof, the term "Involuntary Termination of
Employment" shall mean termination of your employment with
the Company for any reason, (including your voluntary
termination of employment for Good Reason (as hereinafter
defined) within the ninety (90) day period commencing on the
ninety-first (91st) day following the first occurrence of an
event constituting Good Reason (a "Good Reason
Termination")), other than (i) for Cause, (ii) your death,
(iii) your permanent disability, (iv) your voluntary
retirement or (v) your resignation (other than a Good Reason
Termination.) "Cause" shall mean a material breach of, or
willful misconduct in, the performance of your duties as an
employee of the Company; employment by a firm not affiliated
with the Company while you are employed by the Company;
theft, embezzlement, bribery or other act of comparable
dishonesty or disloyalty or breach of trust against the
Company; or the conviction of a felony. "Voluntary
Termination of Employment" shall mean voluntary retirement
or resignation. "Good Reason" shall mean reduction in your
base compensation or in your incentive compensation target
opportunities, substantial curtailment of your status or
responsibilities, or your forced relocation of more than 35
miles (whether or not any other executives are requested to
relocate). The fact that SCO ceases to be publicly held, in
and of itself, shall not be deemed "substantial curtailment
of your status or responsibilities" within the meaning of
this Agreement. "Change-in-Control" shall be deemed to have
occurred if (a) any "person" (as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of
1934), excluding HM Holdings, Inc., is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company representing 51% or more of the
combined voting power of the Company's then outstanding
securities; or (b) if, at any time, a majority of the
members of the board have been elected or designated by any
"person" (including, without limitation, any persons or
entities affiliated with such person but excluding, without
limitation, HM Holdings, Inc. and/or any entity controlling,
under common control with or controlled by HM Holdings, Inc.
This continuation of salary will not be applicable if you
obtain employment, or enter into any personal service
arrangement, which would result in your providing services
that would relate directly or indirectly to the business of
providing equipment and/or supplies for the small
office/home office market on behalf of a competitor of SCO
or its successor.
2. Upon your Voluntary or Involuntary Termination
of Employment, the Company shall pay you for all accrued
vacation time in the current year calculated in accordance
with Company policy. Such vacation pay shall be paid to you
by the Company in one lump sum in the pay period immediately
following the Termination Date. Additional vacation time
shall not accrue for the period you are receiving Severance
Pay from the Company.
3. Your participation in the Company's Group
Major Medical Insurance Program and Group Life Insurance
Program shall continue following your Termination of
Employment during the period that you are receiving
Severance Pay from the Company, subject to the provisions of
such Company Programs, including provisions relating to
COBRA.
4. Upon your Voluntary or Involuntary Termination
of Employment, you will be entitled to participate in the
Company's Salaried Employees' Retirement Pension Plan in
accordance with the provisions of that Plan. For the
purpose of service and credited service under such Plan,
service attributable to the severance period shall be
counted only for the period for which you would have
received severance in accordance with the terms of such
Plan. Your participation in all other benefit plans and
programs of the Company shall cease as of the Termination
Date, except as specifically provided in paragraph 3 above
and paragraph 5 below.
5. Upon your Voluntary or Involuntary Termination
of Employment, you will be entitled to receive pension
benefits as a participant in the Smith Corona Corporation
Supplemental Executive Retirement Plan ("SERP"). As you
know, in July 1990 the Compensation and Benefits Committee,
as the Plan Administrator, awarded you three (3) years of
Adjusted Credited Service and three (3) years of Adjusted
Age under Section 4.4 of the SERP.
6. The Company will provide you, at its sole cost
and expense up to a maximum of $25,000, with outplacement
assistance at a firm selected by the Company following your
Termination of Employment during the period that you are
receiving Severance Pay from the Company. At your option
and in lieu of the Company's obligations to provide you with
outplacement assistance, the Company will pay you $25,000 as
soon as practicable after you make such an election and
communicate your election to the Company.
7. Notwithstanding anything in the foregoing to
the contrary, if any of the payments provided for in this
Agreement, together with any other payments which you have
the right to receive from the Company or any corporation
which is a member of an "affiliated group" (as defined in
Section 1504(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute
a "parachute payment" (as defined in Section 280(G)(2) of
the Code), the Severance Pay to be made pursuant to this
Agreement shall be reduced to the largest amount as will
result in no portion of such payments being subject to the
excise tax imposed by Section 4999 of the Code; provided,
however, that the determination as to whether any reduction
in the payments under this Agreement pursuant to this
proviso is necessary shall be made by the Company in good
faith.
8. The parties hereto hereby agree that the
calculations of Deloitte & Touche LLP attached hereto as
Exhibit A and made a part hereof, setting forth change in
control calculations as of March 1, 1995 and as of December
1, 1994, are a true and correct estimate of such figures as
of such dates. Each party affirms that such party is not
presently aware of any other facts or circumstances which
would render the figures on Exhibit A incorrect.
9. This Agreement, upon your acceptance in the
space provided below, shall be a binding contract to be
governed by and construed in accordance with the laws of the
state of Connecticut and it shall supersede and replace all
prior agreements and understandings between the parties.
As the terms described above exceed normal Company
policy regarding employee separation, it is understood that
this Agreement sets forth the entire agreement between the
Company and you and supersedes any and all prior agreements
and understandings, whether oral or written, relating to the
subject matter hereof; that your acceptance of these
arrangements is a compromise and settlement of any and all
claims which you may have against the Company; and that you
release the Company from any liability other than that which
the Company has agreed to above.
If the foregoing is acceptable to your please sign
both copies of this Agreement in the space indicated below
and return one executed copy to the undersigned at your
earliest convenience.
Very truly yours,
SMITH CORONA CORPORATION
By:
Richard R. West
Chairman, Compensation
and Benefits Committee
of Board of Directors
I accept and agree to the
foregoing terms and conditions.
G. Lee Thompson
___________________________
Date
SMITH CORONA CORPORATION
65 LOCUST AVENUE
NEW CANAAN, CONNECTICUT 06840
February 3, 1995
PERSONAL AND CONFIDENTIAL
Mr. Thomas C. DeFazio
31 Codfish Lane
Weston, CT 06883
Dear Mr. DeFazio:
This letter will confirm the terms and conditions of
your Employment Agreement (the "Agreement") with Smith
Corona Corporation ("SCO").
1. You will be employed as the Executive Vice
President and Chief Financial Officer of SCO, reporting to
me.
2. Your compensation in such capacity will be:
(a) An initial base salary at the annual
rate of $185,000.
(b) You will participate in the SCO Short-
Term Incentive Compensation Program. Your maximum bonus
percentage will be fifty-five percent (55%) of your base
salary.
3. You will be eligible for consideration of
grants of SCO share options when other officers are
considered, usually annually; upon commencement of your
employment, you received 40,000 share options based on the
average share price on the day of the grant. All options
will be exercisable in accordance with the SCO 1990 Stock
Option Plan, as amended from time to time.
(a) In the event that (i) the Board of
Directors of SCO terminates your employment for reasons
other than Cause, or (ii) you terminate your employment
within the ninety (90) day period commencing on the ninety-
first (91st) day following the first occurrence of an event
of Good Reason (a "Good Reason Termination"), you shall be
free to seek and accept employment elsewhere, but you shall
nonetheless be paid your base salary, plus fringe benefits
as set forth in Paragraph 4 below, for the balance of this
Agreement, but not less than twenty four (24) months. "Good
Reason" is defined herein to mean reduction in your base
compensation or in your incentive compensation target
opportunities, substantial curtailment of your status or
responsibilities, or your forced relocation of more than 35
miles (whether or not any other executives are required to
relocate), and "Cause" shall mean a material breach of, or
willful misconduct in, the performance of your duties as an
employee of SCO; employment by a firm not affiliated with
SCO while you are employed by SCO; theft, embezzlement,
bribery or other act of comparable dishonesty or disloyalty
or breach of trust against SCO; or the conviction of a
felony. The fact that SCO ceases to be publicly held, in
and of itself, shall not be deemed "substantial curtailment
of your status or responsibilities" within the meaning of
this Agreement. Moreover, this continuation of salary will
not be applicable if you obtain employment, or enter into
any personal service arrangement, which would result in your
providing services that would relate directly or indirectly
to the business or providing equipment and/or supplies for
the small office/home office market on behalf of a
competitor of SCO or its successor or if your employment
terminates by reason of your death, permanent disability or
your voluntary retirement or resignation other than a Good
Reason Termination.
(b) If your employment should terminate for
a reason entitling you to salary continuation under Section
3(a) above following a Change-in-Control (defined below),
the twenty-four (24) months referenced in Section 3(a)
above, will be changed to "2.9 years". For purposes of this
Section 3(b), "Change-in-Control" of SCO shall be deemed to
have occurred if (a) any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) excluding HM
Holdings Inc. and/or any entity controlling, under common
control with or controlled by HM Holdings, Inc. is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of SCO representing 51% or more of the combined
voting power of SCO's then outstanding securities; or (b) if
at any time a majority of the members of the board have been
elected or designated by any "person" (including, without
limitation, any persons or entities affiliated with such
person but excluding without limitation, HM Holdings Inc.
and/or any entity controlling, under common control or
controlled by HM Holdings Inc.)
(c) Notwithstanding anything in the
foregoing to the contrary, if any of the payments provided
for in this Agreement, together with any other payments
which you have the right to receive from SCO or any
corporation which is a member of an "affiliated group" (as
defined in Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which SCO is a member, would
constitute a "parachute payment" (as defined in Section
280(g)(2) of the Code), the payments to be made pursuant to
this Agreement shall be reduced to the largest amount as
will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code;
provided, however, that the determination as to whether any
reduction in the payments under this Agreement pursuant to
this provision is necessary shall be made by SCO in good
faith.
4. You will be entitled to receive the following
fringe benefits:
(a) Term life insurance coverage equal to
two times your annual base salary;
(b) A company car in accordance with the SCO
policy;
(c) Participation in the SCO Salaried
Employees' Retirement Plan (the "Salaried Plan"). Upon your
termination of employment for any reason including death,
you (or your beneficiaries) will be entitled to receive
pension benefits under SCO's Salaried Plan in accordance
with the provisions of that Plan. For the purpose of
service and credited service under such Plan, service
attributable to the severance period shall be counted only
for the period for which you would have received severance
in accordance with the terms of such Plan.
(d) Participation in the SCO Supplemental
Executive Retirement Plan. The period of any salary
continuation under Paragraph 3(a) or (b) above shall not
count as Credited Service under the SCO Supplemental
Executive Retirement Plan.
(e) Participation in the Executive Medical
Program;
(f) Participation in the SCO disability plan
or equivalent.
5. If your employment should terminate for a
reason entitling you to salary continuation under Section
3(a) above, SCO will provide you, at its sole cost and
expense up to a maximum of $20,000, with outplacement
assistance at a firm selected by SCO. At your option and in
lieu of SCO's obligations to provide you with outplacement
assistance, SCO will pay you $12,000 as soon as practicable
after you make such an election and communicate your
election to SCO.
6. When you retire (that is, when your
employment is terminated at a time when you are eligible for
benefits under the Salaried Plan), you will receive payment
directly from SCO calculated as follows:
An amount equal to the amount, if any, that would be
payable to you under the Salaried Plan based on your
combined service with SCM Corporation (23 years, 9 months)
and SCO (from 4/1/91 to termination); less
(i) the amount actually payable to you under the Salaried
Plan based upon your Credited Service with SCO (from 4/1/91 to
termination, including, if any, the severance period referred to
in 4.(c) above), and less
(ii) the amount that would be payable to you under the
SCM Salaried Employees Retirement Plan based on your age at your
retirement from SCO, and less
(iii) the amount, if any, payable to you under the SCO
Supplemental Retirement Plan based upon your Credited Service with
SCO (from 4/1/91 to termination).
It is understood that the amount payable under this
arrangement may, at the option of SCO, be paid to you as a lump
sum based on the Pension Benefit Guaranty Corporation interest
rate in effect at your retirement date and the mortality table
referred to in the Salaried Plan.
7. The terms of this Agreement shall expire on June
30, 1995 with renewals for subsequent one-year periods at the
discretion of the Board of Directors.
8. This Agreement, upon your acceptance in the space
provided below, shall be in a binding contract to be governed and
construed in accordance with the laws of the state of Connecticut
and it shall supersede and replace all prior agreements and
understandings between the parties.
The parties hereto hereby agree that the calculations
of Deloitte & Touche LLP attached hereto as Exhibit A and made a
part hereof, setting forth change in control calculations as of
March 1, 1995 and as of December 1, 1994, are a true and correct
estimate of such figures as of such dates. Each party affirms
that such party is not presently aware of any other facts or
circumstances which would render the figures on Exhibit A
incorrect.
As the terms described in this letter exceed normal
SCO policy regarding employee separation, it is understood that
this Agreement sets forth the entire agreement between SCO and you
relating to your employment; that your acceptance of these
arrangements is a compromise and settlement of any and all claims
which you may have against SCO; and that you release SCO from any
liability other than that to which SCO has agreed above.
Very truly yours,
SMITH CORONA CORPORATION
By:_/s/ G. Lee Thompson__
G. Lee Thompson
Chairman and Chief
Executive Officer
I accept and agree to the
foregoing terms and conditions.
Thomas C. DeFazio
Date
FOREWORD
The SCM Corporation Retirement Plan For Salaried
Employees was most recently amended and restated in its entirety
as of January 1, 1985 ("Prior Plan"). As so restated, the Prior
Plan applied to eligible salaried employees of Participating
Companies including Smith Corona Corporation and its subsidiary
Hulse Manufacturing Company.
Effective January 1, 1987, Smith Corona Corporation
adopted the Smith Corona Corporation Salaried Employees'
Retirement Plan ("Successor Plan") for the benefit of its
eligible salaried employees and the salaried employees of its
subsidiary Hulse Manufacturing Company and, simultaneously
therewith, the assets and liabilities respecting all salaried
employees and former employees of Smith Corona Corporation and
Hulse Manufacturing Company were "spun-off" from the Prior Plan
and transferred to the Successor Plan. The "spin-off" was
accomplished pursuant to Section 414(1) of the Internal Revenue
Code of 1986, as amended, and applicable regulations thereunder
and in accordance with Article XVII, Section 17.1 of the Prior
Plan. As of July 28, 1989, Smith Corona Corporation became a
public company with an offering of its common stock on the New
York Stock Exchange. Hulse Manufacturing Company closed its only
plant in Geneva N.Y. and there currently are no employees of
Hulse Manufacturing Company. The Successor Plan was also amended
and restated effective as of January 1, 1989 to comply with the
changes in applicable law, including without limitation, the Tax
Reform Act of 1986, as amended.
Subject to approval from the Internal Revenue Service,
Smith Corona Corporation has further amended and restated the
Successor Plan effective January 1, 1994 to read as set forth
herein designed principally to comply with changes in applicable
law, including without limitation, the Tax Reform Act of 1986, as
amended.
Unless otherwise provided herein, these provisions
added or amended to comply with the Tax Reform Act of 1986
required to be effective as of January 1, 1987 or January 1, 1989
shall be effective as of such dates.
Except as otherwise specifically provided herein, the
terms of this restated Successor Plan shall apply to Members who
are or become Members on and after January 1, 1989.
ARTICLE I
DEFINITIONS
As used herein, unless otherwise defined or required by
the context, the following words and phrases shall have the
meanings indicated. Some of the words and phrases used in the
Plan are not defined in this Article I, but, for convenience are
defined as they are introduced into the text.
1.1 "Accrued Benefit" means, as of any determination
date, the amount computed in accordance with Section 4.1 (Normal
Retirement Benefit) based on the Member's Credited Service,
Average Final Compensation and Social Security Benefit each as of
the determination date.
1.2 "Actuarial Equivalent" means a benefit of
equivalent value when computed on the basis of the following
rates of mortality and interest:
(a) As to mortality, 80% of the rates underlying the
Unisex Pension-1984 Table, adjusted by applying a 3-year age
setback for the Member's spouse, where applicable.
(b) As to interest, 5% per annum compounded annually,
except that for purposes of determining lump sum benefits under
Section 8.6 (Payment of Small Amounts), the interest rate shall
be equal to the rate (or rates) used by the Pension Benefit
Guaranty Corporation for purposes of calculating the present
value of benefits under plans terminating on the first day of the
Plan Year in which the lump sum becomes payable.
1.3 "Actuary" means an individual chosen by the
Company to provide actuarial services for the Plan who is an
enrolled actuary under Subtitle C of Title III of ERISA, or a
firm of actuaries which has on its staff such an actuary.
1.4 "Authorized Leave of Absence" means an absence or
interruption of service approved by the Retirement Committee
under uniform and nondiscriminatory rules and procedures.
Members on leave of absence for service in the Armed Forces of
the United States, however, shall be deemed to have been on an
Authorized Leave of Absence, provided they return to service with
a Participating Company within the required time limitations set
forth in the then applicable laws governing reemployment rights
of persons inducted, or who have enlisted, in the Armed Forces.
1.5 "Average Final Compensation" for Members who
retired before January 1, 1991 means the average Compensation for
the 5 consecutive calendar years up to and including the Member's
Retirement Date or his earlier termination of employment or, if
higher, any 5 consecutive calendar years prior thereto; however,
for this purpose Compensation of a Member who does not have an
Hour of Service on or after January 1, 1988 after the Member's
Normal Retirement Date shall not be recognized. If the Member
has not received Compensation in 5 full consecutive calendar
years, his Average Final Compensation shall be determined by
averaging his Compensation over the period of his continuous
employment immediately prior to his Retirement Date or earlier
termination of employment. If the Member had a previous period
of employment with a Participating Company for which he is
entitled to Credited Service, Compensation during such period
shall be recognized for purposes of determining Average Final
Compensation as if the two periods of employment were
consecutive. "Average Final Compensation" for Members who retire
on and after January 1, 1991 means the average Compensation for
the 5 full calendar years of the 10 calendar years immediately
preceding the Member's Retirement Date or his earlier termination
of employment for which the Member's Compensation is the highest;
provided, however, that in the case of a Member who does not have
an Hour of Service on or after January 1, 1988 his Compensation
after his Normal Retirement Date shall not be recognized. If the
Member has not received Compensation for 5 full calendar years of
the 10 calendar years immediately preceding the Member's
Retirement Date or his earlier termination of employment, his
Average Final Compensation shall be determined by averaging his
Compensation over the full calendar months of his employment
immediately prior to his Retirement Date or earlier termination
of employment. If the Member had a previous period of employment
with a Participating Company for which he is entitled to Credited
Service, Compensation during such period shall be recognized for
purposes of determining Average Final Compensation.
1.6 "Board" or "Board of Directors" means the Board of
Directors of the Company.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any predecessor Code, as
appropriate.
1.8 "Company" means Smith Corona Corporation or any
person, firm, corporation or partnership which may succeed to its
business.
1.9 "Compensation"
(a) In General. "Compensation" means, with respect to
a calendar year, the sum of the amount reported by the
Participating Company to the Internal Revenue Service on Form W-2
as the Member's compensation for such calendar year and the
amount of any "salary deferral contributions" made on such
Member's behalf to the SCM Corporation Retirement Savings and
Investment Plan and to the Smith Corona Corporation Retirement
Savings and Investment Plan, as the case may be, plus any salary
reduction amounts in connection with a plan maintained under
section 125 of the Code; but exclusive of termination or
severance pay, prizes, awards, grievance settlements, overseas
cost of living allowances, relocation allowances, mortgage
assistance, executive perquisites, stock options, and such other
extraordinary items of remuneration as the Retirement Committee
shall determine from time to time pursuant to such uniform and
nondiscriminatory rules as it shall adopt. A Member on an
Authorized Leave of Absence for service in the Armed Forces shall
be deemed to have received Compensation during such period at the
same rate he was receiving immediately prior to the commencement
of the leave.
(b) Limitation on Amount.
(1) Accruals for Plan Years Beginning on or After
January 1, 1989 and Before January 1, 1994. In determining
benefit accruals of any Member for any Plan Year beginning on or
after January 1, 1989 and before January 1, 1994, the amount of
Compensation taken into account for any Plan Year shall not
exceed $200,000, or such other amount as shall be determined by
the Secretary of the Treasury under Code section 415(d) to
reflect cost-of-living adjustments. For purposes of applying the
preceding sentence, a Member's Accrued Benefit as of a given date
shall be determined by applying the Compensation limitation in
effect for the Plan Year in which such date occurs to all prior
Plan Years taken into account in determining such Accrued
Benefit.
(2) Accruals for Plan Years Beginning on or After
January 1, 1994. In determining benefit accruals of any Member
for any Plan Year beginning on or after January 1, 1994, the
amount of Compensation taken into account shall not exceed
$150,000, or such other limit as shall be in effect for such Plan
Year, as determined in accordance with section 401(a)(17)(B) of
the Code.
(3) Preservation of Accrued Benefit.
(A) General Rule. The Accrued Benefit of
any Member whose Compensation exceeds the limit in paragraph (1)
or (2) shall not be less than his or her December 31, 1988
Accrued Benefit or his or her December 31, 1993 Accrued Benefit,
whichever is greater. For purposes of preserving the Member's
December 31, 1988 and December 31, 1993 Accrued Benefits, the
method set forth in Treasury regulation section
1.401(a)(4)-13(c)(4)(iii) shall be employed. This method is
described in subparagraphs (B) and (C), below.
<PAGE>
(B) Determination of Accrued Benefit as of a
Date Prior to January 1, 1994. For purposes of determining a
Member's Accrued Benefit as of a given date prior to January 1,
1994, a Member's Accrued Benefit shall be equal to the greater of
(i) and (ii), below, where--
(i) equals the sum of--
(I) the Member's benefit as of
December 31, 1988, determined without regard to the limitation on
Compensation in paragraph (1); plus
(II) the Member's benefit at the
earlier of termination of service or December 31, 1993, based on
Credited Service after December 31, 1988, determined with regard
to the limitation in paragraph (1);
(ii) equals the greater of--
(I) the Member's benefit as of
December 31, 1988, determined without regard to the limitation on
Compensation in paragraph (1); or
(II) the Member's benefit at the
earlier of termination of service or December 31, 1993, based on
all Credited Service, determined with regard to the limitation in
paragraph (1).
(C) Determination of Accrued Benefit as of a
Date on or After January 1, 1994. A Member's Accrued Benefit
determined as of a given date on or after January 1, 1994 shall
be equal to the greater of (i) or (ii) below, where--
(i) equals the sum of--
(I) the Member's benefit as of
December 31, 1993, calculated after applying subparagraph (B),
above, and determined without regard to the limitation on
Compensation in paragraph (2); plus
(II) the Member's benefit at
termination of service, based on Credited Service after
December 31, 1993, determined with regard to the limitation in
paragraph (2);<PAGE>
(ii) equals the greater of--
(I) the Member's benefit as of
December 31, 1993, calculated after applying subparagraph (B),
above, and determined without regard to the limitation on
Compensation in paragraph (2); or
(II) the Member's benefit at
termination of service, based on all Credited Service, determined
with regard to the limitation in paragraph (2).
(4) Compensation of Family Members. In
determining the Compensation of a Member for purposes of the
annual limitation, the rules of section 414(q)(6) of the Code
shall apply except in applying such rules, the term "family"
shall include only the spouse of the Member and any lineal
descendants of the Member who have not attained age 19 before the
close of the applicable Plan Year.
1.10 "Corporate Group" means the Company, any
Participating Company, and any other company which is related to
the Company as a member of a controlled group of corporations in
accordance with section 414(b) of the Code, or as a trade or
business under common control in accordance with section 414(c)
of the Code, or as an affiliated service group under common
control in accordance with section 414(m) and section 414(o) of
the Code.
1.11 "Credited Service" means, subject to the
following rules and exceptions and Section 2.4, a Member's
Service as an Eligible Employee not in excess of 30 years:
(a) Credited Service shall include an Authorized Leave
of Absence, (i) for service in the Armed Forces, (ii) for a
period during which the Member is Totally and Permanently
Disabled to the extent provided in Article VI (Disability
Benefits) and (iii) for the period of absence up to a maximum of
2 years for any other cause.
(b) Employment with a Participating Company before
such Company adopted the Plan shall be included in Credited
Service if and to the extent the Board so provides in accordance
with Section 17.1 (Adoption of Plan by Subsidiary).
(c) Credited Service shall be measured in full years
with any fraction of a year treated as a full year, except that
for purposes of determining the Accrued Benefit for a Member who
is entitled to a benefit under the provisions of
<PAGE>
Article V (Benefits Upon Termination of Employment),
Credited Service shall be measured in years and months taken to
the nearest month.
(d) To the extent not already credited under this
Section 1.11, Credited Service shall include any period for which
a Member receives severance pay from a Participating Company up
to a maximum of 52 weeks, regardless of whether such severance
pay is received in a lump sum or in periodic installments.
(e) Credited Service shall include periods of Service
after a Member's Normal Retirement Date if the Member had at
least one Hour of Service on or after January 1, 1988.
1.12 "Deferred Retirement Date" means the first day of
the month coincident with or immediately following the date a
Member actually retires after his Normal Retirement Date pursuant
to the provisions of Section 3.2 (Deferred Retirement Date).
1.13 "Early Retirement Date" means the first day of
the month coincident with or immediately following the date a
Member retires prior to his Normal Retirement Date pursuant to
the provisions of Section 3.3 (Early Retirement Date).
1.14 "Eligible Employee" means an Employee who is
employed on a salaried basis at a division or unit of a
Participating Company with respect to which the Plan has been
made applicable by appropriate action of the Board of Directors,
excluding an individual who is covered by a collective bargaining
agreement between a Participating Company and any union unless
participation by such Employee in the Plan has been agreed to by
the parties to such agreement.
1.15 "Employee" means an individual (but not including
a person acting only as a director or any "leased employee"
within the meaning of section 414(n)(2) of the Code) employed by
the Company or any Participating Company.
1.16 "ERISA" means Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as amended from time to
time.
1.17 "Hour of Service" means each hour for which an
Employee is directly or indirectly compensated, or entitled to be
compensated, by the Company or Participating Company for the
performance of duties or for any other reason, such as vacation,
sickness, holidays, disability, layoff, or leave of absence,
including each hour for which back pay, irrespective of
mitigation of damages has been awarded or agreed to by the
Company or Participating Company. Each such Hour of Service
<PAGE>
shall be credited to the applicable computation period in
accordance with section 2530.200b-2(b) and (c) of the U.S.
Department of Labor Regulations, which are hereby incorporated by
reference.
1.18 "Investment Manager" means the individual and/or
other entity appointed in accordance with Section 12.3
(Investment Manager) who has acknowledged in writing that he is a
fiduciary with respect to the Plan and who is:
(a) registered as an investment adviser under the
Investment Advisers Act of 1940, or
(b) a bank, as defined in such Act, or
(c) an insurance company qualified to manage, assign
or dispose of assets of pension plans.
1.19 "Member" means an Employee who has become a
Member of the Plan in accordance with the provisions of Article
II (Eligibility and Membership). Each Member shall continue to
be such after he ceases to be an Employee, provided he continues
to be entitled to benefits under the Plan.
1.20 "Normal Retirement Date" means the first day of
the month next following the date on which a Member attains his
65th birthday.
1.21 "Participating Company" means the Company and any
domestic or foreign corporation which is a subsidiary of the
Company and which is designated by the Board as a Participating
Company under the provisions of Article XVII (Adoption of Plan by
Subsidiary).
1.22 "Plan" means the Smith Corona Corporation
Retirement Plan for Salaried Employees as set forth herein or as
amended from time to time.
1.23 "Plan Year" means the calendar year.
1.24 "Prior Plan" means the SCM Corporation Retirement
Plan for Salaried Employees, as amended from time to time.
1.25 "Required Beginning Date" means (a) except as
provided in IRS Notice 89-42, with respect to a Member who
attains age 70-1/2 on or after January 1, 1988 and with respect
to a Member who is a 5% owner (as defined in section 416(i)(1)(B)
of the Code), the April 1 (but not before April 1, 1986) of the
year following the calendar year in which the Member attains 70-
1/2 years of age and (b) with respect to a Member who attained
age 70-1/2 before January 1, 1988 (other than a 5% owner), the
April 1 of the calendar year following the calendar year in which
the Member actually retires.
<PAGE>
1.26 "Retirement Benefit" means a series of monthly
payments which are payable to an individual who is entitled to
receive benefits under the Plan.
1.27 "Retirement Committee" means the committee
appointed in accordance with Section 11.3 (Appointment of the
Retirement Committee).
1.28 "Retirement Date" means the Early Retirement
Date, the Normal Retirement Date or the Deferred Retirement Date,
whichever is applicable.
1.29 "Service" means, subject to the following rules
and exceptions, the duration of an Employee's employment with the
Company:
(a) The Employee's first year of Service is the twelve
month period beginning on his employment commencement date
provided that he accumulates 1,000 or more Hours of Service in
such year or, the first calendar year beginning after his
employment commencement in which he accumulates 1,000 or more
Hours of Service; provided that if, as of the beginning of any
such year, the Employee is scheduled to work 1000 or more Hours
of Service during that year, he shall be credited with 1000 Hours
regardless of the actual number of Hours of Service worked so
long as he is an Employee as of the last day of the year.
(b) Service shall include the period from the date an
Employee quits, retires or is discharged if he returns to
employment with the Company or the Participating Company within
12 months of such quit, retirement or discharge.
(c) Service shall include (i) an Authorized Leave of
Absence, (ii) a period of up to 12 months of absence from
employment for any other reason (except because of quit,
retirement, death or discharge) and (iii) Service recognized
under the Prior Plan.
(d) If an Employee who incurs a "Break in Service" (as
hereinafter defined) prior to his becoming entitled to a benefit
under the Plan is reemployed, his period of Service prior to such
Break in Service shall be disregarded if the duration of such
Break in Service equals or exceeds both 5 years and the number of
years of Service which the Employee had to his credit at the
start of such period. However, if the Break in Service began
prior to January 1, 1985, such prior Service shall also be
disregarded if it had already been lost under the terms of the
Plan in effect prior to January 1, 1985 or if it would have been
lost had the Member been reemployed on December 31, 1984 under
the terms of the Plan then in effect.
<PAGE>
"Break in Service" means a continuous period of twelve
months or more during which the Employee is not employed by the
Company or other member of the Corporate Group. Except as
provided below, such period begins on the earliest of (i) the
date the Employee retires, quits or is discharged, (ii) the
expiration of an Authorized Leave of Absence, and (iii) one year
after the date on which the Employee was first absent from
employment for any reason other than quit, retirement, discharge
or Authorized Leave of Absence. In the case of a Member who is
entitled to Service for a period in which he receives severance
pay in accordance with (g) of this Section 1.29, a Break in
Service shall not be deemed to have commenced before the end of
the period for which he is credited with such Service. If the
Employee was first absent from employment on or after January 1,
1985 due to the pregnancy of the Employee, birth or adoption of a
child to or by the Employee, or caring for a child immediately
after such birth or adoption, and if such Employee's employment
is not severed by reason of quit, retirement or discharge, a
Break in Service shall not be deemed to have commenced until two
years after the leave commenced.
(e) Employment with a Participating Company before
such company became a member of the Corporate Group shall be
included in Service if and to the extent the Board so provides in
accordance with Section 17.1 (Adoption of Plan by Subsidiary).
(f) Service shall be measured in full years with any
fraction of a year treated as a full year, except that for
purposes of determining the eligibility for a benefit under the
provisions of Sections 5.1 (Deferred Vested Benefit), 7.1 (Family
Benefit) and 7.2 (Pre-Retirement Death Benefit for Certain Other
Members), Service shall be measured in full years with a fraction
of a year equal to 6 months or more treated as a full year and a
fraction of a year equal to less than 6 months disregarded.
(g) To the extent not already credited under this
Section 1.29, Service shall include any period for which a Member
receives severance pay from a Participating Company up to a
maximum of 52 weeks, regardless of whether such severance pay is
received in a lump sum or in periodic installments.
1.30 "Social Security Benefit" means the estimated
annual benefit (based upon actual changes in national average
wages from year to year as determined by the Social Security
Administration) which a Member is or would be entitled to receive
in an unreduced amount (excluding any benefit available on behalf
of a spouse or other dependent) under the Federal Social Security
Act, as amended, and as in effect for persons covered by Social
Security at the date his Credited Service ceases to accrue,
<PAGE>
whether or not he applies for such Social Security Benefit, and
even though he may lose part or all of such Social Security
Benefit through delay in applying for it, or by making
application prior to age 65 for a reduced benefit, or by entering
into covered employment, or for any other reason. In estimating
such Social Security benefit no further earnings shall be
anticipated after the date the Member's Credited Service ceases.
Notwithstanding the foregoing, if the Retirement
Committee receives documentation from the Social Security
Administration of the Member's Social Security earnings record,
within such period of time as the Retirement Committee shall
establish from time to time, his Social Security Benefit shall be
determined on the basis of his actual Social Security earnings
record.
1.31 "Trust Fund" means the trust fund established in
accordance with Section 12.1 (Trust Fund), from which the
benefits provided by this Plan will be paid.
1.32 "Trustee" means the corporate trustee and/or
insurance company appointed from time to time by the Board to
administer the Trust Fund in accordance with Section 12.2
(Trustee).
1.33 "Vested Terminated Member" means a Member whose
employment has terminated but who is entitled to deferred
Retirement Benefits in accordance with the provisions of Article
V (Benefits Upon Termination of Employment).
1.34 The use of the masculine pronoun shall include
the feminine and the singular shall include the plural.
<PAGE>
ARTICLE II
ELIGIBILITY AND MEMBERSHIP
2.1 Commencement of Membership
(a) Employees Commencing Employment Prior to
January 1, 1995. Each individual who was a Member in the
Prior Plan on December 31, 1993 shall continue to be a Member,
subject to the provisions of this Plan. Each other person who is
or becomes an Employee of the Employer prior to January 1, 1995
shall become a Member on the day that he or she becomes an
Eligible Employee, or attains age 21, whichever occurs later.
(b) Employees Commencing Employment on or After
January 1, 1995. Each person who first becomes an Employee of
the Employer on or after January 1, 1995 shall become a Member on
the latest of--
(1) the date on which he or she attains age 21;
(2) the date on which he or she completes a year
of Service; or
(3) the date on which he or she becomes an
Eligible Employee.
2.2 Authorized Leave of Absence. Any person who is
absent from the active employment of a Participating Company on
the date he would otherwise become a Member, by reason of an
Authorized Leave of Absence, shall automatically become a Member
as of the date of his return to active employment, subject to the
provisions of this Article II.
2.3 Transfer to or from Non-Covered Status. If a
Member ceases to meet the definition of Eligible Employee as set
forth in Section 1.14 ("Eligible Employee") but continues in the
employment of the Corporate Group, his Credited Service shall
cease to accrue but he shall continue as a Member and earn
Service in accordance with Section 1.29 ("Service"). If
immediately after his ceasing to be an Eligible Employee such
Member becomes a participant in another qualified pension or
profit sharing plan to which a Participating Company contributes,
(a) his compensation while a participant in such plan shall be
recognized under this Plan for purposes of determining his
Average Final Compensation and his Social Security Benefit, and
(b) the amount of Retirement Benefit to which the Member may be
entitled under this Plan shall be computed under the provisions
of the Plan in effect on his termination of employment with a
Participating Company. If immediately after the Member's ceasing
to be an Eligible Employee he does not become a participant in
another qualified pension or profit sharing plan to which a
<PAGE>
Participating Company contributes, such Member's Accrued Benefit
shall not increase until such time as he may again be an Eligible
Employee.
If the status of a person in the employment of a member
of the Participating Company who does not meet the definition of
Eligible Employee as set forth in Section 1.14 ("Eligible
Employee") is changed so that he does meet such definition, he
shall become a Member in accordance with the provisions of
Section 2.1. If immediately prior to becoming an Eligible
Employee such person was a participant in another qualified
pension or profit sharing plan to which a Participating Company
contributes, and provided that he completes at least one year of
Service as an Eligible Employee, his service rendered and
compensation earned while a participant in such other plan shall
be recognized as Credited Service and Compensation under this
Plan, subject to the reduction as provided in Section 4.4
(Nonduplication of Benefits) and, if applicable, to the
provisions of Section 17.1 (Adoption of Plan by Subsidiary).
<PAGE>
ARTICLE III
RETIREMENT DATE
3.1 Normal Retirement Date. A Member who retires on
his Normal Retirement Date (which is the first day of the month
next following his 65th birthday) shall be entitled to elect to
receive a Retirement Benefit as determined in accordance with
Section 4.1 (Normal Retirement Benefit).
3.2 Deferred Retirement Date. A Member whose
employment is continued beyond his Normal Retirement Date shall
retire on a Deferred Retirement Date and shall be entitled to
elect to receive a Retirement Benefit determined in accordance
with Section 4.2 (Deferred Retirement Benefit).
If a Member continues in employment until his Required
Beginning Date, such date shall be deemed to be his Deferred
Retirement Date for all purposes of the Plan whether or not his
employment continues beyond that date.
3.3 Early Retirement Date. A Member who, on the day
his Service ceases to accrue, has either
(a) attained age 50 and accrued 15 or more years of
Service, or
(b) attained age 60, regardless of the number of years
of Service which he has accrued,
may, by filing a written application at least six months in
advance (or such lesser period as the Retirement Committee may
prescribe from time to time), retire at an Early Retirement Date.
In such case the Member shall be entitled to elect to receive a
Retirement Benefit as determined in accordance with Section 4.3
(Early Retirement Benefit).
3.4 Reemployment of a Retired Member. If a retired
Member is reemployed by a Participating Company his Retirement
Benefit payments, if any, shall be suspended for each month
during the period of such reemployment immediately following a
calendar month in which he is compensated for 8 or more days.
Upon his reemployment, the Member shall become an active Member
as of the date of his reemployment. Upon his subsequent
retirement his Retirement Benefit shall be based on the total of
both periods of Credited Service but shall be appropriately
reduced to reflect benefit payments previously made to him.
<PAGE>
ARTICLE IV
RETIREMENT BENEFITS
4.1 Normal Retirement Benefit. A Member retiring on
his Normal Retirement Date shall be entitled to elect, at or
after his termination of employment, to receive an annual amount
of Retirement Benefit, commencing as of his Normal Retirement
Date or as of any month thereafter but not later than his
Required Beginning Date, equal to the greater of (a) and (b), as
follows:
(a) the product of (i) and (ii), as follows:
(i) the number of his years of Credited Service
(ii) the difference between (A) and (B), as
follows:
(A) 1.5% of such Member's Average Final
Compensation, and
(B) 1/60th of his Social Security Benefit.
(b) $360 multiplied by the number of his years of
Credited Service (but not in excess of 10 years of Credited
Service); provided, however, such benefit shall be reduced in the
case of a Member who works less than the normal work week at his
location. Such reduction shall be made on a pro rata basis
reflecting the Member's average hours worked per week as compared
to the normal work week or 40 hours, whichever is the lesser,
during the period used in determining his Average Final
Compensation.
4.2 Deferred Retirement Benefit. If a Member remains
in employment after his Normal Retirement Date, Retirement
Benefit payments to him shall be postponed until his actual
retirement on his Deferred Retirement Date. The Member shall be
entitled to elect, at or after his termination of employment, to
receive a Retirement Benefit commencing as of his Deferred
Retirement Date or, if later, as of any month thereafter which is
not after his Required Beginning Date. The amount of Retirement
Benefit shall be equal to the amount computed under Section 4.1
but based on the provisions of the Plan in effect on his Deferred
Retirement Date and his Average Final Compensation and Credited
Service at his Deferred Retirement Date.
4.3 Early Retirement Benefit. A Member retiring prior
to his Normal Retirement Date, as provided in Section 3.3 (Early
Retirement Date), shall be entitled to elect, at or after his
termination of employment, to receive a Retirement Benefit,
commencing as of his Normal Retirement Date or as of any month
thereafter but not later than his Required Beginning Date, equal
to his Accrued Benefit.
In lieu of such Retirement Benefit commencing on or
after his Normal Retirement Date, the Member shall be entitled to
elect, at or after his termination of employment, to have his
Retirement Benefit commence as of his Early Retirement Date or as
of any month thereafter before his Normal Retirement Date. In
such case the Member's Retirement Benefit shall equal a
percentage of his Accrued Benefit, in accordance with the
following schedule:
Age at Date of Percentage of
Benefit Commencement Accrued Benefit Payable
50 50%
51 54%
52 58%
53 62%
54 66%
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
61 95%
62 100%
63 100%
64 100%
4.4 Nonduplication of Benefits. If a Member is
entitled to any pension or retirement benefits under the
Prior Plan or under any other qualified pension or profit
sharing plan of the Corporate Group as defined herein or
under the Prior Plan (other than the Smith Corona
Corporation Retirement Savings and Investment Plan), then
to the extent such benefit is attributable to a period of
employment included as Credited Service under this Plan,
the amount thereof shall be deducted from the amount of
Retirement Benefit otherwise payable under this Plan with
respect to such period of Credited Service. However, no
such deduction shall be made with respect to that part of
such retirement income which is attributable to
contributions made by the Member. If such other benefit is
not paid at the same time and manner as his Retirement
Benefit under this Plan, the deduction shall be made on an
equitable basis as determined by the Retirement Committee.
<PAGE>
ARTICLE V
BENEFITS UPON TERMINATION OF EMPLOYMENT
5.1 Deferred Vested Benefit. In the event of
the termination of employment of a Member, for any reason
other than death or retirement under the Plan, after
completion of 5 or more years of Service, he shall become a
Vested Terminated Member and shall be entitled to elect, at
or after his termination of employment, to receive a
Retirement Benefit commencing as of his Normal Retirement
Date or as of any month thereafter but not later than his
Required Beginning Date. The amount of such Retirement
Benefit shall be equal to his Accrued Benefit computed as
of the date of such termination of employment, subject to
the reduction provided under (b) of Section 7.3 (Pre-
Benefit Commencement Option for Vested Terminated Members),
if applicable. In the event of the termination of
employment of a Member, for any reason other than death or
retirement under the Plan, before completion of 5 years of
Service, he shall be deemed to have received an immediate
constructive cash-out distribution of his entire nonvested
Accrued Benefit at termination equal to zero dollars.
5.2 Early Commencement of Vested Benefit. A
Vested Terminated Member who has 15 or more years of
Service shall be entitled to elect, at or after his
termination of employment, to receive a reduced Retirement
Benefit, commencing as of the month next following his
attainment of age 50 or as of any month thereafter before
his Normal Retirement Date, which is the Actuarial
Equivalent of his Accrued Benefit.
A Vested Terminated Member who has less than 15
years of Service shall be entitled to elect, at or after
his termination of employment, to receive a reduced
Retirement Benefit, commencing as of the month next
following his attainment of age 60 or as of any month
thereafter before his Normal Retirement Date, which is the
Actuarial Equivalent of his Accrued Benefit.
5.3 Reemployment of a Vested Terminated Member.
If a Vested Terminated Member is reemployed by a
Participating Company his Retirement Benefit payments, if
any, shall be suspended for each month during the period of
such reemployment immediately following a calendar month in
which he is compensated for 8 or more days. Upon
reemployment of the Member, he shall become an active
Member as of the date of his reemployment. Upon his
subsequent termination of employment or retirement his
<PAGE>
Retirement Benefit shall be based on the total of both
periods of Credited Service but shall be appropriately
reduced to reflect any benefit payments previously made to
him.
<PAGE>
ARTICLE VI
DISABILITY BENEFITS
6.1 Eligibility and Amount of Benefit. If a
Member who has 15 or more years of Service shall become
Totally and Permanently Disabled (as hereinafter defined)
prior to his Normal Retirement Date he shall be deemed to
be on an Authorized Leave of Absence and shall continue to
accrue Credited Service during the period prior to his
Normal Retirement Date that he remains Totally and
Permanently Disabled. If such Member remains Totally and
Permanently Disabled he shall, upon attaining his Normal
Retirement Date, be entitled to a Retirement Benefit
determined in accordance with the provisions of Section 4.1
(Normal Retirement Benefit) in effect on his Normal
Retirement Date, except that the calculation of the benefit
referred to in subsection (a) of Section 4.1 shall be made
by reference to the Member's Social Security Benefit as of
the date on which he so became Totally and Permanently
Disabled rather than as of his Normal Retirement Date. In
lieu of the Retirement Benefit to commence as of his Normal
Retirement Date, the Member may, at any time after
attaining age 50, elect to retire on an Early Retirement
Date and receive a Retirement Benefit determined in
accordance with Section 4.3 (Early Retirement Benefit)
based on his Credited Service at such date.
For purposes of this Section 6.1, "Totally and
Permanently Disabled" means a physical or mental condition
which renders a Member disabled to the extent he is
eligible for and receiving Social Security disability
benefits; provided, however, that no Member shall be deemed
to be Totally and Permanently Disabled if his incapacity
(a) resulted from or consists of habitual drunkenness or
addiction to narcotics, or (b) was incurred, suffered or
occurred while he was engaged in, or resulted from his
having engaged in, a criminal enterprise, or (c) was
intentionally self-inflected or (d) arose out of service in
the Armed Forces of any country.
6.2 Medical Examination; Recovery From
Disability. Any member who is accruing Credited Service
pursuant to Section 6.1 may be required by the Retirement
Committee to submit from time to time to medical and
physical examination and to submit evidence of his
continued eligibility for Social Security Disability
benefits. In the event that the Member shall refuse to
submit to examination, or if as the result of any such
examination, the Retirement Committee shall determine that
the Member is no longer Totally and Permanently Disabled or
if he fails to submit evidence of his continued eligibility
for Social Security Disability benefits, such Member shall
cease to accrue Credited Service provided in Section 6.1.
Unless such Member returns to active employment with a
Participating Company, he shall be deemed to have
terminated his employment or to have retired at an Early
Retirement Date as of the first day of the month following
the date his Credited Service ceased to accrue.
<PAGE>
ARTICLE VII
DEATH BENEFITS
7.1 Family Benefit. Upon the death, on or after
August 23, 1984, of a Member who has completed 5 or more
years of Service, either while an Employee or after his
retirement under Article III (Retirement Date) but before
his Retirement Benefit commences, his surviving spouse, if
any, shall be entitled to a Retirement Benefit payable for
life. The surviving spouse may elect to have such
Retirement Benefit commence as of the month following the
Member's date of death or, if later, as of any month
thereafter which is not after the month in which the Member
would have attained age 62 (or such other date which may be
required by applicable law or regulation).
If the Retirement Benefit commences as of the
month following the Member's date of death, the amount of
such Retirement Benefit shall be equal to the greater of
(a) and (b), as follows:
(a) a $300 annual benefit, or
(b) 100% of the Member's Accrued Benefit,
multiplied by an Early Commencement Percentage based on the
Member's age at his date of death in accordance with the
table below and further reduced to reflect the Actuarial
Equivalent charge for the election of Option (100%
continuation) under Section 8.4 (Other Optional Forms of
Benefit), based on the ages of the Member and his surviving
spouse on the earlier of his date of death or his Normal
Retirement Date.
Deceased Employee's Early Commencement
Age at Date of Death Percentage
36 or under 8%
37 11%
38 14%
39 17%
40 20%
41 23%
42 26%
43 29%
Deceased Employee's Early Commencement
Age at Date of Death Percentage
44 32%
45 35%
46 38%
47 41%
48 44%
49 47%
50 50%
51 54%
52 58%
53 62%
54 66%
55 70%
56 74%
57 78%
58 82%
59 86%
60 90%
61 95%
62 or over 100%
If the Retirement Benefit commences as of any
month after the month following the Member's date of death,
the amount of survivor benefit shall be recomputed based on
the surviving spouse's age and the age the Member would
have been when survivor benefits commence.
If at any time on or after the Member's death
there is no surviving spouse but there are one or more
dependent children under age 19 or, if students, age 23,
the Retirement Benefit which would have been paid to
surviving spouse shall be paid in equal shares to the
dependent children as long as each shall qualify.
Benefit payments to a dependent child shall cease
upon the earlier of (a) the last day of the month in which
such child ceases to qualify as dependent child, or (b) the
last day of the month preceding the month in which such
child dies. The share payable in respect of any such
child shall subsequently increase by reason of the
subsequent cessation of payments in respect of any other
such child.
For the purposes of determining dependency, a
child shall be deemed dependent if the Member of the
surviving spouse, whichever the case may be, provided one-
half or more of such child's support during the year
immediately prior to such Member's or surviving spouse's
death. The Retirement Committee shall determine on a
uniform and non-discriminatory basis the dependency of any
person to whom a Retirement Benefit may be payable under
this Section 7.1, and such determination shall be final and
conclusive.
7.2 Pre-Benefit Commencement Survivor Option for
Vested Terminated Members.
(a) In General. Unless revoked as provided
herein, if a Vested Terminated Member who was an Employee
on or after August 23, 1984 dies before his Retirement
Benefit commences, his surviving spouse, if any, shall be
entitled to a Retirement Benefit commencing on the earliest
date the Vested Terminated Member's Retirement Benefit
could have commenced had he survived, in accordance with
the provisions of Article V (Benefit Upon Termination of
Employment), or as of any month thereafter on or before the
Member's Normal Retirement Date, as the surviving spouse
may elect.
(b) Charge for Coverage. There shall be a
charge for this survivor annuity coverage, based on the
period of coverage, in the form of an adjustment to the
amount of Retirement Benefit otherwise payable to the
Vested Terminated Member.
For purposes of determining the charge for
this survivor annuity coverage, the period of coverage
shall begin on the latest of (1) January 1, 1985, (2) the
date the Member terminates employment or (3) the date the
Member attains age 35, and shall end on the date his
Retirement Benefit is first payable; provided, however,
that there shall be excluded from the period of coverage
any period during which (1) the Member is reemployed by a
Participating Company, (2) the Member is not married, or
(3) the Member has effectively revoked this coverage as
provided in subsection (d) below.
The adjustment factor for the survivor
annuity coverage shall be determined in accordance with the
table below:
Period of Coverage
For each 12 months of coverage
from age 35 through age 44 1/12%
For each 12 months of coverage
from age 45 through age 54 1/4%
For each 12 months of coverage
from age 55 through age 64 1/2%
(c) Amount of Survivor Benefit. The amount of
the Retirement Benefit payable to the surviving spouse
shall equal 50% of the Retirement Benefit the Vested
Terminated Member would have received under the automatic
joint and survivor option described in Section 8.3
(Automatic Joint and Survivor Option) had he survived to
the date his Retirement Benefit would have commenced but
without regard to the charge for coverage under this option
that would have been made in accordance with (b) above.
(d) Election to Revoke the Option. A married
Member may elect, during the election period specified
below, to revoke this survivor annuity coverage, in which
case no benefit will be payable in the event of the Vested
Terminated Member's death before his Retirement Benefit
commences.
An election to revoke this coverage shall not
take effect unless the Member's spouse gives written
consent on a form provided by the Retirement Committee for
such purpose, which consent acknowledges the effect of the
revocation and is witnessed by a notary public (or an
individual designated by the Retirement Committee). A
spousal consent is irrevocable; however, any such consent
shall apply only to the spouse who gave the consent. The
Retirement Committee, in its sole discretion, may waive the
requirement of consent of the spouse if the Member
establishes to the Retirement Committee's satisfaction that
the spouse cannot be located or that there are other
special circumstances permitted under Treasury Regulations.
An election to revoke this survivor annuity
coverage may be made at any time within the election period
beginning on the later of (i) the date of the Member's
termination of employment or (ii) January 1, 1985, and
ending on the date of the Vested Terminated Member's death.
A Vested Terminated Member may cancel a
revocation of this survivor annuity coverage at any time
during the applicable election period. There is no limit
on the number of times during the election period that the
Member may revoke the coverage or cancel a revocation.
(e) Explanation. Upon the Vested Terminated
Member's termination of employment (and at such other times
as may be required by applicable law) the Retirement
Committee shall furnish him with a written explanation of
(1) the terms and conditions of the survivor annuity
coverage, (2) the Vested Terminated Member's right to make,
and the effect of, an election to revoke the coverage, (3)
the rights of the Vested Terminated Member's spouse to
consent, or refuse to consent, to such revocation, and (4)
the Vested Terminated Member's right to make, and the
effect of, a cancellation of a revocation.
(f) Claim for Benefit. The surviving spouse
must file a claim for benefits before payment of benefits
will commence. The claim for benefits shall be in such
form as the Retirement Committee shall designate, and shall
include certifications as to the dates of birth of the
Member and of such surviving spouse, the date of marriage
to the Member, and such other information with respect to
any prior marriages of the Member as the Retirement
Committee shall deem necessary to determine the appropriate
charge, if any, for the surviving spouse annuity coverage.
7.3 Death Benefits After Retirement Benefit
Commences. There are no benefits payable under the Plan in
the event of the Member's death after his Retirement
Benefit has commenced unless an option is in effect in
accordance with Article VIII (Time and Form of Benefit
Payment).
<PAGE>
ARTICLE VIII
TIME AND FORM OF BENEFIT PAYMENT
8.1 Normal Form of Benefit. Except as otherwise
provided in this Article VIII, Retirement Benefit payments
shall be made monthly as of the last day of each calendar
month commencing as of the date provided under the
applicable Plan section and ceasing with the payment due as
of the last day of the month preceding the month in which
the Member's death occurs. This shall be referred to as
the normal form of Retirement Benefit for an unmarried
Member.
8.2 Claim for Benefit.
(a) A Member must file a claim for benefits
before payment of benefits shall commence. The claim for
benefits shall be in writing, in such form as the
Retirement Committee shall designate.
(b) The claim for benefits shall specify the
date on which Retirement Benefit payments are to commence,
consistent with the provisions of the Plan with respect to
commencement of benefits in case of normal, early, or
deferred retirement, or for a Vested Terminated Member, as
the case may be.
(c) The claim for benefits shall include a
certification by the Member either (i) that the Member is
not married or (ii) that the Member is married and the name
and date of birth of the individual to whom the Member is
married; and such other information with respect to the
Member's marital history as the Retirement Committee shall
deem necessary to determine the appropriate charge, if any,
for survivor annuity coverage under Section 7.3. If he has
not previously done so, the Member must submit satisfactory
proof of his date of birth and, if he certifies that he is
married he must submit satisfactory proof of the date of
his spouse's birth and of their marriage. The
certification as to the Member's marital status shall be
binding upon the Member.
(d) Subject to retroactive payment thereof, any
Retirement Benefit otherwise due under the Plan shall be
delayed until 30 days after the later of whichever of the
following is applicable:
(i) The receipt by the Retirement Committee
of the completed election form,
(ii) The receipt by the Retirement
Committee of satisfactory proof of the Member's date of
birth, and the date of birth of the spouse and the date of
marriage of a Member for whom the automatic joint and
survivor option described in Section 8.3 is effective.
8.3 Automatic Joint and Survivor Option.
(a) In General. If a Member who was an
Employee on or after August 23, 1984 and whose Retirement
Benefit commences on or after January 1, 1985 is married on
the date his Retirement Benefit is to commence, unless
revoked as provided herein, the amount of each benefit
payment which otherwise would be payable to the Member
shall be reduced and, if the Member's spouse shall survive
him, Retirement Benefit payments shall continue after his
death for the remaining lifetime of his surviving spouse in
an amount equal to 50% of the Member's reduced Retirement
Benefit. The reduction in the Member's Retirement Benefit
shall be made on an Actuarial Equivalent basis. This shall
be referred to as the normal form of Retirement Benefit for
a married Member.
(b) Election to Revoke the Automatic Joint and
Survivor Option. A Member may, during the election period
specified below, revoke the automatic joint and survivor
option, in which case Retirement Benefit payments shall be
made in the normal form as provided in Section 8.1 or under
such optional form as the Member may elect in accordance
with Section 8.4.
A revocation shall not take effect unless the
Member's spouse gives written consent on a form provided by
the Retirement Committee for such purpose, which consent
acknowledges the effect of the revocation and is witnessed
by a notary public (or an individual designated by the
Retirement Committee). A spousal consent is irrevocable
but shall apply only to the spouse who gave the consent and
to the particular form of alternative payment to which the
consent applies. The Retirement Committee may waive the
requirement for consent of the spouse if the Member
establishes to the Retirement Committee's satisfaction that
the spouse cannot be located or that there are other
special circumstances permitted under Treasury Regulations.
Notwithstanding the foregoing, no spousal consent shall be
required if the Member elects Option 1 specified in Section
8.4.
A revocation of the automatic joint and survivor
option may be made at any time within the 90 day period
ending on the date the Member's Retirement Benefit is first
payable. A Member may cancel a revocation of the automatic
joint and survivor option at any time during the election
period.
There is no limit on the number of times during
the election period that a Member may revoke the automatic
joint and survivor option or cancel a revocation.
(c) Explanation. Within a reasonable period
before the Member's Retirement Benefit commences the
Retirement Committee shall furnish the Member with a
written explanation of (i) the terms and conditions of the
automatic joint and survivor option and (ii) an estimate,
based on the personnel records maintained by the
Participating Company, of the amount of Retirement Benefit
payable both under the automatic option and under the
normal form described in Section 8.1.
At the time that the explanation is furnished to
the Member the election form referred to Section 8.2 will
also be furnished to him. If the Member fails to complete
such form and return it to the Retirement Committee before
the date as of which his Retirement Benefit payments are to
commence he shall be deemed for all purposes of the Plan to
have certified that he elects to be covered under the
automatic joint and survivor option.
(d) Termination of Marriage. The spouse to whom
the Member was married at the date his Retirement Benefit
commences is entitled to the survivor annuity upon the
death of the Member after Retirement Benefits commence,
whether or not the Member and such spouse were married at
the date of the Member's death.
8.4 Other Optional Forms of Benefit. In lieu of
the normal form of Retirement Benefit referred to in
Sections 8.1 and 8.3(a) above, a Member may elect one of
the following optional forms of benefit payment:
Option 1. A Member may elect a reduced
Retirement Benefit payable during his lifetime, with the
provisions that 75%, or 100%, of such reduced income shall
be continued thereafter during the remaining lifetime of
his spouse. Such reduced Retirement Benefit shall be the
Actuarial Equivalent of the normal form of benefit
specified in Section 8.1. If the spouse dies prior to the
Member's Retirement Benefit commencement date, any election
of this Option 1 shall automatically be deemed to be
revoked.
Option 2. An unmarried Member may elect a
reduced Retirement Benefit payable during his
lifetime, with the provision that either 50%, 75%, or 100%
of such reduced income shall be continued thereafter during
the remaining lifetime of his designated beneficiary. Such
Retirement Benefit shall be the Actuarial Equivalent of the
normal form of benefit specified in Section 8.1. If the
designated beneficiary dies prior to the Member's
Retirement Benefit commencement date, any election of this
Option 2 shall automatically be deemed to be revoked.
The availability of the 75% and 100%
joint and survivor option shall be subject to the rules
contained in Proposed Treasury regulation section
1.401(a)(9)-2, Q & A 6(b), which limits the survivor
annuity percentage payable to a nonspouse beneficiary where
the difference in age between the Member and such
beneficiary exceeds 10 years. The percentage limitation
applicable to a nonspouse beneficiary shall be determined
in accordance with the Table set forth in Proposed Treasury
regulation section 1.401(a)(9)-2, Q & A 6(b)(2).
Option 3. A Member who has elected early
retirement in accordance with Section 3.3 (Early Retirement
Date) may elect to receive an Actuarial Equivalent
Retirement Benefit providing larger monthly payments, in
lieu of the retirement benefit otherwise payable upon early
retirement, until the date his Social Security payments
commence, with a reduction of such Retirement Benefit
payments thereafter, to make available to him, insofar as
practicable, level payments of total retirement income.
Option 4. A Member may elect that even if he has
a spouse at his retirement date or the date his Retirement
Benefit is to commence, if later, his Retirement Benefit
shall be paid for his lifetime only with payment of 60 or
120 monthly installments guaranteed.
Option 5. A Member may elect that even if he has
a spouse at his retirement date or on the date his
Retirement Benefits are to commence, if later, his
Retirement Benefits shall be paid for his life and will
cease with the payment due as of the last day of the month
preceding the month in which the Member's death occurs.
<PAGE>
An election of an optional form of benefit under
this Section 8.4 shall be made on an appropriate form
provided by the Retirement Committee. The Member may
change or cancel an option at any time before his
Retirement Benefit is to commence, by filing the
appropriate form with the Retirement Committee.
8.5 Payment of Small Amounts. Notwithstanding
the foregoing provisions of this Article VIII, whenever the
lump sum Actuarial Equivalent of a Retirement Benefit or
Survivor Benefit payable to or with respect to a Member is
not in excess of $3,500.00, the Retirement Committee shall
direct that such lump sum be paid in lieu of the Retirement
Benefit or Survivor Benefit otherwise payable under the
Plan.
8.6 Mandatory Distributions. Notwithstanding
any provision in the Plan to the contrary, a Member's
Retirement Benefits shall be distributed, beginning not
later than his Required Beginning Date, in accordance with
section 401(a)(9) of the Code and regulations thereunder,
over the life of the Member (or the lives of the Member and
his designated beneficiary) or the life expectancy of the
Member (or the life expectancies of the Member and his
designated beneficiary). Further, distributions under the
Plan shall be made in accordance with Proposed Treasury
regulation section 1.401(a)(9)-2.
<PAGE>
ARTICLE IX
LIMIT ON BENEFITS
9.1 Maximum Annual Benefit. Anything to the
contrary herein notwithstanding and, subject to the
provisions below, the maximum annual amount of a Member's
Retirement Benefit shall not be more than the amount
specified in (a) or, if he was a Member prior to January 1,
1983, the amount specified in (b), if greater or, if he was
a Member after January 1, 1983 and on December 31, 1986,
the amount specified in (c), if greater:
(a) the smaller of (i) and (ii) as follows:
(i) $90,000 adjusted for increases in the
cost of living to the extent permitted under section 415(d)
of the Code, and
(ii) 100% of the Member's average
compensation for his high 3 years (within the meaning of
section 415(b)(3) of the Code and the regulations issued
thereunder) adjusted for increases in the cost of living to
the extent permitted under section 415(d) of the Code.
(b) the annual amount of Retirement Benefit
payable to such Member determined under the provisions of
the Prior Plan as in effect on July 1, 1982, based upon his
"Benefit Base" thereunder as of December 31, 1982, but
without adjustment for increases in the cost of living
which become effective after July 1, 1982.
(c) the annual amount of Retirement Benefit
payable to such a Member shall be the Benefit accrued as of
December 31, 1986.
The maximum annual amount of a Member's
Retirement Benefit is subject to the following:
(1) If the Retirement Benefit is payable in
a form other than the normal form under Section 8.1 (Normal
Form of Benefit), the automatic joint and survivor option
under Section 8.3 (Automatic Joint and Survivor Benefit) or
Option 1 under Section 8.4 (Other Optional Forms of
Benefit), the maximum amount of Retirement Benefit shall be
adjusted so that it is the Actuarial Equivalent of life
annuity equal in amount to that determined above.
(2) For the purpose of applying the maximum
benefit, all defined benefit pension plans
maintained by members of the Corporate Group shall be
combined.
(3) If a Member in this Plan has also been
a participant in any defined contribution plan maintained
by a member of the Corporate Group, and if, as of the end
of the year in which Retirement Benefits under this Plan
are due to commence to or on account of such Member, his
defined contribution plan fraction, determined, in
accordance with section 415(e) of the Code and related
regulations, on the basis of his combined membership in all
such defined contribution plans, shall exceed two-tenths
(.2) then the defined benefit limitation applicable to such
Member under this Plan, prior to any reduction in such
limitation for benefits payable under other defined benefit
plans of the Corporate Group, shall be determined as
follows:
(i) by multiplying the amounts in
(a)(1)(i) and (a)(2) by the quantity (but not greater than
one (1.0)) equal to one and one quarter (1.25) multiplied
by the excess of one (1.0) over his defined contribution
fraction and
(ii) by multiplying the amount in
(a)(1)(ii) by the quantity (but not greater than one (1.0))
equal to one and four tenths (1.4) multiplied by the excess
of one (1.0) over his defined contribution fraction.
(4) For purposes of this Article IX, the
standard of control for determining a member of the
Corporate Group under Sections 4.14(b) and 414(c) of the
Code shall be deemed to be "more than 50%" rather than "at
least 80%."
9.2 Adjustment to Maximum Annual Benefit. If
the annual amount of a Member's Retirement Benefit begins
before the Member's Social Security Retirement Age (as
defined in section 415(b)(8) of the Code), the $90,000
limitation shall be reduced so that it is the Actuarial
Equivalent of the $90,000 limitation beginning at the
Member's Social Security Retirement Age. If the annual
amount of a Member's Retirement Benefit begins after the
Member's Social Security Retirement Age, the $90,000
limitation shall be increased so that it is the Actuarial
Equivalent of the $90,000 limitation beginning at the
Member's Social Security Retirement Age.
9.3 Reduction for Participation or Service of
Less than 10 Years. If a Member has less than 10 years of
Service at the time he begins to receive Retirement
Benefits under the Plan, the limitations in Sections 9.1
and 9.2 shall be reduced by multiplying such limitations by
an "appropriate fraction." The "appropriate fraction" in
the case of the compensation limitation shall be (a) the
numerator of which is the number of years of service (or
part thereof) and (b) the denominator of which is 10. The
"appropriate fraction" in the case of the dollar limitation
shall be (a) the numerator of which is the number of years
of participation (or part thereof) and (b) the denominator
of which is 10.
<PAGE>
ARTICLE X
CONTRIBUTIONS TO TRUST FUND
10.1 Company Contribution: Each Participating
Company shall make contributions to the Trust Fund from
time to time in such amounts based on the advice and
calculations of the Actuary taking into account expenses
incurred by the Trust Fund, as the Company shall deem to be
necessary to provide Retirement Benefits in accordance with
the Plan under the funding method then in effect. All
contributions shall, when made, be deemed conditioned upon
deductibility under section 404(a)(1) if the Code.
10.2 Refund of Company Contributions: Any
obligation of the Participating Companies to make
contributions to the Trust Fund hereby is conditioned upon
the initial qualification of the Plan under section 401(a)
of the Code, the exempt status of the Trust Fund under
section 501(a) of the Code, and any contribution hereby is
conditioned upon deductibility under section 404(a)(1) of
the Code. If, and to the extent, a deduction is not
allowed for a Participating Company's contributions under
the Plan for a taxable year, an amount equal to the
Participating Company's contributions so disallowed as a
deduction for such year shall be repaid by the Trustee to
the Participating Company within one year after such
disallowance, provided the Participating Company so directs
the Trustee.
If a Participating Company's contribution under
the Plan was made by a mistake of fact, such contribution
shall be returned to the Participating Company within one
year after it was made, provided that the Participating
Company so directs the Trustee.
10.3 Member Contributions: No Member shall be
required or permitted to make any contributions to the
Plan.
10.4 Forfeitures: Any forfeiture arising under
the Plan shall not be applied to increase the benefits any
Member would otherwise receive under the Plan but shall be
applied to reduce contributions under the Plan.
10.5 Separate Accounting for Certain
Participating Companies: The Board may, in its sole
discretion, authorize the Retirement Committee to maintain
separate accounting with respect to all funds held under
the Plan attributable to contributions made by any
Participating Company. Any Participating Company or group
of Participating Companies for which separate accounting of
funds is maintained shall be treated as a "single plan"
within the meaning of section 1.414(1) of the Treasury
Department Regulations.
<PAGE>
ARTICLE XI
ADMINISTRATION OF THE PLAN
11.1 Plan Administrator: The Company shall be
the Plan Administrator except to the extent that:
(a) Authority to administer the Plan has been
delegated to the Retirement Committee in accordance with
Sections 1.4 (Authorized Leave of Absence), 1.9
(Compensation), 1.29 (Social Security Benefit), 3.3 (Early
Retirement Date), 4.4 (Nonduplication of Benefits), 6.2
(Medical Examination; Recovery From Disability), 7 (Death
Benefits), 8 (Time and Form of Benefit Payment), 10.5
(Separate Accounting for Certain Participating Companies),
12.4 (Disbursement of Funds), 15 (Miscellaneous), 17.3
(Allocation of Assets) and the remainder of this Article
XI, and
(b) Authority to hold the funds of the Plan has
been delegated to the Trustee in accordance with Section
12.2 (Trustee), and
(c) Authority to direct the investment of the
Plan's funds may be delegated to the Investment Manager in
accordance with Section 12.3 (Investment Manager), and
(d) Authority to act for the Company has been
reserved to the Board of Directors in accordance with
Section 11.2 (Board of Directors).
With respect to all other responsibilities of the Plan
Administrator, the Company shall act through its
appropriate officers and, if applicable, through the
appropriate officers of a Participating Company.
11.2 Board of Directors: With respect to
Sections 1.14 (Eligible Employee), 1.21 (Participating
Company), 11.3 (Appointment of the Retirement Committee),
11.8 (Personal Liability), 12.2 (Trustee), 12.3 (Investment
Manager), 13.1 (Right to Amend), 14.1 (Suspension of
Contributions), 14.2 (Discontinuance) and 16 (Adoption of
Plan by Subsidiary) the Company shall act only by or
pursuant to a resolution of the Board of Directors.
11.3 Appointment of the Retirement Committee:
The Board of Directors or its delegate shall appoint a
Retirement Committee of not less than 3 members each of
whom shall be an Employee of a Participating Company. Any
member may resign by written notice to the other members
and to the Board of Directors or be removed by the Board of
Directors, at any time. Vacancies shall be filled by the
Board of Directors.
11.4 Compensation, Expenses: The members of the
Retirement Committee shall serve as such without
compensation but all proper expenses incurred by them, the
Company or the Trustee for actuarial, accounting, legal and
other professional, consulting or technical services
required for the administration of the Plan, shall be paid
by the Trustee out of the Trust Fund unless the Company
elects to pay any such expenses directly.
11.5 Appointment of Secretary, Agents: The
Retirement Committee may appoint a secretary and one or
more assistant secretaries, none of whom need be a member
of the Retirement Committee; and any of whom may but need
not be an Employee. It may appoint such agents, who need
not be members of the Retirement Committee, as it may deem
necessary for the effective performance of its duties and
may delegate to such agents such powers and duties as the
Retirement Committee may deem expedient or appropriate.
The compensation, if any, of such agents shall be fixed by
the Retirement Committee within limits set by the Company.
The Retirement Committee shall, from time to
time, authorize any one or more of its members to sign
documents for and on behalf of the Retirement Committee.
Any action of the Retirement Committee, including but not
by way of limitation, instruction to the Trustee, shall be
evidenced by the signature of a member who has been so
authorized by the Retirement Committee to sign for it, and
the Trustee shall be fully protected in acting thereon. A
certificate of the secretary or an assistant secretary of
the Retirement Committee setting forth the name of the
members thereof shall be sufficient evidence at all times
as to the persons then constituting the Retirement
Committee.
11.6 Retirement Committee Meetings: The
Retirement Committee shall hold meetings upon such notice,
at such time and place as they may determine. The
Retirement Committee shall act by a majority of its members
at the time in office and such action may be taken from
time to time by a vote at a meeting or in writing without a
meeting. A majority of the members of the Retirement
Committee at the time in office shall constitute a quorum
for transaction of business.
11.7 Authority and Duties of the Retirement
Committee: The Retirement Committee may from time to time
establish rules for the administration of the Plan. The
Retirement Committee shall have the exclusive right to
interpret the Plan and to decide any matters arising
thereunder in connection with the administration of the
Plan. It shall endeavor to act by general rules so as not
to discriminate in favor of any person. Its decisions and
the records of the Retirement Committee shall be conclusive
and binding upon the Company, Members and all other persons
having an interest under the Plan. No member of the
Retirement Committee shall be disqualified from exercising
the powers and discretions herein conferred by reason of
the fact that the exercise of any such power or discretion
may affect the payment of benefits to him under the Plan;
however, no member may vote on a matter relating
exclusively to himself.
The Retirement Committee shall keep a record of
all of its proceedings and shall keep or cause to be kept
all such records and other data as may be necessary for the
administration of the Plan.
11.8 Personal Liability: The members of the
Retirement Committee and the officers and directors of the
Company shall be entitled to rely upon all tables,
valuations, certificates and reports furnished by the
Actuary, upon all certificates and reports made by any duly
appointed accountant, and upon all opinions given by any
duly appointed legal counsel. To the extent not contrary
to the provisions of ERISA, no member of the Retirement
Committee, officer, director or employee of a Participating
Company shall be personally liable for acts done in good
faith hereunder unless resulting from his own negligence or
willful misconduct. Each such member of the Retirement
Committee, officer and director shall be indemnified by the
Company against expenses (other than amounts paid in
settlement not approved by the Board of Directors)
reasonably incurred by him in connection with any action to
which he may be a party by reason of his responsibilities
hereunder, except in relation to matters as to which he
shall be adjudged in such action to be liable for
negligence or misconduct in the performance of his duty.
However, nothing in this Plan shall be deemed to relieve
any person who is a fiduciary under the Plan for purposes
of ERISA from any responsibility or liability which such
Act shall impose upon him.
11.9 Dealings Between the Retirement Committee
and Individual Members: Any notice required to be given
to, or any document required to be filed with, the
Retirement Committee will be properly given or filed if
mailed by registered or certified mail, postage prepaid, or
delivered to the Secretary of the Retirement Committee, c/o
the Director, Human Resources, Smith Corona Corporation,
65 Locust Avenue, New Canaan, CT 06840, or to such other
place as the Retirement Committee may hereafter from time
to time designate.
The Retirement Committee shall make available to
such Member for his examination, such of its records as
pertain to the benefits to which such Member shall be
entitled under the Plan.
11.10 Claim Procedures: Any person who believes
that he is entitled to benefits under the Plan may file a
claim for such benefits in accordance with Section 8.2
(Claim for Benefits). Adequate notice shall be provided in
writing to any person whose claim for benefits under the
Plan has been wholly or partially denied. Such notice
shall set forth the specific reasons for such denial and
special reference to the pertinent Plan provisions on which
the denial is based. Such notice shall be written in a
manner calculated to be understood by the claimant and
shall afford reasonable opportunity to the claimant whose
claim for benefits has been denied for a full and fair
review by the Retirement Committee of the decision denying
the claim. All determinations by the Retirement Committee
regarding benefit claims shall be final, conclusive and
binding on all interested parties.
11.11 Lawsuits: Every right of action claiming
benefits under the Plan, irrespective of the place where
such action may be brought, shall be barred after the
expiration of 3 years from the event giving rise to the
claim or, if later, the date of receipt of the notice of
denial of the claim under Section 11.10 of the Plan.
<PAGE>
ARTICLE XII
MANAGEMENT OF THE FUNDS
12.1 Trust Fund: All assets of the Plan shall
be held in trust as a Trust Fund for the exclusive benefit
of Members and their beneficiaries, and, prior to the
satisfaction of all liabilities with respect to them, no
part of the corpus or income shall be used for or diverted
to any other purpose. No person shall have any interest in
or right to any part of the Trust Fund, except to the
extent provided in the Plan.
12.2 Trustee: All contributions to the Plan
shall be paid over to a Trustee or Trustees (which may be a
corporate trustee or an insurance company or both) which
shall be appointed from time to time by the Board by
appropriate instrument with such powers in the Trustee as
to the control and disbursement of the funds as the Board
shall approve and as shall be in accordance with the Plan.
The Board may remove any Trustee at any time, upon
reasonable notice and upon such removal or upon the
resignation of any Trustee the Board shall designate a
successor Trustee.
12.3 Investment Manager: In accordance with the
terms of the trust instrument, the Board may appoint one or
more Investment Managers (individuals and/or other
entities), who may include the Trustee and who are
collectively referred to herein as the Investment Manager,
to direct the investment and reinvestment of part or all of
the Plan's funds, and the Board may change the appointment
of the Investment Manager from time to time.
12.4 Disbursement of Funds: The funds held by
the Trustee shall be applied, in the manner determined by
the Retirement Committee, to the payment of benefits to
such persons as are entitled thereto in accordance with the
Plan.
The Retirement Committee shall determine the
manner in which the funds of the Plan shall be disbursed in
accordance with the Plan, including the form of voucher or
warrant to be used in authorizing disbursements and the
qualification of persons authorized to approve and sign the
same and any other matters incident to the disbursement of
such funds. Also, the Retirement Committee shall from time
to time advise the Trustee and the Investment Manager of
the Plan's needs for liquidity with respect to benefit
payments and disbursements.
All charges of the Trustee and of the Investment
Manager shall be paid either directly by the Company or out
of the Trust Fund, as the Company shall elect from time to
time.
<PAGE>
ARTICLE XIII
AMENDMENT
13.1 Right to Amend: The Board reserves the
right at any time, and from time to time, to modify or
amend in whole or in part the provisions of the Plan, but
no such amendment shall cause the elimination of any
optional benefit payment form or any reduction in the
Accrued Benefit of any Member (except to the extent
permitted under section 412(c)(8) of the Code), and further
provided that no part of the assets of the Trust Fund
shall, by reason of any modification or amendment, be used
for or diverted to, purposes other than for the exclusive
benefit of Members and their beneficiaries, under the Plan
except as otherwise provided in Sections 12.1 and 14.2 of
the Plan including defraying reasonable expenses of
administering the Plan. For purposes of this Section 13.1,
the Retirement Committee, on behalf of the Board, may adopt
any and all amendments to the Plan which do not
substantially increase the cost of the Plan to the Company.
Amendments which substantially increase the cost of the
Plan to the Company must be adopted by the Board.
<PAGE>
ARTICLE XIV
SUSPENSION AND DISCONTINUANCE
14.1 Suspension of Contributions: A
Participating Company may suspend contributions in whole or
in part. The suspension of the Participating Company's
contributions shall not in itself constitute a
discontinuance of the Plan so long as the minimum funding
requirements of section 412 of the Code have been met.
14.2 Discontinuance: The Board will have the
right at any time to terminate this Plan in whole or with
respect to any Participating Company, by delivering to the
Trustee its duly authorized instrument of termination.
Upon partial or complete discontinuance or
termination of the Plan by a Participating Company the
Accrued Benefit of each affected Member of such
Participating Company shall become non-forfeitable to the
extent then funded. The Trustee shall allocate the assets
of the Trust Fund for the benefit of each such Member and
beneficiary, in a manner approved by the Internal Revenue
Service in accordance with the provisions of, and
regulations issued pursuant to, section 4044 of ERISA.
The amounts so allocated in accordance with the
above shall be applied for the benefit of each person
either by a cash payment, by insurance company contract or
by the continuance of the Trust Fund and the payment of
Retirement Benefits therefrom in such amounts as may be
provided by the funds so allocated, all as the Board shall
determine. However, in the event that the assets available
for allocation are less than the value of insured vested
benefits, the Pension Benefit Guaranty Corporation may
direct how the allocated amounts are to be applied.
If any of the assets of the Trust Fund remains
after the satisfaction of all liabilities of the Plan, the
remaining funds shall be distributed by the Trustee to the
Participating Companies in a manner prescribed by the
Board.
14.3 Merger, Consolidation or Transfer: In the
case of any merger or consolidation with, or transfer of
assets or liabilities to, any other plan after September 2,
1974 each Member in the Plan would (if the Plan then
terminated) receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater
than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer
(if the Plan had then terminated).
<PAGE>
ARTICLE XV
MISCELLANEOUS
15.1 Uniform Administration: Whenever, in the
administration of the Plan, any action is required by a
Participating Company or the Retirement Committee,
including, but not by way of limitation, action with
respect to eligibility or classification of Employees,
contributions or benefits, such action shall be uniform in
nature as applied to all persons similarly situated and no
such action shall be taken which will discriminate in favor
of Members who are officers or significant shareholders of
a Participating Company or persons whose principal duties
consist of supervising the work of other employees or
highly compensated Members within the meaning of section
414(q) of the Code.
15.2 Payment Due an Incompetent: If the
Retirement Committee determines that any person to whom a
payment is due hereunder is incompetent by reason of
physical or mental disability, the Retirement Committee
shall have power to cause the payments becoming due to such
person to be made to another for the benefit of the
incompetent, without responsibility of the Retirement
Committee or the Trustee to see to the application of such
payment. Payments made in accordance with such power shall
operate as a complete discharge of all obligations on
account of such payment of the Retirement Committee, the
Trustee and the Trust Fund.
15.3 Identity of Payee: The determination of
the Retirement Committee as to the identity of the proper
payee of any benefit under the Plan and the amount of such
benefit properly payable shall be conclusive, and payment
in accordance with such determination shall constitute a
complete discharge of all obligations on account of such
benefit.
15.4 Non-alienation of Benefits: Except as may
be required under a qualified domestic relations order as
defined in section 414(p) of the Code, no benefit payable
under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, bankruptcy or charge, and any such
action shall be void and of no effect; nor shall any such
benefit be in any manner liable for or subject to the
debts, contracts, liabilities, engagements or torts of the
person entitled to such benefit. The Retirement Committee
shall establish procedures for the determination of whether
a domestic relations order is a qualified domestic
relations order.
If a qualified domestic relations order requires
the distribution of all or part of a Member's benefits
under the Plan, the establishment or acknowledgment of the
alternate payee's right to benefits under the Plan in
accordance with the terms of such qualified domestic
relations order shall in all cases be deemed to be
consistent with the terms of the Plan.
15.5 Source of Payments: Retirement Benefits
and all other benefits shall be paid or provided solely
from the Trust Fund and the Participating Companies assume
no liability or responsibility therefor, except to the
extent required by law.
15.6 Plan Not a Contract of Employment: Nothing
herein contained shall be deemed to give any Employee or
Member the right to be retained in the employ of a
Participating Company or to interfere with the right of the
Participating Company to discharge any Employee or Member
at any time.
15.7 Payment of Retirement Benefits: Unless the
Member elects otherwise and the Plan permits, Retirement
Benefit payments shall in no event commence later than the
60th day after the close of the Plan Year in which the
latest of the following events occurs:
(a) the attainment by the Member of age 65,
(b) the 10th anniversary of the year in which
the Member commenced participation in the Prior Plan or
Plan, or
(c) the termination of the Member's employment
with the Company or Participating Company, except that, if
the amount of the payment required to commence on the date
determined under the Plan cannot be ascertained by such
date, a payment retroactive to such date may be made no
later than 60 days after the earliest date on which the
amount of such payment can be ascertained under the Plan;
provided, however, that no Retirement Benefit payments
shall commence until the Member has filed a claim for
benefits in accordance with Section 8.2 (Claim for
Benefit), and further provided that notwithstanding any
other provision of the Plan to the contrary, if the
Member's Retirement Benefit commences after the later of
(i) his Normal Retirement Date and (ii) his actual
retirement on a Deferred Retirement Date, he shall be
entitled to an additional single payment on the date his
Retirement Benefit commences equal to the sum of the
<PAGE>
additional payments he would have received had he elected
to have his Retirement Benefit commence on his Normal
Retirement Date (or on his actual Deferred Retirement Date,
if applicable).
15.8 Invalidity of Certain Provisions: If any
provisions of this Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall
not affect any other provisions hereof and the Plan shall
be construed and enforced as if such provisions, to the
extent invalid or unenforceable, had not been included.
15.9 Headings: The headings of articles and
sections are included solely for convenience of reference,
and, if there is any conflict between such headings and the
text of the Plan, the text shall control.
15.10 Uniform and Non-Discriminatory Treatment:
Any discretion exercisable hereunder by the Company, a
Participating Company, or the Retirement Committee shall be
exercised in a uniform and non-discriminatory manner.
15.11 Applicable Law: The Plan shall be
administered and interpreted in accordance with the laws of
the State of New York (disregarding the principles of
conflicts of law), except to the extent preempted by
Federal law or the law of another jurisdiction.
15.12 Unclaimed Benefits: In the event that
all, or any portion, of Retirement Benefits or any other
benefits payable to any individual under the Plan, shall,
at the expiration of 3 years after it shall be payable,
remain unpaid solely by reason of the inability of the
Retirement Committee, after sending a registered letter,
return receipt requested, to the last known address, and
after further diligent and reasonable effort to ascertain
the whereabouts of such payee, including utilizing the
services of the Internal Revenue Service to deliver such
notice in accordance with Rev. Proc. 94-22, the amount
payable shall be forfeited and shall be used to reduce the
cost of the Plan. In the event the payee is located
subsequent to his benefit being forfeited, such benefit
shall be restored.<PAGE>
ARTICLE XVI
TREASURY DEPARTMENT LIMITATIONS
16.1 Early Termination: The purpose of this
Article XVI is to conform the Plan to the requirements of
Section 401(a)(4) of the Code and related regulations.
(a) The provisions of this Section 16.1 shall
apply to "highly compensated employees" and "highly
compensated former employees" within the meaning of section
414(q) of the Code; provided that in any one year the total
number of such employees subject to the restrictions of
this Section 16.1 shall be limited to the group consisting
of the twenty-five highly compensated employees and highly
compensated former employees having the greatest
compensation (the "Top Paid Group").
(b) In the event of the termination of the Plan,
the benefit of any highly compensated employee and any
former highly compensated employee is limited to a benefit
that is nondiscriminatory under section 401(a)(4) of the
Code.
(c) If (b) applies, then annual payments to any
Member who is in the Top Paid Group shall be restricted to
an amount equal to the payments that would be made on
behalf of such Member under a single life annuity that is
the Actuarial Equivalent of the Member's accrued benefit
and the Member's other benefits, if any, under the Plan.
However, this foregoing restriction shall not apply if
either (i) after taking into account payment to or on
behalf of the Member of all benefits payable to or on
behalf of that Member under the Plan, the value of Plan
assets equals or exceeds 110 percent of the value of
"current liabilities," as defined in section 412(1)(7) of
the Code, (ii) the value of the benefits payable to or on
behalf of the Member under the Plan does not exceed one
percent of the value of "current liabilities" (as defined
in section 412(l)(17) of the Code) before distribution or
(iii) the value of the benefits payable to or on behalf of
the Member under the Plan does not exceed $3,500.
(d) In the event that it shall be determined by
statute, court decision or ruling by the Internal Revenue
Service or otherwise that the provisions of this Section
16.1 are no longer necessary to qualify the Plan under the
Code, this Section 16.1 shall thereupon be void without the
necessity of further amendment of the Plan.
(e) The Retirement Committee may adopt and
implement on a uniform basis any administrative procedures
authorized by the Internal Revenue Service, in regulations
or other rulings and announcements, pursuant to which
benefit payments otherwise restricted by this Section 16.1
can be paid into an escrow account or other acceptable
secured deposit arrangement.
(f) The provisions of this Section 16.1 shall be
effective for Plan Years beginning on or after January 1,
1994. For Plan Years beginning prior to such date, the
provisions of Section 16.1 of the prior Plan document (as
amended and restated as of January 1, 1989) shall apply.
<PAGE>
ARTICLE XVII
ADOPTION OF PLAN BY SUBSIDIARY
17.1 Adoption by Subsidiary: Any domestic or
foreign corporation which is a subsidiary of the Company
may adopt this Plan by appropriate action of its board of
directors and approval of the Board of Directors of the
Company. In such case the subsidiary will come within the
definition of Participating Company in Section 1.21
(Participating Company) and its Eligible Employees shall
become Members in accordance with Article II (Eligibility
and Membership). The Board shall determine, at the time
the subsidiary is designated as a Participating Company,
the extent to which service with the subsidiary (both
before and after such subsidiary was acquired by the
Company) shall be included as Service and Credited Service
under the Plan.
17.2 Withdrawal by Subsidiary: A subsidiary
which has adopted the Plan as provided in Section 17.1 may
subsequently withdraw from the Plan or terminate the Plan
with respect to its employees by appropriate action of its
own board of directors and timely notification thereof to
the Board of Directors of the Company. If it ceases to be
a subsidiary of the Company it shall so withdraw from the
Plan unless the Board of Directors of the Company approves
the continuation of its participation in the Plan.
In the event that any Participating Company fails
to establish or ceases to maintain the Plan, with respect
to its employees, as a "Qualified Plan" under section
401(a) of the Internal Revenue Code such Participating
Company shall cease to make contributions hereunder until
(a) such time as such Plan is determined by the Internal
Revenue Service to be a "Qualified Plan" or (b) the Board
of Directors determines that such Participating Company
should terminate the Plan with respect to its employees.
17.3 Allocation of Assets: When a Participating
Company withdraws from the Plan or terminates the Plan with
respect to its employees it shall promptly, by action of
its board of directors, file notice in writing with the
Trustee and shall direct the Trustee to segregate the
assets of the Plan certified by the Retirement Committee to
be allocable to its Members and beneficiaries under the
Plan. The Retirement Committee shall determine the share
of the assets so allocable and shall certify to the Trustee
what assets are to be so segregated, such assets to be used
and applied as follows upon receipt by the Trustee of the
written approval of the Board of Directors to such
certification.
(a) In the case of withdrawal from the Plan with
respect to the employees of the subsidiary, the Trustee
shall hold the aforesaid assets as a separate trust for the
exclusive benefit of such employees. From and after the
effective date of such withdrawal the provisions of the
Plan shall (pending the preparation, execution and delivery
by the withdrawing company of an appropriate separate Plan
and Trust Agreement) continue to be effective with respect
to such company and its employees as a separate plan under
which such company shall have and succeed to all the
rights, powers and duties of the Company and under which
its board of directors shall have and succeed to all the
rights, powers and duties of the Board of Directors of the
Company under the Plan.
(b) In the case of termination of the Plan with
respect to the employees of a subsidiary, subject to the
approval of the Pension Benefit Guaranty Corporation, the
aforesaid assets shall be used only for the exclusive
benefit of such company's Members and beneficiaries, except
that any assets not required to satisfy all liabilities for
such benefits because of erroneous actuarial computation
shall be returned to such company. The aforesaid assets
shall then be distributed in accordance with the provisions
of Article XIV (Suspension and Discontinuance).
<PAGE>
ARTICLE XVIII
TOP-HEAVY PROVISIONS
18.1 Purpose and Limited Application of this
Article: The purpose of this Article XVIII is to conform
to the requirement of section 401(a)(10)(B) of the Code
that the Plan contain provisions (a) which will take effect
if it becomes Top-heavy and (b) which meet the requirements
of section 416 of the Code.
18.2 Additional Definitions: As used in this
Article XVIII, the following words and phrases, in addition
to those defined in Article I shall have the following
meanings:
"Key Employee" means a Member who at any time during a
specific Plan Year or any of the four preceding Plan Years
is:
(1) an officer of the Company having an
annual compensation greater than 50 percent of the amount
in effect under section 415(c)(1)(A) of the Code for any
such Plan Year.
(2) 1 of the 10 Employees having annual
compensation from the Company of more than the limitation
in effect under section 415(c)(1)(A) of the Code and owning
(or considered as owning within the meaning of section 318
of the Code) the largest interests in the Company,
(3) a 5 percent owner of the Company, or
(4) a 1 percent owner of the Company having
an annual compensation from the Company of more than
$150,000.
For purposes of (1), no more than 50
individuals (or, if lesser, the greater of 3 or 10 percent
of the total number of individuals) shall be treated as
officers. For purposes of (2), if two individuals have the
same interest in the Company, the one having greater annual
compensation from the Company shall be treated as having a
larger interest.
Other Criteria for determining whether an
individual is a Key Employee shall be consistent with the
provisions of section 416(i) of the Code and regulations
issued thereunder.
"Beneficiary" means a deceased Member's
spouse or dependent child who is receiving benefits under
the Plan.
"Determination Date" means, with respect to
a specific Plan Year, the last day of the preceding Plan
Year.
"Present Value of Accrued Benefits" as of a
specific Determination Date means:
(1) the actuarial present value, as of the
most recent Valuation Date which is within the 12-month
period ending on the Determination Date, of a Member's
Accrued Benefit or the benefit payable to the Beneficiary
of a deceased Member, plus
(2) the aggregate of amounts paid to such
Member or Beneficiary during the Plan Year ending on the
Determination Date and the four preceding Plan Years, (but
excluding amounts included in the determination of (1)).
The actuarial assumptions used shall include
the interest rate and decremental rates (mortality,
termination of employment, etc.) used in the regular
actuarial valuations of the Plan.
"Valuation Date" means the date within a
Plan Year as of which the Actuary regularly determines the
contribution requirements under the Plan for minimum
funding purposes regardless of whether such a valuation was
performed for that Plan Year.
"Required Aggregation Group" means all plans
of the Corporate Group in which one or more Key Employees
participate and each other plan which enables this Plan to
meet the requirements of section 401(a)(4) or 410 of the
Code.
"Permissive Aggregation Group" means each
plan included in the Required Aggregation Group and any
other plans of the Corporate Group if, taking suchother
plans into account, such group would continue to meet the
requirements of section 401(a)(4) and 410 of the Code.
"Top-Heavy" means with respect to the Plan
for a specific Plan year, that
(1) the Present Value of Accrued Benefits
of Key Employees and their Beneficiaries exceeds 60% of the
Present Value of Accrued Benefits of all Members and
Beneficiaries but excluding amounts for former Key
Employees and for Members and former Members who have not
received any compensation from the Company during the five
years ending on the Determination Date, or
(2) the Plan is part of a Required
Aggregation Group that is a Top-Heavy Group,
unless the plan or such Top-heavy Group is part of a
Permissive Aggregation Group that is not a Top-Heavy Group.
"Top-heavy Group" means, either a Required
Aggregation Group or a Permissive Aggregation Group, for a
specific Plan Year, that meets the definition in section
416(g)(2)(B) of the Code.
18.3 Effect of the Plan's Becoming Top-Heavy:
If, for any Plan Year commencing after 1983, the Plan
becomes Top-Heavy, the following provisions shall
automatically become effective with respect only to each
Member who is an Employee:
(a) A member who has completed at least 3 but
less than 10 years of Service and who has not attained age
60, shall (i) upon his termination of employment other than
by death, be deemed to be a Vested Terminated Member
entitled to a Retirement Benefit under the provisions of
Article V (Benefits upon Termination of Employment), or
(ii) upon his termination of employment by reason of death,
be deemed to satisfy the eligibility requirements of
Section 7.2 (Pre-retirement Death Benefit for Certain Other
Members), in which case his surviving spouse, if any, shall
be entitled to a Retirement Benefit under the provisions of
Section 7.2. Such Member's (or spouse's) Retirement
Benefit shall be based on his Accrued Benefit (including
the effect, if any, or paragraph (b) below). If in a
subsequent Plan Year the Plan is not top-heavy this vesting
schedule shall continue to apply with respect to
(1) Members who have completed at least 5
years of Service as of the end of the latest Plan Year in
which the Plan was Top-heavy, and
(2) the Accrued Benefit as of the end of
the latest Plan Year in which the Plan was Top-heavy for
all other Members who have completed at least 3 years of
Service on such date.
<PAGE>
(b) The amount of Accrued Benefit for a Member
who is not a Key Employee shall not be less than 2% of
average annual aggregate compensation (for the 5
consecutive Plan Years producing the highest such average)
for each year of Credited Service but excluding years in
excess of 10 and excluding years during which the Plan is
not Top-heavy. In computing the average annual aggregate
compensation, compensation for years beginning after the
last year for which the Plan was Top-heavy shall be
excluded. If there remain fewer than 5 years the average
of such remaining years shall be used.
(c) For both the calculation of the minimum
described in (b) above and the determination of aggregate
compensation, compensation in excess of the amount
determined in accordance with section 416(d) of the Code
shall be excluded with respect to any Plan Year in which
the Plan is Top-heavy.
(d) In applying the maximum benefit limitation
st forth in subparagraph (b)(3)(i) of Article IX, for a
Plan Year in which the Plan is Top-heavy, the term "one
(1.00)" shall be substituted for the term "one and one
quarter (1.25)". However, this substitution shall not
result in a reduction in any Member's Accrued Benefit as of
the end of the Plan Year immediately preceding the Plan
Year in which the Plan became Top-heavy.
18.4 Effect of Change in Pertinent Legislation
or Regulation: In the event that Congress should provide
by statute, or the Internal Revenue Service should provide
by regulation or ruling, that such limitations are no
longer necessary for the Plan to meet the requirements of
section 401(a) or other applicable provisions of the
Internal Revenue Code then in effect, such limitations
shall become void and shall no longer apply, without the
necessity of further amendment to the Plan.
<PAGE>
ARTICLE XIX
DIRECT ROLLOVER DISTRIBUTIONS
19.1 Purpose and Limited Application of this
Article: The purpose of this Article is to conform to
section 401(a)(31) of the Code. This Article applies to
distributions made on or after January 1, 1993.
Notwithstanding any provision of the plan to the contrary
that would otherwise limit a distributee's election under
this Article, a distributee may elect, at the time and in
the manner prescribed by the Retirement Committee, to have
any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the
distributee in a direct rollover, subject to the
limitations in Section 19.3.
19.2 Definitions:
(a) Eligible Rollover Distribution: An eligible
rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not
include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the
Code; and the portion of any distribution that is not
includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect
to employer securities).
(b) Eligible Retirement Plan: An eligible
retirement plan is an individual retirement account
described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code,
an annuity plan described in section 403(a) of the Code, or
a qualified trust described in section 401(a) of the Code,
that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to a surviving spouse, an eligible retirement
plan is an individual retirement account or an individual
retirement annuity.
<PAGE>
(c) Distributee: A distributee includes an
employee or former employee. In addition, the employee's
or former employee's surviving spouse and the employee's or
former employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order,
as defined in section 414(p) of the Code, are distributees
with regard to the interest of the spouse or former spouse.
(d) Direct Rollover: A direct rollover is a
payment by the Plan to an eligible retirement plan
specified by the distributee.
19.3 Limitations on Right to Elect a Direct
Rollover.
(a) Minimum Amount of Direct Rollover. A Member
may elect to have a direct rollover made with respect to
the entire amount of his or her eligible rollover
distribution, provided the amount of such distribution
equals at least $200.
(b) Partial Direct Rollovers. A Member may
elect to have a direct rollover made with respect to a
portion of his or her distribution, provided the amount of
such partial direct rollover equals at least $500.
19.4 Waiver of Distribution Waiting Period: If a
distribution is one to which section 401(a)(11) and 417
(relating to the provision of joint and survivor annuities)
of the Code do not apply, such distribution may commence
less than 30 days after the notice required by section
411(a)-11(c) of the Treasury Regulations is given, provided
that:
(a) The Retirement Committee clearly informs the
Member that the Member has a right to a period of at
least 30 days after receiving the notice to consider the
decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and
(b) the Member, after receiving the notice,
affirmatively elects a distribution.
THE SMITH CORONA CORPORATION SALARIED EMPLOYEES'
RETIREMENT PLAN
As Amended and Restated
as of January 1, 1994<PAGE>
TABLE OF CONTENTS
Page
FOREWORD . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 "Accrued Benefit". . . . . . . . . . . . . . . . . . . .1
1.2 "Actuarial Equivalent" . . . . . . . . . . . . . . . . .1
1.3 "Actuary". . . . . . . . . . . . . . . . . . . . . . . .1
1.4 "Authorized Leave of Absence". . . . . . . . . . . . . .1
1.5 "Average Final Compensation" . . . . . . . . . . . . . .1
1.6 "Board" or "Board of Directors". . . . . . . . . . . . .2
1.7 "Code" . . . . . . . . . . . . . . . . . . . . . . . . .2
1.8 "Company". . . . . . . . . . . . . . . . . . . . . . . .2
1.9 "Compensation" . . . . . . . . . . . . . . . . . . . . .2
1.10 "Corporate Group". . . . . . . . . . . . . . . . . . . .5
1.11 "Credited Service" . . . . . . . . . . . . . . . . . . .5
1.12 "Deferred Retirement Date" . . . . . . . . . . . . . . .5
1.13 "Early Retirement Date". . . . . . . . . . . . . . . . .6
1.14 "Eligible Employee". . . . . . . . . . . . . . . . . . .6
1.15 "Employee" . . . . . . . . . . . . . . . . . . . . . . .6
1.16 "ERISA". . . . . . . . . . . . . . . . . . . . . . . . .6
1.17 "Hour of Service". . . . . . . . . . . . . . . . . . . .6
1.18 "Investment Manager" . . . . . . . . . . . . . . . . . .6
1.19 "Member" . . . . . . . . . . . . . . . . . . . . . . . .6
1.20 "Normal Retirement Date" . . . . . . . . . . . . . . . .7
1.21 "Participating Company". . . . . . . . . . . . . . . . .7
1.22 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . .7
1.23 "Plan Year". . . . . . . . . . . . . . . . . . . . . . .7
1.25 "Required Beginning Date". . . . . . . . . . . . . . . .7
1.26 "Retirement Benefit" . . . . . . . . . . . . . . . . . .7
1.27 "Retirement Committee" . . . . . . . . . . . . . . . . .7
1.28 "Retirement Date". . . . . . . . . . . . . . . . . . . .7
1.29 "Service". . . . . . . . . . . . . . . . . . . . . . . .7
1.30 "Social Security Benefit". . . . . . . . . . . . . . . .9
1.31 "Trust Fund" . . . . . . . . . . . . . . . . . . . . . .9
1.32 "Trustee". . . . . . . . . . . . . . . . . . . . . . . 10
1.33 "Vested Terminated Member" . . . . . . . . . . . . . . 10
1.34 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
ELIGIBILITY AND MEMBERSHIP . . . . . . . . . . . . . . . . . . 11
2.1 Commencement of Membership . . . . . . . . . . . . . . 11
2.2 Authorized Leave of Absence. . . . . . . . . . . . . . 11
2.3 Transfer to or from Non-Covered Status . . . . . . . . 11
<PAGE>
ARTICLE III
RETIREMENT DATE. . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Normal Retirement Date . . . . . . . . . . . . . . . . 13
3.2 Deferred Retirement Date . . . . . . . . . . . . . . . 13
3.3 Early Retirement Date. . . . . . . . . . . . . . . . . 13
3.4 Reemployment of a Retired Member . . . . . . . . . . . 13
ARTICLE IV
RETIREMENT BENEFITS. . . . . . . . . . . . . . . . . . . . . . 14
4.1 Normal Retirement Benefit. . . . . . . . . . . . . . . 14
4.2 Deferred Retirement Benefit. . . . . . . . . . . . . . 14
4.3 Early Retirement Benefit . . . . . . . . . . . . . . . 14
4.4 Nonduplication of Benefits . . . . . . . . . . . . . . 15
ARTICLE V
BENEFITS UPON TERMINATION OF EMPLOYMENT. . . . . . . . . . . . 16
5.1 Deferred Vested Benefit. . . . . . . . . . . . . . . . 16
5.2 Early Commencement of Vested Benefit . . . . . . . . . 16
5.3 Reemployment of a Vested Terminated Member . . . . . . 16
ARTICLE VI
DISABILITY BENEFITS. . . . . . . . . . . . . . . . . . . . . . 18
6.1 Eligibility and Amount of Benefit. . . . . . . . . . . 18
6.2 Medical Examination; Recovery From Disability. . . . . 18
ARTICLE VII
DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1 Family Benefit . . . . . . . . . . . . . . . . . . . . 20
7.2 Pre-Benefit Commencement Survivor Option for
Vested Terminated Members. . . . . . . . . . . . . . . . . . . 22
7.3 Death Benefits After Retirement Benefit Commences. . . 24
ARTICLE VIII
TIME AND FORM OF BENEFIT PAYMENT . . . . . . . . . . . . . . . 25
8.1 Normal Form of Benefit . . . . . . . . . . . . . . . . 25
8.2 Claim for Benefit. . . . . . . . . . . . . . . . . . . 25
8.3 Automatic Joint and Survivor Option. . . . . . . . . . 26
8.4 Other Optional Forms of Benefit. . . . . . . . . . . . 27
8.5 Payment of Small Amounts. . . . . . . . . . . . . . . 29
8.6 Mandatory Distributions. . . . . . . . . . . . . . . . 29
<PAGE>
ARTICLE IX
LIMIT ON BENEFITS. . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Maximum Annual Benefit . . . . . . . . . . . . . . . . 30
9.2 Adjustment to Maximum Annual Benefit . . . . . . . . . 31
9.3 Reduction for Participation or Service of Less
than 10 Years. . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE X
CONTRIBUTIONS TO TRUST FUND. . . . . . . . . . . . . . . . . . 33
10.1 Company Contribution. . . . . . . . . . . . . . . . . 33
10.2 Refund of Company Contributions . . . . . . . . . . . 33
10.3 Member Contributions. . . . . . . . . . . . . . . . . 33
10.4 Forfeitures . . . . . . . . . . . . . . . . . . . . . 33
10.5 Separate Accounting for Certain Participating
Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE XI
ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . 35
11.1 Plan Administrator. . . . . . . . . . . . . . . . . . 35
11.2 Board of Directors. . . . . . . . . . . . . . . . . . 35
11.3 Appointment of the Retirement Committee . . . . . . . 35
11.4 Compensation, Expenses. . . . . . . . . . . . . . . . 36
11.5 Appointment of Secretary, Agents. . . . . . . . . . . 36
11.6 Retirement Committee Meetings . . . . . . . . . . . . 36
11.7 Authority and Duties of the Retirement Committee. . . 36
11.8 Personal Liability. . . . . . . . . . . . . . . . . . 37
11.9 Dealings Between the Retirement Committee and
Individual Members . . . . . . . . . . . . . . . . . . . . . . 37
11.10 Claim Procedures. . . . . . . . . . . . . . . . . . . 38
11.11 Lawsuits. . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XII
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . 39
12.1 Trust Fund. . . . . . . . . . . . . . . . . . . . . . 39
12.2 Trustee . . . . . . . . . . . . . . . . . . . . . . . 39
12.3 Investment Manager. . . . . . . . . . . . . . . . . . 39
12.4 Disbursement of Funds . . . . . . . . . . . . . . . . 39
ARTICLE XIII
AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.1 Right to Amend. . . . . . . . . . . . . . . . . . . . 41
ARTICLE XIV
SUSPENSION AND DISCONTINUANCE. . . . . . . . . . . . . . . . . 42
14.1 Suspension of Contributions . . . . . . . . . . . . . 42
14.2 Discontinuance. . . . . . . . . . . . . . . . . . . . 42
14.3 Merger, Consolidation or Transfer . . . . . . . . . . 42
<PAGE>
ARTICLE XV
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 43
15.1 Uniform Administration. . . . . . . . . . . . . . . . 43
15.2 Payment Due an Incompetent. . . . . . . . . . . . . . 43
15.3 Identity of Payee . . . . . . . . . . . . . . . . . . 43
15.4 Non-alienation of Benefits. . . . . . . . . . . . . . 43
15.5 Source of Payments. . . . . . . . . . . . . . . . . . 44
15.6 Plan Not a Contract of Employment . . . . . . . . . . 44
15.7 Payment of Retirement Benefits. . . . . . . . . . . . 44
15.8 Invalidity of Certain Provisions. . . . . . . . . . . 45
15.9 Headings. . . . . . . . . . . . . . . . . . . . . . . 45
15.10 Uniform and Non-Discriminatory Treatment. . . . . . . 45
15.11 Applicable Law. . . . . . . . . . . . . . . . . . . . 45
15.12 Unclaimed Benefits. . . . . . . . . . . . . . . . . . 45
ARTICLE XVI
TREASURY DEPARTMENT LIMITATIONS. . . . . . . . . . . . . . . . 46
ARTICLE XVII
ADOPTION OF PLAN BY SUBSIDIARY . . . . . . . . . . . . . . . . 48
17.1 Adoption by Subsidiary. . . . . . . . . . . . . . . . 48
17.2 Withdrawal by Subsidiary. . . . . . . . . . . . . . . 48
17.3 Allocation of Assets. . . . . . . . . . . . . . . . . 48
ARTICLE XVIII
TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . 50
18.1 Purpose and Limited Application of this Article . . . 50
18.2 Additional Definitions. . . . . . . . . . . . . . . . 50
18.3 Effect of the Plan's Becoming Top-Heavy . . . . . . . 52
18.4 Effect of Change in Pertinent Legislation or
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XIX
DIRECT ROLLOVER DISTRIBUTIONS. . . . . . . . . . . . . . . . . 54
19.1 Purpose and Limited Application of this Article . . . 54
19.2 Definitions . . . . . . . . . . . . . . . . . . . . . 54
19.3 Limitations on Right to Elect a Direct Rollover . . . 55
19.4 Waiver of Distribution Waiting Period . . . . . . . . 55
DEBTOR-IN-POSSESSION
CREDIT AGREEMENT
among
SMITH CORONA CORPORATION,
a Debtor-in-Possession
The Lenders
Party Hereto
and
CHEMICAL BANK,
as Agent
Dated as of July 10, 1995
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . 20
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS. . . . . . . . . . 20
2.1 Revolving Credit Commitments. . . . . . . . . . . . . 20
2.2 Revolving Credit Notes. . . . . . . . . . . . . . . . 21
2.3 Procedure for Revolving Credit Borrowing. . . . . . . 21
2.4 Commitment Fee; Collateral Monitoring Fees. . . . . . 21
2.5 Termination or Reduction of Commitments . . . . . . . 22
2.6 Optional Prepayments; Mandatory Prepayments . . . . . 22
2.7 Interest Rates and Payment Dates. . . . . . . . . . . 24
2.8 Computation of Interest and Fees. . . . . . . . . . . 24
2.9 Pro Rata Treatment and Payments . . . . . . . . . . . 24
2.10 Requirements of Law. . . . . . . . . . . . . . . . . 25
2.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 25
2.12 L/C Commitment.. . . . . . . . . . . . . . . . . . . 27
2.13 Procedure for Issuance of Letters of Credit. . . . . 28
2.14 Fees, Commissions and Other Charges. . . . . . . . . 28
2.15 L/C Participations.. . . . . . . . . . . . . . . . . 29
2.16 Reimbursement Obligation of the Borrower.. . . . . . 30
2.17 Obligations Absolute.. . . . . . . . . . . . . . . . 31
2.18 Letter of Credit Payments. . . . . . . . . . . . . . 31
2.19 Application. . . . . . . . . . . . . . . . . . . . . 31
2.20 Increased Costs. . . . . . . . . . . . . . . . . . . 32
2.21 Further Assurances . . . . . . . . . . . . . . . . . 32
2.22 Nature of Obligations; Indemnities . . . . . . . . . 32
2.23 Superpriority of Obligations . . . . . . . . . . . . 34
2.24 Payments of Prior Indebtedness . . . . . . . . . . . 35
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 35
3.1 Financial Condition . . . . . . . . . . . . . . . . . 35
3.2 No Change . . . . . . . . . . . . . . . . . . . . . . 36
3.3 Corporate Existence; Compliance with Law. . . . . . . 36
3.4 Corporate Power; Authorization; Enforceable
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.5 No Legal Bar. . . . . . . . . . . . . . . . . . . . . 37
3.6 No Material Litigation. . . . . . . . . . . . . . . . 37
3.7 No Default. . . . . . . . . . . . . . . . . . . . . . 37
3.8 Ownership of Property; Liens. . . . . . . . . . . . . 37
3.9 Intellectual Property . . . . . . . . . . . . . . . . 37
3.10 No Burdensome Restrictions . . . . . . . . . . . . . 38
3.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 38
3.12 Federal Regulations. . . . . . . . . . . . . . . . . 38
3.13 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 38
3.14 Investment Company Act; Other Regulations. . . . . . 39
3.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . 39
3.16 Purpose of Loans . . . . . . . . . . . . . . . . . . 39
3.17 Accuracy and Completeness of Information . . . . . . 39
3.18 Collateral Documents . . . . . . . . . . . . . . . . 39
3.19 Environmental Matters. . . . . . . . . . . . . . . . 40
3.20 Prior Agreement. . . . . . . . . . . . . . . . . . . 41
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 41
4.1 Conditions to Initial Extension of Credit . . . . . . 41
4.2 Conditions to Each Extension of Credit. . . . . . . . 45
SECTION 5. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . 46
5.1 Financial Statements. . . . . . . . . . . . . . . . . 46
5.2 Certificates; Other Information . . . . . . . . . . . 47
5.3 Business Plans. . . . . . . . . . . . . . . . . . . . 48
5.4 Payment of Obligations. . . . . . . . . . . . . . . . 48
5.5 Conduct of Business and Maintenance of Existence. . . 48
5.6 Maintenance of Quality Control Procedures . . . . . . 48
5.7 Maintenance of Property; Insurance. . . . . . . . . . 48
5.8 Inspection of Property; Books and Records;
Discussions. . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.9 Notices . . . . . . . . . . . . . . . . . . . . . . . 49
5.10 Environmental Laws . . . . . . . . . . . . . . . . . 50
5.11 Maintenance of Liens of the Collateral Documents.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.12 Further Assurances; Intellectual Property. . . . . 50
5.13 Cash Management System. . . . . . . . . . . . . . 51
5.14 Payment of Rent Obligations. . . . . . . . . . . . . 51
5.15 Payment of Certain Prior Indebtedness. . . . . . . . 52
5.16 Certain Post-Closing Matters . . . . . . . . . . . . 52
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 52
6.1 Financial Condition Covenants . . . . . . . . . . . . 53
6.2 Limitation on Indebtedness. . . . . . . . . . . . . . 54
6.3 Limitation on Liens . . . . . . . . . . . . . . . . . 54
6.4 Limitation on Guarantee Obligations . . . . . . . . . 55
6.5 Limitation on Fundamental Changes . . . . . . . . . . 56
6.6 Limitation on Sale of Assets. . . . . . . . . . . . . 56
6.7 Limitation on Dividends . . . . . . . . . . . . . . . 57
6.8 Limitation on Capital Expenditures. . . . . . . . . . 57
6.9 Limitation on Investments, Loans and Advances . . . . 57
6.10 Limitation on Transactions with Affiliates . . . . . 58
6.11 Limitation on Sales and Leasebacks . . . . . . . . . 58
6.12 Limitation on Changes in Fiscal Year . . . . . . . . 58
6.13 Limitation on Lines of Business. . . . . . . . . . . 58
6.14 Limitation on Negative Pledge Clauses. . . . . . . . 58
6.15 Chapter 11 Claims. . . . . . . . . . . . . . . . . . 58
SECTION 7. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . 59
SECTION 8. THE AGENT. . . . . . . . . . . . . . . . . . . . . 62
8.1 Appointment . . . . . . . . . . . . . . . . . . . . . 62
8.2 Delegation of Duties. . . . . . . . . . . . . . . . . 63
8.3 Exculpatory Provisions. . . . . . . . . . . . . . . . 63
8.4 Reliance by Agent . . . . . . . . . . . . . . . . . . 63
8.5 Notice of Default . . . . . . . . . . . . . . . . . . 64
8.6 Non-Reliance on Agent and Other Lenders . . . . . . . 64
8.7 Indemnification . . . . . . . . . . . . . . . . . . . 64
8.8 Agent in Its Individual Capacity. . . . . . . . . . . 65
8.9 Successor Agent . . . . . . . . . . . . . . . . . . . 65
SECTION 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 66
9.1 Amendments and Waivers. . . . . . . . . . . . . . . . 66
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . 66
9.3 No Waiver; Cumulative Remedies. . . . . . . . . . . . 68
9.4 Survival of Representations and Warranties. . . . . . 68
9.5 Payment of Expenses and Taxes . . . . . . . . . . . . 68
9.6 Successors and Assigns; Participations and
Assignments. . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.7 Adjustments; Set-off. . . . . . . . . . . . . . . . . 71
9.8 Counterparts. . . . . . . . . . . . . . . . . . . . . 72
9.9 Severability. . . . . . . . . . . . . . . . . . . . . 72
9.10 Integration. . . . . . . . . . . . . . . . . . . . . 72
9.11 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 72
9.12 Acknowledgements . . . . . . . . . . . . . . . . . . 73
9.13 WAIVERS OF JURY TRIAL. . . . . . . . . . . . . . . . 73
9.14 Parties Including Trustees; Court Proceedings. . . . 73
<PAGE>
SCHEDULES
Schedule 1.1 Commitments
Schedule 2.12 Existing Letters of Credit
Schedule 3.9 Certain Intellectual Property Matters
Schedule 3.15 Subsidiaries
Schedule 3.19 Certain Environmental Matters
Schedule 6.2 Existing Indebtedness
Schedule 6.3 Existing Liens
Schedule 6.4 Existing Guarantee Obligations
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Legal Opinion
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Borrowing Certificate
Exhibit E - Form of Borrowing Base Certificate
Exhibit F - Form of Security Agreement
Exhibit G - Form of Collateral Monitoring Reporting
Requirements
Exhibit H - Form of Interim Borrowing Order
Exhibit I - Form of Final Borrowing Order
Exhibit J - Form of Subsidiary Guaranty
Exhibit K - Form of Borrower Pledge Agreement
Exhibit L - Form of Guarantor Pledge Agreement
Exhibit M - Form of Compliance Certificate
<PAGE>
This DEBTOR-IN-POSSESSION CREDIT AGREEMENT is dated as
of July 10, 1995, and entered into by and among SMITH CORONA
CORPORATION, a Delaware corporation, as debtor and debtor-in-possession
(the "Borrower"), the several banks and other financial
institutions from time to time parties to this Agreement (the
"Lenders") and CHEMICAL BANK, a New York banking corporation, as
agent for the Lenders hereunder (in such capacity, the ``Agent'').
INTRODUCTORY STATEMENT
WHEREAS, on July 5, 1995, the Borrower filed a
voluntary petition for relief under the Bankruptcy Code (as
hereinafter defined), with the United States Court for the District
of Delaware, (the "Court") (such proceedings, Case No. 95-788HSB,
are hereinafter referred to as the "Chapter 11 Case"). The
Borrower continues to operate its business and manage its
properties as a debtor in possession pursuant to Sections 1107 and
1108 of the Bankruptcy Code.
WHEREAS, the Borrower has requested the Lenders to
provide, subject to the terms and conditions contained herein, a
revolving credit facility (including letters of credit) of up to
$24,000,000 (including a letter of credit subfacility of
$5,000,000) to fund working capital, issue letters of credit, repay
and terminate the Existing Credit Facilities (as hereinafter
defined) and make certain other payments during the Chapter 11
Case, all as set forth herein, and the Lenders are willing to
extend such postpetition credit to the Borrower in accordance with
and on the terms and conditions set forth herein; and
WHEREAS, the Borrower and Guarantors desire to secure
their respective obligations hereunder and under the other Loan
Documents by granting to the Agent, on behalf of Lenders, a first
or second priority (as the case may be) security interest in
substantially all of their assets as set forth in the Pledge and
Security Agreement and other Collateral Documents.
NOW, THEREFORE, the parties hereto agree that,
effective as of the Effective Date, the Prior Agreement shall be
amended and restated as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
``ABR'': for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% or (c) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For purposes
hereof: "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Agent as its prime rate
in effect at its principal office in New York City (the Prime Rate
not being intended to be the lowest rate of interest charged by
Chemical Bank in connection with extensions of credit to its
customers); "Base CD Rate" shall mean the sum of (a) the product of
(i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus
the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as
being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board of
Governors of the Federal Reserve System (the "Board") through the
public information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate
shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in
New York City received at approximately 10:00 A.M., New York City
time, on such day (or, if such day shall not be a Business Day, on
the next preceding Business Day) by the Agent from three New York
City negotiable certificate of deposit dealers of recognized
standing selected by it; and "Federal Funds Effective Rate" shall
mean, for any day, 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 on the next
succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Agent from three federal funds brokers
of recognized standing selected by it. If for any reason the Agent
shall have determined (which determination shall be conclusive
absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate, or both, for any reason,
including the inability or failure of the Agent to obtain
sufficient quotations in accordance with the terms thereof, the ABR
shall be determined without regard to clause (b) or (c), or both,
of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any
change in the ABR due to a change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate shall
be effective as of the opening of business on the effective day of
such change in the Prime Rate, the Three-Month Secondary CD Rate or
the Federal Funds Effective Rate, respectively.
"Account Debtor": each debtor, customer or obligor in
any way obligated on or in connection with any Account.
"Accounts": all "accounts" (as defined in the UCC).
"Affiliate": as to any Person, any other Person (other
than a Subsidiary) which, directly or indirectly, is in control of,
is controlled by, or is under common control with, such Person.
For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of
directors of such Person or (b) direct or cause the direction of
the management and policies of such Person, whether by contract or
otherwise.
"Aggregate Outstanding Extensions of Credit": as to
any Lender at any time, an amount equal to the sum of (a) the
aggregate principal amount of all Loans made by such Lender then
outstanding and (b) such Lender's Commitment Percentage of the L/C
Obligations then outstanding.
"Agreement": this Debtor-in-Possession Credit
Agreement, as amended, supplemented or otherwise modified from time
to time.
"Application": an application, in such form as the
Issuing Lender may specify from time to time, requesting the
Issuing Lender to open a Letter of Credit.
"Assignee": as defined in subsection 9.6(c).
"Available Commitment": as to any Lender at any time,
an amount equal to the excess, if any, of (a) the amount of such
Lender's Commitment over (b) such Lender's Aggregate Outstanding
Extensions of Credit.
"BAI": Bank of America Illinois, a bank organized
under the laws of the State of Illinois.
"Bankruptcy Code": Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any
successor statute.
"Borrower Pledge Agreement": that certain Pledge
Agreement dated as of the date hereof executed by the Borrower,
substantially in the form attached as Exhibit K hereto, as such
Pledge Agreement may be amended, supplemented or otherwise modified
from time to time.
"Borrowing Base": at any date of determination
thereof, an amount equal to (a) the sum of (i) 70% of Eligible
Accounts at such date, (ii) 40% of Eligible Inventory at such date,
(iii) 20% of Eligible Service Depot Inventory at such date,
provided that 20% of Eligible Service Depot Inventory may not
exceed $500,000, (iv) 40% of finished goods inventory in transit to
the United States, which is subject to the Agent's security
interest under the Security Agreement, from (I) the Borrower's
facility in Singapore, (II) Samsung Corporation, Korea, and (III)
such other third parties as may be designated by the Borrower from
time to time which are reasonably acceptable to the Agent at such
date, less the amount of (b) a reserve for ocean freight, customs
duty and other fees for inventory in transit from the Borrower's
facility in Singapore to the United States, calculated as 5% of the
dollar amount in transit from Singapore, net of intercompany profit
at such date.
"Borrowing Base Certificate": the Certificate of the
Borrower, substantially in the form of Exhibit E required to be
delivered pursuant to subsection 5.2(d).
"Borrowing Date": any Business Day specified in a
notice pursuant to subsection 2.3 as a date on which the Borrower
requests the Lenders to make Loans hereunder.
"Business": as defined in subsection 3.19.
"Business Day": a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized
or required by law to close.
"Business Plan": a business plan delivered to the
Lenders pursuant to subsection 5.3 that is approved in writing by
the Lenders on or prior to September 15, 1995 provided that it is
understood and agreed that (a) no Lender shall have any obligation
to approve such business plan and (b) the approval of any Lender
may be withheld or granted in the sole and absolute discretion of
such Lender without any liability to, or on the part of, any
Lender.
"Business Plan Event": the failure of Lenders to
approve in writing by September 15, 1995 the business plan
delivered by the Borrower to the Lenders pursuant to subsection
5.3; provided that it is understood and agreed that (a) no Lender
shall have any obligation to approve such business plan and (b) the
approval of any Lender may be withheld or granted in the sole and
absolute discretion of such Lender without any liability to, or on
the part of, any Lender.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation) and any and all warrants or
options to purchase any of the foregoing.
"Carve-Out": as defined in subsection 2.23.
"Cash": money, currency or a credit balance in any
deposit account.
"C/D Assessment Rate": for any day as applied to any
ABR Loan, the net annual assessment rate (rounded upward to the
nearest 1/100th of 1%) determined by Chemical to be payable on such
day to the Federal Deposit Insurance Corporation or any successor
("FDIC") for FDIC's insuring time deposits made in Dollars at
offices of Chemical in the United States.
"C/D Reserve Percentage": for any day as applied to
any ABR Loan, that percentage (expressed as a decimal) which is in
effect on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) (the "Board"), for
determining the maximum reserve requirement for a Depositary
Institution (as defined in Regulation D of the Board) in respect of
new non-personal time deposits in Dollars having a maturity of 30
days or more.
"Change in Control": shall be deemed to have occurred
if (a) any person or group (within the meaning of Rule 13d-5 of the
Securities and Exchange Act of 1934 as in effect on the date
hereof) other than HNRC or any direct or indirect wholly owned
subsidiary of HNRC, shall own directly or indirectly, beneficially
or of record, shares representing more than 35% of the aggregate
ordinary voting power represented by the issued and outstanding
capital stock of the Borrower; provided, however, that, at any time
that HNRC or any direct or indirect wholly owned subsidiary of HNRC
shall fail to own, directly and of record, shares representing at
least 35% of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of the Borrower, a Change in
Control shall be deemed to have occurred if any person or group
other than HNRC or any direct or indirect subsidiary of HNRC shall
own, directly or indirectly, beneficially or of record, shares
representing more than 25% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the
Borrower; (b) a majority of the seats (other than vacant seats) on
the board of directors of the Borrower shall at any time have been
occupied by persons who were neither (i) nominated by the
management of the Borrower, nor (ii) appointed by directors so
nominated; or (c) any person or group (other than HNRC or any
wholly owned subsidiary of HNRC) shall otherwise directly or
indirectly control the Borrower; provided, however, that the sale
by HNRC of its shares shall not constitute a Change in Control
except pursuant to (a) above.
"Chapter 11 Case" has the meaning assigned to that term
in the introductory statement hereto.
"Chemical": Chemical Bank.
"Code": the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral Access Agreements": the agreements among
the Borrower and the landlord of each premises at which the
Borrower maintains Collateral, each of such agreements providing
for (i) access by the Lenders to the premises where the Collateral
is located and (ii) waivers by the landlords of landlord's liens on
the Collateral arising by operation of law existing or which may
come to exist.
"Collateral Documents": the Security Agreement, the
Borrower Pledge Agreement, the Guarantor Pledge Agreement, the
Subsidiary Guaranty and all other instruments or documents
(including without limitation the Mortgage) now or hereafter
granting Liens to Agent for the benefit of Agent and/or Lenders.
"Commitment": as to any Lender, the obligation of such
Lender to make Loans to, or issue or participate in Letters of
Credit for the account of, the Borrower hereunder in an aggregate
principal amount at any one time outstanding not to exceed the
amount set forth opposite such Lender's name on Schedule 1.1, as
such amount may be reduced from time to time in accordance with the
provisions of this Agreement.
"Commitment Percentage": as to any Lender at any time,
the percentage which such Lender's Commitment then constitutes of
the aggregate Commitments (or, at any time after the Commitments
shall have expired or terminated, the percentage which the
aggregate principal amount of such Lender's Aggregate Outstanding
Extensions of Credit constitutes of the aggregate principal amount
of the total Aggregate Outstanding Extensions of Credit).
"Commitment Period": the period from and including the
Effective Date to but not including the Termination Date or such
earlier date on which the Commitments shall terminate as provided
herein.
"Commonly Controlled Entity": an entity, whether or
not incorporated, which is under common control with the Borrower
within the meaning of Section 4001 of ERISA or is part of a group
which includes the Borrower and which is treated as a single
employer under Section 414 of the Code.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person is
a party or by which it or any of its property is bound.
"Cortland Distribution Property": the real property of
the Borrower that is the subject of the J.M. Murray Contract.
"Cortland Warehouse Property": the real property of
the Borrower located in Cortland, New York that is not the subject
of the J.M. Murray Contract.
"Court" shall have the meaning assigned to it in the
introductory statement hereto.
"Credit Party": the Borrower and any Subsidiary of the
Borrower that is or becomes a party to a Loan Document.
"Default": any of the events specified in Section 7,
whether or not any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.
"Defective Stock": laminators (LX2000, LX900, LX400,
and LX800), address writers (also referred to as envelope
printers), and handifaxes, and other products determined to be
defective in the reasonable judgment of the Agent.
"Dollars" and "$": dollars in lawful currency of the
United States of America.
"Effective Date": the date on which the conditions
precedent set forth in subsection 4.1 shall be satisfied.
"Eligible Accounts": at the time of any determination
thereof, all Accounts of the Borrower which meet the following
criteria at the time of creation and continue to meet such criteria
at all times relevant to such determination, and which are and
which continue to be acceptable to the Agent in all respects.
Standards of eligibility may be fixed and revised from time to time
solely by the Agent in its exclusive reasonable judgment. The
following requirements shall apply in determining whether a
particular Account constitutes an Eligible Account:
(a) such Account is evidenced by an invoice and has
arisen from the sale of goods which have been shipped or delivered
to an Account Debtor on an absolute sale basis, have not been
shipped or delivered on a consignment, approval, or sale-or-return
basis, and are not subject to any repurchase or return agreement or
arrangement, other than those repurchase or return agreements that
(i) arise in the ordinary course of the Borrower's business, and
(ii) are consistent with standard industry practices;
(b) such Account has been adjusted to reflect the
return or rejection of, or any loss of or damage to, any of the
Inventory giving rise to such Account, and is not subject to any
material delivery, freight or financing charges, or late or other
fees, or set-offs, counterclaims, defenses, or disputes existing or
asserted with respect to such Account;
(c) the Account Debtor in respect of such Account
is not insolvent or the subject of any bankruptcy case or
insolvency proceeding of any kind, unless such Account is due from
such Account Debtor as an administrative claim under the Bankruptcy
Code and the Agent, in the exercise of its reasonable business
judgment, deems such Account Debtor to be creditworthy;
(d) the Account Debtor in respect of such Account
is located within the United States of America;
(e) the Account Debtor in respect of such Account
is not the United States of America or any state, territory,
subdivision, department or agency thereof, unless all applicable
requirements of the Assignment of Claims Act of 1940 have been met;
(f) such Account is at all times subject to the
Agent's duly perfected, first-priority Lien except for Liens
permitted by subsection 6.3;
(g) such Account does not arise out of transactions
with an employee, officer, agent, director, stockholder,
Subsidiary, or Affiliate of the Borrower;
(h) such Account is not later than sixty (60) days
after the due date stated on the invoice therefor, provided that
the aggregate Accounts of any Account Debtor with original due
dates more recent than 60 days prior to the date of determination
shall be reduced by the amount of net credit balances of such
Account Debtor the dates of which are earlier than 60 days prior to
such date of determination;
(i) for each of the ten Accounts with the highest
aggregate balances on the Borrower's accounts receivable aging
summary, the balance under clause (h) above (``not later than 60
days'clause) is less than 25% of the total face value of such
Account, and for each other Account, the aggregate balance under
clause (h) above is less than 50% of the total face value of such
Account;
(j) such Account has not been and is not required
to be charged off or written off as uncollectible in accordance
with the customary business practice of the Borrower;
(k) such Account does not arise out of any claim in
tort, is not evidenced by chattel paper, a promissory note, a
negotiable instrument, or any other instrument of any kind or, if
such Account is evidenced by chattel paper, a promissory note, a
negotiable instrument, or any other instrument, the Borrower has
delivered and properly endorsed such chattel paper, promissory
note, negotiable instrument or other instrument to the Agent, on
behalf of the Lenders;
(l) the amount of the face value of such Account
listed on any schedule of Accounts and shown on all invoices and
statements delivered to the Agent with respect to such Account is
not subject to any retainages or holdbacks of any type, is actually
and absolutely owing to such Borrower, and is not contingent for
any reason and has not been sold or discounted without recourse;
(m) such Account does not arise out of a cash on
delivery (COD) sale except to the extent that, in the ordinary
course of such Borrower's business, such Borrower has received
payment on such Account, but has not yet applied such payment to
such Account; or
(n) such Account does not arise out of the delivery
of samples or trial merchandise to customers of Account Debtors.
Such Accounts shall be reduced by the greater of (1) the value
of an allowance earned but not taken, or (2) the value of an
accrual for the estimated current liability, in both cases with
respect to advertising/preparation allowances, or "Key City"
allowances, volume and other rebate programs, and downward price
adjustments or price protection and transition programs
(collectively referred to as the "Programs"), where (1) and (2) are
calculated as follows: (1) the allowance earned but not taken with
respect to the Programs, equal to the general ledger provision for
the Programs (giving effect to adjustments for additions and/or
reversals) minus (I) credits issued (also referred to as payments)
to date and (II) total chargebacks requested by customers as
recorded on the Borrower's transaction code summary aging of
accounts report; and (2) the estimate of the current liability for
the Programs, equal to the one-month rolling average of the last
twelve months of credits issued (also referred to as payments) plus
chargebacks requested by customers as recorded in the current to 60
days past due aging categories on the Borrower's transaction code
summary aging of accounts report.
"Eligible Inventory": at any time of determination,
"inventory" (as defined in the UCC) shown on the most recent
schedule of Inventory delivered by the Borrower and meeting the
following requirements (which the Agent may, in its sole
discretion, revise from time to time):
(a) such Inventory consists of finished goods
Inventory owned by the Borrower and is not raw materials,
work-in-process or packing materials or supplies not related to the
Inventory;
(b) such Inventory is merchantable and is currently
salable in the normal course of such Borrower's business;
(c) such Inventory is either (i) located in the
United States and is on the premises listed on the schedule of
Inventory locations attached to the Security Agreement or (ii) in
transit to a location in the United States, provided that the
Borrower has taken all steps necessary for the Agent to perfect its
security interest in such in-transit Inventory, provided further
that with respect to any such Inventory located on leased property
the Borrower shall have delivered a Collateral Access Agreement
executed by the lessor of such property;
(d) such Inventory has not been consigned and does
not represent any goods sold pursuant to a ``bill and hold or
``sale or return'' arrangement, or is otherwise in-transit to third
parties;
(e) such Inventory is at all times subject to the
Agent's duly perfected, first-priority Lien except for Liens
permitted by subsection 6.3;
(f) such Inventory does not constitute
reconditioned product, service depot, rework, or discontinued (as
each such term is used in the inventory records of the Borrower
delivered to the Agent), or Defective Stock;
(g) such Inventory is net of intercompany profits;
and
(h) such Inventory is net of products using
electrical current of other than 110 volts.
``Eligible Service Depot Inventory'': an amount equal
to 70% of Service Depot Inventory, where 70% is an estimation of
such Inventory to be returned to Eligible Inventory. Standards of
eligibility may be revised from time to time solely by the Agent in
its exclusive reasonable judgment.
``Environmental Laws'': any and all foreign, Federal,
state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other Requirements of Law (including
common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
``ERISA'': the Employee Retirement Income Security Act
of 1974, as amended from time to time.
``Event of Default'': any of the events specified in
Section 7, provided that any requirement for the giving of notice,
the lapse of time, or both, or any other condition, has been
satisfied.
``Existing Guarantees'': the Guarantee Obligations
outstanding on the Effective Date to the extent set forth on
Schedule 6.4 and, but only if, immediately after giving effect
thereto, no Default or Event of Default would exist.
``Existing Letters of Credit'': as defined in
subsection 2.12(a).
``Federal Funds Effective Rate'': means, for any
period, a fluctuating interest rate equal for each day during such
period 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 which is a Business Day, the average
of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing
selected by the Agent.
``Final Borrowing Order'': an order of the Court
entered in the Chapter 11 Case after a final hearing under
Bankruptcy Rule 4001(c)(2) in the form attached as Exhibit I with
any modifications approved by Lenders in their sole discretion.
The Final Borrowing Order shall also contain a finding consistent
with the representation of Borrower set forth in subsection 3.5.
``Final Order'': an order, judgment or other decree of
the Court or any other court or judicial body with proper
jurisdiction, as the case may be, which has not been reversed,
stayed, modified or amended and to which (i) any right to appeal or
seek certiorari, review or rehearing has been waived or (ii) the
time to appeal or seek certiorari, review or rehearing has expired
and as to which no appeal or petition for certiorari, review or
rehearing is pending.
``Financing Lease'': any lease of property, real or
personal, the obligations of the lessee in respect of which are
required in accordance with GAAP to be capitalized on a balance
sheet of the lessee.
``GAAP'': generally accepted accounting principles in
the United States of America in effect from time to time.
``Governmental Authority'': any nation or government,
any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
``Guarantee Obligation'': as to any Person (the
``guaranteeing person''), any obligation of (a) the
guaranteeing person or (b) another Person (including, without
limitation, any bank under any letter of credit) to induce the
creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either
case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the ``primary
obligations'') of any other third Person (the ``primary obligor'')
in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person, whether or
not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing
person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing
person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.
``Guarantor Pledge Agreement'': that certain Pledge
Agreement dated as of the date hereof executed by the Subsidiary
Guarantors party thereto, substantially in the form attached as
Exhibit L hereto, as such Pledge Agreement may be amended,
supplemented or otherwise modified from time to time.
``Hazardous Materials'': any hazardous materials,
hazardous wastes, hazardous constituents, hazardous or toxic
substances, petroleum products (including crude oil or any fraction
thereof), defined or regulated as such in or under any
Environmental Law.
``HNRC'': Hanson Natural Resources Company, any entity
that owns 100% of the capital stock of Hanson Natural Resources
Company or any wholly-owned Subsidiary of such entity.
``Indebtedness'': of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable
in accordance with customary practices), (b) any other indebtedness
of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under
Financing Leases, (d) all obligations of such Person in respect of
letters of credit or acceptances issued or created for the account
of such Person and (e) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof.
``Insolvency'': with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning
of Section 4245 of ERISA.
``Insolvent'': pertaining to a condition of
Insolvency.
``Intellectual Property'': as defined in subsection
3.9.
``Interest Payment Date'': the last day of each
calendar month to occur while any Loan is outstanding.
``Interim Borrowing Order'': an order of the Court
entered in the Chapter 11 Case after an interim hearing under
Bankruptcy Rule 4001(e)(2) in the form attached as Exhibit H with
any modifications approved by Lenders in their sole discretion.
The Interim Borrowing Order shall also contain a finding consistent
with the representation of Borrower set forth in subsection 3.5.
``Issuing Lender'': (a) with respect to Letters of
Credit issued after the Effective Date, either Chemical or BAI and
(b) with respect to each of the Existing Letters of Credit and any
extension, amendment and renewal thereof, the bank listed as the
issuing bank of such Existing Letters of Credit on Schedule 2.12.
``Inventory'': all ``inventory'' (as defined in the
UCC).
``J.M. Murray Contract'': that certain purchase and
sale agreement by and between the J.M. Murray Center, Inc. and the
Borrower, as such agreement may be amended from time to time to
extend the date by which the sale of the property contemplated by
such agreement may be consummated.
``Letters of Credit'': as defined in subsection 2.12.
``L/C Commitment'': as defined in subsection 2.12.
``L/C Obligations'': at a particular time the sum of
(a) the undrawn and unexpired amount of the Letters of Credit and
(b) the aggregate amount of drawings under the Letters of Credit
which have not been reimbursed pursuant to subsection 2.16.
``L/C Participants'': the collective reference to all
the Lenders other than the Issuing Lender.
``Lien'': any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any
Financing Lease having substantially the same economic effect as
any of the foregoing).
``Loan'': any loan made by any Lender pursuant to this
Agreement.
``Loan Documents'': this Agreement, the Collateral
Documents, the Notes and any Application.
``Material Adverse Effect'': a material adverse effect
on (a) the business, operations, property or condition (financial
or otherwise) of the Borrower and its Subsidiaries taken as a whole
or (b) the validity or enforceability of this Agreement, any of the
Notes or any of the other Loan Documents or the rights or remedies
of the Agent or the Lenders hereunder or thereunder.
``Materials of Environmental Concern'': any gasoline
or petroleum (including crude oil or any fraction thereof) or
petroleum products or any hazardous or toxic substances, materials
or wastes, defined or regulated as such in or under any
Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
``Maximum Available Credit'': as at any date of
determination, the remainder of (a) the lesser of (i) the sum of
the Borrowing Base and the Permitted Overadvance Amount or (ii) the
aggregate amount of the Commitments as reduced from time to time in
accordance with this Agreement minus (b) if the Borrower rejects or
moves to reject any lease of real property on which Inventory is,
at any time located, unless the Lenders have received a Collateral
Access Agreement in form and substance satisfactory to the Lenders
with respect to such property, an amount equal to the sum of (i)
the maximum amount of the claim asserted or that could be asserted
by the applicable lessor in the Chapter 11 Case as a result of such
rejection and (ii) all accrued and unpaid obligations owed by the
Borrower to such lessor, including without limitation all
obligations owed with respect to any period prior to the Petition
Date.
``Mortgage'': as defined in subsection 4.1(n).
``Multiemployer Plan'': a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
``Net Cash Proceeds'': with respect to any sale of
assets, an amount equal to the gross cash proceeds (including cash
payments when and as received on any note or instrument received as
part of the consideration of such asset sale) net of the following
amounts (but only to the extent such amounts are paid or incurred
by the Borrower or any Subsidiary): (i) reasonable attorneys' fees,
accountants' fees, brokerage, consultant and other customary fees
and other reasonable fees and expenses actually incurred in
connection with such asset sale, (ii) taxes paid or reasonably
estimated to be payable as a result thereof, after taking into
account all available deductions and credits in connection with
such asset sale, (iii) appropriate amounts to be provided by the
Borrower or any of its Subsidiaries as a reserve, in accordance
with GAAP, against any liabilities associated with such asset sale
and retained by the Borrower or such Subsidiary, as the case may
be, after such asset sale, (iv) in the case of an asset sale
involving an asset subject to a Lien securing any Indebtedness
permitted hereunder, payments required to be made to repay such
Indebtedness, including payments and penalties and (v) in the case
of a sale of the Singapore Property or any property of the Borrower
and its Subsidiaries located in Mexico, Canada or Germany, expenses
related to employee termination, severance and other wind-down
expenses, which expenses are necessary to consummate the asset sale
and remit the proceeds to the Borrower.
``Non-Excluded Taxes'': as defined in subsection 2.11.
``Notes'': the collective reference to the Revolving
Credit Notes.
``Obligations'': all obligations of every nature of the
Borrower and the other Credit Parties from time to time owed to the
Agent, Lenders or any of them under the Loan Documents, whether for
principal, interest, reimbursement of amounts drawn under Letters
of Credit, fees, expenses, indemnification or otherwise.
``Participant'': as defined in subsection 9.6(b).
``PBGC'': the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
``Permitted Investments'': (a) direct obligations of,
or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the
full faith and credit of the United States of America), in each
case maturing within 270 days from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Ratings Group or from Moody's Investors Service, Inc.; (c)
investments in certificates of deposit, banker's acceptances and
time deposits maturing within 270 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any Lender, or any domestic
office of any commercial bank organized under the laws of the
United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than
$500,000,000 and whose short-term debt is rated A-1 or better by
Standard & Poor's Ratings Group or P-1 by Moody's Investor's
Service, Inc., or similarly rated by any successor to either of
such rating services; and (d) other investment instruments
approved in writing by the Required Lenders and offered by
financial institutions which have a combined capital and surplus
and undivided profits of not less than $500,000,000.
``Permitted Overadvance Amount'': the remainder of (a)
the lesser of (i) $10,000,000 and (ii) $25,000,000 minus the
Borrowing Base as of the last day of fiscal month June 1995 minus
(b) the aggregate amount of reductions in such amount in accordance
with subsection 2.6(c); provided that in no event shall the
Permitted Overadvance Amount be less than zero.
``Person'': an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity
of whatever nature.
``Petition Date'': July 5, 1995.
``Plan'': at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the Borrower
or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be
deemed to be) an ``employer'' as defined in Section 3(5) of ERISA.
``Prepetition Indebtedness'': Indebtedness of Borrower
outstanding on the Petition Date.
``Prior Agreement'': that certain Amended and Restated
Revolving Credit Agreement dated as of April 7, 1995 by and among
Smith Corona Corporation, the Lenders and the Agent, and that
certain Security Agreement dated as of April 7, 1995 by and between
Smith Corona Corporation and the Agent as each such agreement has
been amended, supplemented or otherwise modified to the date
hereof, including without limitation as supplemented by that
certain letter agreement dated as of June 16, 1995.
``Prior Indebtedness'': all obligations outstanding
under the Prior Agreement.
``Properties'': as defined in subsection 3.19(a).
``Register'': as defined in subsection 9.6(d).
``Regulation U'': Regulation U of the Board of
Governors of the Federal Reserve System as in effect from time to
time.
``Reimbursement Obligation'': the obligation of the
Borrower to reimburse the Issuing Lender pursuant to subsection
2.16.
``Reorganization'': with respect to any Multiemployer
Plan, the condition that such plan is in reorganization within the
meaning of Section 4241 of ERISA.
``Reports'': the Borrower's Annual Report on Form 10-K
for the fiscal year ended June 30, 1994 and any other document that
has been both (a) filed subsequent to June 30, 1994 under the
Securities Exchange Act of 1934, as amended, in the form (including
exhibits) filed with the Securities and Exchange Commission and (b)
delivered to the Agent.
``Reportable Event'': any of the events set forth in
Section 4043(b) of ERISA, other than those events as to which the
thirty day notice period is waived under subsections .13, .14, .16,
.18, .19 or .20 of PBGC Reg. SS 2615.
``Required Lenders'': at any time, Lenders the
Commitment Percentages of which aggregate 100%.
``Requirement of Law'': as to any Person, the
Certificate of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any
of its property is subject.
``Responsible Officer'': the chief executive officer
or the president of the Borrower or, with respect to financial
matters, the chief financial officer, treasurer, vice president -
finance or controller of the Borrower.
``Revolving Credit Loans'': as defined in subsection
2.1.
``Revolving Credit Note'': as defined in subsection
2.2.
``SCC Singapore'': Smith Corona Private Ltd., a
corporation organized under the laws of the Republic of
Singapore.
``SCC UK'': Smith Corona (United Kingdom) Limited, a
corporation organized under the laws of the United Kingdom.
``Security Agreement'': the Security Agreement, dated
as of the date hereof, between the Borrower and the Agent, as the
same may from time to time be amended, modified or supplemented.
``Service Depot Inventory'': the Inventory currently
described by the Borrower in its books and records as ``department
390 inventory''.
``Single Employer Plan'': any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
``Subsidiary'': as to any Person, a corporation,
partnership or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock
or such other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the board
of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a ``Subsidiary'' or to
``Subsidiaries'' in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
``Subsidiary Guarantors'': the Subsidiaries of the
Borrower named as guarantors on Schedule 3.15 and any other
Subsidiary of the Borrower that becomes a party to the Subsidiary
Guaranty.
``Termination Date'': the earliest to occur of: (i)
June 30, 1996; (ii) the date the Lenders elect to terminate the
Commitments pursuant to Section 7; (iii) the date of prepayment in
full by the Borrower of the Loans and all other amounts owed under
this Agreement (including without limitation the L/C Obligations)
and termination of the Commitments in accordance with the
provisions of Section 2.5; (iv) August 2, if the Final Borrowing
Order has not been entered by the Court by such date and (v) if a
Business Plan Event has occurred, November 15, 1995.
``Transferee'': as defined in subsection 9.6(f).
``UCC'': shall mean the Uniform Commercial Code as
from time to time in effect in the State of New York.
``Uniform Customs'': the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, as the same may be amended from time
to time.
1.2 Other Definitional Provisions. (a) Unless
otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Notes, and any
certificate or other document made or delivered pursuant hereto,
accounting terms relating to the Borrower and its Subsidiaries not
defined in subsection 1.1 and accounting terms partly defined in
subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words ``hereof'', ``herein'' and ``hereunder''
and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, subsection, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. Subject to the
terms and conditions hereof, each Lender severally agrees to make
revolving credit loans (``Revolving Credit Loans'') to the Borrower
from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding which, when added to
such Lender's Commitment Percentage of the then outstanding L/C
Obligations, does not exceed the lesser of (i) the amount of such
Lender's Commitment and (ii) such Lender's Commitment Percentage
multiplied by the Maximum Available Credit in effect at such time.
During the Commitment Period, the Borrower may use the Commitments
by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and
conditions hereof.
2.2 Revolving Credit Notes. The Revolving Credit
Loans made by each Lender shall be evidenced by a promissory note
of the Borrower, substantially in the form of Exhibit A, with
appropriate insertions as to payee, date and principal amount (a
``Revolving Credit Note''), payable to the order of such Lender and
in a principal amount equal to the lesser of (a) the amount of the
initial Commitment of such Lender and (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by such Lender.
Each Lender is hereby authorized to record the date and amount of
each Revolving Credit Loan made by such Lender, the date and
amount of each payment or prepayment of principal thereof on the
schedule annexed to and constituting a part of its Revolving Credit
Note, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded; provided
that failure to make any such recordation, or any error in such
recordation, shall not affect the rights of such Lender or the
Borrower's obligations in respect of the applicable Revolving
Credit Loans . Each Revolving Credit Note shall (x) be dated the
Effective Date, (y) be stated to mature on the Termination Date and
(z) provide for the payment of interest in accordance with
subsection 2.7.
2.3 Procedure for Revolving Credit Borrowing. The
Borrower may borrow under the Commitments during the Commitment
Period on any Business Day, provided that the Borrower shall give
the Agent irrevocable notice (which notice (x) must be received by
the Agent prior to 10:00 A.M., New York City time, on the requested
Borrowing Date and (y) may be given to the Agent telephonically and
confirmed via facsimile by the Borrower), specifying (i) the amount
to be borrowed and (ii) the requested Borrowing Date. Each
borrowing under the Commitments shall be in an amount equal to
$100,000 or a whole multiple thereof (or, if the then Available
Commitments are less than $100,000, such lesser amount). Upon
receipt of any such notice from the Borrower, the Agent shall
promptly notify each Lender thereof. Each Lender will make the
amount of its pro rata share of each borrowing available to the
Agent for the account of the Borrower at the office of the Agent
specified in subsection 9.2 prior to 12:00 Noon, New York City
time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Agent. Such borrowing will then be
made available to the Borrower by the Agent crediting the account
of the Borrower on the books of the Agent with the aggregate of the
amounts made available to the Agent by the Lenders and in like
funds as received by the Agent.
2.4 Commitment Fee; Collateral Monitoring Fees. (a)
The Borrower agrees to pay to the Agent for the account of each
Lender a commitment fee for the period from and including the first
day of the Commitment Period to the Termination Date equal to the
average of the daily excess of the aggregate amount of the
Commitments over the aggregate principal amount of Loans
outstanding multiplied by 1/2 of 1% per annum, payable quarterly
in arrears on the last day of each March, June, September and
December and on the Termination Date or such earlier date on which
the Commitments shall terminate as provided herein, commencing on
the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Agent, for its
own account, a non-refundable collateral monitoring fee equal to
$2,800 per month, payable quarterly in advance on the last day of
each March, June, September and December.
2.5 Termination or Reduction of Commitments. The
Borrower shall have the right, upon not less than five Business
Days' notice to the Agent, to terminate the Commitments or, from
time to time, to reduce the amount of the Commitments, provided
that no such termination or reduction shall be permitted if, after
giving effect thereto and to any prepayments of the Loans made on
the effective date thereof, the then outstanding principal amount
of the Loans, when added to the then outstanding L/C Obligations,
would exceed the amount of the Commitments then in effect. Any
such reduction shall be in an amount equal to $100,000 or a whole
multiple thereof and shall reduce permanently the Commitments then
in effect.
2.6 Optional Prepayments; Mandatory Prepayments. (a)
The Borrower may, at any time and from time to time, prepay the
Loans, in whole or in part, without premium or penalty, upon at
least three Business Days' irrevocable notice to the Agent,
specifying the date and amount of prepayment. Upon receipt of any
such notice the Agent shall promptly notify each Lender thereof.
If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together
with any amounts payable pursuant to subsection 2.16.
(b) In the event that any Borrowing Base Certificate
delivered pursuant to subsection 5.2(d) shall indicate that, as of
the date thereof, the amount of the Aggregate Outstanding
Extensions of Credit of all Lenders then outstanding exceeds the
amount of the Maximum Available Credit then, without notice or
demand, the Borrower shall, on the date of such certificate, make
a mandatory prepayment of the Loans in an amount equal to such
excess.
(c) If the Borrower or any Subsidiary shall receive
any Net Cash Proceeds from any sale of assets (other than the sale
of Inventory in the ordinary course of business), the Borrower
(i) may, as long as no Default has occurred and is
continuing, retain the first $2,000,000 of such Net Cash Proceeds
as assets of the Borrower;
(ii) (a) shall use 50% of the next $3,000,000 of such Net
Cash Proceeds to prepay the Loans and the L/C Obligations (provided
that each such prepayment shall be accompanied by automatic
permanent reductions of the Commitments and the Permitted
Overadvance Amount, each in the amount of such prepayment) and (b)
may, as long as no Default has occurred and is continuing, retain
the remaining 50% of such Net Cash Proceeds as assets of the
Borrower; and
(iii) (a) thereafter, shall use 80% of all other Net Cash
Proceeds to prepay the Loans and the L/C Obligations (provided that
each such prepayment shall be accompanied by automatic permanent
reductions of the Commitments and the Permitted Overadvance Amount,
each in the amount of such prepayment) and (b) may, as long as no
Default has occurred and is continuing, retain the remaining 20% of
such Net Cash Proceeds as assets of the Borrower;
provided that if a Default has occurred and is continuing, all Net
Cash Proceeds shall be used to prepay the Loans and L/C Obligations
(and all such prepayments shall be accompanied by automatic
permanent reductions of the Commitments and the Permitted
Overadvance Amount, each in the amount of such prepayment; and
provided further that nothing in this subsection 2.6(c) shall be
deemed to permit any sale of assets otherwise prohibited by this
Agreement or any other Loan Document. If, after giving effect to
any such reductions in the Commitments, the Aggregate Outstanding
Extensions of Credit for all Lenders shall exceed the sum of the
Commitments as so reduced, the Borrower shall first, prepay the
Revolving Credit Loans and, second, cash collateralize the L/C
Obligations to the extent of such excess in the manner provided in
subsection 2.6(d). Notwithstanding anything to the contrary
contained in this subsection 2.6(c), to the extent that any Net
Cash Proceeds are derived from a sale of or containing assets which
would otherwise be included in the calculation of the Borrowing
Base, the reduction of the Permitted Overadvance Amount shall be
limited to the excess, if any, of (A) the amount of Net Cash
Proceeds which would be payable to the Lenders pursuant to the
foregoing provisions, over (B) the reduction, if any, in the
Borrowing Base immediately after giving effect to such sale.
(d) With respect to any Letter of Credit for which
presentment for honor shall not have occurred at the time
prepayment of the L/C Obligations is required pursuant to
subsection 2.6(c), the Borrower may satisfy such required
prepayment obligation hereunder by depositing in a cash collateral
account opened and maintained by the Agent, having terms and
conditions satisfactory to the Agent, an amount equal to 105% of
the then undrawn and unexpired amount of such Letter of Credit.
The Borrower hereby grants to the Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in
such cash collateral and cash collateral account to secure all
Obligations in respect of such Letters of Credit. Amounts held in
such cash collateral account shall be applied by the Agent to the
payments of drafts drawn under the Letters of Credit and any fees,
costs and expenses customarily incurred by the Issuing Lenders in
connection with honoring such Letters of Credit. After all the
Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other
obligations in respect of such Letters of Credit shall have been
paid in full, the balance, if any, in such collateral account shall
be returned to the Borrower. The Borrower shall execute and
deliver to the Agent, for the account of the Issuing Lender and the
L/C Participants, such further documents and instruments as the
Agent may request to evidence the creation and perfection of the
security interest referred to above in such cash collateral
account.
2.7 Interest Rates and Payment Dates. (a) Each Loan
shall bear interest at a rate per annum equal to the ABR plus 2%.
Upon the occurrence and during the continuance of an Event of
Default each Loan and other amounts due hereunder shall bear
interest at a rate per annum equal to the ABR plus 4%.
(b) Interest shall be payable in arrears on each
Interest Payment Date, provided that interest accruing pursuant to
paragraph (b) of this subsection shall be payable from time to time
on demand.
2.8 Computation of Interest and Fees. Commitment fees
and interest shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. Any
change in the interest rate on a Loan resulting from a change in
the ABR shall become effective as of the opening of business on the
day on which such change becomes effective. The Agent shall as
soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change in interest rate.
2.9 Pro Rata Treatment and Payments. (a) Each
borrowing by the Borrower from the Lenders hereunder, each payment
by the Borrower on account of any commitment fee hereunder and any
reduction of the Commitments of the Lenders shall be made pro rata
according to the respective Commitment Percentages of the Lenders.
Each payment (including each prepayment) by the Borrower on account
of principal of and interest on the Loans shall be made pro rata
according to the respective outstanding principal amounts of the
Loans then held by the Lenders. All payments (including
prepayments) to be made by the Borrower hereunder and under the
Notes, whether on account of principal, interest, fees or
otherwise, shall be made without set off or counterclaim and shall
be made prior to 12:00 Noon, New York City time, on the due date
thereof to the Agent, for the account of the Lenders, at the
Agent's office specified in subsection 9.2, in Dollars and in
immediately available funds. The Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder becomes due and payable on a
day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of
principal, interest thereon shall be payable at the then applicable
rate during such extension.
(b) Unless the Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will
not make the amount that would constitute its Commitment Percentage
of such borrowing available to the Agent, the Agent may assume that
such Lender is making such amount available to the Agent, and the
Agent may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If such amount is not made
available to the Agent by the required time on the Borrowing Date
therefor, such Lender shall pay to the Agent, on demand, such
amount with interest thereon at a rate equal to the daily average
Federal Funds Effective Rate for the period until such Lender makes
such amount immediately available to the Agent. A certificate of
the Agent submitted to any Lender with respect to any amounts owing
under this subsection shall be conclusive in the absence of
manifest error. If such Lender's Commitment Percentage of such
borrowing is not made available to the Agent by such Lender within
three Business Days of such Borrowing Date, the Agent shall also be
entitled to recover such amount with interest thereon from the end
of such grace period at the rate per annum applicable to ABR Loans
hereunder, on demand, from the Borrower.
2.10 Requirements of Law. If any Lender shall have
determined that the adoption of or any change in any Requirement of
Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof does or
shall have the effect of reducing the rate of return on such
Lender's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which such Lender or
such corporation could have achieved but for such change or
compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to
time, after submission by such Lender to the Borrower (with a copy
to the Agent) of a written request therefore, the Borrower shall
pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction.
2.11 Taxes. (a) All payments made by the Borrower
under this Agreement and the Notes shall be made free and clear of,
and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on the Agent or
any Lender as a result of a present or former connection between
the Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection
arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under,
or enforced, this Agreement or the Notes). If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions
or withholdings (``Non-Excluded Taxes'') are required to be
withheld from any amounts payable to the Agent or any Lender
hereunder or under the Notes, the amounts so payable to the Agent
or such Lender shall be increased to the extent necessary to yield
to the Agent or such Lender (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement and the Notes,
provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state
thereof if such Lender fails to comply with the requirements of
paragraph (b) of this subsection. Whenever any Non-Excluded Taxes
are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when
due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence,
the Borrower shall indemnify the Agent and the Lenders for any
incremental taxes, interest or penalties that may become payable by
the Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this
Agreement and the payment of the Notes and all other amounts
payable hereunder.
(b) Each Lender that is not incorporated under the
laws of the United States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent
(A) two duly
completed copies of United States Internal Revenue Service
Form 1001 or 4224, or successor applicable form, as the case may
be, and (B) an Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be;
(ii) deliver to the Borrower and
the Agent two further
copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Agent;
unless in any such case an event (including, without limitation,
any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with
respect to it and such Lender so advises the Borrower and the
Agent. Such Lender shall certify (i) in the case of a Form 1001 or
4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal
income taxes and (ii) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding tax.
Each Person that shall become a Lender or a Participant pursuant to
subsection 9.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements
required pursuant to this subsection, provided that in the case of
a Participant such Participant shall furnish all such required
forms and statements to the Lender from which the related
participation shall have been purchased.
2.12 L/C Commitment.
(a) Prior to the Effective Date, the Issuing Lender
has issued, for the account of Smith Corona Corporation, the
letters of credit listed on Schedule 2.12 (the ``Existing Letters
of Credit'') and the Borrower hereby assumes all obligations of
Smith Corona Corporation in respect of such letters of credit. All
Existing Letters of Credit shall, as of the Effective Date, be
deemed to be issued and outstanding pursuant to this Agreement and
all Prior Indebtedness in respect of the Existing Letters of Credit
shall be Obligations. Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other
Lenders set forth in subsection 2.15, agrees to issue irrevocable
letters of credit (together with the Existing Letters of Credit,
``Letters of Credit'') for the account of the Borrower on any
Business Day during the Commitment Period in such form as may be
approved from time to time by the Issuing Lender; provided that the
Issuing Lender shall not issue any Letter of Credit if, after
giving effect to such issuance, (1) the Aggregate Outstanding
Extensions of Credit would exceed the lesser of (i) the Commitments
or (ii) the Borrowing Base as of such time, or (2) the aggregate of
the L/C Obligations would exceed $5,000,000. The commitment to
issue Letters of Credit as set forth in this subsection 2.12(a) is
referred to as the ``L/C Commitment.''
(b) Each Letter of Credit:
(i) shall be denominated in Dollars and shall be an
irrevocable commercial letter of credit issued in respect of the
purchase of goods or services by the Borrower and its Subsidiaries
in the ordinary course of business; and
(ii) if issued or extended after 30 days prior to the
Termination Date, expire no later than the Termination Date.
(c) Each Letter of Credit shall be subject to the
Uniform Customs and, to the extent not inconsistent therewith, the
laws of the State of New York.
(d) The Issuing Lender shall not at any time be
obligated to issue any Letter of Credit hereunder if such issuance
would conflict with, or cause the Issuing Lender or any L/C
Participant to exceed any limits imposed by, any applicable
Requirement of Law.
2.13 Procedure for Issuance of Letters of Credit.
The Borrower may from time to time request that the
Issuing Lender issue a Letter of Credit by delivering to the
Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing
Lender, and such other certificates, documents and other papers and
information as the Issuing Lender may request. Upon receipt of any
Application, the Issuing Lender will process such Application and
the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit
requested thereby (but in no event shall the Issuing Lender be
required to issue any Letter of Credit earlier than three Business
Days after its receipt of the Application therefor and all such
other certificates, documents and other papers and information
relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish
a copy of such Letter of Credit to the Borrower promptly following
the issuance thereof.
2.14 Fees, Commissions and Other Charges.
(a) The Borrower shall pay to the Agent (i) a fronting
fee with respect to each Letter of Credit for the account of the
Issuing Lender in an amount equal to 1% of the face amount of such
Letter of Credit and (ii) for the account of the Lenders, an amount
equal to 2-1/2% per annum on the average daily face amount of all
Letters of Credit, to be shared ratably among them in accordance
with their respective Commitment Percentages. Such fronting fee
provided in clause (i) above shall be payable in advance on the
date of issuance of each Letter of Credit and shall be
nonrefundable and the fee provided in clause (ii) above shall be
payable quarterly in arrears on the last day of each March, June,
September and December and on the Termination Date or such earlier
date on which the Commitments shall terminate as provided herein,
commencing on the first of such dates to occur after the date
hereof.
(b) In addition to the foregoing fees and commissions,
the Borrower shall pay or reimburse the Issuing Lender for such
normal and customary costs and expenses as are incurred or charged
by the Issuing Lender in issuing, effecting payment under, amending
or otherwise administering any Letter of Credit.
(c) The Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants
all fees and commissions received by the Agent for their respective
accounts pursuant to this subsection.
2.15 L/C Participations.
(a) Effective on the Effective Date in the case of an
Existing Letter of Credit, and effective on the date of issuance in
the case of a Letter of Credit issued after the Effective Date, the
Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue
Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, on the terms and conditions hereinafter stated,
for such L/C Participant's own account and risk an undivided
interest equal to such L/C Participant's Commitment Percentage in
the Issuing Lender's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid
under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with the terms of
this Agreement, such L/C Participant shall pay to the Issuing
Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's
Commitment Percentage of the amount of such draft, or any part
thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to paragraph 2.15(a) in
respect of any unreimbursed portion of any payment made by the
Issuing Lender under any Letter of Credit is paid to the Issuing
Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of (1) such amount, times (2) the
daily average Federal Funds Effective Rate, as quoted by the
Issuing Lender, during the period from and including the date such
payment is required to the date on which such payment is
immediately available to the Issuing Lender, times (3) a fraction
the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. If any such
amount required to be paid by any L/C Participant pursuant to
paragraph 2.15(a) is not in fact made available to the Issuing
Lender by such L/C Participant within three Business Days after the
date such payment is due, the Issuing Lender shall be entitled to
recover from such L/C Participant, on demand, such amount with
interest thereon calculated from such due date at the rate per
annum applicable to Loans hereunder. A certificate of the Issuing
Lender submitted to any L/C Participant with respect to any amounts
owing under this subsection shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Lender has
made payment under any Letter of Credit and has received from any
L/C Participant its pro rata share of such payment in accordance
with subsection 2.15(a), the Issuing Lender receives any payment
related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied
thereto by the Issuing Lender), or any payment of interest on
account thereof, the Issuing Lender will distribute to such L/C
Participant its pro rata share thereof; provided, however, that in
the event that any such payment received by the Issuing Lender
shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
2.16 Reimbursement Obligation of the Borrower.
(a) The Borrower agrees to reimburse the Issuing
Lender on each date on which the Issuing Lender notifies the
Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender, for the amount of
(1) such draft so paid and (2) any taxes, fees, charges or other
costs or expenses incurred by the Issuing Lender in connection with
such payment. Each such payment shall be made to the Issuing
Lender at its address for notices specified herein in lawful money
of the United States of America and in immediately available funds.
(b) Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this subsection from the
date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate which
would be payable on any outstanding Loans which were then overdue.
(c) Each drawing under any Letter of Credit shall
constitute a request by the Borrower to the Agent for a borrowing
pursuant to subsection 2.3 of Loans in the amount of such drawing.
The Borrowing Date with respect to such borrowing shall be the date
of such drawing.
(d) On the Termination Date, Borrower shall deposit in
a cash collateral account opened by Agent an amount equal to 105%
of the aggregate then undrawn and unexpired amount of all Letters
of Credit to secure its obligations with respect thereto.
2.17 Obligations Absolute.
(a) The Borrower also agrees with the Issuing Lender
that the Issuing Lender shall not be responsible for, and the
Borrower's Reimbursement Obligations under subsection 2.16(a) shall
not be affected by, among other things, (1) the validity or
genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid, fraudulent
or forged (except where the failure to detect such invalidity,
fraud or forgery is the result of acts or omissions of the Issuing
Lender constituting gross negligence or willful misconduct), or (2)
any dispute between or among the Borrower and any beneficiary of
any Letter of Credit or any other party to which such Letter of
Credit may be transferred or (3) any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any
such transferee.
(b) The Issuing Lender shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Lender's gross negligence or
willful misconduct.
(c) The Borrower agrees that any action taken or
omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in the
absence of gross negligence of willful misconduct and in accordance
with the standards of care specified in the Uniform Commercial Code
of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the
Borrower.
2.18 Letter of Credit Payments.
If any draft shall be presented for payment under any
Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the
Issuing Lender to the Borrower in connection with any draft
presented for payment under any Letter of Credit shall, in the
absence of gross negligence or willful misconduct by the Issuing
Lender and in addition to any payment obligation expressly provided
for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of
Credit in connection with such presentment are in conformity with
such Letter of Credit.
2.19 Application.
To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions
of this Section 2, the provisions of this Section 2 shall apply.
2.20 Increased Costs. If, following the Effective
Date, any law or regulation or any change in the interpretation or
application thereof by any court or administrative or Governmental
Authority charged with the administration thereof shall either (i)
impose, modify, assess or deem applicable any reserve, special
deposit, assessment or similar requirement against any L/C
Commitment or Letters of Credit issued by the Issuing Lender or any
Lender or (ii) impose on the Issuing Lender or any Lender any other
condition regarding any Letter of Credit, and the result of any
event referred to in clauses (i) or (ii) above shall be to increase
the cost to the Issuing Lender or such Lender of issuing or
maintaining such Letter of Credit, any L/C Commitment or its
participation therein, as the case may be (which increase in cost
shall be the result of the Issuing Lender's or such Lender's
reasonable allocation of the aggregate of such cost increases
resulting from such events), then, upon demand by the Issuing
Lender, the Agent or such Lender, the Borrower shall immediately
pay to the Issuing Lender or such Lender from time to time as
specified by the Issuing Lender or such Lender additional amounts
which shall be sufficient to compensate the Issuing Lender or such
Lender for such increased cost, together with interest on each such
amount from the date demanded until payment in full thereof at the
rate provided in subsection 2.16(b). A certificate as to the fact
and amount of such increased cost incurred by the Issuing Lender or
any Lender as a result of any event mentioned in clauses (a) or (b)
above, submitted by the Issuing Lender or any such Lender to the
Borrower, shall be conclusive, absent manifest error.
2.21 Further Assurances. The Borrower hereby agrees
from time to time, to do and perform any and all acts and to
execute any and all further instruments required or reasonably
requested by the Issuing Lender or the Required Lenders more fully
to effect the purposes of this Agreement and the issuance of the
Letters of Credit hereunder.
2.22 Nature of Obligations; Indemnities. (a) The
obligations of the Borrower hereunder shall be absolute and
unconditional under any and all circumstances and irrespective of
any set off, counterclaim or defense to payment which the Borrower
may have or have had against the Issuing Lender, the Agent, any
Lender or any beneficiary of a Letter of Credit, provided, however,
that this provision shall be deemed a waiver by the Borrower of the
assertion of a compulsory counterclaim only to the extent permitted
by applicable law. The Borrower assumes all risks of the acts or
omissions of the users of the Letters of Credit and all risks of
the misuse of the Letters of Credit. Neither the Issuing Lender,
any of its correspondents or any Lender shall be responsible: (i)
for the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document specified in any of the Applications for any
of the Letters of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent,
or forged; (ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
of the Letters of Credit or any of the rights or benefits
thereunder or proceeds thereof in whole or in part; (iii) for
failure of any draft to bear any reference or adequate reference to
any of the Letters of Credit, or failure of anyone to note the
amount of any draft on the reverse of any of the Letters of Credit
or to surrender or to take up any of the Letters of Credit or to
send forward any such document apart from drafts as required by the
terms of any of the Letters of Credit, each of which provisions, if
contained in a Letter of Credit itself, it is agreed, may be waived
by the Issuing Lender; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher;
(v) for any error, neglect, default, suspension or insolvency of
any correspondents of the Issuing Lender; (vi) for errors in
translation or for errors in interpretation of technical terms;
(vii) for any loss or delay, in the transmission or otherwise, of
any such document or draft or of proceeds thereof; or (viii) for
any other circumstances whatsoever in making or failing to make
payment under a Letter of Credit. None of the above shall affect,
impair or prevent the vesting of any of the rights or powers of the
Issuing Lender, the Agent or any of the Lenders. The Issuing
Lender or the Agent shall have the right to transmit the terms of
the Letter of Credit involved without translating them.
(b) In furtherance and extension and not in limitation
of the specific provisions hereinabove in these subsections 2.12
through 2.22 set forth, (i) any action taken or omitted by the
Issuing Lender, the Agent, any Lender or by any of their respective
correspondents under or in connection with any of the Letters of
Credit, if taken or omitted in good faith and without willful
misconduct or gross negligence, shall be binding upon the Borrower
and shall not put the Issuing Lender, the Agent, any Lender or
their respective correspondents under any resulting liability to
the Borrower and (ii) the Issuing Lender may accept documents that
appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to
the contrary; provided that if the Issuing Lender shall receive
written notification from both the beneficiary of a Letter of
Credit and the Borrower that sufficiently identifies (in the
opinion of the Issuing Lender) documents to be presented to the
Issuing Lender which are not to be honored, the Issuing Lender
agrees that it will not honor such documents.
(c) The Borrower hereby agrees at all times to
protect, indemnify and save harmless each of the Issuing Lender,
the Agent, its correspondents and any Lender, from and against any
and all claims, actions, suits and other legal proceedings, and
from and against any and all losses, claims, demands, liabilities,
damages, costs, charges, counsel fees and other expenses which they
or any of them may, at any time, sustain or incur by reason of or
in consequence of or arising out of the issuance of any of the
Letters of Credit; it being the intention of the parties that this
Agreement shall be construed and applied to protect and indemnify
each of the Issuing Lender, the Agent, its correspondents and any
Lender against any and all risks involved in the issuance of all of
the Letters of Credit, all of which risks, whether or not
foreseeable, being hereby assumed by the Borrower (except as
otherwise provided for herein), including, without limitation, any
and all risks of all acts by any Governmental Authority, domestic
or foreign. The Issuing Lender, the Agent or any Lender shall not,
in any way, be liable for any failure by it or anyone else to pay
a draft drawn under any of the Letters of Credit as a result of any
acts, whether rightful or wrongful, of any Governmental Authority,
or any other cause not readily within their control or the control
of their respective correspondents, agents, or subagents. Without
limiting the generality of the foregoing, the Borrower shall
reimburse each of the Issuing Lender, the Agent, its correspondents
and any Lender, and shall pay and indemnify each of the Issuing
Lender, the Agent, its correspondents and any Lender against
payment of, out-of-pocket costs and expenses, withholding taxes,
liabilities and damages including, without limitation, reasonable
counsel fees, incurred or sustained by any of them in connection
with any of the Letters of Credit or by reason of any such failure
to pay. Also, without limiting the generality of the foregoing,
the Borrower shall reimburse the Issuing Lender or the Agent
forthwith upon its receipt of any demand therefor, for any and all
commissions, fees and other charges paid or payable by the Issuing
Lender or the Agent to any foreign bank which shall be an advising
bank or a beneficiary of a Letter of Credit which shall, in
reliance thereon, have issued its own letter of credit in respect
of obligations of the Borrower. Notwithstanding the foregoing
provisions of this subsection 2.22(c), the Borrower shall have no
obligation to indemnify any Issuing Lender, the Agent, any
correspondent or any Lender from or against any liabilities or
other costs of any nature whatsoever resulting from any acts or
omissions of any such party constituting gross negligence or
willful misconduct.
2.23 Superpriority of Obligations.
All Obligations under the Loan Documents shall constitute
allowed administrative expense claims against the Borrower in the
Chapter 11 Case with priority under Section 364(c)(1) of the
Bankruptcy Code over any and all other administrative expenses of
the kind specified or ordered pursuant to any provision of the
Bankruptcy Code, including, but not limited to, Sections 105, 326,
328, 503(b), 506(c), 507(a), 507(b) and 726 of the Bankruptcy Code;
provided that, upon the occurrence and during the continuance of an
Event of Default under this Agreement or the exercise by Agent or
any Lender of its remedies after an Event of Default, such claims
shall be subject to: (i) unpaid professional fees and expenses
allowed in the Chapter 11 Case in an aggregate amount (determined
without regard to fees and expenses awarded or otherwise paid on an
interim basis) not to exceed $1,000,000 inclusive of aggregate fee
holdbacks (the ``Carve-Out''); and (ii) fees payable to the United
States Trustee pursuant to 28 U.S.C. SS 1930(a)(6).
2.24 Payments of Prior Indebtedness.
All proceeds of the Loans shall be applied first to
payment of the unpaid loans included within the Prior Indebtedness
until such loans have been paid in full.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to
the Agent and each Lender that:
3.1 Financial Condition. The consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at June
30, 1994 and the related consolidated statements of income and of
cash flows for the fiscal year ended on such date, reported on by
Deloitte & Touche, LLP, copies of which have heretofore been
furnished to each Lender, are complete and correct and present
fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated
results of their operations and their consolidated cash flows for
the fiscal year then ended. The unaudited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at May
31, 1995 and the related unaudited consolidated statements of
income and of cash flows for the eleven-month period ended on such
date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, are complete and correct
and present fairly the consolidated financial condition of the
Borrower and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated
cash flows for the eleven-month period then ended (subject to
normal year-end audit adjustments). All quarterly and annual
financial statements of the Borrower and its Subsidiaries delivered
to the Lenders that are filed with the Securities and Exchange
Commission or otherwise generally made available to the public
shall be prepared in accordance with GAAP and all other financial
statements (including interim financial statements and projections)
delivered to the Lenders will be prepared on a basis consistent
with the basis on which the financial statements delivered pursuant
to the Prior Agreement were prepared. Neither the Borrower nor any
of its consolidated Subsidiaries had, at the date of the most
recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign
currency swap or exchange transaction, which is not reflected in
the foregoing statements or in the notes thereto. During the
period from May 31, 1995 to and including the date hereof there has
been no sale, transfer or other disposition by the Borrower or any
of its consolidated Subsidiaries of any material part of its
business or property and no purchase or other acquisition of any
business or property (including any capital stock of any other
Person) material in relation to the consolidated financial
condition of the Borrower and its consolidated Subsidiaries at May
31, 1995.
3.2 No Change. Since the Petition Date, there has
been no development or event which has had or could have a Material
Adverse Effect except as disclosed in the Reports filed and
delivered to the Agent prior to the date hereof or as otherwise
disclosed to the Agent in connection with the filing of the Chapter
11 Case.
3.3 Corporate Existence; Compliance with Law. Each of
the Borrower and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization, (b) has the corporate power and authority, and
the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which
it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification (provided
that Borrower is not required to be in good standing in the States
of Connecticut and Hawaii until the date that is forty-five (45)
days after the Effective Date) and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, have a Material Adverse
Effect.
3.4 Corporate Power; Authorization; Enforceable
Obligations. The Borrower has the corporate power and authority,
and the legal right, to make, deliver and perform the Loan
Documents to which it is a party and to borrow hereunder and has
taken all necessary corporate action to authorize the borrowings on
the terms and conditions of this Agreement, the Notes and the
Applications and to authorize the execution, delivery and
performance of the Loan Documents to which it is a party. By the
Effective Date, the execution, delivery and performance of the Loan
Documents and the issuance, delivery and payment of the Notes will
be duly authorized by the Court. No consent or authorization of,
filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan
Documents to which the Borrower is a party. This Agreement has
been, and each other Loan Document to which it is a party will be,
duly executed and delivered on behalf of the Borrower. This
Agreement constitutes, and each other Loan Document to which it is
a party when executed and delivered will constitute, a legal, valid
and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and
performance of the Loan Documents to which the Borrower is a party,
the borrowings hereunder and the use of the proceeds thereof will
not, subject to Court approval, violate any Requirement of Law or
Contractual Obligation (the performance or enforceability of which
has not been excused by the Bankruptcy Code or an applicable order
of the Court) of the Borrower or of any of its Subsidiaries and
will not result in, or require, the creation or imposition of any
Lien on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. Except as disclosed in
the Reports filed and delivered to the Agent prior to the date
hereof, no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority that relates to any period
after the Petition Date is pending or, to the knowledge of the
Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties
or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could
have a Material Adverse Effect.
3.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default (other than any default under or with
respect to obligations existing on the Petition Date that was
caused solely by the filing of the Chapter 11 Case) under or with
respect to any of its Contractual Obligations in any respect which
could have a Material Adverse Effect, provided that the Borrower
shall furnish the Agent with copies of any and all waivers granted
for the benefit of the Borrower or any of its Subsidiaries in
respect of Contractual Obligations. No Default or Event of Default
has occurred and is continuing.
3.8 Ownership of Property; Liens. Each of the
Borrower and its Subsidiaries has good record and marketable title
in fee simple to, or a valid leasehold interest in, all its real
property, and good title to, or a valid leasehold interest in, all
its other property, and none of such property is subject to any
Lien except as permitted by subsection 6.3.
3.9 Intellectual Property. The Borrower and each of
its Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, technology, know-how and processes
necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not have
a Material Adverse Effect (the ``Intellectual Property''). Except
as set forth in Schedule 3.9 hereto, no claim has been asserted and
is pending by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of any
such Intellectual Property, nor does the Borrower know of any valid
basis for any such claim. To the Borrower's knowledge, the use of
such Intellectual Property by the Borrower and its Subsidiaries
does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, do not have a
Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement of
Law or Contractual Obligation of the Borrower or any of its
Subsidiaries has a Material Adverse Effect.
3.11 Taxes. Except to the extent payment has been
excused by the Bankruptcy Code or an applicable order of the Court,
each of the Borrower and its Subsidiaries has filed or caused to be
filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect
to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no
tax Lien has been filed, and, to the knowledge of the Borrower, no
claim is being asserted, with respect to any such tax, fee or other
charge.
3.12 Federal Regulations. No part of the proceeds of
any Loans will be used for ``purchasing'' or ``carrying'' any
``margin stock'' within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in
effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors. If requested by any Lender
or the Agent, the Borrower will furnish to the Agent and each
Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in said Regulation U.
3.13 ERISA. Neither a Reportable Event nor an
``accumulated funding deficiency'' (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred
during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code. No termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a
Plan has arisen, during such five-year period. Except as set forth
on Schedule 3.13 hereto, the present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date
prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such
accrued benefits. Neither the Borrower nor any Commonly Controlled
Entity has made, has been required to make or is currently required
to make any contributions to a Multiemployer Plan.
3.14 Investment Company Act; Other Regulations. The
Borrower is not an ``investment company'', or a company
``controlled'' by an ``investment company'', within the meaning of
the Investment Company Act of 1940, as amended. The Borrower is
not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
3.15 Subsidiaries. Schedule 3.15 is a complete and
accurate list of all of the Subsidiaries of the Borrower at the
date hereof.
3.16 Purpose of Loans. The proceeds of the Loans
shall be used by the Borrower for general corporate purposes.
3.17 Accuracy and Completeness of Information. All
information, reports and other papers and data with respect to the
Borrower and its Subsidiaries (other than projections) furnished to
the Lenders by the Borrower were, at the time the same were so
furnished, complete and correct in all material respects, or have
been subsequently supplemented by other information, reports or
other papers or data, to the extent necessary to give the Lenders
a true and accurate description of the subject matter of such
information, reports, or other papers and data in all material
respects. All projections with respect to the Borrower and its
Subsidiaries, furnished to the Lenders by or on behalf of the
Borrower, as supplemented, were prepared and presented in good
faith by the Borrower, it being recognized by the Lenders that such
projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any
such projections may differ from the projected results. No fact is
known or should be known to the Borrower which has or may have a
Material Adverse Effect, which has not been set forth in the
financial statements referred to in subsection 3.1 or in such
information, reports, papers and data or otherwise disclosed in
writing to the Lenders prior to the Effective Date. No document
furnished or statement made in writing to the Lenders by the
Borrower in connection with the negotiation, preparation or
execution of this Agreement contains any untrue statement of a
material fact, or omits to state a material fact necessary in order
to make the statements contained therein, in the light of the
circumstances in which they were made, not misleading, in either
case which has not been corrected, supplemented or remedied by
subsequent documents furnished or statements made in writing to the
Lenders.
3.18 Collateral Documents. The provisions of the
Collateral Documents are effective to create in favor of the Agent,
for the ratable benefit of the Lenders, a legal, valid and non-voidable
security interest in all right, title and interest of the
Borrower in the collateral described therein. Schedule 3 to the
Security Agreement lists the proper filing offices for all UCC
financing statements that must be filed by the Agent in order to
perfect, pursuant to the UCC, for the benefit of the Agent, a fully
perfected, first-priority security interest in all right, title and
interest of the Borrower in the collateral granted pursuant to the
Security Agreement, subject to any Liens permitted by subsection
6.3.
3.19 Environmental Matters. Except as disclosed in
the Reports filed and delivered to the Agent prior to the date
hereof or as set forth in Schedule 3.19 hereto,
(a) The facilities and properties owned, leased or
operated by the Borrower or any of its Subsidiaries (the
``Properties'') do not contain, and have not previously contained,
any Materials of Environmental Concern in amounts or concentrations
which (i) constitute or constituted a violation of, or (ii) could
give rise to liability under, any Environmental Law, except in
either case insofar as such violation or liability, or any
aggregation thereof, is not reasonably likely to result in the
payment of an amount which could have a Material Adverse Effect.
(b) The Properties and all operations at the
Properties are in compliance, and have in the last five years been
in compliance in all material respects, with all applicable
Environmental Laws, and there is no contamination at, under or
about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Borrower
or any of its Subsidiaries (the ``Business'') which could
materially interfere with the continued operation of the Properties
or materially impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries
has received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor does the
Borrower have knowledge or reason to believe that any such notice
will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation
of, or in a manner or to a location which could give rise to any
material liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored
or disposed of at, on or under any of the Properties in violation
of, or in a manner that could give rise to any material liability
under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of the
Borrower, threatened, under any Environmental Law to which the
Borrower or any Subsidiary is or will be named as a party with
respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect
to the Properties or the Business.
(f) There has been no release or, to the best
knowledge of the Borrower, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or
related to the operations of the Borrower or any Subsidiary in
connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could
give rise to any material liability under Environmental Laws.
3.20 Prior Agreement. Pursuant to the Prior
Agreement, the Lenders hold valid, perfected and nonvoidable
security interests in the Collateral other than the Cortland
Distribution Property (as such terms are defined therein) to secure
all obligations and indebtedness covered thereby, including the
Prior Indebtedness.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Extension of Credit. The
agreement of each Lender to make the initial extension of credit
requested to be made by it is subject to the satisfaction,
immediately prior to or concurrently with the making of such
extension of credit on the Effective Date, of the following
conditions precedent:
(a) Loan Documents. The Agent shall have received
(i) this Agreement and each Collateral Document, each executed
and delivered by a duly authorized officer of the applicable Credit
Party, with a respective counterpart for each Lender and (ii) for
the account of each Lender, a Revolving Credit Note conforming to
the requirements hereof and executed by a duly authorized officer
of the Borrower.
(b) Perfection of First-Priority Liens. The Agent
shall have, for the benefit of the Agent and the Lenders, a first-
priority (subject to permitted Liens), perfected security interest
in the collateral granted pursuant to the Collateral Documents,
including without limitation the stock pledged pursuant to the
Borrower Pledge Agreement.
(c) Borrowing Certificate. The Agent shall have
received, with a counterpart for each Lender, a certificate of the
Borrower, dated as of the Effective Date, substantially in the form
of Exhibit D, with appropriate insertions and attachments,
satisfactory in form and substance to the Agent, executed by the
Chief Executive Officer, President or any Vice President of the
Borrower.
(d) Corporate Proceedings of the Credit Parties. The
Agent shall have received, with a counterpart for each Lender, a
copy of the resolutions, in form and substance satisfactory to the
Agent, of the Board of Directors of each Credit Party authorizing
(i) the execution, delivery and performance of each Loan Document
to which such Credit Party is a party and (ii) with respect to the
Borrower, the borrowings contemplated hereunder, certified by the
Secretary or an Assistant Secretary of the applicable Credit Party
as of the Effective Date, which certificate shall be in form and
substance satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended, modified,
revoked or rescinded.
(e) Incumbency Certificate. The Agent shall have
received, with a counterpart for each Lender, a Certificate of each
Credit Party, dated as of the Effective Date, as to the incumbency
and signature of the officers of the applicable Credit Party
executing any Loan Document satisfactory in form and substance to
the Agent, executed by the Chairman and Chief Executive Officer,
President, any Vice President, the Secretary or any Assistant
Secretary of the applicable Credit Party.
(f) Corporate Documents. The Agent shall
have received, with a counterpart for each Lender, true and
complete copies of the certificate of incorporation and by-laws of
each Credit Party, certified as of the Effective Date as complete
and correct copies thereof by the Secretary or an Assistant
Secretary of the applicable Credit Party.
(g) Good Standing Certificates. The Agent shall have
received, for itself and for each Lender, copies of certificates
dated as of a recent date from the Secretary of State or other
appropriate authority, evidencing the good standing of each Credit
Party in each State where the ownership, lease or operation of
property or the conduct of business requires it to qualify as a
foreign corporation, except where the failure to so qualify would
not have a Material Adverse Effect; provided that the good standing
certificates for the Borrower from the respective Secretaries of
State of Connecticut and Hawaii shall be delivered as soon as
available and, in any event, within 45 days after the Effective
Date.
(h) Litigation. No suit, action, investigation,
inquiry or other proceeding (including, without limitation, the
enactment or promulgation of a statute or rule of which the
Borrower is aware after reasonable inquiry) by or before any
arbitrator or any Governmental Authority shall be pending and no
preliminary or permanent injunction or order by a state or federal
court shall have been entered (i) in connection with this Agreement
or the other Loan Documents or any of the transactions contemplated
hereby or thereby or (ii) which, in any such case, in the
reasonable judgment of the Agent, is reasonably likely to have a
Material Adverse Effect.
(i) No Violation. The consummation of the
transactions contemplated hereby shall not contravene, violate or
conflict with, nor involve the Agent or any Lender in a violation
of, any Requirement of Law.
(j) Consents, Licenses, Approvals, Etc. The Agent
shall have received, with a counterpart for each Lender, a
certificate of a Responsible Officer or the treasurer of the
Borrower either (i) attaching copies of all consents, licenses and
approvals required in connection with the execution, delivery and
performance by the Borrower and the validity and enforceability
against the Borrower of the Loan Documents and such consents,
licenses and approvals shall be in full force and effect, or (ii)
stating that no such consents, licenses or approvals are so
required.
(k) Legal Opinion. The Agent shall have received,
with a counterpart for each Lender, the executed legal opinion of
Winthrop, Stimson, Putnam & Roberts, counsel to the Borrower,
substantially in the form of Exhibit B.
(l) Borrowing Base Certificate. The Agent shall have
received, with a counterpart for each Lender, a certificate of the
Borrower, substantially in the form of Exhibit E with appropriate
insertions and attachments, duly executed by a Responsible Officer.
(m) Fees and Interest. All accrued and unpaid fees
and interest payable to the Lenders party to the Prior Agreement
shall be paid in full and distributed to such Lenders in accordance
with the Prior Agreement.
(n) Security Interest in Real Property and Leaseholds.
The Agent shall have received in respect of the Cortland Warehouse
Property, the following:
(1) an executed mortgage encumbering the Cortland
Warehouse Property (the ``Mortgage''), reasonably acceptable to the
Agent and the Agent's counsel; provided, however, the face amount
of the Mortgage shall not exceed 125% of the appraised value of the
Cortland Warehouse Property;
(2) an appraisal of the Cortland Warehouse Property in
compliance with all FIRREA regulations;
(3) a Phase I environmental audit, with a copy for each
Lender, from an environmental consulting or auditing firm
reasonably satisfactory to the Agent and in form and substance
satisfactory to the Agent, which audit, in any event, shall address
and provide conclusions in respect of any environmental hazards,
conditions or liabilities (contingent or otherwise) with respect to
the Cortland Warehouse Property;
(4) a survey, consisting of maps or plats of an as-built
survey of the site of the Cortland Warehouse Property certified to
the Agent and the title insurance company issuing the policy
referred to in subsection 5.12(e) (the ``Title Insurance Company'')
in a manner satisfactory to them, dated a date reasonably
satisfactory to them by an independent professional licensed land
surveyor reasonably satisfactory to the Agent and the Title
Insurance Company, which maps or plats and the surveys on which
they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and
the American Congress on Surveying and Mapping in 1992, and,
without limiting the generality of the foregoing, there shall be
surveyed and shown on such maps, plats or surveys the following:
(i) the locations on such sites of all the buildings, structures
and other improvements and the established building setback lines;
(ii) the lines of streets abutting the sites and width thereof;
(iii) all access and other easements appurtenant to the sites or
necessary or desirable to use the sites; (iv) all roadways, paths,
driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the site, whether recorded, apparent
from a physical inspection of the sites or otherwise known to the
surveyor, (v) any encroachments on any adjoining property by the
building structures and improvements on the sites; and (vi) if the
site is described as being on a filed map, a legend relating the
survey to said map;
(5) a mortgagee's title policy (or policies) or
marked-up unconditional commitments for such insurance dated
within 30 days of the Effective Date. Each such policy shall
(i) be in an amount reasonably satisfactory to the Agent; (ii) be
issued at ordinary rates; (iii) insure that the Cortland Warehouse
Property insured thereby creates a valid first Lien on the property
covered by the Mortgage free and clear of all defects and
encumbrances, except such as may be reasonably approved by the
Agent and its counsel; (iv) name the Agent for the benefit of the
Lenders as the insured thereunder; (v) be in the form of an
acceptable New York State mortgage form; (vi) contain such
endorsements and affirmative coverage as the Agent may reasonably
request and (vii) be issued by a title insurance company
satisfactory to the Agent (including any such title insurance
companies acting as co-insurers or reinsurers, at the option of the
Agent). The Agent shall have received evidence reasonably
satisfactory to it that all premiums in respect of each such
policy, and all charges for recording of the Mortgage and for
mortgage recording tax, if any, have been paid;
(6) with respect to any parcel of improved real
property encumbered by the Mortgage which is within an area
designated as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, the Agent shall have
received (i) a policy of flood insurance which (A) covers any
parcel of such improved real property, (B) is written in an amount
not less than the outstanding principal amount of the Indebtedness
secured by the Mortgage which is reasonably allocable to such real
property or the maximum limit of coverage made available with
respect to the particular type of property, whichever is less, and
(C) has a term ending not later than the maturity of the
indebtedness secured by the Mortgage and (ii) original copies of
each of the notice(s), if any, required pursuant to Section
208(e)(3) of Regulation H of the Board of Governors of the Federal
Reserve System, duly executed by the Borrower;
(o) Prior Indebtedness. All Prior Indebtedness (other
than reimbursement obligations in respect of outstanding letters of
credit) shall be paid in full, concurrently with the extension of
the initial Loans under this Agreement.
4.2 Conditions to Each Extension of Credit. The
agreement of each Lender to make any extension of credit requested
to be made by it on any date (including, without limitation, its
initial Loan) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by each Credit Party in or
pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall
have occurred and be continuing on such date or after giving effect
to the extension of credit requested to be made on such date.
(c) Borrowing Order. The Interim Borrowing Order or
the Final Borrowing Order, as applicable, shall be in full force
and effect.
(d) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal matters
in connection with the transactions contemplated by this Agreement
and the other Loan Documents shall be satisfactory in form and
substance to the Agent, and the Agent shall have received such
other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as
it shall reasonably request.
Each borrowing by, and each issuance of a Letter of Credit for the
account of, the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date of such
Loan that the conditions contained in this subsection 4.2 have been
satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the
Commitments remain in effect, any Note or any Letter of Credit
remains outstanding and unpaid or any other amount is owing to any
Lender or the Agent hereunder, the Borrower shall and (except in
the case of delivery of financial information, reports and notices)
shall cause each of its Subsidiaries to:
5.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within
95 days after the end of each fiscal year of the Borrower, a
copy of the consolidated and consolidating balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of such
year, the related consolidated and consolidating statements of
income and retained earnings and the related consolidated
statements of cash flows for such year, setting forth in each case
in comparative form the figures for the previous year, and, with
respect to the consolidated financial statements, reported on
without a qualification arising out of the scope of the audit, by
Deloitte & Touche, LLP or other independent certified public
accountants of nationally recognized standing;
(b) as soon as available, but in any event not later
than 50 days after the end of each of the first three quarterly
periods of each fiscal year of the Borrower, the unaudited
consolidated and consolidating balance sheets of the Borrower and
its consolidated Subsidiaries as at the end of such quarter, the
related unaudited consolidated and consolidating statements of
income and retained earnings and the related unaudited consolidated
statements of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments); and
(c) not later than 20 days after the end of each
calendar month, the unaudited consolidated and consolidating
balance sheets of the Borrower and its consolidated Subsidiaries as
at the end of such month, the related unaudited consolidated and
consolidating statements of income and retained earnings and the
related consolidated statements of cash flows of the Borrower and
its consolidated Subsidiaries for such month, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal audit adjustments).
All quarterly and annual financial statements of the Borrower and
its Subsidiaries delivered to the Lenders that are filed with the
Securities and Exchange Commission or otherwise generally made
available to the public shall be prepared in accordance with GAAP
and all other financial statements (including interim financial
statements and projections) delivered to the Lenders will be
prepared on a basis consistent with the basis on which the
financial statements delivered pursuant to the Prior Agreement were
prepared. For purposes of this Section 5.1, the term
``consolidating balance sheets'' shall refer to the consolidated
balance sheet (which contains consolidating accounting entries) in
substantially the form prepared by the Borrower and delivered to
the Lenders prior to the Effective Date.
5.2 Certificates; Other Information. Furnish to each
Lender:
(a) concurrently with the delivery of the financial
statements referred to in subsections 5.1(a), 5.1(b) and 5.1(c), a
certificate of a Responsible Officer, substantially in the form
attached hereto as Exhibit M, stating that, to the best of such
Officer's knowledge, the Borrower during such period has observed
or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement, any
Applications and in the Notes to be observed, performed or
satisfied by it, and that such Officer has obtained no knowledge of
any Default or Event of Default except as specified in such
certificate and setting forth calculations evidencing compliance
with the financial covenants contained in subsection 6.1;
(b) within five days after the same are sent, copies
of all financial statements and reports which the Borrower sends to
its stockholders, and within five days after the same are filed,
copies of all financial statements and reports which the Borrower
may make to, or file with, the Securities and Exchange Commission
or any successor or analogous Governmental Authority;
(c) promptly, such additional financial and other
information as any Lender may from time to time reasonably request;
(d) within 20 days after the end of each fiscal month
(or more frequently as may be agreed by the Borrower and the
Agent), a Borrowing Base Certificate, substantially in the form of
Exhibit E or in such other form as the Agent shall reasonably
request, as of the close of business on the last day of such fiscal
month, accompanied by the reports described on Exhibit G or in such
other form as the Agent shall reasonably request, and certified as
complete and correct as of the date thereof by a Responsible
Officer of the Borrower; provided that if a Default has occurred
and is continuing, Borrower shall deliver a Borrowing Base
Certificate and the accompanying reports from time to time as often
as the Agent may request; and
(e) promptly give notice to the Agent and each Lender
if the Borrower should reasonably know that an account debtor of
the Borrower or a Subsidiary becomes a debtor in any bankruptcy,
insolvency or reorganization proceeding and such account debtor
owes the Borrower or a Subsidiary an amount equal to or greater
than 2% of all Accounts of the Borrower.
5.3 Business Plans. By September 5, 1995, furnish to
each Lender a business plan containing detailed financial
projections, including without limitation consolidating balance
sheets and income statements and consolidated statements of cash
flows, in each case for the Borrower and its Subsidiaries prepared
on a monthly basis through June 30, 1996, and proposed covenant
amounts for the remaining term of this Agreement for the financial
covenants contained in subsections 6.1(a) and (b).
5.4 Payment of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever
nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the
case may be.
5.5 Conduct of Business and Maintenance of Existence.
Engage solely in the business in which it is presently engaged and
preserve, renew and keep in full force and effect its corporate
existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal
conduct of its business except as otherwise permitted pursuant to
subsection 6.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, have a Material Adverse
Effect.
5.6 Maintenance of Quality Control Procedures.
Maintain in accordance with historical practice the quality of
products and services offered.
5.7 Maintenance of Property; Insurance. Keep all
property useful and necessary in its business in good working order
and condition; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such
amounts and against at least such risks as are usually insured
against in the same general area by companies engaged in the same
or a similar business; and furnish to each Lender, upon written
request, full information as to the insurance carried.
5.8 Inspection of Property; Books and Records;
Discussions. Keep proper books of records and account in which
full, true and correct entries in conformity in all material
respects with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and
activities; and permit representatives of any Lender to visit and
inspect any of its properties and examine and make abstracts from
any of its books and records upon reasonable prior notice and
during normal business hours and as often as may reasonably be
desired and to discuss the business, operations, properties and
financial and other condition of the Borrower and its Subsidiaries
with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
5.9 Notices. As soon as possible after a Responsible
Officer of the Borrower has knowledge of any of the following, give
notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any
Contractual Obligation of the Borrower or any of its Subsidiaries
or (ii) litigation, investigation or proceeding which may exist at
any time between the Borrower or any of its Subsidiaries and any
Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, could have a Material
Adverse Effect;
(c) any litigation or proceeding affecting the
Borrower or any of its Subsidiaries in which the amount involved is
$1,000,000 or more and not covered by insurance or in which
injunctive or similar relief is sought;
(d) the following events, as soon as possible and in
any event within 30 days after the Borrower knows or has reason to
know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, a failure to make any
required contribution to a Plan, the creation of any Lien in favor
of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;
(e) any amendment of the certificate of incorporation or
by-laws of the Borrower; and
(f) any development or event which has had a Material
Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the Borrower
proposes to take with respect thereto.
5.10 Environmental Laws. (a) Comply with, and ensure
compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply with and
maintain, and ensure that all tenants and subtenants obtain and
comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable
Environmental Laws.
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply with all
lawful orders and directives of all Governmental Authorities
regarding Environmental Laws.
5.11 Maintenance of Liens of the Collateral Documents.
Promptly, upon the reasonable request of the Agent or any Lender,
at the Borrower's expense, execute, acknowledge and deliver, or
cause the execution, acknowledgement and delivery of, and
thereafter register, file or record, or cause to be registered,
filed or recorded, in an appropriate governmental office, any
document or instrument supplemental to or confirmatory of any
Collateral Document or otherwise deemed by the Agent necessary or
desirable for the continued validity, perfection and priority of
the Liens on the collateral covered thereby (subject to any
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar law).
5.12 Further Assurances; Intellectual Property.
Execute and deliver such further documents and do such other acts
and things as the Agent or Lenders may at any time or from time to
time reasonably request in order to effect fully the purposes of
this Agreement and the other Loan Documents and to provide for
payment of the obligations hereunder and the under the other Loan
Documents in accordance with the terms of this Agreement and the
other Loan Documents and to grant a perfected, first-priority
security interest in all of its real, personal and mixed property,
including without limitation, deliver to the Agent the stock
certificates (together with signed, undated stock powers duly
endorsed in blank) representing the stock pledged pursuant to the
Borrower Pledge Agreement. Without limiting any of the foregoing,
in the event the Borrower or any of its Subsidiaries registers any
trademark, copyright or patent with any governmental authority,
then, the Borrower upon the request of the Agent, shall or shall
cause its Subsidiaries to execute and deliver such guaranties,
Collateral Documents and such other agreements, pledges,
assignments in a mutually satisfactory fashion, documents and
certificates (including, without limitation, any amendments to the
Loan Documents) as may be necessary or as the Agent may reasonably
request and do such other acts and things as the Agent may
reasonably request in order to have such trademark, copyright or
patent secure the Obligations and the other obligations secured by
the Collateral Documents, as the case may be, and effect fully the
purposes of this Agreement and the other Loan Documents and to
provide for payment of the Obligations in accordance with the terms
of this Agreement and the other Loan Documents.
Upon the request of the Agent or Lenders, the Borrower
shall cause any or all of its Subsidiaries to execute and deliver
guaranties of the Obligations and the other obligations secured by
the Collateral Documents, pledge agreements and security
agreements, in each case in form and substance satisfactory to the
Agent, and shall cause each such Subsidiary to take all actions and
deliver all documents required or reasonably requested to give the
Agent a valid and perfected first-priority security interest in all
of its property (real, personal or mixed), as requested by the
Agent. If requested by the Agent or the Lenders, the Borrower
shall cause an opinion or opinions of counsel covering the matters
described in this paragraph and otherwise in form and substance
satisfactory to the Agent and Lenders and all applicable corporate
documents (including without limitation resolutions of the board of
directors, organizational documents and signature and incumbency
certificates) to be delivered to the Agent and the Lenders.
5.13 Cash Management System. Within 30 days after
the Effective Date, the Borrower shall establish a cash management
system reasonably acceptable to the Lenders and the Agent and shall
take all actions and execute all documents as shall be reasonably
directed by the Lenders and the Agent in connection with the
establishment of such cash management system. It is understood
that such establishment of such cash management system will not
require that the Borrower's account debtors be instructed to change
their method or location of payments but rather will involve
entering into agreements with the banks at which the Borrower's
existing collection accounts are maintained to provide that (i)
such collection accounts will be maintained in the name of and
under the control of the Agent, (ii) only proceeds of the Lenders'
collateral will be deposited in such collection accounts and (iii)
collected and available funds in such collection accounts will be
transferred daily to the Agent without the requirement of any
further instruction or notification by the Agent.
5.14 Payment of Rent Obligations. Timely pay all
amounts due with respect to any period after the Petition Date to
each lessor of real property at which Inventory is located at any
time after the Petition Date; provided that nothing contained
herein shall require the Borrower to elect to assume or reject any
such lease of real property.
5.15 Payment of Certain Prior Indebtedness.
Notwithstanding anything to the contrary contained in this
Agreement (including without limitation subsections 2.5 and 2.6
hereof), if the Borrower elects to prepay the Loans and other
Obligations (including any prepayment from the proceeds of
refinancing Indebtedness) or terminate the Commitments, it shall
not incur any such Indebtedness or terminate the Commitments or
this Agreement unless the Borrower has paid in full, in Cash all
Prior Indebtedness incurred during the period from June 16, 1995
and the Petition Date in accordance with that certain letter
agreement dated as of June 16, 1995 among the Borrower, the Lenders
and the Agent.
5.16 Certain Post-Closing Matters.
(a) Cortland Distribution Property. If the J.M.
Murray Contract is terminated or if the sale of the Cortland
Distribution Property is not consummated in accordance with the
terms of the J.M. Murray Contract, shall promptly execute a
mortgage with respect to the Cortland Distribution Property
substantially in the form of the Mortgage and shall deliver with
respect to the Cortland Distribution Property each of the items set
forth in Section 4.1(n) with respect to the Cortland Warehouse
Property.
(b) SCC UK. Without limiting the generality of
subsection 5.12, prior to the entry of the Final Borrowing Order,
the Borrower shall cause SCC UK to execute such documents and take
such actions as are necessary to grant a security interest in its
property to secure its obligations under the Subsidiary Guaranty.
(c) SCC Singapore. Prior to the entry of the Final
Borrowing Order, the Borrower shall cause SCC Singapore to execute
a counterpart of the Subsidiary Guaranty and such documents and
instruments as are necessary, or that the Lenders may reasonably
request, to grant a security interest in SCC Singapore's property
in favor of the Agent, on behalf of the Lenders, to secure the
Obligations; provided that, if the laws applicable to SCC Singapore
prohibit the execution of such documents, or otherwise make any
such guaranty or security interest illegal, invalid or otherwise
ineffective to accomplish the purposes of this subsection 2.25,
then the Borrower shall, upon the request of the Lenders, take such
actions and execute such documents as are reasonably necessary to
add SCC Singapore as a borrower under the Credit Agreement and the
other Loan Documents.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the
Commitments remain in effect, any Note or any Letter of Credit
remains outstanding and unpaid or any other amount is owing to any
Lender or the Agent hereunder, the Borrower shall not, and (except
with respect to subsection 6.1) shall not permit any of its
Subsidiaries to, directly or indirectly:
6.1 Financial Condition Covenants.
(a) Maximum Inventory. Permit the aggregate amount of Inventory
of the Borrower and its Subsidiaries, calculated on a consolidated
basis in accordance with GAAP, as of the last day of any Fiscal
Month set forth below to be greater than the corresponding amount
set forth below:
Fiscal Month Amount
August 1995 $ 64,400,000
September 1995 $ 62,100,000
October 1995 $ 61,000,000
; provided that unless a Business Plan Event has occurred, this
subsection 6.1(a) shall be automatically amended on September 15,
1995 to add applicable covenant amounts, which shall be the
covenant amounts contained in the Business Plan, for each fiscal
month during the remaining term of this Agreement.
(b) Maximum Cash Disbursements. (i) Permit the
aggregate amount of Cash disbursements, measured on a consolidated
basis for the Borrower and its Subsidiaries, for any fiscal month
set forth below to be greater than the corresponding amount
indicated below:
Fiscal Month Amount
July 1995 $ 11,973,000
August 1995 $ 9,266,000
September 1995 $ 15,207,000
; provided that, unless a Business Plan Event shall have occurred,
the covenant set forth in this clause (i) of this subsection shall
be automatically amended on September 15, 1995 to add applicable
covenant amounts, which shall be the covenant amounts contained in
the Business Plan, for each of the fiscal months in the remaining
term of this Agreement.
(ii) If a Business Plan Event shall have occurred,
permit the aggregate Cash disbursements, measured on a consolidated
basis for the Borrower and its Subsidiaries, for any fiscal month
occurring during the remaining term of this Agreement to be greater
than the sum of (A) the average of the aggregate Cash disbursements
for the three consecutive fiscal months preceding the applicable
fiscal month plus (B) $1,000,000.
6.2 Limitation on Indebtedness. Create, incur, assume
or suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of the Borrower to any Subsidiary and
of any Subsidiary to the Borrower or any other Subsidiary; and
(c) Borrower may become and remain liable with
respect to Prepetition Indebtedness without giving effect to any
extensions, renewals, refinancings, supplemental borrowings or
other incurrences thereof, it being understood that all such
Indebtedness shall be permitted under this clause (c) only to the
extent listed on Schedule 6.2 hereto.
6.3 Limitation on Liens. Create, incur, assume or
suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except for:
(a) Liens created pursuant to the Security
Agreement;
(b) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books
of the Borrower or its Subsidiaries, as the case may be, in
conformity with GAAP;
(c) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by
appropriate proceedings;
(d) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(e) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(f) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and which do
not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct
of the business of the Borrower or such Subsidiary;
(g) Liens in existence on the date hereof listed on
Schedule 6.3, securing Indebtedness permitted by subsection
6.2(c), provided that no such Lien is spread to cover any
additional property after the Effective Date and that the amount of
Indebtedness secured thereby is not increased;
(h) Liens securing Indebtedness of the Borrower and
its Subsidiaries permitted by subsection 6.2 incurred to finance
the acquisition of fixed or capital assets, provided that (i) such
Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not
at any time encumber any property other than the property financed
by such Indebtedness, (iii) the amount of Indebtedness secured
thereby is not increased and (iv) the principal amount of
Indebtedness secured by any such Lien shall at no time exceed 80%
of the lesser of the original purchase price of such property or
the fair value (as determined in good faith by the board of
directors of the Borrower) of such property at the time it was
acquired;
(i) Liens arising solely as a result of precautionary
filings of UCC financing statements in respect of personal property
leased pursuant to operating leases; and
(j) Liens on Inventory granted after the Effective
Date to secure claims to freight forwarders not in excess of
$250,000 in the aggregate, provided that such Liens shall be
subordinate to the Liens granted herein to the Lenders and shall
cover Inventory having a value at the lower of cost or market not
more than 110% of such obligations
6.4 Limitation on Guarantee Obligations. Create,
incur, assume or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the
date hereof and listed on Schedule 6.4;
(b) Guarantee Obligations in respect of Indebtedness
incurred pursuant to subsection 6.2(d);
(c) guarantees made in the ordinary course of its
business by the Borrower of obligations of any of its Subsidiaries,
which obligations are otherwise permitted under this Agreement; and
(d) Guarantee Obligations of the Subsidiary Guarantors
pursuant to the Subsidiary Guaranty.
6.5 Limitation on Fundamental Changes. Merge into or
consolidate with any other Person in a transaction in which the
Borrower is not the surviving entity, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or,
except as expressly permitted under subsection 6.6(b), convey,
sell, lease, assign, transfer or otherwise dispose of, all or
substantially all of its property, business or assets, or, except
as expressly permitted under subsection 6.8, purchase, lease or
otherwise acquire all or substantially all of the assets of any
other Person, or make any material change in its present method of
conducting business, except:
(a) any Subsidiary of the Borrower may be merged or
consolidated with any one or more wholly owned Subsidiaries of the
Borrower (provided that the wholly owned Subsidiary or Subsidiaries
shall be the continuing or surviving corporation);
(b) any wholly owned Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any other
wholly owned Subsidiary of the Borrower; and
(c) the Borrower and any Subsidiary of the Borrower
may purchase inventory in the ordinary course of business.
6.6 Limitation on Sale of Assets. Convey, sell,
lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation,
receivables and leasehold interests), whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person
other than the Borrower or any wholly-owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn
out property in the ordinary course of business;
(b) the sale of Inventory in the ordinary course of
business;
(c) the sale or discount without recourse of accounts
receivable arising in the ordinary course of business in connection
with the compromise or collection thereof;
(d) the sale or other disposition of property
(other than Inventory), provided that (i) such property shall be
disposed of for not less than fair market value and (ii) the net
proceeds (excluding proceeds pursuant to the J.M. Murray Contract)
of all such dispositions from and after the Effective Date shall
not exceed $500,000; and
(e) as permitted by subsection 6.5(b).
6.7 Limitation on Dividends. Declare or pay any
dividend (other than dividends payable solely in common stock of
the Borrower) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any
shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Stock, whether now or
hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property
or in obligations of the Borrower or any Subsidiary (all of the
foregoing, ``Restricted Payments''); provided that any Subsidiary
of the Borrower may make Restricted Payments to the Borrower.
6.8 Limitation on Capital Expenditures. Make or
commit to make (by way of the acquisition of assets or securities
of a Person or otherwise) any expenditure in respect of the
purchase or other acquisition of fixed or capital assets (excluding
any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except
for expenditures for assets and acquisitions of securities not
exceeding (a) $500,000 in the aggregate for the Borrower and its
Subsidiaries during the period from June 30, 1995 to and including
December 31, 1995 and (b) $500,000 in the aggregate for the
Borrower and its Subsidiaries during the period from January 1,
1996 to and including June 30, 1996; provided, the acquisition by
the Borrower of the building covered by the J.M. Murray Contract
for the approximate amount of $550,000 (approximately $250,000 of
which will be in cash, and the balance of which will result from
the assumption by the Borrower of the existing first mortgage
encumbering such building) shall not be regarded as a capital
expenditure for purposes of the above restriction.
6.9 Limitation on Investments, Loans and Advances.
Make any advance, loan, extension of credit or capital contribution
to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or
make any other investment in, any Person, except :
(a) extensions of trade credit in the ordinary course
of business;
(b) Permitted Investments; and
(c) subject to subsection 6.8, investments by the
Borrower in its wholly owned Subsidiaries now or hereafter existing
and loans and advances made by the Borrower to its wholly owned
Subsidiaries in the ordinary course of the Borrower's business to
the extent authorized by the Bankrupcty Court.
6.10 Limitation on Transactions with Affiliates.
Enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of
any service, with any Affiliate unless such transaction is
(a) otherwise permitted under this Agreement, (b) in the ordinary
course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an
Affiliate.
6.11 Limitation on Sales and Leasebacks. Enter into
any arrangement with any Person providing for the leasing by the
Borrower or any Subsidiary of real or personal property which has
been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have
been or are to be advanced by such Person on the security of such
property or rental obligations of the Borrower or such Subsidiary.
6.12 Limitation on Changes in Fiscal Year. Permit the
fiscal year of the Borrower to end on a day other than June 30.
6.13 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for the
business in which the Borrower is presently engaged or similar or
related businesses.
6.14 Limitation on Negative Pledge Clauses. Enter
into any agreement with any Person other than the Lenders pursuant
to this Agreement or any other Loan Document which prohibits or
limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter
acquired; provided that, the Borrower may enter into such an
agreement in connection with any Lien permitted by this Agreement,
when such prohibition or limitation is by its terms effective only
against the assets subject to such Lien.
6.15 Chapter 11 Claims. Without limiting the
provisions of subsection 6.3 hereof, incur, create, assume, suffer
or permit any claim or Lien or encumbrance against it or any of its
property or assets in any Chapter 11 Case (other than the claims
specifically referred to in subsections 2.23 (i) and (ii) but only
to the extent therein described) pari passu with or senior to the
claims and Liens of the Agent and the Lenders against the Borrower
in respect of the Obligations hereunder, or apply to the Court for
authority to do so, except to the extent expressly permitted
herein.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be
continuing:
(a) The Borrower shall fail to pay any principal of,
or interest on, any Note or any Reimbursement Obligation or any
other amount payable hereunder when due in accordance with the
terms thereof or hereof; or
(b) Any representation or warranty made or deemed made
by the Borrower herein or which is contained in any certificate,
document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any other Loan
Document shall prove to have been incorrect in any material respect
on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or
performance of any agreement contained in Section 6; or
(d) The Borrower shall default in the observance or
performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a)
through (c) of this Section), and such default shall continue
unremedied for a period of 10 days; or
(e) The Borrower or any of its Subsidiaries shall
(i) default in any payment of principal of or interest on any
Indebtedness (other than the Notes, Prepetition Indebtedness,
amounts payable to employees of any Subsidiary and accounts payable
of the Subsidiaries of Borrower incurred by such Subsidiaries in
the ordinary course) or in the payment of any Guarantee Obligation,
beyond the period of grace (not to exceed 30 days), if any,
provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created provided that, the
aggregate principal amount of such Indebtedness or Guarantee
Obligation shall be greater than $100,000; or (ii) default in the
observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is
to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a
trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or
such Guarantee Obligation to become payable; or
(f) (i) Any Person shall engage in any ``prohibited
transaction'' (as defined in Section 406 of ERISA or Section 4975
of the Code) involving any Plan, (ii) any ``accumulated funding
deficiency'' (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the Borrower or
any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Single Employer Plan, or any Single Employer
Plan shall terminate, which Reportable Event or commencement of
proceedings, appointment of a trustee or termination is, in the
reasonable opinion of the Required Lenders, likely to result in the
imposition of a Lien on any property of the Borrower, (iv) the
Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency
or Reorganization of, a Multiemployer Plan or (v) any other event
or condition shall occur or exist with respect to a Plan (other
than the fact of termination of a Plan), and in each case in
clauses (i) through (iv) above, such event or condition, together
with all other such events or conditions, if any, could have a
Material Adverse Effect; or
(g) One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of
$100,000 or more (with respect to the Borrower) or $300,000 or more
(with respect to the Subsidiaries of the Borrower), and all such
judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry
thereof; or
(h) There shall have occurred a Change in Control; or
(i) Ronald F. Stengel shall cease to be the President
and Chief Executive Officer of the Borrower or shall at any time
fail to have, in any material respect, any of the authority
associated on the Effective Date with the positions of President
and Chief Executive Officer; or
(j) (i) The entry of an order authorizing the Borrower
in the Chapter 11 Case to obtain additional financing under Section
364(c) or (d) or the Bankruptcy Code, or authorizing any Person to
recover from any portions of the Collateral any costs or expenses
of preserving or disposing of such Collateral under Section 506(c)
of the Bankruptcy Code, or authorizing the use of Cash Collateral
without Requisite Lenders prior written consent under Section
363(c) of the Bankruptcy Code; (ii) the appointment of an interim
or permanent trustee in the Chapter 11 Case or the appointment of
an examiner in the Chapter 11 Case with expanded powers to operate
or manage the financial affairs, the business, or reorganization of
any Credit Party; (iii) the dismissal of the Chapter 11 Case, or
the conversion of the Chapter 11 Case to a case under Chapter 7 of
the Bankruptcy Code; (iv) the entry of an order granting relief
from or modifying the automatic stay of Section 362 of the
Bankruptcy Code with respect to obligations in an aggregate amount
in excess of $200,000 (a) to allow any creditor to execute upon or
enforce a Lien on any Collateral or on any other property or assets
of the Borrower or (b) with respect to any Lien of, or the granting
of any Lien on any Collateral or any other property or assets of
the Borrower or any of its Subsidiaries to, any State or local
environmental or regulatory agency or authority; (v) the entry of
an order amending, supplementing, staying, vacating or otherwise
modifying the Interim Borrowing Order or the Final Borrowing Order,
as applicable, or this Agreement or any other Loan Document or any
of the Agent's or Lenders' rights, benefits, privileges or remedies
under the Borrowing Order, this Agreement or any other Loan
Document, in any case without the Required Lenders' prior consent;
(vi) an order shall be entered approving, or there shall arise, any
other administrative expense claim (other than those specifically
referred to in subsection 2.23) having any priority over, or being
pari passu with the administrative expenses priority of the
Obligations in respect of the Chapter 11 Case;
then, and in any such event, either or both of the following
actions may (notwithstanding the provisions of Sections 105 and 362
of the Bankruptcy Code and without application or motion to, or
order from, the Court) be taken: (i) with the consent of the
Required Lenders, the Agent may, or upon the request of the
Required Lenders, the Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the consent
of the Required Lenders, the Agent may, or upon the request of the
Required Lenders, the Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement including, without
limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder,) and the Notes to be
due and payable forthwith, whereupon the same shall immediately
become due and payable. Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
Further, upon the occurrence and during the continuance
of any Event of Default, the Agent may exercise all rights and
remedies of the Agent set forth in the Security Agreement, in
addition to all rights and remedies allowed by applicable laws of
the United States and of any state thereof, including but not
limited to the Uniform Commercial Code; provided that, any other
provision of this Agreement or any other Loan Document to the
contrary notwithstanding, with respect to the foregoing, the Agent
shall give the Borrower and counsel to any official committees in
respect of the Chapter 11 Case three Business Days' prior notice
(which notice shall be delivered by facsimile or overnight courier)
of the exercise of its rights and remedies with respect to the
collateral granted pursuant to the Security Agreement or any other
Loan Documents and file a copy of such notice with the clerk of the
Court.
Neither the Agent nor the Lenders shall have any
obligation of any kind to make a motion or application to the
Bankruptcy Court to exercise their rights and remedies set forth or
referred to in this Agreement or in the other Loan Documents.
With respect to all Letters of Credit with respect to
which presentment for honor shall not have occurred at the time of
an acceleration pursuant to the preceding paragraph, the Borrower
shall at such time deposit in a cash collateral account opened by
the Agent an amount equal to 105% of the aggregate then undrawn and
unexpired amount of such Letters of Credit. The Borrower hereby
grants to the Agent, for the benefit of the Issuing Lender and the
L/C Participants, a security interest in such cash collateral to
secure all obligations of the Borrower under this Agreement and the
other Loan Documents. Amounts held in such cash collateral account
shall be applied by the Agent to the payment of drafts drawn under
such Letters of Credit, and the unused portion thereof after all
such Letters of Credit shall have expired or been fully drawn upon,
if any, shall be applied to repay other obligations of the Borrower
hereunder and under the Notes. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the Notes shall have been paid in
full, the balance, if any, in such cash collateral account shall be
returned to the Borrower. The Borrower shall execute and deliver
to the Agent, for the account of the Issuing Lender and the L/C
Participants, such further documents and instruments as the Agent
may request to evidence the creation and perfection of the within
security interest in such cash collateral account.
SECTION 8. THE AGENT
8.1 Appointment. Each Lender hereby irrevocably
designates and appoints Chemical Bank as the Agent of such Lender
under this Agreement and the other Loan Documents, and each Lender
irrevocably authorizes Chemical Bank, as the Agent for such Lender,
to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers
and perform such duties as are expressly delegated to the Agent by
the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist
against the Agent.
8.2 Delegation of Duties. The Agent may execute any
of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys in-fact selected by it with reasonable
care.
8.3 Exculpatory Provisions. Neither the Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection
with this Agreement or any other Loan Document (except for its or
such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or
in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or the Notes or any other Loan
Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower.
8.4 Reliance by Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Agent.
The Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the Notes and the other Loan
Documents in accordance with a request of the Required Lenders, and
such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future
holders of the Notes.
8.5 Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Agent has received notice
from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such
notice is a ``notice of default''. In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the
Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the
Required Lenders; provided that unless and until the Agent shall
have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
8.6 Non-Reliance on Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and
that no act by the Agent hereinafter taken, including any review of
the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender
represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and
other documents expressly required to be furnished to the Lenders
by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness
of the Borrower which may come into the possession of the Agent or
any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify
the Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to
do so), ratably according to their respective Commitment
Percentages in effect on the date on which indemnification is
sought under this subsection (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and
the Loans shall have been paid in full, and the L/C Obligations
have been cash collateralized ratably in accordance with their
Commitment Percentages immediately prior to such date), from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment
of the Notes) be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of this Agreement, any
of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender
shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's
gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Notes and all other
amounts payable hereunder.
8.8 Agent in Its Individual Capacity. The Agent and
its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower as
though the Agent were not the Agent hereunder and under the other
Loan Documents. With respect to its Loans made or renewed by it
and any Note issued to it and with respect to any Letter of Credit
issued or participated in by it, the Agent shall have the same
rights and powers under this Agreement and the other Loan Documents
as any Lender and may exercise the same as though it were not the
Agent, and the terms ``Lender'' and ``Lenders'' shall include the
Agent in its individual capacity.
8.9 Successor Agent. The Agent may resign as Agent
upon 10 days' notice to the Lenders and the Borrower. If the Agent
shall resign as Agent under this Agreement and the other Loan
Documents, then the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent
shall be approved by the Borrower, whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent, and
the term ``Agent'' shall mean such successor agent effective upon
such appointment and approval, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other
or further act or deed on the part of such former Agent or any of
the parties to this Agreement or any holders of the Notes. After
any retiring Agent's resignation as Agent, the provisions of this
subsection shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement
and the other Loan Documents.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement,
any Note or any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in
accordance with the provisions of this subsection. The Required
Lenders may, or, with the written consent of the Required Lenders,
the Agent may, from time to time, (a) enter into with the Borrower
written amendments, supplements or modifications hereto and to the
Notes and the other Loan Documents for the purpose of adding any
provisions to this Agreement, the Notes or the other Loan Documents
or changing in any manner the rights of the Lenders or of the
Borrower hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Agent, as the case may
be, may specify in such instrument, any of the requirements of this
Agreement, the Notes or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall
(i) reduce the amount or extend the scheduled date of maturity of
any Note or of any installment thereof, or reduce the stated rate
of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the amount or extend the
expiration date of any Lender's Commitment, in each case without
the consent of each Lender affected thereby, or (ii) amend, modify
or waive any provision of this subsection or reduce the percentage
specified in the definition of Required Lenders, or consent to the
assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents or
release any material portion of the Collateral (as defined in the
Security Agreement), in each case without the written consent of
all the Lenders, or (iii) amend, modify or waive any provision of
Section 8 without the written consent of the then Agent. Any such
waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the
Borrower, the Lenders, the Agent and all future holders of the
Notes. In the case of any waiver, the Borrower, the Lenders and
the Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes and any other Loan
Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or 3 days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the
Agent, and as set forth on the applicable signature page hereto in
the case of the other parties hereto, or to such other address as
may be hereafter notified by the respective parties hereto and any
future holders of the Notes:
The Borrower: Smith Corona Corporation
65 Locust Avenue
New Canaan, Connecticut
Attention: John Piontkowski
Telecopy: (203) 972-4226
Telephone: (203) 972-4222
With a copy to: Richard L. Epling, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, NY 10004
Telecopy: (212) 858-1500
Telephone: (212) 858-1649
With a copy to: James Patton, Esq.
Young, Conaway, Stargatt & Taylor
Eleventh Floor
Rodney Square North
P.O. Box 391
Wilmington, DE 19899-0391
The Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: John J. Huber III
Telecopy: (212) 270-2625
Telephone: (212) 270-1402
With a copy to: Chemical Bank
270 Park Avenue, 30th Floor
New York, NY 10017
Attention: Steven C. Pickhardt
Telecopy: (212) 270-5748
With a copy to: O'Melveny & Myers
153 East 53rd Street
New York, NY 10022
Attention: Joel B. Zweibel, Esq.
Telecopy: (212) 326-2061
With a copy to: Potter, Anderson & Corroon
350 Delaware Trust Building
902 Market Street, Room 350
Wilmington, DE 19801
Attention: Laurie Silverstein, Esq.
Telecopy: (302) 658-1192
provided that any notice, request or demand to or upon the Agent or
the Lenders pursuant to subsection 2.3, 2.5, 2.6, 2.7 or 2.12 shall
not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Lender, any right, remedy, power or privilege hereunder or
under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan
Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the Notes and the
making of the Loans hereunder until all obligations of the Borrower
hereunder have been discharged.
9.5 Payment of Expenses and Taxes. The Borrower agrees
(a) to pay or reimburse the Agent and each Lender, promptly upon
presentation of statements, for all its out-of-pocket costs and
expenses incurred in connection with the negotiation, development,
preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the Notes and the other Loan
Documents and any other documents prepared in connection herewith
or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees and disbursements of counsel and
financial advisors to the Agent, (b) to promptly pay or reimburse
each Lender and the Agent for all of their costs and expenses
incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes, the other Loan Documents
and any such other documents, including, without limitation, the
fees and disbursements of counsel and financial advisors to the
Agent and to the several Lenders (including, without duplication,
the allocated cost of in-house counsel), (c) to promptly pay,
indemnify, and hold each Lender and the Agent harmless from, any
and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise
and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement,
the Notes, the other Loan Documents and any such other documents,
(d) to promptly pay or reimburse each Lender and the Agent for all
of their costs and expenses incurred in the Chapter 11 Case
(including, without limitation, the on-going monitoring by the
Agent of the Chapter 11 Case, including attendance by the Agent and
their counsel at hearings or other proceedings and the on-going
review of documents filed with the Court in respect thereof) and
the Agent's and Lenders' interests with respect to the Borrower
(including, without limitation, the on-going review of the
Borrower's business, assets, operations, prospects or financial
condition as the Agent shall deem necessary), the Collateral or the
Obligations, (e) to pay, indemnify, and hold each Lender and the
Agent harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever
with respect to the Chapter 11 Case or the execution, delivery,
enforcement, performance and administration of this Agreement, the
Notes, the other Loan Documents and any such other documents,
including, without limitation, any of the foregoing relating to the
violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Borrower, any
of its Subsidiaries or any of the Properties (all the foregoing in
this clause (d), collectively, the ``indemnified liabilities''),
provided that the Borrower shall have no obligation hereunder to
the Agent or any Lender with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of the
Agent or any such Lender. The agreements in this subsection shall
survive repayment of the Notes and all other amounts payable
hereunder.
9.6 Successors and Assigns; Participations and
Assignments. (a) This Agreement shall be binding upon and inure
to the benefit of the Borrower, the Lenders, the Agent, all future
holders of the Notes and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its
rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable law,
at any time sell to one or more banks or other entities (each a
``Participant'') participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender
or any other interest of such Lender hereunder and under the other
Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for
the performance thereof, such Lender shall remain the holder of any
such Note for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other
Loan Documents. The Borrower agrees that if amounts outstanding
under this Agreement and the Notes are due or unpaid, or shall have
been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed
to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement and any Note to the
same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement or any Note,
provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in subsection 9.7(a) as
fully as if it were a Lender hereunder. The Borrower also agrees
that each Participant shall be entitled to the benefits of
subsections 2.10 and 2.11 with respect to its participation in the
Commitments and the Loans outstanding from time to time as if it
was a Lender; provided that, in the case of subsection 2.15, such
Participant shall have complied with the requirements of said
subsection and provided further that no Participant shall be
entitled to receive any greater amount pursuant to any such
subsection than the transferor Lender would have been entitled to
receive in respect of the amount of the participation transferred
by such transferor Lender to such Participant had no such transfer
occurred.
(c) Any Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable law,
at any time and from time to time assign to any Lender or any
affiliate thereof or, with the consent of the Borrower and the
Agent (which in each case shall not be unreasonably withheld), to
an additional bank or financial institutions (an ``Assignee'') all
or any part of its rights and obligations under this Agreement and
the Notes in an aggregate principal amount not less than
$10,000,000 pursuant to an Assignment and Acceptance, substantially
in the form of Exhibit C, executed by such Assignee, such assigning
Lender (and, in the case of an Assignee that is not then a Lender
or an affiliate thereof, by the Borrower and the Agent) and
delivered to the Agent for its acceptance and recording in the
Register. Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a
party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment as set forth therein, and (y) the assigning
Lender thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto).
(d) The Agent shall maintain at its address referred to
in subsection 9.2 a copy of each Assignment and Acceptance
delivered to it and a register (the ``Register'') for the
recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Agent and the Lenders may treat each Person whose name is recorded
in the Register as the owner of the Loan recorded therein for all
purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and, in the case
of an Assignee that is not then a Lender or an affiliate thereof,
by the Agent) together with payment to the Agent of a registration
and processing fee of $2,000, the Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and
recordation to the Lenders and the Borrower. On or prior to such
effective date, the Borrower, at its own expense, shall execute and
deliver to the Agent (in exchange for the Revolving Credit Note of
the assigning Lender) a new Revolving Credit Note to the order of
such Assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Commitment hereunder, a new Revolving Credit
Note, to the order of the assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Notes shall be
dated the Effective Date or the Termination Date, as the case may
be, and shall otherwise be in the form of the Note replaced
thereby.
(f) The Borrower authorizes each Lender to disclose to
any Participant or Assignee (each, a ``Transferee'') and any
prospective Transferee any and all financial information in such
Lender's possession concerning the Borrower and its Affiliates
which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to
such Lender by or on behalf of the Borrower in connection with such
Lender's credit evaluation of the Borrower and its Affiliates prior
to becoming a party to this Agreement.
(g) Nothing herein shall prohibit any Lender from
pledging or assigning any Note to any Federal Reserve Bank in
accordance with applicable law.
9.7 Adjustments; Set-off. (a) If any Lender (a
``Benefitted Lender'') shall at any time receive any payment of all
or part of its Loans, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the
nature referred to in Section 7(f), or otherwise), in a greater
proportion than any such payment to or collateral received by any
other Lender, if any, in respect of such other Lender's Loans or
the Reimbursement Obligation owing to it, or interest thereon, such
benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's
Loan or the Reimbursement Obligation owing to it, or shall provide
such other Lenders with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such benefitted
Lender to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Lenders; provided, however,
that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior
notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder or under
the Notes (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount
any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each
Lender agrees promptly to notify the Borrower and the Agent after
any such set-off and application made by such Lender, provided that
the failure to give such notice shall not affect the validity of
such set-off and application.
9.8 Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts
taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Borrower and the Agent.
9.9 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
9.10 Integration. This Agreement and the other Loan
Documents represent the agreement of the Borrower, the Agent and
the Lenders with respect to the subject matter hereof, and there
are no promises, undertakings, representations or warranties by the
Agent or any Lender relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Loan
Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND
THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Acknowledgements. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the
other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents,
and the relationship between Agent and Lenders, on one hand, and
the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
9.13 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
9.14 Parties Including Trustees; Court Proceedings.
This Agreement and the other Loan Documents shall be binding upon,
and inure to the benefit of, the successors of Agent and each
Lender, and the assigns, transferees and endorsees of the Agent and
each Lender. The security interests and Liens created in this
Agreement and the other Loan Documents shall be and remain valid
and perfected, and the claims of the Agent and Lenders hereunder
valid and enforceable in accordance with the terms hereof,
notwithstanding the discharge of the Borrower pursuant to 11 U.S.C.
article 1141, the conversion of the Chapter 11 Case or any other
bankruptcy case of the Borrower to a case under Chapter 7 of the
Bankruptcy Code, the dismissal of the Chapter 11 Case or any
subsequent Chapter 7 case or the release of any Collateral from the
property of the Borrower. Further, the security interests and
Liens created in this Agreement and the other Loan Documents shall
be and remain valid and perfected without the necessity that the
Agent file financing statements or otherwise perfect the Lenders'
security interests or Liens under applicable law. This Agreement,
the claims of the Agent and Lenders hereunder, and all security
interests or Liens created hereby or pursuant hereto or by or
pursuant to any other Loan Document shall at all times be binding
upon the Borrower, the estate of the Borrower and any trustee
appointed in the Chapter 11 Case or any Chapter 7 case, or any
other successor in interest to the Borrower. This Agreement shall
not be subject to Section 365 of the Bankruptcy Code.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
SMITH CORONA CORPORATION,
as Debtor and Debtor-In-Possession
By:
Title:
CHEMICAL BANK,
as Agent and as a Lender
By:
Title:
BANK OF AMERICA ILLINOIS
By:
Title:
Address:
<PAGE>
SCHEDULE 1.1
COMMITMENTS
Commitment
Bank Commitment Percentage
CHEMICAL BANK $15,000,000 62.50%
BANK OF AMERICA ILLINOIS $ 9,000,000 37.50%
___________ __________
$24,000,000 100%
<PAGE>
SCHEDULE 2.12
EXISTING LETTERS OF CREDIT
Number Amount Expiration
6010523 $357,549.50 8/24/95
6076318 $190,950.00 10/16/95
6088712 $411,000.00 7/31/95
6977429 $29,840.00 7/15/95<PAGE>
SCHEDULE 3.9
CERTAIN INTELLECTUAL PROPERTY MATTERS
<TABLE>
<CAPTION>
SMITH CORONA - U.S. PATENTS
T-NO. TITLE INVENTOR PAT. NO. ISSUE DATE EXPIRE
<S> <C> <C> <C> <C> <C>
T-206 DUAL SEGMENT CONT. PORTERFIELD 4131374 12/26/78 12/26/95
MOTION RIBBON FEED
MECHANISM
T-208 RIBBON FEED MECH. PORTERFIELD 4140407 02/20/79 02/20/96
RESPONSIVE TO CASE SHATTUCK
SHIFT MECHANISM
T-213 TYPEWRITER SPIRAL HOCK 4149809 04/17/79 04/17/96
DISC PRINTER
T-191 LOW SILHOUETTE DANNATT 4188137 02/12/80 02/12/97
KEYBOARD
T-216 TYPEWRITER KEY MUELLER 4191483 03/04/80 03/04/97
ACTION
T-218 PLATEN VARIABLE DEWEY 4235556 11/25/80 11/25/97
NELSON
T-214 MULTI BAR ENCODING JALBERT 4258356 03/24/81 03/24/98
APPARATUS UTILIZING
ACOUSTIC ENERGY
T-217 KEY MECHANISM LONGROD 4269521 05/26/81 05/26/98
HAVING SNAP ACTION
T-226 ACOUSTIC RIMBEY 4311991 01/19/82 01/19/99
TRANSMISSION
T-233 RELEASABLE RIBBON CAPPOTTO 4337001 06/29/82 06/29/99
LOCKING DEVICE IN A
RIBBON CARTRIDGE
T-223 ELECTRIC MOTOR HOYER 4340830 07/20/82 07/20/99
-ELLEFSEN
T-246 HALFSPACE CONTROL SMITH 4408918 10/11/83 10/11/00
SYSTEM FOR ELECTRONIC
TYPEWRITER WITH
CORRECTION REGISTER
T-280 AUTOMATIC WORD BLANCHARD 4561793 12/31/85 12/31/02
CORRECTING SYSTEM
T-290 ONE-TOUCH CHARACTER GRAY 4585362 04/29/86 04/29/03
CORRECTION AND RE-
PLACEMENT SYSTEM
T-300 SPELLING ERROR ADAMS 4655620 04/07/87 04/07/04
FINDING FEATURE GRAY
INCLUDING AN
ELECTRONIC SPELLING
DICTIONARY
T-304 RIGHT MARGIN ZONE CURLEY 4678351 07/07/87 07/07/04
HYPHENATION
T-310 PRINT HAMMER VOUGHT 4743128 05/10/88 05/10/05
SOLENOID MUELLER
CONDITIONED SINGLE
SOLENOID RIBBON AND
TAPE FEED SYSTEM
T-305 SOLENOID DEVICE PAWLAK 4745386 05/17/88 05/17/05
T-307 PRINTING ELEMENT MUELLER 4746235 05/24/88 05/24/05
HOMING DEVICE PAWLAK
T-308 TYPEWRITER LID MUELLER 4768891 09/06/88 09/06/05
ACTUATED PRINTING
ELEMENT HOMING
AND CARRIER
REPOSITIONING DEVICE
T-291 COMPACT SPELLING GRAY 4782464 11/01/88 11/01/05
-CHECK ADAMS
DICTIONARY DUNCAN
T-292 SPELLING CHECK GRAY 4783761 11/08/88 11/08/05
DICTIONARY WITH ADAMS
EARLY ERROR SIGNAL DUNCAN
T-299 WORD PROCESSOR DUNCAN 4797855 01/10/89 01/10/06
HAVING SPELLING GRAY
CORRECTOR BATTISTA
ADAPTIVE TO OPERATOR
ERROR EXPERIENCE
T-301 DICTIONARY MEMORY DUNCAN 4807181 02/21/89 02/21/06
WITH VISUAL ADAMS
SCANNING FROM A GRAY
SELECTABLE STARTING
POINT
T-314 ELECTRONIC KEYBOARD CURLEY 4818828 04/04/89 04/04/06
LONGROD
T-316 DICTIONARY MCRAE 4847766 07/11/89 07/11/06
TYPEWRITER WITH ROBERTS
CORRECTION OF
COMMONLY CONFUSED
WORDS
T-328 KEYBUTTON GUIDE CURLEY 4855548 08/08/89 08/08/06
ASSY FOR A KEYBOARD LONGROD
T-324 TAPE CASSETTE FOR MUELLER 4886383 12/12/89 12/12/06
METERING CORRECTION
TAPE FEED
T-327 RIBBON TENSIONING CAPPOTTO 4886385 12/12/89 12/12/06
MECH.
T-326 PUNCTUATION CHECK MCRAE 4887920 12/19/89 12/19/06
FEATURE FOR AN ROBERTS
ELECTRONIC
TYPEWRITER
T-317 MEMORY TYPEWRITER MCRAE 4888730 12/19/89 12/19/06
WITH COUNT OF ROBERTS
OVERUSED WORDS
T-322 INK RIBBON AND MUELLER 4900171 02/13/90 02/13/07
CORRECTION TAPE CAPPOTTO
CASSETTE CAPABILITY
T-311 AUTO-REALIGNED PRINT DUNCAN 4907900 03/13/90 03/13/07
CORRECTION
T-325 THESAURUS FEATURE BLANCHARD 4923314 05/08/90 05/08/07
FOR ELECTRONIC ROBERTS
TYPEWRITERS
T-329C PLURAL CASSETTES MUELLER 4971462 11/20/90 11/20/07
HAVING COMPATIBILITY CAPPOTTO
ARRANGEMENT
T-331 PRINT CARRIER RACK LONGROD 4976556 12/11/90 12/11/07
DRIVE
T-343 PLAIN PAPER CARTRIDGE CURLEY 5057930 10/15/91 10/15/08
FOR FACSIMILE MACHINE
T-330 ELECTRONIC DUNCAN 5060154 10/22/91 10/22/08
TYPEWRITER OR WORD
PROCESSOR WITH
DETECTION AND/OR
CORRECTION OF
SELECTED PHRASES
T-344 THERMAL PAPER CURLEY 5060076 10/21/91 10/21/08
CARTRIDGE FOR
FACSIMILE MACHINE
T-347 RIBBON CASSETTE WITH MARTINEZ 5074689 12/24/91 12/24/08
CIP INTEGRAL PAPER GUIDE
T-342 FACSIMILE CARTRIDGE CURLEY 5089897 02/18/92 02/12/09
SYSTEM
T-347 RIBBON CASSETTE WITH MARTINEZ 5098208 03/24/92 03/24/09
CONT INTEGRAL PAPER GUIDE
T-349 THERMAL PRINT HEAD MARTINEZ 5106213 04/21/92 04/21/09
CONTROL MECHANISM CURLEY
T-352 BRAKE MECHANISM SHERMAN 5109573 05/05/92 05/05/09
FOR A PIVOTABLE
CHARACTER DISPLAY
T-362 INTEGRAL LOCKING BARON 5158382 10/27/92 10/27/09
DEVICE FOR A ANDERSON, JR.
TYPEWRITER
T-346 HINGE FOR USE WITH SHERMAN 5165145 11/24/92 11/24/09
PORTABLE ELECTRONIC
APP.
T-361 PRINTING DEVICE MARTINEZ 5174666 12/29/92 12/29/09
HAVING PRINTWHEEL MUELLER
COUPLING MEANS
T-363 PRINTING MECHANISM PAWLAK 5174671 12/29/92 12/29/92
WITH PRINT HAMMER RIMBEY
HAVING NOISE ANDERSON, JR.
DAMPENER
T-358 QUIET IMPACT RIMBEY 5183344 02/02/93 02/02/10
PRINTER MECH. PAWLAK
RODEE
T-358 QUIET IMPACT. RIMBEY 5199804 04/06/93 04/06/10
CIP PRINTER MECH PAWLAK
T-329C4CASSETTE HAVING CAPPOTTO 5267803 12/07/93 12/07/10
COMPATIBILITY
ARRANGEMENT
T-368 MINIATURE KEYBOARD SMILEY 5383735 01/24/95 01/24/12
DIV
</TABLE>
<PAGE>
SMITH CORONA - U.S. DESIGN PATENTS
ISSUE
T-NO. TITLE INVENTOR PAT. NO. DATE EXPIRE
TD-225 CARRYING CASE FOR A LABARBERA D259,975 07/28/81 07/28/95
TYPEWRITERS
TD-224 TYPEWRITER LABARBERA D262,036 11/24/81 11/24/95
TD-227 RIBBON CARTRIDGE CHRISTIE D265,566 07/27/82 07/27/96
CAPPOTTO
TD-238 RIBBON CARTRIDGE CHRISTIE D265,567 07/27/82 07/27/96
CAPPOTTO
TD-241 TYPEWRITER JOLLIFFE D266,674 10/26/82 10/26/96
TD-236 PRINT ELEMENT CLAXTON D266,742 11/02/82 11/02/96
CONTAINER
TD-240 CONTROL KNOB FOR JOLLIFFE D267,254 12/14/82 12/14/96
OFFICE MACHINES
TD-248 RIBBON CARTRIDGE PAONE D267,542 01/11/83 01/11/97
SHIPPING TRAY
TD-262 CONTROL KNOB FOR AN JOLLIFFE D268,846 05/03/83 05/03/97
OFFICE MACHINE
TD-260 PRINTER LABARBERA D269,346 06/14/83 06/14/97
TD-259 CASE FOR A LABARBERA D269,647 07/12/83 07/12/97
TYPEWRITER
TD-258 TYPEWRITER CLAXTON D270,070 08/09/83 08/09/97
JOLLIFFE
TD-255 TYPEWRITER METZNER D270,545 09/13/83 09/13/97
TD-273 TYPEWRITER JOLLIFFE D271,024 10/18/83 10/18/97
TD-275 TYPEWRITER JOLLIFFE D277,968 03/12/85 03/12/99
TD-278 TYPEWRITER CORNELIUS D281,253 11/05/85 11/05/99
TD-281 TYPEWRITER JOLLIFFE D281,509 11/26/85 11/26/99
TD-293 RIBBON CASSETTE CAPPOTTO D289,529 04/28/87 04/28/01
BARTOLONE
TD-297 TYPEWRITER BENSON D289,902 05/19/87 05/19/01
TD-294 TYPEWRITER LID GREENE D290,468 06/23/87 06/23/01
MCCALL
TD-303 TYPEWRITER KASPRZYCKI D301,041 05/09/89 05/09/03
TD-323 RIBBON CASSETTE MUELLER D308,070 05/22/90 05/22/04
VOUGHT
TD-319 TYPEWRITER KASPRZYCKI D308,535 06/12/90 06/12/04
TD-335 PORTABLE WORD LAMPE D309,859 08/14/90 08/14/04
PROCESSOR
TD-332 HAND HELD ELECTRONIC KASPRZYCKI D310,209 08/28/90 08/28/04
DICTIONARY
TD-323 RIBBON CASSETTE MUELLER D310,384 09/04/90 09/04/04
CIP VOUGHT
TD-312 TYPEWRITER KASPRZYCKI D311,926 11/06/90 11/06/04
TD-336 PRINTER LAMPE D315,172 03/05/91 03/05/05
TD-333 TYPEWRITER PIERCE D316,558 04/30/91 04/30/05
TD-313 TYPEWRITER KASPRZYCKI D317,321 06/04/91 06/04/05
TD-334 TYPEWRITER PIERCE D317,934 07/02/91 07/02/05
TD-339 POCKET ELECTRONIC PIERCE D319,223 08/20/91 08/20/05
DICTIONARY KASPRZYCKI
TD-338 WORD PROCESSOR LAMPE D319,636 09/03/91 09/03/05
TD-348 RIBBON CASSETTE LAMPE D319,652 09/03/91 09/03/05
TD-337 TYPEWRITER KASPRZYCKI D322,087 12/03/91 12/03/05
TD-340 TYPEWRITER PIERCE D332,960 02/02/93 02/02/07
TD-353 WORD PROCESSOR LAMPE D333,830 03/09/93 03/09/07
TD-355 WORD PROCESSOR SMILEY D333,816 03/09/93 03/09/07
TD-354 PORTABLE WORD SMILEY D335,123 04/27/93 04/27/07
PROCESSOR<PAGE>
SMITH CORONA, FOREIGN PATENTS
T-NO. TITLE COUNTRY PAT. NO. ISSUE
DATE
T-223 ELECTRIC MOTOR ASSEMBLY CANADA 1156704 11/08/83
T-242 RIBBON CARTRIDGE HANDLING CANADA 1156593 11/08/83
APPARATUS
T-244 SPACEBAR TOUCH CONTROL CANADA 1150657 07/26/83
APPARATUS
T-253 REVERSE TABULATION CANADA 1193993 09/24/85
T-276 CABLE DRIVE SYSTEM CANADA 1214423 11/25/86
T-276 CABLE DRIVE SYSTEM JAPAN 2-39,989 09/07/90
T-280 AUTOMATIC WORD CANADA 1219680 03/24/87
CORRECTING SYSTEM
T-280 AUTOMATIC WORD GREAT 2156559 01/22/87
CORRECTING SYSTEM BRITAIN
T-280 AUTOMATIC WORD ITALY 1184976 10/28/87
CORRECTING SYSTEM
T-280 AUTOMATIC WORD GERMANY P35 08 472.3 10/06/88
CORRECTING SYSTEM
T-280 AUTOMATIC WORD JAPAN 1696036 09/28/92
CORRECTING SYSTEM
T-314 ELECTRONIC KEYBOARD CANADA 1294020 07/01/92
T-322 CASSETTE COMPATIBILITY TAIWAN UM 71575 06/02/92
T-322 CASSETTE COMPATIBILITY MEXICO 171119 10/01/93
T-322 CASSETTE COMPATIBILITY TAIWAN NI-42715 03/05/91
T-322 CASSETTE COMPATIBILITY CANADA 1309371 10/27/92
T-322 CASSETTE COMPATIBILITY KOREA 66238 10/08/93
T-324 TAPE CASSETTE FOR TAIWAN NI-37536 06/26/90
METERING CORRECTION
TAPE FEED
T-324 TAPE CASSETTE FOR CANADA 1316138 04/13/93
METERING CORRECTION
TAPE FEED
T-324 TAPE CASSETTE FOR EUROPEAN 0330777 07/17/91
METERING CORRECTION
TAPE FEED
T-324 TAPE CASSETTE FOR KOREA 43988 08/30/91
METERING CORRECTION
TAPE FEED
T-324 TAPE CASSETTE FOR MEXICO 164035 07/10/92
METERING CORRECTION
TAPE FEED
T-324 TAPE CASSETTE FOR SINGAPORE 1136/92 11/12/92
METERING CORRECTION
TAPE FEED
T-327 RIBBON TENSIONING MECH. KOREA 51177 05/01/92
T-328 KEYBUTTON GUIDE ASSY CANADA 1327222 02/22/94
FOR A KEYBOARD
T-328 KEYBUTTON GUIDE ASSY KOREA 47427 02/04/92
FOR A KEYBOARD
T-329 PLURAL CASSETTES HAVING EUROPEAN 0319285 03/03/93
COMPATIBILITY ARRANGEMENT
(RIBBON CASSETTE)
T-329 PLURAL CASSETTES HAVING SINGAPORE 627/93 06/16/93
COMPATIBILITY ARRANGEMENT
(RIBBON CASSETTE)
T-329 PLURAL CASSETTES HAVING GERMANY DE3878853T2 03/03/93
COMPATIBILITY ARRANGEMENT
(RIBBON CASSETTE)
T-329 PLURAL CASSETTES HAVING ITALY 67608 BE-93 03/08/93
COMPATIBILITY ARRANGEMENT
(RIBBON CASSETTE)
T-331 CARRIER RACK DRIVE AUSTRALIA 617914 03/31/92
T-331 CARRIER RACK DRIVE EUROPEAN 0378290 04/13/94
T-347 RIBBON CASSETTE WITH TAIWAN NI-41,704 01/12/91
INTEGRAL PAPER GUIDE
T-347 RIBBON CASSETTE WITH MEXICO 173158 02/02/94
INTEGRAL PAPER GUIDE
T-359 SYSTEM INCLUDING INK GREAT 0449392 05/18/94
RIBBON AND CORRECTION BRITAIN
TAPE CASSETTES HAVING A
COMPATIBILTY ARRANGEMENT
T-360 CORRECTION TAPE CASSETTE GREAT 448184 07/06/94
HAVING COMPATIBILITY BRITAIN
ARRANGEMENT
T-360 CORRECTION TAPE CASSETTE ITALY 70350 BE-94 10/04/94
HAVING COMPATIBILITY
ARRANGEMENT<PAGE>
SMITH CORONA, FOREIGN PATENT - DESIGN
T-NO. TITLE COUNTRY PAT. NO. ISSUE DATE
TD-323 RIBBON CASSETTE CANADA 62181 12/20/88
TD-323 RIBBON CASSETTE FRANCE 88 3447 09/08/89
TD-323 RIBBON CASSETTE GREAT 1051115 01/04/89
BRITAIN
TD-323 RIBBON CASSETTE GERMANY MR 29 654 06/30/88
TD-323 RIBBON CASSETTE ITALY 53758 04/02/90
TD-323 RIBBON CASSETTE JAPAN 82 7791 10/25/91
TD-323 RIBBON CASSETTE KOREA 96880 10/12/89
TD-323 RIBBON CASSETTE MEXICO 3 955 11/14/90
TD-323 RIBBON CASSETTE SWITZERLAND 116899 09/26/88
TD-323CIP RIBBON CASSETTE FRANCE 88 7313 11/17/89
TD-323CIP RIBBON CASSETTE GERMANY M 88 03 078.4 11/09/88
TD-323CIP RIBBON CASSETTE ITALY 57 054 02/07/92
TD-323CIP RIBBON CASSETTE KOREA 102578 04/17/90
TD-323CIP RIBBON CASSETTE KOREA 102,578-1 04/17/90
TD-323CIP RIBBON CASSETTE SWITZERLAND 117158 11/25/88
TD-348 RIBBON CASSETTE CANADA 67988 02/12/91
TD-348 RIBBON CASSETTE FRANCE 02 96095 05/30/91
TD-348 RIBBON CASSETTE GREAT 2011375 01/30/92
BRITAIN
TD-348 RIBBON CASSETTE ITALY 59 774 09/13/93
TD-348 RIBBON CASSETTE JAPAN 87 0306 03/25/93
TD-348 RIBBON CASSETTE KOREA 121394 11/04/91
TD-348 RIBBON CASSETTE MEXICO 5405 09/08/92
TD-348 RIBBON CASSETTE PORTUGAL 23041 03/23/93
TD-348 RIBBON CASSETTE SPAIN 124004 10/29/91
TD-348 RIBBON CASSETTE SWEDEN 50 488 09/18/91
TD-348 RIBBON CASSETTE TAIWAN ND 25247 12/06/90
TD-348 RIBBON CASSETTE DENMARK 0254/92 03/19/92
<PAGE>
SMITH CORONA, U.S. APPLICATIONS
T-NO. TITLE S.N. FILING DATE
MECH.
- --------
T-366 INTEGRAL LINEFINDER 08/144,387 11/02/93
AND RIBBON GUIDE
T-368 MINIATURE KEYBOARD 08/095,470 07/23/93
T-372 LABEL PRINTER AND TAPE 08/174,936 12/28/93
AND INK CARTRDIGE FOR
USE THEREIN
DES.
- ------
TD-373 LABEL PRINTER 29/018,252 02/02/94
TD-374 RIBBON AND TAPE CART. 29/018,262 02/02/94
<PAGE>
SMITH CORONA, FOREIGN APPLICATIONS
T-NO. TITLE COUNTRY S.N. FILING DATE
T-314 ELECTRONIC KEYBOARD JAPAN 63-325,750 12/23/88
T-314 ELECTRONIC KEYBOARD KOREA 17,062/1988 12/20/88
T-322 CASSETTE COMPATIBILITY TAIWAN 80 212,802 07/28/88
T-324 TAPE CASSETTE FOR METERING JAPAN 63-221,514 09/06/88
CORRECTION TAPE FEED
T-327 RIBBON TENSIONING MECH. JAPAN 1-116,249 05/11/89
T-328 KEYBUTTON GUIDE ASSEMBLY JAPAN 1-46,358 02/27/89
FOR A KEYBOARD
T-331 CARRIER RACK DRIVE CANADA 2004580 12/05/89
T-331 CARRIER RACK DRIVE JAPAN 1-338862 12/28/89
T-331 CARRIER RACK DRIVE KOREA 2371990 01/08/90
T-331 CARRIER RACK DRIVE MEXICO 19029 01/05/90
T-331 CARRIER RACK DRIVE NORWAY P900067 01/08/90
T-331 CARRIER RACK DRIVE PORTUGAL 92,810L 01/09/90
T-347 RIBBON CASSETTE WITH CANADA 2031152 11/29/90
INTEGRAL PAPER GUIDE
T-347 RIBBON CASSETTE WITH JAPAN 2-414792 12/27/90
INTEGRAL PAPER GUIDE
T-347 RIBBON CASSETTE WITH KOREA 20522/1990 12/13/90
INTEGRAL PAPER GUIDE
T-347 RIBBON CASSETTE WITH NORWAY P905335 01/07/91
INTEGRAL PAPER GUIDE
T-347 RIBBON CASSETTE WITH PORTUGAL 96466 01/11/91
INTEGRAL PAPER GUIDE
T-352 BRAKE MECHANISM FOR A CANADA 2037323 02/28/91
PIVOTABLE CHARACTER DISPLAY
T-352 BRAKE MECHANISM FOR A JAPAN 3-94696 04/01/91
PIVOTABLE CHARACTER DISPLAY
T-358CIP QUIET IMPACT PRINTER MECH. CANADA 2076992 08/27/92
T-358CIP QUIET IMPACT PRINTER MECH. JAPAN 4-265,306 09/08/92
T-358CIP QUIET IMPACT PRINTER MECH. MEXICO 92-6123 10/23/92
T-363 PRINTING MECH. WITH PRINT CANADA 2076900 08/27/92
HAMMER HAVING NOISE
DAMPENER
T-363 PRINTING MECH. WITH PRINT JAPAN 4-266,489 09/09/92
HAMMER HAVING NOISE
DAMPENER
T-363 PRINTING MECH. WITH PRINT MEXICO 92-6188 10/27/92
HAMMER HAVING NOISE
DAMPENER
T-372 LABEL PRINTER AND TAPE AND CANADA N.A. 11/17/94
INK CARTRIDGE FOR USE
THEREIN
T-372 LABEL PRINTER AND TAPE AND EUROPEAN 94308594.4 11/22/94
INK CARTRIDGE FOR USE
THEREIN
<PAGE>
SCHEDULE 2
----------
TRADEMARKS AND TRADEMARK LICENSES
Trade Name
- ----------
Smith Corona Corporation
Trademark License
- -----------------
SCM Office Supplies, Inc. and Ampad Corporation
July 5, 1994
TRADEMARKS
----------
A. U.S. TRADEMARKS
<TABLE>
<CAPTION>
TRADEMARK GOODS REGNO EXPIRES C_UDATE
- --------- ----- ----- ------- -------
<S> <C> <C> <C> <C>
2J SUPPLIES & ACCESSORIES FOR
PRINTERS ABANDONED
AUTOSPELL TYPEWRITERS 1469029 2007/12/15 2007/06/
CHARACTERSWAP TYPEWRITERS/PWPS 1783432 2003/07/20 1998/07/
CITATION TYPEWRITERS 727463 2002/02/13 2001/07/
CORONA TYPEWRITERS 1807465 2003/11/30 1998/11/
CORONACALC COMPUTER PROGRAMS 1624551 2000/11/27 1995/11/
CORONACOM WP PRINTED CIRCUIT BOARD 1792130 2003/09/07 1998/09/
CORONAFAX FAX MACHINES, CARRYING CASES,
KITS, PAPER FOR FAX MACHINES APPLN
CORONAFONT COMPUTER SOFTWARE FOR PRINTIN
FONTS 1667484 2001/12/10 1996/12/
CORONAJET PRINTERS 1769203 2003/05/04 1998/05/
CORONAPRINT CORRECTION TAPES, ET AL.
FOR WPS AND TYPEWRITERS 1820586 2004/02/08 1999/02/
DESIGN
(STEAMROLLER) FACSIMILE MACHINES
DESIGN
(KEYBUTTON) WORD PROCESSORS & TYPEWRITERS 1625761 2000/12/04 1995/12/
DEVILLE TYPEWRITERS 932178 2002/01/14 2001/07/
ERASE-A-WORD TYPEWRITERS 1442567SR 2007/06/09 1992/06/
EXPRESSION TYPEWRITERS APPLN
FLAT PAPER
OUTPUT FACSIMILE MACHINES APPLN
FLAT PAPER
OUTPUT(design) FACSIMILE MACHINES APPLN
GALAXIE TYPEWRITERS 707783 2000/11/29 2000/05/
GRAMMAR-RIGHT
SYSTEM I TYPEWRITERS 1503854 2008/09/13 1993/09/
H KITS - WP & TYPEWRITER 1748229 2003/01/26 1997/07/
HRT PRINTERS 1810619 2003/12/14 1998/12/
IQ
INTELLIGENTLY
QUIET TYPEWRITERS/WPS 1778243 2003/06/22 1998/06/
JUNIOR
SCHOLASTIC
ALL-AMERICAN PROMOTION OF EDUCATION
& GOLF THRU AWARDS APPLN
LIFT-RITE TW RIBBONS,CARTRIDGES 1214793 2002/11/02 2001/06/
LINEERASER AUTOMATIC ERASING MEANS
SOLD AS PART OF TYPEWRITER 1558632SR 1999/08/07 1994/08/
OFFICE 2000 TYPEWRITERS APPLN
OFFICE XL TYPEWRITERS APPLN
PERSONAL CARD
FILE COMPUTER PROGRAM FOR
WORD PROCESSING 1664806 2001/11/19 1996/11/
PHRASE ALERT TYPEWRITER COMPONENT
SIGNALLING OPERATOR OF
MISUSED PHRASES 1624761 2000/11/27 1995/11/
PUNCTUATION
CHECK TYPEWRITERS 1578403SR 2000/01/16 1995/01/
PWP WORD PROCESSORS 1670136 2001/12/31 1996/12/
PWP START-RITE SUPPLIES FOR PWP 1479472 2008/03/08 2007/10/
PWP START-RITE KITS WP PRINT WHEELS, DATA
DISKS & CASSETTES 1800511 2003/10/26 1998/04/
RE-RITE TW RIBBON CARTRIDGES 1079860 1997/12/20 1997/06/
RIGHT RIBBON
SYSTEM WORD PROCESSORS, TYPEWRITERS
AND ACC & SUPPLIES 1583619 2000/02/20 1995/02/
S SALE OF KITS SUPPLIES
FOR WORD PROCESSORS 1715330 2002/09/15 1997/09/
SCM TYPEWRITERS AND TYPEWRITER
RIBBON CASSETTES 1873814 2005/01/17 2000/01/
SCM (tri-bar) TYPEWRITERS 738222 2002/09/25 2002/03/
SCM (tri-bar) RIBBON CARTRIDGES 1208293 2002/09/14 2002/03/
SCM (tri-bar) ELECTROSTATIC COPY PAPERS 774333 2004/08/04 2004/02/
SCM (tri-bar) TYPEWRITERS AND TYPEWRITER
RIBBON CASSETTES 1871294 2005/01/03 2000/01/
SCM OFFICE SUPPLIES APPLN
SCM (tri-bar) OFFICE SUPPLIES APPLN
SIMPLY SMART COMPUTERS 1709808 2002/08/25 1997/08/
SMITH CORONA WORD PROCESSORS 1620948 2000/11/06 1995/11/
SMITH CORONA PRINTERS 1631434 2001/01/15 1996/01/
SMITH CORONA
(LOGO) WORD PROCESSORS 1633823 2001/02/05 1996/02/
SMITH CORONA
(LOGO) TYPEWRITERS 1396799 2006/06/10 2005/12/
SMITH CORONA
(LOGO) PRINTERS 1633042 2001/01/29 1996/01/
SMITH CORONA
(LOGO) DESKS, WORK STATIONS,FURNITURE,
ACCESSORIES,LAMPS,CABINETS APPLN
SMITH CORONA
(LOGO) MACHINES FOR LAMINATING
DOCUMENTS 1870333 2004/12/27 1999/12/
SMITH CORONA
(LOGO) FAX MACHINES, ETC, PAPER
& SUPPLIES FOR FAX APPLN
SMITH CORONA
(LOGO) CALCULATORS APPLN
SMITH CORONA COMBO ELECTRONIC DICT
AND CALCULATOR 1620947 2000/11/06 ABANDON
SMITH CORONA WORD PROCESSORS 1620948 2000/11/06 1995/11/
SMITH CORONA
(LOGO) COMBO ELECTRONIC
DICT AND CALCULATOR 1623390 2000/11/20 ABANDON
SMITH-CORONA TYPEWRITERS,ADD MACHINES 517362 2009/11/08 2009/05/
SMITH CORONA SUPPLIES/ACCESSORIES
(horizontal FOR TYPEWRITERS, WORD
form) PROCESSORS APPLN
SPELL-RIGHT I TYPEWRITERS 1529647 1999/03/14 1994/03/
SPELL-RIGHT I DICTIONARY MODULE FOR
ELECTRONIC TYPEWRITERS 1531902 1999/03/28 1998/09/
SPELL-RIGHT I ELEC. DICTIONARY AND
CALCULATOR 1581219 2000/02/06 1995/02/
START-RITE RIBBONS, PRINTWHEELS 1414200 2006/10/21 2006/04/
STERLING TYPEWRITERS 780263 2004/11/17 2004/05/
THE INTELLIGENT
ALTERNATIVE
TO PC WORD PROCESSORS 1638925 2001/03/26 ABANDON
TOMORROWS
TECHNOLOGY
AT YOUR TOUCH WORD PROCESSORS 1583498 2000/02/20 1995/02/
TOOLS FOR
THOUGHT WPS, TYPEWRITERS, PCS 1787277 2003/08/20 1998/08/
WORKROOM OFFICE, WORK STATIONS, DESK
& COMPUTER ACCESSORIES APPLN
WORD-RIGHT WORD PROCESSOR, TYPEWRITER
COMPONENTS 1776316 2003/06/15 1998/06/
WORD-RIGHT &
DESIGN TYPEWRITERS 1410436 2006/09/23 2006/03/
WORDERASER TYPEWRITERS 1361225SR 2005/09/17 2005/03/
WORDERASER TYPEWRITER COMPONENT
FOR ERASING SPELLING ERRORS 1683757 2002/04/21 1997/04/
WORDFIND TYPEWRITERS 1428368 2007/02/10 2006/08/
WORDSWAP TYPEWRITERS/PWPS 1779404 2003/06/29 1998/06/
B. FOREIGN TRADEMARKS
Trademark INDEX# Country Goods Regno C_ud
- ----------------------------------- ------- ----- ----
SCM (tri-bar) SCM106 ARGENTINA CALCULATORS, ADDING
MACHINES 1054227 2003
SMITH-CORONA SCM111 ARGENTINA TYPEWRITERS 1053107 2003
CORONACALC SCM193 AUSTRALIA ALL GOODS IN CLASS 9 A525768 1996
CORONAMATIC SCM92 AUSTRALIA TYPEWRITERS, RIBBON
CARTRIDGES 302674 1997
RIGHT RIBBON
SYSTEM SCM133 AUSTRALIA TYPEWRITERS & PARTS APPLN
RIGHT RIBBON
SYSTEM SCM133 AUSTRALIA TYPEWRITERS, PARTS
& ACCES. APPLN
SCM (tri-bar) SCM106 AUSTRALIA TYPEWRITERS & PARTS B172444 1998
SCM (tri-bar) SCM106 AUSTRALIA TYPEWRITER REPAIR,
SERVICE, MAINTENANCE B332952 1999
SMITH CORONA SCM236 AUSTRALIA WORD PROCESSORS A521844 1996
SMITH CORONA
logo SCM229 AUSTRALIA TYPEWRITERS A560884 1998
SMITH CORONA
logo SCM229 AUSTRALIA WORD PROCESSORS &
COMPUTER HDW A560885 1998
SMITH CORONA
logo SCM395 AUSTRALIA CALCULATORS & OTHER
GOODS IN CLASS APPLN
SMITH CORONA
logo SCM416 AUSTRALIA MACHINES FOR LAMINA-
TING DOCUMENTS A606182 2000
SMITH-CORONA SCM111 AUSTRALIA TYPEWRITERS & PARTS A105164 2006
START-RITE SCM117A AUSTRALIA ALL GOODS IN CLASS 16 561034 1998
START-RITE SCM117B AUSTRALIA ALL GOODS IN CLASS 9 B55588 1997
START-RITE SCM117C AUSTRALIA SUPPLIES FOR
TYPEWRITERS & W/P APPLN
IQ INTELLIGENTLY
QUIET SCM360 AUSTRIA TWS, WP SYSTEMS, ETC 147077 2002
SMITH CORONA
logo SCM229 AUSTRIA WORD PROCESSORS,
TYPEWRITERS 140341 2001
SMITH-CORONA SCM236 AUSTRIA TYPEWRITERS & WORD
PROCESSORS 034124 1995
WORDERASER SCM122 AUSTRIA TYPEWRITERS, WORD
PROCESSORS 130171 1999
CORONA SCM90 BENELUX TYPEWRITERS 72103 2000
CORONAMATIC SCM92 BENELUX TYPEWRITERS 335003 1995
H SCM191 BENELUX TYPEWRITER PARTS &
ACCESSORIES 538481 2003
IQ SERIES
INTELLIGENTLY
QUIET SCM360 BENELUX TYPEWRITERS 520111 2001
RIGHT RIBBON
SYSTEM SCM133 BENELUX ALL GOODS IN CLASSES
9 & 16 466898 1999
SCM (tri-bar) SCM106 BENELUX TYPEWRITERS, COPIERS,
CALCULATORS 072106 2002
SMITH CORONA SCM236 BENELUX ALL GOODS IN CLASS 9 474890 1999
SMITH CORONA
logo SCM229 BENELUX TYPEWRITERS ETC 505484 2001
SMITH-CORONA
design SCM111 BENELUX TYPEWRITERS,
CALCULATORS 072105 2000
SMITH CORONA
design SCM416 BENELUX MACHINES FOR
LAMINATING DOCUMENTS 535836 2003
SMITH CORONA
design SCM395 BENELUX CALCULATORS 535836 2003
SPELL-RIGHT SCM33A BENELUX TYPEWRITERS 464222 1998
SPELL-RIGHT SCM33B BENELUX COMPUTERS,WORD
PROCESSORS &
TYPEWRITERS 464222 1998
SPELL-RIGHT &
design SCM33C BENELUX TYPEWRITERS &
ACCESSORIES 431230 1996
WORDERASER SCM122 BENELUX TYPEWRITERS &
ACCESSORIES 430672 1996
SCM (tri-bar) SCM106 BOLIVIA TYPEWRITERS 37465 1997
SMITH-CORONA SCM111A BOLIVIA CALCULATING MACHINES 42442 1999
SMITH-CORONA SCM111B BOLIVIA TYPEWRITERS & PARTS 42443 1999
SMITH-CORONA SCM111 BRAZIL TYPEWRITERS, PARTS
SUPPLIES, WPS &
PRINTERS 2778637 2001
CHARACTER SWAP SCM376 CANADA TYPEWRITERS/WORD
PROCESSORS APPLN
CORONAFAX SCM245 CANADA FACSIMILE MACHINES&
ACCESSORIE APPLN
CORONAFONT SCM319 CANADA COMPUTER SOFTWARE FOR
PRINTING FONTS 439983 2009
CORONAMATIC SCM92 CANADA TYPEWRITERS &
CARTRIDGES 212703 2005
CORONCALC SCM193 CANADA WORD PROCESSORS 379789 2005
H SCM191 CANADA WORD PROCESSORS APPLN
IQ INTELLIGENTLY
QUIET SCM360 CANADA TYPEWRITERS & PWPS 426936 2008
PHRASE ALERT SCM151 CANADA TYPEWRITER FEATURE 373404 2005
PRESTIGE SCM175 CANADA TYPEWRITERS 276505 1997
PWP SCM196 CANADA WORD PROCESSORS 386454 2006
RIGHT RIBBON
SYSTEM SCM133A CANADA TYPEWRITERS 363178 2004
RIGHT RIBBON
SYSTEM SCM133B CANADA WPS,RIBBON, TAPE
CASSETTES FOR APPLN
TWS & WPS
RIGHT RIBBON
SYSTEM SCM133C CANADA TYPEWRITERS 363178 2004
SCM (tri-bar) SCM106 CANADA TYPEWRITERS, ADDING
MACHINES,PHOTOCOPY 149596 1996
SMITH CORONA SCM236 CANADA WPS,COMPONENTS, ELECT
REF DEVICES 423537 2008
SMITH CORONA
Logo SCM229A CANADA TYPEWRITERS 333676 2002
SMITH CORONA
Logo SCM229B CANADA TYPEWRITERS, WORD
PROCESSORS, PARTS 427137 2008
SMITH CORONA
Logo SCM395 CANADA CALCULATORS 435689 2009
SMITH CORONA
Logo SCM416 CANADA MACHINES FOR
LAMINATING DOCUMENTS APPLN
SMITH-CORONA SCM111 CANADA TYPEWRITERS, RIBBONS, TMDA
PAPER+ 54677 2002
SPELL-RIGHT I &
design SCM33 CANADA TYPEWRITERS 328817 2002
START-RITE SCM117 CANADA PRINT/CORRECTION
RIBBONS & PRINT WHEELS356852 2003
TOMORROWS TECH-
NOLOGY AT YOUR
TOUCH SCM178 CANADA WORD PROCESSORS 393105 2006
TOOLS FOR
THOUGHT SCM351 CANADA TYPEWRITERS, W/P, PCS 422527 2008
WORDERASER SCM122 CANADA TYPEWRITERS 341784 2002
WORDSWAP SCM377 CANADA TYPEWRITERS/WORD
PROCESSORS APPLN
SCM (tri-bar) SCM106 CHILE TYPEWRITERS, PAPER 411685 2003
SMITH CORONA
logo SCM229 CHILE WORD PROCESSORS,
TYPEWRITERS 378177 2001
SMITH-CORONA SCM111 CHILE TYPEWRITERS, COPYING,
PRINTING 350316 1999
SMITH CORONA
Logo SCM229 COLOMBIA TYPEWRITERS 158737 2003
SCM (tri-bar) SCM106 COLOMBIA TYPEWRITERS 94965 1998
SMITH-CORONA SCM111 COLOMBIA TYPEWRITERS 29016 2001
29016A
SCM (tri-bar) SCM106 COSTA RICA TYPEWRITERS 26614 1997
SMITH-CORONA SCM111 COSTA RICA TYPEWRITERS & PARTS 13067 2000
SMITH-CORONA SCM111 CYPRUS TYPEWRITERS & PARTS 4550 2001
H-SERIES SCM191 DENMARK TYPEWRITER PARTS &
ACCESSORIES
IQ SERIES
INTELLIGENTLY SCM360 DENMARK TYPEWRITERS 9416/ 2002
QUIET 1992
SCM (tri-bar) SCM106 DENMARK TYPEWRITERS,+ VRO3589 2004
1964
SMITH CORONA SCM236 DENMARK WORD PROCESSORS APPLN
SMITH CORONA
logo SCM229 DENMARK WORD PROCESSORS, 07214/ 2003
TYPEWRITERS ETC 1993
SMITH-CORONA SCM111 DENMARK TYPEWRITERS,+ 353/19512000
SPELL-RIGHT SCM33 DENMARK TYPEWRITERS 3256- 1999
1990
SMITH-CORONA SCM111 DOMINICAN TYPEWRITERS, ADDING 7601 2000
REP MACHINES
SMITH CORONA
logo SCM111 ESTONIA TYPEWRITER, WPS 09811 1999
SMITH CORONA
logo SCM229 FINLAND WORD PROCESSORS,
TYPEWRITERS 129988 2003
SMITH-CORONA SCM111 FINLAND TYPEWRITERS, ADDING
MACHINES 64935 1995
CORONA SCM90 FRANCE ADDING MACHINES 1652125 2000
CORONA SCM90B FRANCE TYPEWRITERS & PARTS 1195240 2001
H SCM191 FRANCE TYPEWRITER PARTS &
ACCESSORIES 934873252003
IQ INTELLIGENTLY
QUIET SCM360 FRANCE TYPEWRITERS & PWPS 924326322002
RIGHT RIBBON
SYSTEM SCM133 FRANCE ALL GOODS IN CLASSES
9 & 16 1558288 1999
SCM (tri-bar) SCM106 FRANCE TYPEWRITERS 1589956 1999
SMITH CORONA SCM236 FRANCE WORD PROCESSORS 1584299 1999
SMITH CORONA
Logo SCM229 FRANCE TYPEWRITERS, WORD
PROCESSORS 1692649 2001
SMITH CORONA
logo SCM395 FRANCE CALCULATORS 460268 2002
SMITH CORONA
logo SCM416 FRANCE MACHINES FOR 93/
LAMINATING DOCUMENTS 478888 2003
SMITH-CORONA SCM111 FRANCE TYPEWRITERS, WORD
PROCESSORS 1584299 1999
SPELL-RIGHT SCM33 FRANCE TYPEWRITERS 1528853 1998
WORDERASER SCM122 FRANCE ALL GOODS IN CLASSES
9&16 1569351 1998
H SCM191 GERMANY TYPEWRITERS PARTS &
ACCESSORIES APPLN
SCM SMITH-CORONA SCM111A GERMANY TYPEWRITERS 857102 1996
SMITH CORONA SCM236 GERMANY WORD PROCESSORS 1179305 1996
SMITH CORONA
logo SCM229 GERMANY TYPEWRITERS & WORD
PROCESSORS 2030234 2001
SMITH CORONA
logo SCM416 GERMANY LAMINATING MACHINES
FOR DOCUMENTS 2067581 2003
SMITH CORONA
logo SCM395 GERMANY CALCULATORS, POCKET
CALCULATORS 2067581 2003
SMITH-CORONA SCM111 GERMANY TYPEWRITERS 627719 2000
H SCM191 GREECE TYPEWRITER PARTS
& ACCESSORIES APPLN
SMITH-CORONA SCM111 GREECE TYPEWRITERS,
ADDING MACHINES 47177 2001
SPELL-RIGHT SCM33 GREECE TYPEWRITERS 95160 1999
SMITH-CORONA SCM111A GUATEMALA TYPEWRITERS & PARTS 7930 2001
SMITH-CORONA SCM111B GUATEMALA ADDING MACHINES 7929 2001
CORONAMATIC SCM92 HONG KONG TYPEWRITERS & PARTS 1769 1997
SCM (tri-bar) SCM106 HONG KONG TYPEWRITERS & ADDING
MACHINES 8584/5 2002
SMITH-CORONA SCM111 HONG KONG TYPEWRITERS & ADDING 1072/
MACHINES 1949 2004
SMITH CORONA
logo SCM229 HUNGARY WORD PROCESSORS 132293 2006
SMITH-CORONA SCM111 INDIA TYPEWRITERS & PARTS 147010 2000
SMITH-CORONA SCM111 INDONESIA TYPEWRITERS & ADDING
MACHINES 85506 1997
H SERIES SCM191 IRELAND TYPEWRITERS,
ACCESSORIES & STA APPLN
SCM (tri-bar) SCM106 ISRAEL TYPEWRITERS 34228 2006
SMITH-CORONA SCM111 ISRAEL TYPEWRITERS & PARTS 34230 2006
H SCM191 ITALY TYPEWRITERS & WORD
PROCESSORS
CORONA SCM90A ITALY TYPEWRITERS & PARTS 429388 1993
IQ INTELLIGENTLY
QUIET SCM360 ITALY TYPEWRITERS & PWPS APPLN
SCM SCM109 ITALY TYPEWRITERS + VARIOUS
GOODS 264828 2000
SCM (tri-bar) SCM106 ITALY TYPEWRITERS + VARIOUS
GOODS 264830 2000
SMITH CORONA SCM236 ITALY WORD PROCESSORS 605763 1998
SMITH CORONA
Logo SCM229 ITALY TYPEWRITERS & WORD
PROCESSORS APPLN
SMITH-CORONA SCM111 ITALY TYPEWRITERS 423515
SPELL-RIGHT SCM33 ITALY ALL GOODS IN CLASES
9&16 557752 1999
WORDERASER SCM122 ITALY ALL GOODS IN CLASSES
9&16 559888 1999
SCM (tri-bar) SCM106A JAPAN ADDING MACHINES 613969 2002
SCM SCM106B JAPAN CARBON RIBBONS AND
STATIONERY 616121 ABAN
SMITH CORONA SCM236 JAPAN WORD PROCESSORS 2495000 2002
SMITH CORONA
Logo SCM395 JAPAN CALCULATORS APPLN
SMITH-CORONA SCM111 JAPAN TYPEWRITERS & PARTS 437649 2003
CORONAMATIC SCM92 KOREA TYPEWRITERS, RIBBONS,
CARTRIDG 56828 1998
GRAMMAR RIGHT
SYSTEM I SCM124 KOREA TYPEWRITERS 202081 2000
LINEERASER SCM149 KOREA TYPEWRITERS 204262 2000
PHRASE ALERT SCM151 KOREA TYPEWRITERS 204263 2000
SCM (tri-bar) SCM106 KOREA TYPEWRITERS, ADDING
MACHINES 6526 2001
SMITH-CORONA SCM111 KOREA TWS, RIBBONS &
CARTRIDGES FOR TWS 494 1994
SMITH CORONA
Logo SCM111 LATVIA TYPEWRITERS, WPS
SMITH-CORONA SCM111 LEBANON TYPEWRITERS, ADDING
MACHINES 41879 1996
SPELL-RIGHT SCM33 LIECH- COMPUTERS (WORD
PROCESSORS)
TENSTEIN 7673 2009
SMITH CORONA
logo SCM111 LITHUANIA TYPEWRITERS, WPS APPLN
H-SERIES SCM191 MEXICO TYPEWRITER PARTS &
ACCESSORIES 456209 1996
H-SERIES SCM191 MEXICO TYPEWRITER PARTS &
ACCESSORIES 456210 1996
IQ INTELLIGENTLY
QUIET SCM360 MEXICO TYPEWRITERS & PWPS 435451 1995
RIGHT RIBBON SCM133 MEXICO WORD PROCESSORS,
CASSETTES, IN 381135 2004
RIGHT RIBBON
SYSTEM SCM133 MEXICO WORD PROCESSORS 381136 2004
SCM SCM106 MEXICO TYPEWRITER RIBBONS 110702 2001
SMITH CORONA
Logo SCM229 MEXICO WORD PROCESSORS 119736 2001
SMITH CORONA
Logo SCM395 MEXICO CALCULATORS 448372 2002
SMITH CORONA
Logo SCM416 MEXICO MACHINES FOR
LAMINATING DOCUME 467275 1997
SMITH-CORONA SCM111 MEXICO TYPEWRITERS, ADDING
MACHINES 63435 2004
SMITH CORONA SCM111A MEXICO ELECTRIC TYPEWRITERS 461538 1999
SMITH CORONA SCM236 MEXICO WPS AND ELECTRONIC
COMPONENTS 461689 1999
WORDERASER SCM122 MEXICO ALL GOODS IN CLASS 9 396650/11994
SPELL-RIGHT SCM202 MONACO COMPUTERS (WORD 89.
PROCESSORS) 12768 1999
CORONAMATIC SCM92 NEW ZEALAND TYPEWRITERS & PARTS 118726 1997
SCM (tri-bar) SCM106 NEW ZEALAND TYPEWRITERS, ADDING
MACHINES 70479 1996
SMITH CORONA
logo SCM229 NEW ZEALAND WORD PROCESSORS APPLN
SMITH-CORONA SCM111A NEW ZEALAND TYPEWRITERS 98086 2006
SMITH-CORONA SCM111B NEW ZEALAND TYPEWRITERS,ELECTRIC 100085 2006
SPELL-RIGHT SCM202 NEW ZEALAND COMPUTERS, ETC. APPLN
SPELL-RIGHT SCM33 NEW ZEALAND TYPEWRITERS APPLN
IQ SERIES
INTELLIGENTLY
QUIET SCM360 NORWAY TYPEWRITERS APPLN
SCM (tri-bar) SCM106 NORWAY COPIERS, ADDING
MACHINES 61277 2002
SMITH CORONA SCM236 NORWAY WORD PROCESSORS 148501 2001
SMITH CORONA
Logo SCM229 NORWAY TYPEWRITERS, WPS &
PARTS 154460 2002
SMITH-CORONA SCM111 NORWAY TYPEWRITERS, ADDING
MACHINES 48132 1995
CORONAMATIC SCM92 PAKISTAN TYPEWRITERS & PARTS 65413 1998
SCM (tri-bar) SCM106 PAKISTAN TYPEWRITERS & PARTS 65455 1998
SMITH-CORONA SCM111 PAKISTAN TYPEWRITERS & PARTS 65412 1998
SMITH-CORONA SCM111 PARAGUAY TYPEWRITERS,
CARTRIDGES 150507 2001
SMITH CORONA SCM111A PEO.REP.
CHINA TYPEWRITERS APPLN
SMITH CORONA SCM111B PEO.REP.
CHINA WORD PROCESSORS APPLN
SMITH CORONA
Logo SCM395 PEO.REP.
CHINA COMPUTERS/CALCULATORS 691549 2003
CORONAMATIC SCM92 PHILIPPINES TYPEWRITERS & PARTS 28910 2000
SCM (tri-bar) SCM106 PHILIPPINES TYPEWRITERS & PARTS 29182 2000
SMITH CORONA SCM111 POLAND TYPEWRITERS 79458 2002
SMITH CORONA
Logo SCM229A POLAND TYPEWRITERS APPLN
H SCM191 PORTUGAL TYPEWRITER PARTS &
ACCESSORIES APPLN
IQ INTELLIGENTLY
QUIET SCM 360 PORTUGAL TYPEWRITERS & PWPS 284665N 1998
SCM (tri-bar) SCM106 PORTUGAL TYPEWRITERS 179599L 1997
SMITH CORONA SCM236 PORTUGAL WORD PROCESSORS 262064J 1997
SMITH CORONA
Logo SCM229B PORTUGAL WORD PROCESSORS 277111-K1998
SMITH CORONA
logo SCM229A PORTUGAL TYPEWRITERS 276247U 1998
SMITH-CORONA SCM111 PORTUGAL TYPEWRITERS & PARTS 179670B 1997
SPELL-RIGHT SCM33 PORTUGAL ALL GOODS IN CLASS 16 256500 1997
WORDERASER SCM122 PORTUGAL ALL GOODS IN CLASS 16 256723Y 1997
IQ INTELLIGENTLY
QUIET SCM360 ROMANIA TYPEWRITERS & PWPS APPLN
SMITH CORONA SCM111 ROMANIA TYPEWRITERS APPLN
SMITH CORONA
Logo SCM229A ROMANIA TYPEWRITERS APPLN
SMITH CORONA &
DEVICE SCM229 SAUDI
ARABIA ALL IN CLASS 16 245/60 2000
CORONA SCM90 SINGAPORE TYPEWRITERS & PARTS S/56465 1993
CORONACALC SCM193 SINGAPORE GOODS IN CLASS 9 S/789/901996
IQ SERIES
INTELLIGENTLY
QUIET SCM360 SINGAPORE IN CLASS 16 APPLN
SCM (tri-bar) SCM106 SINGAPORE TYPEWRITERS & PARTS 56466 1993
SMITH CORONA SCM236 SINGAPORE WORD PROCESSORS 854/90 1996
SMITH CORONA
Logo SCM229 SINGAPORE TYPEWRITERS S/7364/
91 2001
SMITH-CORONA SCM111 SINGAPORE TYPEWRITERS & PARTS 56467 2002
CORONA SCM90 SOUTH
AFRICA TYPEWRITERS 12/25 1996
SCM (tri-bar) SCM106 SOUTH
AFRICA TYPEWRITERS 62/0501
/1 1995
SMITH CORONA SCM236 SOUTH
AFRICA WORD PROCESSORS 90/0523 1999
SMITH-CORONA SCM111 SOUTH
AFRICA TYPEWRITERS 139/51 1994
H SCM191 SPAIN TYPEWRITERS APPLN
H SCM191 SPAIN WORD PROCESSORS APPLN
IQ INTELLIGENTLY
QUIET SCM360 SPAIN TYPEWRITERS & PWPS APPLN
SCM (tri-bar) SCM106 SPAIN TYPEWRITERS 397245 2003
SCM (tri-bar) SCM107 SPAIN ADDING MACHINES
CALCULATORS 379246 2003
SMITH CORONA SCM236 SPAIN WORD PROCESSORS 1583772 2003
SMITH CORONA
Logo SCM229 SPAIN TYPEWRITERS, WORD
PROCESSORTS 1664112 2001
SMITH-CORONA SCM111 SPAIN TYPEWRITERS 243964 1995
SPELL-RIGHT SCM33B SPAIN ALL GOODS IN CLASS 16 APPLN
SPELL-RIGHT SCM33A SPAIN TYPEWRITERS APPLN
WORDERASER SCM122A SPAIN TYPEWRITERS 1504265 2001
WORDERASER SCM122B SPAIN ALL GOODS IN CLASS 9 1504264 2000
SMITH CORONA
logo SCM229 SWEDEN ALL GOODS IN CLASSES
9/16 261384 2004
SMITH-CORONA SCM111 SWEDEN TYPEWRITERS, ADDING
MACHINES 141547 2002
SMITH CORONA SCM236 SWEDEN WORD PROCESSORS 253252 2003
CORONA SCM90 SWITZERLAND TYPEWRITERS 302645 1999
CORONAMATIC SCM92 SWITZERLAND TYPEWRITERS 267554 2003
IQ INTELLIGENTLY
QUIET SCM360 SWITZERLAND TYPEWRITERS & PWPS 400125 2001
SCM (tri-bar) SCM106 SWITZERLAND TYPEWRITERS 319239 2001
SMITH CORONA
logo SCM229 SWITZERLAND TYPEWRITERS 392201 2011
SMITH-CORONA SCM111 SWITZERLAND TYPEWRITERS, WPS,
RIBBON CARTR 381910 2009
SCM (tri-bar) SCM106 TAIWAN TYPEWRITERS & PARTS 91619 1997
SMITH CORONA SCM236 TAIWAN COMPUTERS, WORD
PROCESSORS 514665 2000
SMITH CORONA
Logo SCM229A TAIWAN TYPEWRITERS &
PRINTWHEELS FOR TWS 554694 1994
SMITH CORONA
Logo SCM229B TAIWAN WORD PROCESSORS,
PRINTWHEELS, 612722 2000
SMITH CORONA
Logo SCM229C TAIWAN SHEET FEEDERS; CASSETTES; CORRECTION
TAPES ETC. 616446 2003
SMITH-CORONA SCM111 TAIWAN TYPEWRITERS 2715 1994
CORONAMATIC SCM92 THAILAND TYPEWRITERS & PARTS 61578 1996
IQ INTELLIGENTLY
QUIET SCM 360 THAILAND TYPEWRITERS & PWPS TM13954 2002
SMITH CORONA
Logo SCM236A THAILAND WORD PROCESSORS APPLN
SMITH CORONA
Logo SCM236B THAILAND TYPEWRITERS APPLN
SMITH-CORONA SCM111 THAILAND TYPEWRITERS 69772 1996
SMITH-CORONA
Logo SCM229 THAILAND TYPEWRITERS APPLN
SCM & DESIGN SCM106 TURKEY TYPEWRITERS,
CALCULATING MACHINES 60222 1997
SMITH-CORONA SCM111 TURKEY TYPEWRITERS,
TYPEWRITER RIBBON 60292 1997
SMITH CORONA
Logo SCM229A U.A.E TYPEWRITERS & WORD
PROCESSORS 7858 2001
SMITH CORONA
Logo SCM229B U.A.E. WORD PROCESSORS 7857 2001
SPELL-RIGHT SCM33 U.S.S.R ALL GOODS IN CLASSES
9&16 88740 1999
AUTOSPELL SCM87 U.S.S.R. ALL GOODS IN CLASSES
9/16 95466 2000
RIGHT RIBBON
SYSTEM SCM133A U.S.S.R. ALL GOODS IN CLASSES
9&16 88646 1999
RIGHT RIBBON
SYSTEM(CYRILLIC) SCM133B U.S.S.R. ALL GOODS IN CLASSES
9 & 16 96867 2000
SMITH CORONA
device SCM111 U.S.S.R. ALL GOODS IN CLASSES
9/16 88647 1999
SMITH CORONA
device(CYR) SCM229 U.S.S.R. ALL GOODS IN CLASSE
9/16 88644 1999
SPELL-RIGHT
(CYRILLIC) SCM33 U.S.S.R. TYPEWRITERS & WORD
PROCESSORS 96869 2000
WORDERASER SCM122A U.S.S.R. ALL GOODS IN CLASSES
9&16 88739 1999
WORDERASER
(CYRILLIC) SCM122B U.S.S.R. ALL GOODS IN CLASSES
9/16 96870 2000
WORDFIND SCM123A U.S.S.R. TYPEWRITERS,
WORDPROCESSORS 88645 1999
WORDFIND(IN CYR) SCM123B U.S.S.R. TYPEWRITERS, WORD
PROCESSORS, ETC. 96968 2000
WORDRIGHT SCM121 U.S.S.R. TYPEWRITERS, WORD
PROCESSORS 95467 2000
CHARACTER SWAP SCM377 UNITED
KINGDOM WORD PROCESSORS B1502090 1998
CORONA SCM90 UNITED
KINGDOM TYPEWRITERS 341299 1995
CORONACALC SCM193 UNITED
KINGDOM COMPUTERS (WORD
PROCESSORS) 1407399 1996
H SCM191 UNITED
KINGDOM TYPEWRITER PARTS AND
ACCESSORIES
IQ SERIES
INTELLIGENTLY SCM360 UNITED
QUIET KINGDOM TYPEWRITERS 1504616 1998
SCM (tri-bar) SCM106 UNITED
KINGDOM TYPEWRITERS 855595 1998
SMITH CORONA SCM111 UNITED
KINGDOM TYPEWRITERS, PARTS 695405 1999
SMITH CORONA SCM395 UNITED
KINGDOM CALCULATORS, PARTS AND
FITTINGS 1524682 1999
SMITH CORONA SCM236 UNITED
KINGDOM WORD PROCESSORS 1396565 1996
SMITH CORONA
Logo SCM229A UNITED
KINGDOM TYPEWRITERS 1472565 1998
SMITH CORONA
Logo SCM229B UNITED
KINGDOM WORD PROCESSORS 1472564 1998
SMITH CORONA
logo SCM416 UNITED
KINGDOM MACHINES FOR
LAMINATING DOCUMENTS 1540505 2000
START-RITE SCM117 UNITED
KINGDOM TW ACCESSORIES, PRINT
& CORRECTION RIBBONS 1333449 2004
WORD SWAP SCM376 UNITED
KINGDOM WORD PROCESSORS APPLN
SCM SCM105 VENEZUELA TYPEWRITERS 99834 1997
SCM SCM105 VENEZUELA TYPEWRITERS 99818-F 1997
SCM (tri-bar) VENEZUELA BUSINESS CARDS 104782-F 1998
SCM (tri-bar) SCM106 VENEZUELA TYPEWRITERS 99855-F 1997
SCM(tri-bar) SCM106 VENEZUELA TYPEWRITERS 99833-F 1997
SMITH CORONA
Logo SCM229 VENEZUELA TYPEWRITERS,
WORD PROCESSORS APPLN
SMITH-CORONA SCM111A VENEZUELA TYPEWRITERS 107491-F 1998
SMITH-CORONA SCM111B VENEZUELA TYPEWRITERS 17819-D 1998
</TABLE>
<PAGE>
SCHEDULE 3.13
CERTAIN ERISA MATTERS
SCHEDULE 3.13
ERISA FUNDINGS
as of JANUARY 1, 1994
<TABLE>
<CAPTION>
Office Supplies Group Smith Corona
Hourly Salaried Hourly Salaried Total
VALUE OF ACCRUED
BENEFITS
<S> <C> <C> <C> <C> <C>
Vested Benefits $2,990,001 $2,189,401 $26,446,176 $33,327,163 $64,903,543
Nonvested Benefits 163,538 124,660 18,662 695,958 1,002,818
Value of All Accrued
Benefits 3,154,339 2,264,061 26,464,840 34,023,121 65,906,361
Accrued Market
Value of Assets 2,301,581 2,611,488 24,574,436 38,068,637 67,556,142
Funded Ratio .9 (.3) 1.9 (3.2) 1.2
(Total Accrued
Benefits) 73% 115% 93% 112% 103%
P/Y 72% 105% 97% 110% 103%
/TABLE
<PAGE>
SCHEDULE 3.15
SUBSIDIARIES
<TABLE>
<CAPTION>
Subsidiary Name Country/State of Incorporation
<S> <C>
SCC LI Corp. New York
Hulse Manufacturing Company New York
SCM Office Supplies Incorporated Delaware
Smith Corona Overseas Holdings, Inc. Delaware
SCM (United Kingdom) Limited Delaware
SCM Inter-American Corporation California
Smith Corona International, Ltd. St. Croix, U.S. Virgin
Islands
Smith Corona France S.A.R.L. France
Smith Corona (Canada) Limited Ontario, Canada
Smith Corona Private Ltd. Republic of Singapore
Smith Corona (United Kingdom) Limited United Kingdom
Coronasphere (Inactive) United Kingdom
Smith Corona Australia Pty. Ltd. Australia
P.T. Smith Corona Batam Republic of Indonesia
Smith Corona de Mexico SA de C.V. Mexico
Smith Corona GmbH Germany
Smith Corona S.A. (Belgium) Belgium
/TABLE
<PAGE>
SCHEDULE 3.19
CERTAIN ENVIRONMENTAL MATTERS
SCHEDULE 3.19
<TABLE>
<CAPTION>
MATTER DESCRIPTION STATUS
<S> <C> <C>
1 State of NY, State and municipal Entered into settlement
et al.v.SCC authorities suing SCC agreement 5/12/89
(USDC NDNY) for cleanup costs resolving SCC's liability
under the to State and municipal
Comprehensive authorities and including
Environmental Response State approval of the on-
compensation and site remedial design.
Liability Act Public nuisance claims
("CERCLA") for not released until
groundwater completion of remedial
contamination in action. Remedial
Cortlandville and activity is continuing
Cortland,New York estimated completion 14,
years.
2 State of NY v. State Attorney Gen- Trial of liability issues
Allied Corp., eral suing Allied completed in August 1992.
et al.(USDC and others for Memorandum - Decision and
NDNY) clean-up costs
under CERCLA for Order dated 9/7/93 found
alleged disposal of SCC not liable. (Appeal
hazardous substancespossible but apparently
at "Solvent Savers" unlikely).
and "Novak Farm" sites
in central New York
State. Private third-
party action brought
against SCC and three
other corporations for
indemnification and/or
contribution.
3 Groton,NY New York State Entered into consent
Site Department of order March 31,1993; SCC
Environmental to develop and implement
Conservation ("NYDEC") remediation plan and
listed SCC's former reimburse State for
operations in Groton, costs.
New York as an
inactive hazardous
waste disposal site.
4 Rosen U.S.Environmental Responded to EPA's
Superfund Site Protection Agency request that SCC set
("EPA") named SCC a forth its position
potentially regarding its non-
responsible party response to order to
(PRP") at Rosen perform a Remedial
superfund Site. SCC Investigation/Feasibility has used a hauler Study ("RI/FS" ).
related to the site
owner, but only to
haul non-hazardous -
waste.
5 Cooper Private contribution Entered into (i) Joint
Industries, action brought against Defense Agreement with 2
Inc.,et al. SCC and others by other parties to be
v.Agway, parties participating represented by Nixon,
Inc.,et al. in the clean-up of the Hargrave and (ii)
(USDC NDNY) Rosen Superfund Site. comprehensive Joint
Defense and Cost Sharing
Agreement with all other
defendants. Currently
engaged in discovery.
6 Envirotek II Named a PRP at One of 300PRP's which
Site Envirotek site in entered into a consent
Tonawanda,New York, order to perform removal
to which SCC had sent of hazardous waste from
certain hazardous the site. Hulse
waste and non- Manufacturing subsidiary
hazardous waste for opted for de minimis
disposal. buyout for removal phase
for less that $5,000.
Investigation during
removal phase may lead to
EPA demand for RI/FS and
site remediation.
7 Quanta Named a PRP by EPA at One of 25PRP's which
Resources Site Quanta Resources site entered into Settlement
in Syracuse,New York, Agreement with EPA and
to which SCC allegedly Dept. of Justice
sent hazardous waste 10/22/92. Possible claim
for disposal. for New York State
investigation costs,
through no claims
currently threatened or
asserted.
8 PAS Oswego
Superfund Site Named a PRP at Entered into consent
Pollution Abatement order to conduct a RI/FS
Services ("PAS") at the site. Entered
Superfund Site in into second consent order
Oswego,New York. with EPA in September
1991 to undertake interim
ground water removal.
9 PAS Satel- Named a PRP at eight
lite Sites: PAS "Satellite" sites
which were used as
waste staging
facilities for the
main PAS Oswego Site.
Three of the satellite
sites are listed on
the National
Priorities List and,
as noted in Status
column,investigation
and/or remediation is
proceeding at various
stages.
(a) Fulton Entered into consent
Terminals decree in September 1991
Site to perform certain
remedial actions and
reimburse EPA for certain past costs.
(b) Volney Entered into consent
Site order in September 1990
to conduct a RI/FS.
Entered into Consent
Order in May 1993 to
conduct Supplemental Pre-
Remedial Design Study.
(c) Clothier Entered into consent
Site decree in June 1989 to
undertake remedial
action. Entered into
second consent decree
with EPA in September
1991, reimbursing EPA for
$2.5 Million past
response costs (SCC
allocated share less that
1%. Barring unexpected
developments, remedy has
been completed.
10 Byron Barrel & Served with subpoena After searching records,
Drum Site August 1990 by PRP at SCC informally reported
Byron Barrel & Drum to PRP that it had no
Superfund Site seek- information concerning
ing information disposals. No activity
about alleged SCC since 1990.
waste disposal
at site.
/TABLE
<PAGE>
SCHEDULE 6.2
EXISTING INDEBTEDNESS
None.<PAGE>
SCHEDULE 6.3
EXISTING LIENS
1. A second priority security interest in favor of Chemical Bank
and Bank of America Illinois -- all domestic accounts receivable,
inventory, equipment, and stock of certain wholly-owned subsidiaries
of the Borrower.
2. Lloyds Bank Plc having some interest in the United Kingdom
accounts receivables and Prudential Assurance having an interest in
United Kingdom real property.
3. 1995 Taxes -- an item not yet payable.
4. Certain operating and capital leases of equipment.
5. Materialmen's claims not yet a lien for work done with respect
to environmental remediation.
6. Tooling used in the manufacturing process.
<PAGE>
SCHEDULE 6.4
EXISTING GUARANTEE OBLIGATIONS
None.
<PAGE>
EXHIBIT A
FORM OF
REVOLVING CREDIT NOTE
$____________ New York, New York
____________, 1995
FOR VALUE RECEIVED, the undersigned, Smith Corona
Corporation, a Delaware corporation (the ``Borrower''), hereby
unconditionally promises to pay to the order of _______________
(the ``Lender'') at the office of Chemical Bank, located at 270
Park Avenue, New York, New York 10017, in lawful money of the
United States of America and in immediately available funds, on
the Termination Date the principal amount of (a)_____________
DOLLARS ($___________), or, if less, (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by the Lender
to the Borrower pursuant to subsection 2.1 of the Credit
Agreement, as hereinafter defined. The Borrower further agrees
to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the
rates and on the dates specified in subsections 2.7 and 2.9 of
such Credit Agreement.
The holder of this Note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a
part hereof the date and amount of each Revolving Credit Loan
made pursuant to the Credit Agreement and the date and amount of
each payment or prepayment of principal thereof. Each such
endorsement shall constitute prima facie evidence of the accuracy
of the information endorsed. The failure to make any such
endorsement shall not affect the rights of the Lender or the
obligations of the Borrower in respect of such Revolving Credit
Loan.
This Note (a) is one of the Revolving Credit Notes referred
to in the Debtor-in-Possession Credit Agreement dated as of
__________ ___, 1995 (as amended, supplemented or otherwise
modified from time to time, the ``Credit Agreement''), among the
Borrower, the Lender, the other banks and financial institutions
from time to time parties thereto and Chemical Bank, as agent,
(b) is subject to the provisions of the Credit Agreement and (c)
is subject to optional and mandatory prepayment in whole or in
part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of
Default, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable,
all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive presentment, demand, protest and all
other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them
in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SMITH CORONA CORPORATION
By:
Name:
Title:
WINTHROP, STIMSON, PUTNAM & ROBERTS
July 11, 1995
Chemical Bank, as Agent 270 Park Avenue
New York, New York 10017
And each of the Lenders parties to the Credit Agreement
referred to below
We have acted as counsel to Smith Corona
Corporation, a Delaware corporation (the
"Borrower"), SCM (United Kingdom) Limited, a Delaware
corporation, and Smith Corona Overseas Holdings, Inc., a
Delaware corporation, (collectively, the "Parties") in
connection with (a) the Debtor-in-Possession Credit
Agreement, dated as of July 10, 1995 (the "Credit
Agreement"), among the Borrower, the lenders parties
thereto (the "Lenders") and Chemical Bank, as agent for
the Lenders (in such capacity, the "Agent"), (b) the
Revolving Credit Notes, (c) the Security Agreement, (d)
the Subsidiary Guaranty and (e) the Guarantor Pledge
Agreement.
The opinions expressed below are furnished to
you pursuant to subsection 4.1(k)of the Credit
Agreement. Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
In arriving at the opinions expressed below,
(a) we have examined and relied on the
originals, or copies certified or otherwise
identified to our satisfaction, of each of (1) the
Credit Agreement, (2) the Revolving Credit Notes dated
the date hereof and (3) the Security Agreement,
Subsidiary Guaranty, the Guarantor Pledge Agreement and
Borrower Pledge Agreement dated the date hereof (the
Credit Agreement, the Revolving Credit Notes and the
Security Agreement, Subsidiary Guaranty, the Guarantor
Pledge Agreement and Borrower Pledge Agreement being
hereinafter referred to collectively as the
"Transaction Documents");
(b) we have examined two (2) Connecticut form
UCC-1 Financing Statements and two (2) New York form
UCC-1 Financing Statements, each naming the Borrower as
debtor and the Agent as secured party
together with such other form UCC-1 Financing Statements
for California and Hawaii as you have furnished us on
the date hereof (collectively, the Financing
Statements");
(c) we have examined such corporate documents
and records of the Borrower and such other
instruments and certificates of public officials,
officers and
representatives of the Borrower and other Persons; and
(d) we have examined that certain Interim
Order dated July 10, 1995 (i) Authorizing
Post Petition Financing and (ii) Granting Senior Liens
and Priority Administrative Expense Claim Status (the
"Interim Order") together with the form of that certain
Final Order (i) Authorizing Post Petition Financing and
(ii) Granting Senior Liens and Priority Administrative
Expense Claim Status (the "Final Order")
which we have assumed will be entered on August 2, 1995
in the form annexed to the Credit Agreement.
In arriving at the opinions expressed below,
we have made such investigations of law as we
have deemed appropriate as a basis for such opinions.
In rendering the opinions expressed below, we
have assumed, with your permission, without
independent investigation or inquiry, (a) the
authenticity of all documents submitted to us as
originals, (b) the genuineness of all signatures on all
documents that we examined (other than those of the
Borrower and officers of the Borrower) and (c) the
conformity to authentic originals of documents submitted
to us as certified, conformed or photostatic copies.
For all purposes of this opinion, we have also
assumed, without any independent investigation
or inquiry on our part, that:
(a) the Collateral, as defined in the Security
Agreement and Borrower Pledge Agreement, exists and
the Borrower has title to such Collateral;
(b) the information contained in each one of the
Schedules attached to the Security Agreement,
Borrower Pledge Agreement and each one of the Financing
Statements is accurate in all material respects;
(c) Borrower will be in good standing in the States of
Connecticut and Hawaii on or before August 2,
1995; and
(d) payment in full pursuant to the Credit Agreement,
of all Obligations arising under a certain Amended and
Restated Credit Agreement dated as of April 7, 1995
and all "Prior Obligations" as defined in the Interim Order
has occurred.
When our opinions expressed below are stated
"to the best of our knowledge," we have made
reasonable and diligent investigation of the subject
matters of such opinions and have no reason to believe that
there exist any facts or other information that would
render such opinions incomplete or incorrect.
Based upon and subject to the foregoing, we are of
the opinion that:
l. Each Party (a) is duly organized, validly existing
and in good standing under the laws of Delaware, (b)
has the corporate power and authority and the legal right to
own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently
engaged and (c) is duly qualified as a foreign
corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such
qualification, except for the States of Connecticut and Hawaii.
The failure to be so qualified in any states (other than
Connecticut and Hawaii) in which the Borrower is not presently
qualified does not, in the aggregate, have a Material Adverse
Effect.
2. Upon the entry of the Interim Order, the Borrower
has the corporate power and authority, and the legal
right, to make, deliver and perform its obligations under the
Credit Agreement, the Security Agreement and each of the other
Transaction Documents to which it is a party, to
borrow under the Credit Agreement (to the extent set forth in
the Interim Order and then upon entry of the Final Order to the
extent set forth therein) and to grant security interests in
its property under the Security Agreement. Each Party other
than the Borrower has the corporate power and authority, and
the legal right to make, deliver, and perform its obligations
under the Transaction Documents to which it is a party. The
Borrower has taken all necessary corporate action to authorize
the borrowings on the terms and conditions of the Credit
Agreement, the Security Agreement, and the other Transaction
Documents and each Party has taken all necessary corporate
action to authorize the execution, delivery and performance of
the Transaction Documents to which it is a party. Except for
entry of the Interim and Final Orders, no consent or
authorization of, approval by, notice to, filing with or other
act by or in respect of, any Governmental Authority or any
other Person is required in connection with the borrowings
under the Credit Agreement, granting of security interests
under the Security Agreement or with the execution, delivery,
performance, validity or enforceability of the Credit
Agreement, the Security Agreement and the other Transaction
Documents.
3. Each of the Credit Agreement, Security Agreement
and the other Transaction Documents to which the
each Party is a party has been duly executed and delivered on
behalf of such Party and constitutes a legal, valid and binding
obligation of such Party, enforceable against the Borrower in
accordance with its terms as set forth in the Interim Order
and, upon its entry, the Final Order.
4. The execution and delivery of the Transaction
Documents to which any Party is a party, the
performance by the applicable Party of its obligations
thereunder, the consummation of the transactions contemplated
thereby, the compliance by the Parties and each of their
Subsidiaries with any of the provisions thereof, the borrowings
under the Credit Agreement and the use of proceeds thereof, all
as provided therein, will not violate, or constitute a default
under, any Requirement of Law or, to the best of our knowledge,
(and excepting any defaults resulting from the filing of the
Borrower's Chapter 11 petition), any Contractual
Obligations of the Borrower or of any of its Subsidiaries and
will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or
revenues, except for the Liens created by the Security
Agreement, the Borrower Pledge Agreement and Guarantor Pledge
Agreement.
5. The entry of the Interim Order on the docket has
created in favor of the Agent, for the ratable
benefit of the Lenders, a valid and fully perfected security
interest in all of the Collateral as to which a first priority
(subject to Permitted Liens) security interest may be perfected
under the laws of the states in the United States in which the
Collateral is located.
6. To the best of our knowledge, no postpetition
litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or
threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective
properties or revenues
(a) with respect to the Credit Agreement or any of
the other Transaction Documents or (b) which could
have a Material Adverse Effect on the postpetition business
activities of the Borrower.
7. To the best of our knowledge, (and excepting any
defaults resulting from the filing of the Borrowers
Chapter 11 petition), neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any
Contractual Obligations in any respect which could have a
Material Adverse Effect.
8. No Party is ( i ) an "investment company",
company "controlled" by an "investment company", or
a
within the meaning of the Investment Company Act of
1940, as amended, or (ii) a "holding company" as
defined in, or otherwise subject to regulation under, the
Public Utility Holding Company Act of 1935. No Party is
subject to regulation under any Federal or state statute or
regulation which limits its ability to incur Indebtedness.
Our opinions set forth in paragraph 3 above are
subject to any orders hereafter entered by the
Bankruptcy Court.
With respect to all borrowings made from and after
August 2, 1995, the Final Order shall have been
entered on the docket of such Court by the Clerk of the
Bankruptcy Court and shall not have been stayed, modified,
altered or reversed as of August 2, 1995.
We are members of the bar of the State of New York
and we express no opinion as to the laws of any
jurisdiction other than the laws of the State of New York, the
General Corporate Law of the State of Delaware and the Federal
laws of the United States of America.
Very truly yours,
/s/ Winthrop Stimson, Putnum
Roberts
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Debtor-in-Possession Credit
Agreement, dated as of July 10, 1995, (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"),
among Smith Corona Corporation (the "Borrower"), the Lenders
named therein and Chemical Bank, as agent for the Lenders (in
such capacity, the "Agent"). Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement.
(the "Assignor") and
(the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee
hereby irrevocably purchases and assumes from the Assignor
without recourse to the Assignor, as of the Effective Date (as
defined below), a ___% interest (the "Assigned Interest") in and
to the Assignor's rights and obligations under the Credit
Agreement with respect to those commitments contained in the
Credit Agreement as are set forth on Schedule I thereto in a
principal amount for each commitment as set forth on Schedule I
hereto.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit
Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that it has not
created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such
adverse claim; (b) makes no representation or warranty and
assumes no responsibility with respect to the financial condition
of the Borrower, any of its Subsidiaries or any other obligor or
the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective
obligations under the Credit Agreement or any other Loan Document
or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches the Note held by it pursuant to the
Credit Agreement and requests that the Agent exchange such Note
for a new Note payable to the Assignor (if the Assignor has
retained any interest in the Credit Agreement) and a new Note or
Notes payable to the Assignee in the respective amounts which
reflect the assignment being made hereby (and after giving effect
to any other assignments which have become effective on the
Effective Date).
3. The Assignee (a) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance;
(b) confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements delivered
pursuant to subsection 3.1 thereof and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Agent or any other Lender and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit
Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Agent to take such action as agent on its behalf
and to exercise such powers and discretion under the Credit
Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto as are delegated to
the Agent by the terms thereof, together with such powers as are
incidental thereto; and (e) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance
with its terms all the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender
including, if it is organized under the laws of a jurisdiction
outside the United States, its obligation pursuant to subsection
2.11(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance
shall be , 19 (the "Effective Date"). Following
the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance by it and recording by the
Agent pursuant to subsection 9.6 of the Credit Agreement,
effective as of the Effective Date (which shall not, unless
otherwise agreed to by the Agent, be earlier than five Business
Days after the date of such acceptance and recording by the
Agent).
5. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest,
fees and other amounts) to the Assignee whether such amounts have
accrued prior to the Effective Date or accrue subsequent to the
Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Agent for periods
prior to the Effective Date or with respect to the making of this
assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations
of a Lender thereunder and under the other Loan Documents and
shall be bound by the provisions thereof and (b) the Assignor
shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under
the Credit Agreement.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
8. The Assignor and Assignee respectively represent and
warrant to each other and to each of the Borrower and the Agent
that this Assignment and Acceptance, and the transaction
contemplated hereby, complies with the terms and provisions of
the Credit Agreement related hereto, including without limitation
subsection 9.6 thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first
above written by their respective duly authorized officers on
Schedule I hereto.<PAGE>
Schedule I
to Assignment and Acceptance
relating to the Amended and Restated
Revolving Credit Agreement,
dated as of April , 1995,
among
SMITH CORONA CORPORATION,
the Lenders named therein
and
Chemical Bank, as agent for the Lenders (in such capacity, the
"Agent")
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Principal Commitment
Amount Assigned Percentage Assigned(1)
$ . %
[Name of Assignee] [Name of Assignor]
By: By:
Name: Name:
Title: Title:
Accepted:
Chemical Bank, as Agent
By
Name:
Title:
Consented To:
[Name of Borrower]
By
Name:
Title:
1. Calculate the Commitment Percentage that is assigned to at
least 15 decimal places and show as a percentage of the aggregate
commitments of all Lenders.
EXHIBIT D
FORM OF BORROWING CERTIFICATE
Pursuant to subsection 4.1(c) of the Debtor-in-Possession Credit
Agreement dated as of July 10, 1995 by and among Smith Corona
Corporation, a Delaware corporation, as debtor and debtor-in-
possession, (the "Borrower"), Chemical Bank, as Agent and the
Lenders parties thereto (as the same may be amended, supplemented
or otherwise modified from time to time, the "Credit Agreement";
terms defined in the Credit Agreement being used herein as therein
defined), the Borrower hereby certifies as follows:
1. The representations and warranties of the borrower set forth
in the Loan Documents or which are contained in any
certificate, document or financial or other statement
furnished pursuant to or in connection with any Loan Documents
are true and correct n all material respects on and as of the
date hereof with the same effect as if made on and as of the
date hereof, except to the extent that such representations
and warranties related to an earlier date.
2. No Default or Event of Default has occurred and is continuing
as of the date hereof or after giving effect to the making of
the Loans as of the date hereof.
3. The Borrower is a corporation duly incorporated and validly
existing under the laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate on behalf of the Borrower as of the date indicated
below.
SMITH CORONA CORPORATION,
as debtor and debtor-in-possession
By:
Title:
Date:
EXHIBIT E
BORROWING BASE CERTIFICATE
Pursuant to subsection 5.2(d) of the DEBTOR-IN-
POSSESSION dated as of July 10, 1995 (the "Credit Agreement"),
among SMITH CORONA CORPORATION, a Delaware corporation, as debtor
and debtor-in-possession (the "Borrower"), the banks parties
thereto (the "Banks") and CHEMICAL BANK, as agent for the Banks
thereunder (in such capacity, the "Agent"), the Borrower hereby
certifies to the Agent as follows:
I. Set forth below for the Borrower and its Subsidiaries are
(1) the total amount of domestic accounts receivables
excluding Puerto Rico, (2) each item subtracted therefrom
pursuant to the definition of Eligible Accounts and (3) the
amount of Eligible Accounts, each as of the last day of the
fiscal month of __________, 199_.
Total Accounts __________________
Less adjustments to Accounts for:
(a) Accounts which do not meet the requirements of clause (a)
and (f) of the definition of "Eligible Accounts" in the
Credit Agreement __________________
(b) Accounts that are later than sixty (60) days after the due
date stated on the invoice therefor; __________________
(c) amounts of net credit balances the dates of which are
earlier than 60 days prior to the date of determination (as
calculated on the Report RBAR4515-A) with respect to the
aggregate Accounts of any Account Debtor with original due
dates more recent than 60 days prior to the date of
determination; __________________
(d) for the ten Accounts with the highest aggregate balances on
the accounts receivable aging summary aging of the Borrower,
the balance in the current to 60 days past due aging
categories, where 25% or more of the total face value of
such Account has been unpaid for more than 60 days, as
calculated on the Report RBAR4515-B __________________
(e) for all other Accounts, the aggregate balance in the current
to 60 days past due aging categories, where 50% or more of
the total face value of such Account has been unpaid for
more than 60 days, as calculated on the Report RBAR 4515-B
__________________
(f) advertising/preparation allowances, or "Key City"
allowances, volume and other rebate programs, and downward
price adjustments or price protection and transition
programs (collectively referred to as the "Programs"), equal
to the greater of (i) or (ii):
(i) allowance earned but not taken with respect to the
Programs, calculated as follows:
general ledger provision for the Programs, after
adjustments for additions and/or reversals
less credits issued (also referred to as payments) to
date
less total chargebacks requested by customers as
recorded on the Transaction Code Summary Aging of
Accounts
Total of (i) __________________
(ii) estimate of the current liability for the Programs,
calculated as follows:
a one-month rolling average of the last twelve months
of credits issued (also referred to as payments)
plus chargebacks requested by customers as recorded in
the current to 60 days past due aging categories on the
Transaction Code Summary Aging of Accounts
Total of (ii)
Greater of (i) or (ii)
(g) adjustments to reflect the return or rejection of, or any
loss of or damage to, any of the Inventory giving rise to
such Account, and for any material delivery, freight or
financing charges, or late or other fees, or set-offs,
counterclaims, defenses, or disputes existing or asserted
with respect to such Account __________________
(h) Accounts arising from transactions with employees, officers,
agents, directors, Stockholders, Subsidiaries or Affiliates
_________________
(i) Accounts arising from sales to the United States of America
or any state, territory, subdivision, department or agency
thereof, unless all applicable requirements of the
Assignment of Claims Act of 1940 have been met.
__________________
(j) Accounts arising from sales to debtors located outside the
United States not previously excluded __________________
(k) Accounts arising from sales to customers which are insolvent
or the subject of any bankruptcy case or insolvency
proceeding of any kind, unless such Account is due from such
Account Debtor as an administrative claim under the
Bankruptcy Code and the Agent, in the exercise of its
reasonable business judgment, deems such Account Debtor to
be creditworthy __________________
(l) non-trade receivables __________________
(m) retainages or holdbacks __________________
(n) Accounts which are not actually and absolutely owing to such
Borrower __________________
(o) Accounts which are contingent for any reason or have been
sold or discounted without recourse; __________________
(p) unbilled accounts __________________
(q) accounts unacceptable to the Required Lenders
__________________
(r) Accounts which should be charged off or written off as
uncollectible in accordance with the customary business
practice of the Borrower __________________
(s) Accounts which arise out of any claim in tort, is evidenced
by chattel paper, a promissory note, a negotiable
instrument, or any other instrument of any kind, unless the
Borrower has delivered and properly endorsed such chattel
paper, promissory note, negotiable instrument or other
instrument to the Agent, on behalf of the Required Lenders
__________________
(t) Accounts based on a cash on delivery sale, unless cash has
been received on but not yet applied to any such Account
________________
(u) Accounts arising out of the delivery of samples or trial
merchandise to customers of Account Debtors
__________________
Total Accounts Excluded __________________
Total Eligible Accounts __________________
Adjusted Eligible Accounts:
Eligible Accounts x 70% =
II. Set forth below for the Borrower and its Subsidiaries are
(1) total Inventory, (2) each item subtracted from total
Inventory pursuant to the definition of Eligible Inventory,
(3) Eligible Inventory, and (4) Eligible Service Depot
Inventory each as of the last day of the fiscal month of
_________, 199_.
Total domestic and in-transit Inventory from the Borrower's
Singapore and Mexico facilities __________________
Less Inventory consisting of:
(a) work-in-process and raw materials not previously excluded
__________________
(b) packaging materials and supplies __________________
(c) damaged or unsalable Inventory __________________
(d) Inventory located on premises other than those listed on
Schedule 4 of the Security Agreement __________________
(e) Inventory to be returned to suppliers _________________
(f) Inventory which has been consigned or sold pursuant to a
"bill and hold" or "sale or return" arrangement
_________________
(g) Inventory which is not subject to the Agent's duly
perfected, first priority Lien and no other Lien other than
Liens permitted by subsection 6.3 of the Credit Agreement
__________________
(h) reconditioned product, rework or discontinued (as each such
term is used in the inventory records of the Borrower
delivered to the Agent), Service Depot Inventory or
Defective Stock __________________
(i) Inventory which is in transit to third parties
__________________
(j) Inventory consisting of products using electrical current of
other than 110 volts _________________
(k) intercompany profit __________________
(l) Inventory unacceptable to the Required Lenders
__________________
Total Inventory Excluded __________________
Eligible (Non-Service Depot) Inventory
Adjusted Eligible (Non-Service Depot) Inventory:
Eligible (Non-Service Depot) Inventory x 40% =
Total Service Depot Inventory
Less: 30% of total Service Depot Inventory
Eligible Service Depot Inventory
Adjusted Eligible Service Depot Inventory (limited to the lesser
of the amount calculated below or $500,000):
Eligible Service Depot
Inventory X 20% = ______________
In Transit Inventory:
Finished goods Inventory in transit to the United States from
Samsung Corporation, Korea, and other approved vendors, and that
is subject to the Agent's security interest x 40% =
_______________
Total Borrowing Base:
Adjusted Eligible Accounts
Adjusted Eligible Service Depot Inventory
Adjusted Eligible (Non-Service Depot) Inventory
_____________
In Transit Inventory
Reserve for Ocean Freight, Customs Duty and Other Fees for
In Transit Inventory
Acceptance Obligations (________________)
Total Borrowing Base __________________
Terms defined in the Credit Agreement are used herein with their
meanings as defined therein.
By:
Title:
Dated as of
EXHIBIT F
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, is dated as of July 10, 1995, and made by
SMITH CORONA CORPORATION, a Delaware corporation, as a debtor and
debtor in possession (the "Borrower"), in favor of CHEMICAL BANK,
as Agent (in such capacity, the "Agent") for the lenders party to
the Debtor-in-Possession Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, Borrower, Agent and the lenders party thereto
("Lenders") have entered into a Debtor-in-Possession Credit
Agreement dated as of July 10, 1995 (as amended, restated,
supplemented or otherwise modified from time to time, the "DIP
Credit Agreement"); and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the
Borrower under the DIP Credit Agreement that the Borrower shall
have executed and delivered this Security Agreement to the Agent
for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Agent and the Lenders to enter into the DIP Credit Agreement
and to induce the Lenders to make their respective extensions of
credit to the Borrower, the Borrower hereby agrees with the Agent,
for the ratable benefit of the Lenders, as follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined herein,
terms defined in the DIP Credit Agreement and used herein shall
have the meanings given to them in the DIP Credit Agreement, and
the following terms which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents,
Equipment, Fixtures, General Intangibles, Instruments, Inventory
and Proceeds.
(b) The following terms shall have the following meanings:
"Agreement": this Security Agreement, as the same may be
amended, modified or otherwise supplemented from time to time.
"Collateral": as defined in Section 2 of this Agreement.
"Collateral Account": any collateral account established by
the Agent as provided in subsection 5.3 or subsection 7.2.
"Obligations": the collective reference to (a) the unpaid
principal of and interest on the Notes, the L/C Obligations and all
other obligations and liabilities of the Borrower to the Agent and
the Lenders (including, without limitation, interest accruing at
the then applicable rate provided in the DIP Credit Agreement after
the Termination Date), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
DIP Credit Agreement, the Notes, this Agreement, the other Loan
Documents or any other document made, delivered or given in
connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Agent or to the Lenders that are
required to be paid by the Borrower pursuant to the terms of the
DIP Credit Agreement or this Agreement or any other Loan Document)
and (b) the Prior Indebtedness.
"Patents": (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including,
without limitation, any thereof referred to in Schedule 1 hereto,
and (b) all applications for letters patent of the United States or
any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any
thereof referred to in Schedule 1 hereto.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to the Borrower of any right to
manufacture, use or sell any invention covered by a Patent,
including, without limitation, any thereof referred to in Schedule
1 hereto.
"Trademarks": (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names,
trade styles, service marks, logos and other source or business
identifiers, and the goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in
the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in Schedule
2 hereto, and (b) all renewals thereof.
"Trademark License": any agreement, written or oral,
providing for the grant by or to the Borrower of any right to use
any Trademark, including, without limitation, any thereof referred
to in Schedule 2 hereto.
"UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
2. Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the
Obligations, the Borrower hereby grants to the Agent for the
ratable benefit of the Lenders a security interest in all of the
property of the estate of the Borrower (as such term is defined in
Section 541 of the Bankruptcy Code), including all of the following
property, in each case whether now owned or at any time hereafter
acquired by the Borrower or in which the Borrower now has or at any
time in the future may acquire any right, title or interest and
wherever the same may be located (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Documents;
(e) all Equipment;
(f) all Fixtures;
(g) all General Intangibles;
(h) all Instruments;
(i) all Inventory;
(j) all Patents;
(k) all Patent Licenses;
(l) all Trademarks;
(m) all Trademark Licenses;
(n) all books and records pertaining to the Collateral; and
(o) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
3. Representations and Warranties. The Borrower hereby
represents and warrants that:
3.1 Title; No Other Liens. Except for the security interest
granted to the Agent for the ratable benefit of the Lenders
pursuant to this Agreement and the other Liens permitted to exist
on the Collateral pursuant to the DIP Credit Agreement, the
Borrower owns each item of the Collateral free and clear of any and
all Liens or claims of others. No security agreement, financing
statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except
such as have been filed in favor of the Agent, for the ratable
benefit of the Lenders, pursuant to this Agreement or as are
permitted pursuant to the DIP Credit Agreement.
3.2 Perfected First Priority Liens. The security interests
granted pursuant to this Agreement (a) constitute perfected, non-
voidable security interests in the Collateral for the ratable
benefit of the Lenders, (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for Liens
permitted to exist pursuant to the DIP Credit Agreement and (c) are
enforceable as such against (1) all creditors of and purchasers
from the Borrower (except purchasers of Inventory in the ordinary
course of business) and (2) any Person having any interest in the
real property where any of the Equipment is located.
3.3 Inventory and Equipment. The Inventory and the Equipment
constituting part of the Collateral are kept at the locations
listed on Schedule 3 hereto.
3.4 Chief Executive Office. The Borrower's chief executive
office and chief place of business is located at 65 Locust Avenue,
New Canaan, Connecticut.
4. Covenants. The Borrower covenants and agrees with the
Agent and the Lenders that, from and after the date of this
Agreement until this Agreement is terminated and the security
interests created hereby are released:
4.1 Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be
or become evidenced by any Instrument or Chattel Paper, such
Instrument or Chattel Paper shall be immediately delivered to the
Agent, duly indorsed in a manner satisfactory to the Agent, to be
held as Collateral pursuant to this Agreement.
4.2 Marking of Records. The Borrower will mark its books and
records pertaining to the Collateral to evidence this Agreement and
the security interests created hereby.
4.3 Maintenance of Insurance. (a) The Borrower will
maintain, with financially sound and reputable companies, insurance
policies (1) insuring the Inventory and Equipment constituting part
of the Collateral against loss by fire, explosion, theft and such
other casualties as may be reasonably satisfactory to the Agent and
(2) insuring the Borrower, the Agent and the Lenders against
liability for personal injury and property damage relating to such
Inventory and Equipment, such policies to be in such form and
amounts and having such coverage as may be reasonably satisfactory
to the Agent and the Lenders, with losses payable to the Borrower,
the Agent and the Lenders as their respective interests may appear.
(b) All such insurance shall (1) provide that no
cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after
receipt by the Agent of written notice thereof, (2) name the Agent
and the Lenders as additional insured parties and, with respect to
property insurance policies only, having lender's loss payable only
endorsements naming the Agent and the Lenders as loss payees and
reasonably satisfactory in all material respects to the Agent and
(3) be otherwise reasonably satisfactory in all material respects
to the Agent, with losses payable under the property insurance
policies to the Borrower, to the Agent and the Lenders as their
respective interests may appear. If the Borrower fails to provide
and pay for any insurance required herein, the Agent may, at the
Borrower's expense, procure the same, but shall not be under any
obligation to do so.
(c) The Borrower shall deliver to the Agent and the Lenders
a report of a reputable insurance broker with respect to such
insurance during the first month of each fiscal year and such
supplemental reports with respect thereto as the Agent may from
time to time reasonably request.
4.4 Payment of Obligations. The Borrower will pay and
discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all taxes, assessments and
governmental charges or levies imposed upon the Collateral or in
respect of income or profits therefrom, as well as all claims of
any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity
thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto
have been provided on the books of the Borrower and such
proceedings do not involve any material danger of the sale,
forfeiture or loss of any of the Collateral or any interest
therein.
4.5 Maintenance of Perfected Security Interest; Further
Documentation. (a) The Borrower shall maintain the security
interest created by this Agreement as a first, perfected security
interest subject only to Liens permitted to exist pursuant to the
DIP Credit Agreement and shall defend such security interest
against claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Agent
may reasonably request for the purpose of obtaining or preserving
the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, the filing of any
financing or continuation statements under the UCC in effect in any
jurisdiction with respect to the security interests created hereby.
4.6 Changes in Locations, Name, etc. The Borrower will not:
(a) permit any of the Inventory or Equipment constituting part
of the Collateral to be kept at a location other than those listed
on Schedule 4 hereto (it being understood that such Inventory and
Equipment may be relocated among such locations in the ordinary
course of the Borrower's Business); or
(b) change the location of its chief executive office and
chief place of business from that specified in subsection 3.4;
(c) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Agent in
connection with this Agreement would become seriously misleading,
unless it shall have given the Agent and the Lenders at least 30
days' prior written notice of such change.
4.7 Further Identification of Collateral. The Borrower will
furnish to the Agent and the Lenders from time to time statements
and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Agent
may reasonably request, all in reasonable detail.
4.8 Notices. The Borrower will advise the Agent and the
Lenders promptly, in reasonable detail, at their respective
addresses set forth in the DIP Credit Agreement of:
(a) any Lien (other than security interests created hereby or
Liens permitted under the DIP Credit Agreement) on, or claim
asserted against, any of the Collateral; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the
aggregate value of the Collateral or on the security interests
created hereby.
4.9 Indemnification. The Borrower agrees to pay, and to save
the Agent and the Lenders harmless from, any and all liabilities,
costs and expenses (including, without limitation, legal fees and
expenses, which may include the allocated cost of in-house counsel)
(1) with respect to, or resulting from any delay in paying, any and
all excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Collateral, (2) with
respect to, or resulting from, any delay in complying with any
Requirement of Law applicable to any of the Collateral and (3) in
connection with any of the transactions contemplated by this
Agreement.
5. Provisions Relating to Accounts.
5.1 Borrower Remains Liable under Accounts. Anything herein
to the contrary notwithstanding, the Borrower shall remain liable
under each of the Accounts to observe and perform all the
conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement
giving rise to each such Account. Neither the Agent nor any Lender
shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Agent or any Lender of any payment
relating to such Account pursuant hereto, nor shall the Agent or
any Lender be obligated in any manner to perform any of the
obligations of the Borrower under or pursuant to any Account (or
any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any
party under any Account (or any agreement giving rise thereto), to
present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or
times.
5.2 Analysis of Accounts. The Agent shall have the right to
make test verifications of the Accounts in any manner and through
any medium that it reasonably considers advisable, and the Borrower
shall furnish all such assistance and information as the Agent may
require in connection with such test verifications. At any time
and from time to time, upon the Agent's reasonable request and at
the expense of the Borrower, the Borrower shall cause independent
public accountants or others reasonably satisfactory to the Agent
to furnish to the Agent reports showing reconciliations, aging and
test verifications of, and trial balances for, the Accounts. The
Agent in its own name or on behalf of the Lenders may communicate
with account debtors on the Accounts to verify with them to the
Agent's satisfaction the existence, amount and terms of any
Accounts.
5.3 Collections on Accounts. (a) The Agent hereby
authorizes the Borrower to collect the Accounts, subject to the
Agent's direction and control, and the Agent may curtail or
terminate said authority at any time after the occurrence and
during the continuance of a Default. If required by the Agent at
any time after the occurrence and during the continuance of a
Default, any payments of Accounts, when collected by the Borrower,
(1) shall be forthwith (and, in any event, within two Business
Days) deposited by the Borrower in the exact form received, duly
indorsed by the Borrower to the Agent if required, in a Collateral
Account maintained under the sole dominion and control of the
Agent, subject to withdrawal by the Agent for the account of the
Lenders only as provided in subsection 7.3, and (2) until so turned
over, shall be held by the Borrower in trust for the Agent and the
Lenders, segregated from other funds of the Borrower.
(b) Each such deposit of Proceeds of Accounts shall be
accompanied by a report identifying in reasonable detail the nature
and source of the payments included in the deposit.
(c) At the Agent's request, the Borrower shall deliver to the
Agent all original and other documents evidencing, and relating to,
the agreements and transactions which gave rise to the Accounts,
including, without limitation, all original orders, invoices and
shipping receipts.
5.4 Representations and Warranties. (a) No amount payable
to the Borrower under or in connection with any Account is
evidenced by any Instrument or Chattel Paper which has not been
delivered to the Agent.
(b) The places where the Borrower keeps its records
concerning the Accounts are 65 Locust Avenue, New Canaan,
Connecticut and 839 State Route 13, Cortland, New York.
(c) None of the obligors on any Accounts is a Governmental
Authority.
5.5 Covenants. (a) The amount represented by the Borrower
to the Lenders from time to time as owing by each account debtor or
by all account debtors in respect of the Accounts will at such time
be the correct amount actually owing by such account debtor or
debtors thereunder.
(b) The Borrower will not amend, modify, terminate or waive
any agreement giving rise to an Eligible Account in any manner
which could reasonably be expected to materially adversely affect
the value of such Account as Collateral.
(c) The Borrower will not fail to exercise promptly and
diligently each and every material right which it may have under
each agreement giving rise to an Eligible Account (other than any
right of termination).
(d) The Borrower will not fail to deliver to the Agent a copy
of each material demand, notice or document received by it relating
in any way to any agreement giving rise to an Eligible Account.
(e) Other than in the ordinary course of business as
generally conducted by the Borrower over a period of time, the
Borrower will not grant any extension of the time of payment of any
of the Accounts, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partially, any
Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(f) The Borrower will not remove its books and records from
the location specified in paragraph 5.4(b).
(g) In any suit, proceeding or action brought by the Agent or
any Lender under any Account for any sum owing thereunder, the
Borrower will save, indemnify and keep the Agent and such Lender
harmless from and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor thereunder,
arising out of a breach by the Borrower of any obligation
thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor
or its successors from the Borrower.
6. Provisions Relating to Patents and Trademarks.
6.1 Representations and Warranties. (a) Schedule 1 hereto
includes all Patents and Patent Licenses owned by the Borrower in
its own name as of the date hereof.
(b) Schedule 2 hereto includes all Trademarks and Trademark
Licenses owned by the Borrower in its own name as of the date
hereof.
(c) To the best of the Borrower's knowledge, each Patent and
Trademark is valid, subsisting, unexpired, enforceable and has not
been abandoned.
(d) Except as set forth in either Schedule 1 or Schedule 2,
none of such Patents and Trademarks is the subject of any licensing
or franchise agreement.
(e) To the best of the Borrower's knowledge, no holding,
decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of any
Patent or Trademark.
(f) To the best of the Borrower's knowledge, no action or
proceeding is pending (other than with respect to any pending
Patent and Trademark applications) (1) seeking to limit, cancel or
question the validity of any Patent or Trademark, or (2) which, if
adversely determined, would have a material adverse effect on the
value of any Patent or Trademark.
6.2 Covenants.
(a) The Borrower (either itself or through licensees) will,
except with respect to any Trademark that the Borrower shall
reasonably determine is of negligible economic value to it, (1)
continue to use each Trademark on each and every trademark class of
goods applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-
use, (2) maintain as in the past the quality of products and
services offered under such Trademark, (3) employ such Trademark
with the appropriate notice of registration, (4) not adopt or use
any mark which is confusingly similar or a colorable imitation of
such Trademark unless the Agent, for the ratable benefit of the
Lenders, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (5) not (and not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any Trademark may become invalidated.
(b) The Borrower will not, except with respect to any Patent
that the Borrower shall reasonably determine is of negligible
economic value to it, do any act, or omit to do any act, whereby
any Patent may become abandoned or dedicated.
(c) The Borrower will notify the Agent and the Lenders
immediately if it knows, or has reason to know, that any
application or registration relating to any material Patent or
Trademark may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the
institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or any
court or tribunal in any country) regarding the Borrower's
ownership of any material Patent or Trademark or its right to
register the same or to keep and maintain the same.
(d) Whenever the Borrower, either by itself or through any
agent, employee, licensee or designee, shall file an application
for the registration of any material Patent or Trademark with the
United States Patent and Trademark Office or any similar office or
agency in any other country or any political subdivision thereof,
the Borrower shall report such filing to the Agent and the Lenders
within five Business Days after the last day of the fiscal quarter
in which such filing occurs. Upon request of the Agent, the
Borrower shall execute and deliver any and all agreements,
instruments, documents, and papers as the Agent may request to
evidence the Agent's and the Lenders' security interest in any
Patent or Trademark and the goodwill and general intangibles of the
Borrower relating thereto or represented thereby;
(e) Subject to the provisions of subsections 6.2(a) and (b),
the Borrower will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United
States Patent and Trademark Office, or any similar office or agency
in any other country or any political subdivision thereof, to
maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of the Patents and
Trademarks, including, without limitation, filing of applications
for renewal, affidavits of use and affidavits of incontestability;
provided, however, that this subsection 6.2(e) shall not be deemed
to obligate the Borrower to continue the prosecution of any
application which the Borrower reasonably believes, after
consultation with the Agent, is not patentable or registrable or is
of insignificant value to it.
(f) In the event that the Borrower should reasonably become
aware that any Patent or Trademark included in the Collateral is
infringed, misappropriated or diluted by a third party, the
Borrower shall promptly notify the Agent and the Lenders after it
learns thereof and shall, unless the Borrower shall reasonably
determine that such Patent or Trademark is of negligible economic
value to the Borrower, which determination the Borrower shall
promptly report to the Agent and the Lenders, promptly sue for
infringement, misappropriation or dilution, to seek injunctive
relief where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution, or take such other
actions as the Borrower shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark.
7. Remedies.
7.1 Notice to Account Debtors. Upon the request of the Agent
at any time after the occurrence and during the continuance of an
Event of Default, the Borrower shall notify account debtors on the
Accounts that the Accounts have been assigned to the Agent for the
ratable benefit of the Lenders and that payments in respect thereof
shall be made directly to the Agent.
7.2 Proceeds to be Turned Over To Agent. In addition to the
rights of the Agent and the Lenders specified in subsection 5.3
with respect to payments of Accounts, if an Event of Default shall
occur and be continuing all Proceeds received by the Borrower
consisting of cash, checks and other near-cash items shall be held
by the Borrower in trust for the Agent and the Lenders, segregated
from other funds of the Borrower, and shall, forthwith upon receipt
by the Borrower, be turned over to the Agent in the exact form
received by the Borrower (duly indorsed by the Borrower to the
Agent, if required) and held by the Agent in a Collateral Account
maintained under the sole dominion and control of the Agent. All
Proceeds while held by the Agent in a Collateral Account (or by the
Borrower in trust for the Agent and the Lenders) shall continue to
be held as collateral security for all the Obligations and shall
not constitute payment thereof until applied as provided in
subsection 7.3.
7.3 Application of Proceeds. At such intervals as may be
agreed upon by the Borrower and the Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the
Agent's election, the Agent may apply all or any part of Proceeds
held in any Collateral Account in payment of the Obligations in
such order as the Agent may elect, and any part of such funds which
the Agent elects not so to apply and deems not required as
collateral security for the Obligations shall be paid over from
time to time by the Agent to the Borrower or to whomsoever may be
lawfully entitled to receive the same. Any balance of such
Proceeds remaining after the Obligations shall have been paid in
full and the Commitments shall have been terminated shall be paid
over to the Borrower or to whomsoever may be lawfully entitled to
receive the same.
7.4 UCC Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, may exercise, in
addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies
of a secured party under the UCC. Without limiting the generality
of the foregoing, the Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below and the three
business days' notice provided in Section 7 of the DIP Credit
Agreement) to or upon the Borrower or any other Person (all and
each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Agent or
any Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit
risk. The Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption
in the Borrower, which right or equity is hereby waived or
released. The Borrower further agrees, at the Agent's request, to
assemble the Collateral and make it available to the Agent at
places which the Agent shall reasonably select, whether at the
Borrower's premises or elsewhere. The Agent shall apply the net
proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care
or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Agent may elect, and only after
such application and after the payment by the Agent of any other
amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the UCC, need the Agent account
for the surplus, if any, to the Borrower. To the extent permitted
by applicable law, the Borrower waives all claims, damages and
demands it may acquire against the Agent or any Lender arising out
of the exercise by them of any rights hereunder. If any notice of
a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper
if given at least 10 days before such sale or other disposition.
7.5 Deficiency. The Borrower shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Agent or any Lender
to collect such deficiency.
7.6 Borrowing Orders. Notwithstanding anything to the
contrary contained in this Agreement, the Agent's right to exercise
rights and remedies hereunder with respect to the Collateral shall
be subject to (i) the requirements of the DIP Credit Agreement,
(ii) the Interim Borrowing Order and (iii) once entered, the Final
Borrowing Order.
8. Agent's Appointment as Attorney-in-Fact; Agent's
Performance of Borrower's Obligations.
8.1 Powers. The Borrower hereby irrevocably constitutes and
appoints the Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the
Borrower and in the name of the Borrower or in its own name, from
time to time in the Agent's discretion, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing,
the Borrower hereby gives the Agent the power and right, on behalf
of the Borrower, without assent by the Borrower, to do the
following:
(a) in the case of any Account, at any time when the
authority of the Borrower to collect the Accounts has been
curtailed or terminated pursuant to paragraph 5.3(a), or in the
case of any other Collateral, at any time when any Event of Default
shall have occurred and is continuing, in the name of the Borrower
or its own name or the names of the Lenders, to take possession of
and indorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Account,
Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise deemed
appropriate by the Agent for the purpose of collecting any and all
such moneys due under any Account, Instrument, General Intangible
or Contract or with respect to any other Collateral whenever
payable;
(b) in the case of any Patents or Trademarks, to execute and
deliver any and all agreements, instruments, documents, and papers
as the Agent may request to evidence the Agent's and the Lenders'
security interest in any Patent or Trademark and the goodwill and
general intangibles of the Borrower relating thereto or represented
thereby;
(c) to pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral, to effect any repairs or any
insurance called for by the terms of this Agreement and to pay all
or any part of the premiums therefor and the costs thereof;
(d) to execute, in connection with the sale provided for in
Section 7.4 hereof, any indorsements, assignments or other
instruments of conveyance or transfer with respect to the
Collateral; and
(e) upon the occurrence and during the continuance of any
Event of Default, (1) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys
due or to become due thereunder directly to the Agent or as the
Agent shall direct; (2) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising
out of any Collateral; (3) to sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the
Collateral; (4) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (5) to defend
any suit, action or proceeding brought against the Borrower with
respect to any Collateral; (6) to settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, to
give such discharges or releases as the Agent may deem appropriate;
(7) to assign any Patent or Trademark (along with the goodwill of
the business to which any such Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions,
and in such manner, as the Agent shall in its sole discretion
determine; and (8) generally, to sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's
option and the Borrower's expense, at any time, or from time to
time, all acts and things which the Agent deems necessary to
protect, preserve or realize upon the Collateral and the Agent's
and the Lenders' security interests therein and to effect the
intent of this Agreement, all as fully and effectively as the
Borrower might do.
8.2 Performance by Agent of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements
contained herein, the Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
8.3 Borrower's Reimbursement Obligation. The expenses of the
Agent incurred in connection with actions undertaken as provided in
this Section, together with interest thereon at a rate per annum
equal to 6 1/2% above the ABR from the date of payment by the Agent to
the date reimbursed by the Borrower, shall be payable by the
Borrower to the Agent on demand.
8.4 Ratification; Power Coupled With An Interest. The
Borrower hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and
the security interests created hereby are released.
9. Duty of Agent. The Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in
its possession, under Section 9-207 of the UCC or otherwise, shall
be to deal with it in the same manner as the Agent deals with
similar property for its own account. Neither the Agent, any
Lender nor any of their respective directors, officers, employees
or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Borrower or any other Person or to take any
other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Agent and the Lenders
hereunder are solely to protect the Agent's and the Lenders'
interests in the Collateral and shall not impose any duty upon the
Agent or any Lender to exercise any such powers. The Agent and the
Lenders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents
shall be responsible to the Borrower for any act or failure to act
hereunder, except for their own gross negligence or willful
misconduct.
10. Execution of Financing Statements. Pursuant to Section
9-402 of the UCC, the Borrower authorizes the Agent to file
financing statements with respect to the Collateral without the
signature of the Borrower in such form and in such filing offices
as the Agent reasonably determines appropriate to perfect the
security interests of the Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any jurisdiction.
The Agent shall, at the Borrower's expense, provide the Borrower
with prior written notice of such filing, as well as a stamped file
copy of such financing statement following any such filing.
11. Authority of Agent. The Borrower acknowledges that the
rights and responsibilities of the Agent under this Agreement with
respect to any action taken by the Agent or the exercise or non-
exercise by the Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting
or arising out of this Agreement shall, as between the Agent and
the Lenders, be governed by the DIP Credit Agreement and by such
other agreements with respect thereto as may exist from time to
time among them, but, as between the Agent and the Borrower, the
Agent shall be conclusively presumed to be acting as agent for the
Lenders with full and valid authority so to act or refrain from
acting, and the Borrower shall be under no obligation, or
entitlement, to make any inquiry respecting such authority.
12. Notices. All notices, requests and demands to or upon
the Agent or the Borrower to be effective shall be in writing (or
by telex, fax or similar electronic transfer confirmed in writing)
and shall be deemed to have been duly given or made (a) when
delivered by hand or (b) if given by mail, when deposited in the
mails by certified mail, return receipt requested, or (c) if by
telex, fax or similar electronic transfer, when sent and receipt
has been confirmed, addressed to the Agent or the Borrower at its
address or transmission number for notices provided in subsection
9.2 of the DIP Credit Agreement. The Agent and the Borrower may
change their addresses and transmission numbers for notices by
notice in the manner provided in this Section.
13. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
14. Amendments in Writing; No Waiver; Cumulative Remedies.
14.1 Amendments in Writing. None of the terms or provisions
of this Agreement may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Borrower
and the Agent, provided, that any provision of this Agreement may
be waived by the Agent and the Lenders in a letter or agreement
executed by the Agent or by telex or facsimile transmission from
the Agent.
14.2 No Waiver by Course of Conduct. Neither the Agent nor
any Lender shall by any act (except by a written instrument
pursuant to subsection 14.1 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising, on the part of the Agent or
any Lender, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Agent or such Lender would
otherwise have on any future occasion.
14.3 Remedies Cumulative. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by
law.
15. Section Headings. The section and subsection headings
used in this Agreement are for convenience of reference only and
are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
16. Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of the Borrower (which shall
include a Chapter 7 or Chapter 11 trustee for the Borrower) and
shall inure to the benefit of the Agent and the Lenders and their
successors and assigns.
17. Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the law of the State
of New York.
18. Chapter 11 Fees and Expenses. Notwithstanding anything
to the contrary contained herein, none of the terms or conditions
hereunder shall be deemed to alter, limit or impair the provisions
of Section 2.23 of the DIP Credit Agreement.
[Remainder of page intentionally left blank]<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Security
Agreement to be duly executed and delivered as of the date first
above written.
SMITH CORONA CORPORATION
By
Title
<PAGE>
Schedule 1
PATENTS AND PATENT LICENSES
<PAGE>
Schedule 2
TRADEMARKS AND TRADEMARK LICENSES
<PAGE>
Schedule 3
INVENTORY AND EQUIPMENT
Item<PAGE>
Location<PAGE>
Inventory 839 Route 13 South
Cortland, New York 13045
2055 Dublin Drive
Suite 102
San Diego, CA 92173
Citywide Transp. Co.
Trucking and Warehousing
933 North Nimitz Highway
Honolulu, Hawaii 96817
Equipment 839 Route 13 South
Cortland, New York 13045
Exhibit G
Smith Corona
Collateral Monitoring Reporting Requirements
Documents to be Submitted to the Bank
Reporting Frequency - Monthly:
1. Exhibit E - Borrowing Base Certificate with supporting
documentation for ineligible accounts receivable and
inventory and Monthly Activity Report (See #14 and #15
below).
2. Reconciliation of Month End A/R Aging Report to Monthly
Activity Report.
3. Consolidated Financial Statements and "Monthly Reporting
Package", including Commentary and Executive Summary.
4. Fiscal Calendar
5. Transaction Code Summary Aging by Customer and in Total
6. Month to Date A/R Transaction Record (Report NBAR2315)
7. "Net Invoice Amount by Order Type" - Detail Gross Sales and
Credits by Order Type #1 through #7.
8. Ten Largest Customer A/R Balances per the most recent aging
and Subsequent Cash Collections of these balances.
9. Summarized Inventory Perpetual referred to as "Domestic
Typewriter Inventory" and "Domestic Accessory Inventory"
Reports, reconciled to Summary Page of "Finished Goods
Inventory by Detail Account" (RBGLO817)
10. Finished Good Inventory by Location, reconciled to
"Inventory Valuation Report"(RBCI7201B)
11. Gross Margin Analysis by Product Line for "Domestic" and "New
Products". Please provide Monthly and Year to Date Reports
compared to Prior Year.
12. Aged Accounts Payable Report - Summary by Vendor
13. Cash Disbursement Ledger (Upon Request)
14. Detailed Supporting Documentation (mutually exclusive) for Ineligibles:
Accounts Receivable:
>60 Days Past Due
Credit Reclassifications (Report RBAR4515-A)
25% Cross Aging Report for Ten Largest Customer A/R Balances
50% cross Aging for all Other Customers (Report RBAR4515-B)
For Adv ertising/Preparation Allowances, Volume and Other
Rebate Programs, Price Protection and Transition Programs,
please provide the calculation of: (fI) allowance earned
but not taken, and (fII) estimated of current liability as
outlined in the Borrowing Base Certificated on Exhibit E.
Supporting documentation to include: "Marketing Reserves Summary,
Life to Date, As of Month End", and "Marketing Program Reserves,
Fiscal Year (93-94-95) Payments, Most Recent 20 Months".
Charge backs: Returned Merchandise
Customer Claiming Short Shipments
Other (Including Unearned Discounts,
(including finance charges)
unidentified underpayments, freight and
vendor audit adjustments)
Consignment
Government
Employee
Inventory:
Reconditioned Product (Department 283)
Service Depot (Department 390)
Rework (Department 277)
Discontinued Typewriters and Word Processors
Goods on Consignment
Defective Stock
Reserve for Ocean Freight, Customs Duty, and Other Fees for
In-transit Inventory from Singapore
15. Detailed Supporting Documentation for Monthly Accounts
Receivable Activity Report (Exhibit_____):
Summary Page of Invoice Register (Report 701-34)
Lockbox Deposit Activity Sheet and JV #120022
Reports should be addressed to:
Tara Hopkins
Chemical Bank
270 Park Avenue-29th Floor
New York, NY 10017
Phone: (212) 270-7649
Fax: (212) 270-7449
<PAGE>
Smith Corona Exhibit_____
Monthly Activity Report
As of________________________
Beginning of Month Accounts Receivable __________
Gross Invoices - Code 01 & Code 07 __________
Other Gross Sales __________
Collection Receipts Applied __________
Cash Discounts __________
Returns (Never Ordered) - Code 02 __________
Net Credit/Rebills - Code 03 & Code 05 __________
Defective Units - Code 04 __________
Price Adjustments - Code 06 __________
Write Offs - Net of Reversals __________
Other Debit/Credit Adjustments __________
End of Month Accounts Receivable __________
The undersigned certifies the information provided in this report
to Chemical Bank is accurate based on the accounting records of
Smith Corona
___________________________________________
EXHIBIT H
UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
IN RE: SMITH CORONA CORP.,
Debtors.
) In Proceedings for a
) Reorganization Under Chapter 11
) Case No.95-788HSB
)
)
)
FINAL ORDER (i) AUTHORIZING POST PETITION FINANCING
AND (iv) GRANTING SENIOR LIENS AND
PRIORITY ADMINISTRATIVE EXPENSE CLAIM STATUS
Upon the motion of the above-captioned Debtor and Debtor-in-
Possession dated July ,1995 (the "Motion") for authority,
pursuant to Section 364(c) of the United States Bankruptcy Code,
11 U.S.C. Section 101 et seq. (the "Bankruptcy Code") and
Bankruptcy Rule 4001(c), inter alia, to (i) borrow funds and
receive letter of credit financing from Chemical Bank and Bank of
America Illinois (jointly and severally, the "Lenders") pursuant
to that certain debtor-in-possession credit agreement, security
agreement and the related agreements, instruments and documents
substantially in the form annexed to the Motion (collectively,
the "Credit Agreement"); (ii) grant security interests for the
loans, advances and obligations owed and to be incurred by the
Debtor pursuant to the Credit Agreement; and (iii) grant super
priority administrative claim status in respect of such loans,
advances and obligations; and it further appearing that:
a. The ability of the Debtor to continue in business so that it
can attempt to reorganize under the Bankruptcy Code depends upon
obtaining the relief requested in the Motion.
b. Notice of the relief requested in the Motion, including a
sufficient description of the terms of the Credit Agreement, has
been given, inter alia, to the United
States Trustee and all parties entitled to notice pursuant to
Bankruptcy Rule 4001(c).
NOW, THEREFORE, upon the record of the interim hearing
held before this
Court with respect to the Motion on July 10,1995 and the final
hearing on July ,1995, it is hereby found that:(1)
A. On July 5, 1995 (the "Petition Date"), the Debtor
filed a voluntary Chapter 11 petition under the
Bankruptcy Code. No trustee or examiner has been
appointed. The Debtor is authorized to operate its
business as debtor-in-possession.
B. The Debtor is unable to obtain the financing that is
contemplated by the Credit Agreement on an unsecured
basis under Section 503(b)(1) of the Bankruptcy Code.
C. Sufficient and adequate notice of the relief
requested in the Motion has been given pursuant to
Sections 102(1) and 364(c) of the Bankruptcy Code and
Bankruptcy Rules 2002 and 4001(c), and no further
notice of or hearing on the relief sought in the Motion
is required. The Court has jurisdiction over this case
and the parties and property affected hereby pursuant
to 28 U.S.C. 157(b)(2)(D) and 1334.
D. The financing arrangement contemplated by the Motion
and approved herein pursuant to which post-petition
loans and letter of credit financing will be made
available to the Debtor is the product of an arms
length negotiation and is entered into by the Lenders
in good faith, as the term "good faith" is used in
Section 364(e) of the Bankruptcy Code, and such
arrangements and the transactions contemplated by the
Credit Agreement do not provide Lenders with sufficient
control over the Debtor to subject the Lenders to any
liability (including, without limitation, environmental
liability as an "owner","operator" or "responsible
person" as those terms are used in the Comprehensive
Environmental Response, Compensation and Liability Act
of 1980, as amended by the Superfund Amendments and
Reauthorizations Act of 1986) in connection with the
management of any of the Debtor's businesses or
properties. Neither the Credit Agreement, the financing
arrangement contemplated therein and approved herein,
including the granting of the liens and security
interests to or for the benefit of the Lenders in the
Collateral nor the exercise of any rights or remedies
by or on behalf of the Lenders in connection therewith,
constitute or will constitute any breach, violation or
infringement of (i) any trademark, copyright or other
intellectual property right of the Debtor or any third
party or (ii) any contract to which the Debtor or any of
their properties is subject.
E. The Debtor will receive and benefit from
the credit provided under the Credit
Agreement authorized herein. The credit provided under
the Credit Agreement is necessary to fund the business
of the Debtor and, will contribute to payment of the
actual and necessary costs and expenses of preserving
its estate.
F. The assets of the Debtor are unencumbered
and do not constitute the collateral of any
party, except (i) for the Lenders as to assets existing
before and after the Petition Date, and (ii) as
expressly permitted under the Credit Agreement.
G. The Lenders have agreed to provide financing on the
terms and conditions in the Credit Agreement and in
reliance thereon and provided that the Court enters
an order satisfactory to the Lenders approving the
Credit Agreement and granting such liens, claims and
priorities to or for the benefit of Lenders as are set
forth herein and in the
Credit Agreement with respect to all Obligations.
H. Good, adequate and sufficient cause has been
shown to justify the granting of the relief requested
in the Motion.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. The motion is granted and the Credit Agreement is
hereby approved subject to the terms and conditions hereinafter
set forth.
2. The Debtor is authorized to obtain loans and
request the issuance of letters of credit pursuant to
the terms of the Credit Agreement and this Order, in a
maximum amount outstanding not to exceed $24,000,000.
3. The payment of the Prior ndebtedness pursuant to
the Credit Agreement and this Order shall be without
prejudice to the right of any official committee
to seek to avoid, pursuant to Section 547 of the
Bankruptcy Code, any lien granted to Lenders in respect
of the Prior Indebtedness.
4. The Debtor is hereby authorized and directed
(x) to execute and deliver the Credit Agreement and all
other documents necessary or desirable to implement the
Credit Agreement (through one or more officers
designated by it), (y) to effect all transactions and
take any actions provided for in the Credit Agreement
(including, subject to the last sentence of this
paragraph, the payment of the Prior Indebtedness) or
deemed necessary by Lenders to effectuate the terms and
conditions of the Credit Agreement and
this Order, including, without limitation, the payment
of any and all fees, costs, charges, commissions and
expenses, including counsel fees, payable under the
Credit Agreement or this Order, and (z) comply with a11
provisions of the Credit Agreement, including (without
limitation) the payment and satisfaction in full of all
Obligations when due in accordance with the terms of
the Credit Agreement.
5. All Obligations owing to Lenders hereunder or under
the Credit Agreement (including, but not limited to,
the obligation to pay principal, interest, professional
fees, costs, charges, commissions and expenses,) shall
be paid as provided in the Credit Agreement when due,
without defense, offset, reduction or counterclaim, and
shall constitute allowed claims to the full extent
thereof against the Debtor arising under Section
364(c)(1) of the Bankruptcy Code, with priority for
such claims over any and all administrative expenses
(other than the United States Trustee's fees) of the
kind specified or ordered pursuant to any provision of
the Bankruptcy Code, including, but not limited to,
Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b)
and 726 of the Bankruptcy Code, provided that, upon the
occurrence and during the continuation of an Event of
Default or the exercise by the Lenders of their
remedies after an Event of Default under the Credit
Agreement, such claims and the liens arising in respect
thereof shall be subject to the Carve-Out;(2) provided
further that, so long as no Event of Default shall have
occurred and be continuing, the Debtor shall be
permitted to pay administration expenses of the kind
specified in Section 503(b) of the Bankruptcy Code
incurred in the ordinary course of the Debtor's
business (or otherwise as expressly permitted in the
Credit Agreement) and compensation and reimbursement
allowed and payable under Sections 330 and 331 of the
Bankruptcy Code in amounts allowed by this Court. Such
claims of the Lenders shall at all times be senior, in
this and any subsequent proceeding under the Bankruptcy
Code, to the rights of the Debtor, any successor
trustee and (except to the extent of the Carve-out) any
claims of any creditor or other entity. No cost or
expense of administration or any claims in this case,
including those resulting from or incurred after any
conversion of this proceeding pursuant to Section 1112
of the Bankruptcy Code shall (except to the extent of
the Carve-Out) rank prior to, or on parity with, the
claims of the Lenders arising hereunder or under the
Credit Agreement. Such claims of Lenders are and shall
be secured by duly perfected, non-voidable (subject
only to paragraph 3 of this Order) first priority
(subject to the next sentence) senior liens on and
security interests in the Collateral (whether now owned
or hereafter acquired, including all proceeds and
products thereof), ranking prior to the liens, security
interests, claims or encumbrances at any time existing
or arising which may be asserted by any person or
entity pursuant to statute, lease or other contract or
otherwise, except that the liens of the Lenders
pursuant to the Credit Agreement and this Order shall
rank junior in priority only to (a) the Replacement
Lien granted to the Lenders pursuant to the Interim
Stipulation And Consent Order Regarding Debtor-In-
Possession's Short Term Use of Cash Collateral dated
and entered July 5,1995, and (b) duly perfected, valid,
enforceable and non-voidable liens and security
interests, if any, existing prior to the conunencement
of these cases as set forth on Schedule 6.3 of the
Credit Agreement ("Preexisting Liens"). Any security
interests or liens in favor of third parties avoided
and preserved in these cases (other than the liens of
the Lenders under the Prior Agreement) shall be subject
and subordinate to the liens and security interests in
favor of the Lenders pursuant to the Credit Agreement
and this Order. Other than (i) liens and security
interests in favor of the Lenders, (ii) Preexisting
Liens, and (iii) permitted encumbrances allowed in
accordance with the terms of the Credit Agreement
(collectively, the "Other Liens"), no liens or security
interests shall attach to the Collateral or any other
property of the Debtor's estate in this or any
subsequent proceeding under the Bankruptcy Code without
the Lenders' express written consent. The Lenders at
their option may release from their security interest
at any time any assets determined by the Lenders to
have a risk of environmental liabilities which the
Lenders, in their discretion, deem unacceptable. The
Lenders shall have no duty, expressed or implied, to
any holder of the Other Liens, to take, or refrain from
taking, any action with respect to the Obligations,
including, without limitation, any action with respect
to the Collateral.
6. No order shall be entered in these cases authorizing
the incurrence of indebtedness or other financial
accommodations not permitted by the Credit Agreement
unless (a) the Lenders consent in writing thereto or
(b) the proceeds thereof are used first to satisfy in
full all Obligations owing to the Lenders under the
Credit Agreement in accordance with the terms of the
Credit Agreement.
7. Other than the Carve-Out, no cost or expense,
including, but not limited to, any cost or expense of
administration of the Debtor's Chapter 11 case or any
future proceeding which may develop out of such case,
including liquidation in chapter 7 or other proceedings
under the Bankruptcy Code, shall be charged against the
Collateral pursuant to Section 506(c) of the Bankruptcy
Code or otherwise, without the prior written consent of
Lenders, and no such consent shall be implied from any
action, inaction or acquiescence by the Lenders.
8. All liens and security interests granted herein or
under the Credit Agreement on or in property of the
Debtor's estate to or for the benefit of the Lenders
shall be, and they hereby are, deemed duly perfected
and recorded under all applicable federal or state laws
as of the date hereof, and no notice, filing, mortgage
recordation, possession, further order or other act,
shall be required to effect such perfection; provided,
however, that the Lenders may, in their sole option
(and notwithstanding the provisions of Section 362 of
the Bankruptcy Code), file or cause the Debtor to
execute, file or record, at the Debtor's expense, such
Uniform Commercial Code financing statements, notices
of liens and security interests, mortgages and other
similar documents as the Lenders may require, and the
Debtor is directed to cooperate and comply therewith.
If the Lenders, in their sole discretion, shall elect
for any reason to file or record any such notices,
financing statements, mortgages, or other documents
with respect to such security interests and liens, or
take possession, all such financing statements or
similar documents or taking possession shall be deemed
to have been filed or recorded or taken in the Debtor's
Chapter 11 case as of the commencement of the case. The
Lenders may, in their discretion, file a certified copy
of this Order in any filing or recording office in any
county or other jurisdiction in which any Debtor has
real or personal property and such filing shall
constitute further evidence of perfection of Lenders'
interest in the Collateral. Neither the granting of the
liens and security interests to the Lenders in the
Collateral (including, without limitation, the
inventory of the Debtor) nor the exercise of any rights
or remedies by Lenders in connection therewith will
result in any breach, violation or infringement of (i)
any trademark, copyright or other intellectual property
right of the Debtor or any third party or (ii) any
contract to which the Debtor or any of its properties
is subject.
9. The Lenders, having been found to be lenders in good
faith, shall be entitled to the full protection of
Section 364(e) of the Bankruptcy Gode, and the liens,
security interests and priorities created or authorized
in this Order and the Credit Agreement are created and
authorized pursuant to Sections 364(c)(1), (2), and (3)
of the Bankruptcy Code and are entitled to the benefits
and protections of Section 364(e) of the Bankruptcy
Code.
10. The Lenders are entitled to all of the rights,
benefits, privileges and remedies set forth or provided
herein or in the Credit Agreement (and to the extent
set forth or provided for in the Credit Agreement are
fully incorporated herein), including, but not limited
to all of the rights, benefits, privileges and remedies
available to the Lenders upon the occurrence and during
the continuance of a Default or an Event of Default (as
defined in the Credit Agreement, and which includes any
reversal, stay or modification of this Order without
the Lenders' consent, the appointment of an interim or
permanent trustee in this case and the conversion or
dismissal of this case), and the automatic stay of
Section 362 of the Bankruptcy Code (to the extent
applicable) is vacated to permit the exercise,
enjoyment and enforcement of any of such rights,
benefits, privileges and remedies, including, but not
limited to, (a) the termination by the Lenders of all
of their obligations under the Credit Agreement and (b)
the enforcement of the priority claims and liens
granted to or for the benefit of Lenders hereunder or
under the Credit Agreement, provided that, the Lenders
shall give the Debtor, and any official committees,
three business days' prior written notice (the
"Enforcement Notice") of any enforcement against the
Collateral, and file a copy of such Enforcement Notice
with the clerk of the Court. Without limiting the
foregoing, upon the occurrence and during the
continuance of an Event of Default and the giving of
the Enforcement Notice, the Lenders may (at their
option), but shall have no duty to, (i) enter upon any
leased premises of the Debtor for the purposes of
exercising their remedies with respect to and taking
possession of Collateral located thereon, (ii) cure
defaults (if any), and/or (iii) perform any obligations
under any leases covering such premises required to be
cured or performed pursuant to Sections 365(d)(3) or
503(a) of the Bankruptcy Code (such actions not to be
deemed an assumption of any such lease), and the
Lenders shall be entitled to (a) all of the Debtor's
rights and privileges as lessee under such leases and
(b) exercise any of such rights and remedies
notwithstanding any default by Debtor under any such
lease, and all without interference from the lessors
thereunder.
11. The provisions of this Order and any actions taken
pursuant hereto shall survive entry of any other order
which may be entered in this case, including any order
(i) confirming any plan of reorganization, (ii)
converting these proceedings from Chapter 11 to Chapter
7, or (iii) dismissing this case, and the terms and
provisions of this Order as well as the priorities in
payment, liens and security interests granted pursuant
to this Order and the Credit Agreement shall continue
in full force and effect notwithstanding the entry of
such other order, until all of the Obligations owing to
Lenders hereunder and under the Credit Agreement are
indefeasibly satisfied and discharged in accordance
with their terms.
12. If any or all of the provisions of this Order are
hereafter reversed, modified, vacated or stayed by
subsequent order of this Court or any other court, such
reversal, stay, modification or vacatur shall not
affect the validity and enforceability of any
Obligation, debt or claim incurred, or any priority,
security interest or lien that is or was incurred or
granted pursuant to the Credit Agreement or this Order,
and notwithstanding any stay, reversal, modification or
vacatur of this Order, any Obligations owing to Lenders
arising prior to the effective date of such stay,
reversal, modification or vacatur, shall be governed in
all respects by the original provisions of this Order
and the Credit Agreement, as the case may be. Lenders
shall be entitled to all of their respective rights,
privileges and benefits hereunder and under the Credit
Agreement including, without limitation, the liens,
security interests, priorities, rights and remedies
granted herein and therein to or for their benefit with
respect to all Obligations owing to Lenders, all
Collateral securing same and the priority granted
therefor under Bankruptcy Code Section 364(c)(1).
13. This Court retains and reserves jurisdiction to
enforce all provisions of this Order.
Dated: Wilmington, DE July ,1995
Helen S. Balick
Chief Judge United States
Bankruptcy Court
(1) All undefined capitalized terms used herein shall have the
meanings ascribed to them in the Credit Agreement.
(2) The Carve-Out as defined in section 2.23 of the Credit
Agreement consists of unpaid professional fees and expenses
allowed in this Chapter 11 Case in an aggregate amount
(determined without regard to fees and expenses awarded and
paid on an interim basis) not to exceed $ 1,000,000 inclusive
of aggregate fee holdbacks. EXHIBIT I
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE:
SMITH CORONA CORP.,
In Proceedings for a
Reorganization Under Chapter 11 Case No. 95-788 HSB
Debtors.
INTERIM ORDER (i) AUTHORIZING POST PETITION FINANCING
AND (ii) GRANTING SENIOR LIENS AND
PRIORITY ADMINISTRATIVE EXPENSE CLAIM STATUS
Upon the motion of the above-captioned Debtor and Debtor-in-
Possession (the "Debtor") dated July ,1995 (the "Motion") for
authority, pursuant to Section 364(c) of the United States
Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the "Bankruptcy
Code") and Bankruptcy Rule 4001(c), inter alia, on an interim
basis until the final hearing, to (i) borrow funds and receive
letter of credit financing from Chemical Bank and Bank of America
Illinois (jointly and severally, the "Lenders") pursuant to that
certain debtor-in-possession credit agreement, security agreement
and the related agreements, instruments and documents
substantially in the form annexed to the Motion (collectively,
the "Credit Agreement"); (ii) grant security interests for the
loans, advances and obligations owed and to be incurred by the
Debtor pursuant to the Credit Agreement; and (iii) grant super
priority administrative claim status in respect of such loans,
advances and obligations; and it further appearing that:
a. The ability of the Debtor to continue in business so that it
can attempt to reorganize under the Bankruptcy Code depends upon
obtaining the relief requested in the Motion.
b. Notice of the relief requested in the Motion, including a
sufficient description of the terms of the Credit Agreement, has
been given, inter alia, to the United States Trustee and all
parties entitled to notice pursuant to Bankruptcy Rule 4001(c).
NOW, THEREFORE, upon the record of the hearing held
before this Court with respect to the Motion on July
10,1995, it is hereby found that:l
A. On July 5, 1995, (the "Petition Date"), the Debtor
filed a voluntary chapter 11 petition under the
Bankruptcy Code. No trustee or examiner has been
appointed. The Debtor is authorized to operate its
business as debtor-in-possession.
B. The Debtor is unable to obtain the financing that is
contemplated by the Credit Agreement on an unsecured
basis under Section 503(b)(1) of the Bankruptcy Code.
C. Sufficient and adequate notice of the relief
requested in the Motion has been given pursuant to
Sections 102(1) and 364(c) of the Bankruptcy Code and
Bankruptcy Rules 2002 and 4001(c), and no further
notice of or hearing on the relief sought in the
Motion is required. The Court has jurisdiction over
this case and the parties and property affected hereby
pursuant to 28 U.S.C. SS157(b)(2)(D) and 1334.
D. The financing arrangement contemplated by the
Motion and approved herein pursuant to which post-
petition loans and letter of credit financing will be
made available to the Debtor is the product of an arms
length negotiation and is entered into by the Lenders
in good faith, as the term "good faith" is used in
Section 364(e) of the Bankruptcy Code, and such
arrangements and the transactions contemplated by the
Credit Agreement do not provide the Lenders with
sufficient control over the Debtor to subject the
Lenders to any liability (including, without
limitation, environmental liability as an "owner",
"operator" or "responsible person" as those terms are
used in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorizations Act of
1986) in connection with the management of any of the
Debtor's businesses or properties. Neither the Credit
Agreement, the financing arrangement contemplated
therein and approved herein, including the granting of
the liens and security interests to or for the benefit
of the Lenders in the Collateral, nor the exercise of
any rights or remedies by or on behalf of the Lenders
in connection therewith, constitute or will constitute
any breach, violation or infringement of (i) any
trademark, copyright or other intellectual property
right of the Debtor or any third party or
(ii) any contract to which the Debtor or any of their
properties is subject.
E. The Debtor will receive and benefit from the credit
provided under the Credit Agreement authorized herein.
The credit provided under the Credit Agreement is
necessary to fund the business of the Debtor and will
contribute to payment of the actual and necessary costs
and expenses of preserving its estate.
F. Entry of this Order on an interim basis is necessary
to avoid immediate and irreparable harm to the estate
pending a final hearing pursuant to Bankruptcy Rule
4001 (c) (the "Final Hearing").
G. The assets of the Debtor are unencumbered and do not
constitute the collateral of any party, except (i) for
the Lenders as to assets existing before and after the
Petition Date, and (ii) as expressly permitted under
the Credit Agreement.
H. The Lenders have agreed to provide financing on the
terms and conditions in the Credit Agreement and in
reliance thereon and provided that the Court enters
an order satisfactory to the Lenders approving the
Credit Agreement and granting such liens, claims and
priorities to or for the benefit of Lenders as are set
forth herein and in the Credit Agreement with respect
to all Obligations.
I. Good, adequate and sufficient cause has been shown
to justify the granting of the relief requested in the
Motion.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. The Motion is granted and the Credit Agreement is
hereby approved on an interim basis subject to the
terms and conditions hereinafter set forth.
2. The Debtor is authorized to obtain loans and request
the issuance of letters of credit pursuant to the terms
of the Credit Agreement and this Order, provided that
(x) the maximum aggregate outstanding amount of Loans
and Letters of Credit available under the Credit
Agreement shall not exceed $24,000,000 and (y) the
payment by the Debtor of the Prior Indebtedness
pursuant to the Credit Agreement shall be without
prejudice to the right of appropriate parties in
interest on behalf of this estate to seek to
avoid, pursuant to Section 547 of the Bankruptcy Code,
any lien granted to the Lenders in respect of such
Prior Indebtedness. The amount to be borrowed by the
Debtor pursuant to this Order, pending the final
hearing, shall be limited to $ 1,500,000 in addition to
the refunding of the Obligations owing to the Lenders
at the Petition Date as set forth in paragraph 31 of
the Motion.
3. The Debtor is hereby authorized and
directed (x) to execute and deliver the
Credit Agreement and all other documents necessary or
desirable to implement the Credit Agreement
(through one or more officers designated by it), (y) to
effect all transactions and take any actions provided
for in the Credit Agreement (including the payment of
the Prior Indebtedness) or deemed necessary by Lenders
to effectuate the terms and conditions of the Credit
Agreement and this Order, including, without
limitation, the payment of any and all fees,
costs, charges, commissions and expenses, including
counsel fees, payable under the Credit Agreement or
this Order, and (z) comply with all provisions of the
Credit Agreement, including, without limitation, the
payment and satisfaction in full of all Obligations
when due in accordance with the terms of the Credit
Agreement.
4. All Obligations owing to the Lenders
hereunder or under the Credit Agreement
(including, but not limited to, the obligation to pay
principal, interest, professional fees, costs, charges,
commissions and expenses), shall be paid as
provided in the Credit Agreement when due, without
defense, offset, reduction or counterclaim, and shall
constitute allowed claims to the full extent thereof
against the Debtor arising under Section 364(c)(1) of
the Bankruptcy Code, with priority for such claims over
any and all administrative expenses (other than the
United States Trustee's fees) of the kind specified or
ordered pursuant to any provision of the Bankruptcy
Code, including, but not limited to, Sections 105, 326,
328, 503(b), 506(c), 507(a), 507(b) and 726 of the
Bankruptcy Code, provided that, upon the
occurrence and during the continuation of an Event of
Default or the exercise by the Lenders of their
remedies after an Event of Default under the Credit
Agreement, such claims and the liens arising in respect
thereof shall be subject to the Carve-Out;(2) provided
further that, so long as no Event of Default shall have
occurred and be continuing, the Debtor shall be
permitted to pay administration expenses of the kind
specified in Section 503(b) of the Bankruptcy Code
incurred in the ordinary course of the Debtor's
business (or otherwise as expressly permitted in the
Credit Agreement), and compensation and reimbursement
payable under Sections 330 and 331 of the Bankruptcy
Code in amounts allowed by this Court. Such claims of
the Lenders shall at all times be senior, in this and
any subsequent proceeding under the Bankruptcy Code, to
the rights of the Debtor, any successor trustee and
(except to the extent of the Carve-Out) any claims of
any creditor or other entity. No cost or expense of
administration or any claims in this case, including
those resulting from or incurred after any conversion
of this proceeding pursuant to Section 1112 of the
Bankruptcy Code shall (except to the extent of the
Carve-Out) rank prior to, or on parity with, the claims
of the Lenders arising hereunder or under the Credit
Agreement. Such claims of Lenders are and shall be
secured by duly perfected, nonvoidable (subject only to
the provisions of paragraph 2 above) first priority
(subject to the next sentence) senior liens on and
security interests in the Collateral (whether now owned
or hereafter acquired, including all proceeds and
products thereof), ranking prior to all liens, security
interests, claims and encumbrances at any time existing
or arising which may be asserted by any person or
entity pursuant to statute, lease or other contract or
otherwise, except that the liens of the Lenders
pursuant to the Credit Agreement and this Order shall
rank junior in priority only to (a) the Replacement
Lien granted to the Lenders pursuant to the Interim
Stipulation and Consent Order Regarding Debtor-In-
Possession's Short Term Use Of Cash Collateral dated
and entered July 5, 1995, and (b) duly perfected,
valid, enforceable and non-voidable liens and security
interests, if any, existing prior to the commencement
of this case as set forth on Schedule 6.3 of the Credit
Agreement ("Preexisting Liens"). Any security interests
or liens in favor of third parties avoided and
preserved in this case (other than the liens of the
Lenders under the Prior Agreement) shall be subject and
subordinate to the liens and security interests in
favor of the Lenders pursuant to the Credit Agreement
and this Order. Other than (i) liens and security
interests in favor of the Lenders, (ii) Preexisting
Liens, and (iii) permitted encumbrances allowed in
accordance with the terms of the Credit Agreement
(collectively, the "Other Liens"), no liens or security
interests shall attach to the Collateral or any other
property of the Debtor's estate in this or any
subsequent proceeding under the Bankruptcy Code without
the Lenders' express written consent. The Lenders at
their option may release from their security interest
at any time any assets including, inter alia, those
assets determined by the Lenders to have a risk of
environmental liabilities which the Lenders, in their
discretion, deem unacceptable. The Lenders shall have
no duty, expressed or implied, to any holder of the
Other Liens, to take, or refrain from taking, any
action with respect to the Obligations,
including, without limitation, any action with respect
to the Collateral.
5. No order shall be entered in these cases
authorizing the incurrence of indebtedness or
other financial accommodations not permitted by the
Credit Agreement unless (a) the Lenders consent in
writing thereto or (b) the proceeds thereof are used
first to satisfy in full all Obligations owing to the
Lenders under the Credit Agreement in accordance with
the terms of the Credit Agreement.
6. Other than the Carve-Out, no cost or
expense, including, but not limited to, any
cost or expense of administration of the Debtor's
Chapter 11 case or any future proceeding which may
develop out of such case, including liquidation in
chapter 7 or other proceedings under the Bankruptcy
Code, shall be charged against the Collateral pursuant
to Section 506(c) of the Bankruptcy Code or otherwise,
without the prior written consent of Lenders, and no
such consent shall be implied from any action, inaction
or acquiescence by the Lenders.
7. All liens and security interests granted
herein or under the Credit Agreement on or
in property of the Debtor's estate to or for the
benefit of Lenders shall be, and they hereby are,
deemed duly perfected and recorded under all
applicable federal or state laws as of the date
hereof, and no notice, filing, mortgage recordation,
possession, further order or other act, shall be
required to effect such perfection; provided, however,
that the Lenders may, in their sole option (and
notwithstanding the provisions of Section 362 of the
Bankruptcy Code), file or cause the Debtor to execute,
file or record, at the Debtor's expense, such Uniform
Commercial Code financing statements, notices of liens
and security interests, mortgages and other similar
documents as the Lenders may require, and the Debtor
is directed to cooperate and comply therewith. If the
Lenders, in their sole discretion, shall elect for any
reason to file or record any such notices, financing
statements, mortgages, or other documents with respect
to such security interests and liens, or take
possession, all such financing statements or similar
documents or taking possession shall be deemed to have
been led or recorded or taken in the Debtor's Chapter
11 case as of the commencement of the case. The
Lenders may, in their discretion, file a certified
copy of this Order in any filing or recording office
in any county or other jurisdiction in which any
Debtor has real or personal property and such filing
shall constitute further evidence of perfection of
Lenders' interest in the Collateral. Neither the
granting of the liens and security interests to
Lenders in the Collateral (including, without
limitation, the inventory of the Debtor) nor the
exercise of any rights or remedies by Lenders in
connection therewith will result in any breach,
violation or infringement of (i) any trademark,
copyright or other intellectual property right of the
Debtor or any third party or (ii) any contract to
which the Debtor or any of its properties is subject.
8. The Lenders, having been found to be
lenders in good faith, shall be entitled to
the full protection of Section 364(e) of the
Bankruptcy Code, and the liens, security interests and
priorities created or authorized in this Order and the
Credit Agreement are so created and authorized
pursuant to Sections 364(c)(1), (2), and (3) of the
Bankruptcy Code and are entitled to the benefits and
protections of Section 364(e) of the Bankruptcy Code.
9. The Lenders are entitled to all of the
rights, benefits, privileges and remedies
set forth or provided herein or in the Credit
Agreement (and to the extent set forth or provided for
in the Credit Agreement are fully incorporated
herein), including, but not limited to all of the
rights, benefits, privileges and remedies available to
the Lenders upon the occurrence and during the
continuance of a Default or an Event of Default (as
defined in the Credit Agreement, and which includes
any reversal, stay or modification of this Order
without Lenders' consent, the appointment of an
interim or permanent trustee in this case and the
conversion or dismissal of this case), and the
automatic stay of Section 362 of the Bankruptcy Code
(to the extent applicable) is vacated to permit the
exercise, enjoyment and enforcement of any of such
rights, benefits, privileges and remedies, including,
but not limited to, (a) the termination by the Lenders
of all of their obligations under the Credit Agreement
and (b) the enforcement of the priority claims and
liens granted to or for the benefit of Lenders
hereunder or under the Credit Agreement, provided
that, the Lenders shall give the Debtor, and any
official committees, three business days' prior
written notice (the "Enforcement Notice") of any
enforcement against the Collateral, and file a copy of
such Enforcement Notice with the clerk of the Court.
Without limiting the foregoing, upon the occurrence
and during the continuance of an Event of Default and
the giving of the Enforcement Notice, the Lenders may
(at their option), but shall have no duty to, (i)
enter upon any leased premises of the Debtor for the
purposes of exercising their remedies with respect to
and taking possession of Collateral located thereon,
(ii) cure defaults (if any), and/or (iii) perform any
obligations under any leases covering such premises
required to be cured or performed pursuant to Sections
365(d)(3) or 503(a) of the Bankruptcy Code (such
actions not to be deemed an assumption of any such
lease), and the Lenders shall be entitled to (a) all
of the Debtor's rights and privileges as lessee under
such leases and (b) exercise any of such rights and
remedies notwithstanding any default by Debtor under
any such lease, and all without interference from the
lessors thereunder.
10. The provisions of this Order and any actions taken
pursuant hereto shall survive entry of any other order
which may be entered in this case, including any order
(i) confirming any plan of reorganization, (ii)
converting these proceedings from Chapter 11 to Chapter
7, or (iii) dismissing this case, and the terms and
provisions of this Order as well as the priorities in
payment, liens and security interests granted pursuant
to this Order and the Credit Agreement shall continue
in full force and effect notwithstanding the entry of
such other order, until all of the Obligations owing to
Lenders hereunder and under the Credit Agreement are
indefeasibly satisfied and discharged in accordance
with their terms.
11. If any or all of the provisions of this Order are
hereafter reversed, modified, vacated or stayed by
subsequent order of this Court (including in connection
with the Final Hearing) or any other court, such
reversal, stay, modification or vacatur shall not
affect the validity and enforceability of any
Obligation, debt or claim incurred, or any priority,
security interest or lien that is or was incurred or
granted pursuant to the Credit Agreement or this Order,
and notwithstanding any stay, reversal, modification or
vacatur of this Order, any Obligations owing to Lenders
arising prior to the effective date of such stay,
reversal, modification or vacatur, shall be governed in
all respects by the original provisions of this Order
and the Credit Agreement, as the case may be. Lenders
shall be entitled to all of their respective rights,
privileges and benefits hereunder and under the Credit
Agreement including, without limitation, the liens,
security interests, priorities, rights and remedies
granted herein and therein to or for their benefit with
respect to all Obligations owing to Lenders, all
Collateral securing same and the priority granted
therefor under Bankruptcy Code Section 364(c)(1).
12. This Court retains and reserves jurisdiction to
enforce all provisions of this Order.
13. Pursuant to Bankruptcy Rule 4001(c), the Final
Hearing on the Motion shall be held on July ,1995 at
. Objections, if any, to the Motion shall be
filed with the Court and served on Debtor's counsel,
Lenders' counsel and all parties who have demanded
service thereof, such that Objections are received no
later than , 1995. If no objections have been
received, a final order may be entered without further
hearing or notice.
Dated: Wilmington, DE July 10,1995
Helen S. Balick
Chief United States Bankruptcy
Judge
(1) All undefined capitalized terms used herein shall have the
meanings ascribed to them in the Credit Agreement.
(2) The Carve-Out as defined in section 2.23 of the Credit
Agreement consists of unpaid professional fees and expenses
allowed in this Chapter 11 Case in an aggregate amount
(determined without regard to fees and expenses awarded and paid
on an interim basis) not to exceed $ 1,000,000 inclusive of
aggregate fee holdbacks. EXHIBIT J
FORM OF SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY is entered into as of July 10,
1995 by the undersigned (each a "Guarantor" and collectively,
"Guarantors") in favor of and for the benefit of CHEMICAL BANK,
as agent for and representative of (in such capacity herein
called "Agent") the financial institutions ("Lenders") party to
the DIP Credit Agreement (as hereinafter defined).
RECITALS
A. On July 5, 1995, Smith Corona Corporation, a
Delaware corporation (``Company''), filed a voluntary petition
for relief under the Bankruptcy Code (as hereinafter defined),
with the United States Court for the District of Delaware (the
``Bankruptcy Filing''). Company continues to operate its
business and manage its properties as a debtor-in-possession
pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
B. Company has entered into that certain Debtor-
In-Possession Credit Agreement dated as of July 10, 1995 with Agent
and Lenders (said Debtor-In-Possession Credit Agreement, as it
may hereafter be amended, supplemented or otherwise modified from
time to time, being the "DIP Credit Agreement"; capitalized terms
defined therein and not otherwise defined herein being used
herein as therein defined).
C. A portion of the proceeds of the extensions of
credit under the DIP Credit Agreement may be advanced to
Guarantors and thus the Guarantied Obligations (as hereinafter
defined) are being incurred for and will inure to the benefit of
Guarantors (which benefits are hereby acknowledged).
D. It is a condition precedent to the initial
extension of credit under the DIP Credit Agreement that Company's
obligations thereunder be guarantied by Guarantors.
E. Guarantors are willing irrevocably and
unconditionally to guaranty such obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to induce Lenders and Agent
to enter into the DIP Credit Agreement and to make extensions of
credit thereunder, Guarantors hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. As used in this Guaranty, the
following terms shall have the following meanings unless the
context otherwise requires:
"Bankruptcy Code" mans Title 11 of the United States
Code entitled "Bankruptcy", as now and hereafter in effect,
or any successor statute.
"Guarantied Obligations" has the meaning assigned to
that term in subsection 2.1.
"payment in full", "paid in full" or any similar term
means payment in full, in Cash, of the Guarantied
Obligations including, without limitation, all principal,
interest, costs, fees and expenses (including, without
limitation, legal fees and expenses) of Lenders and Agent
as required under the Loan Documents.
"Subsidiary Guaranty" means this Guaranty dated as of
July 10, 1995, as it may be amended, supplemented or
otherwise modified from time to time.
"Subordinated Indebtedness" means indebtedness of
Company or any of its Subsidiaries subordinated in right of
payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions and other
material terms in form and substance satisfactory to Agent
and Required Lenders.
1.2 Interpretation.
(a) References to "Sections" and "subsections" shall
be to Sections and subsections, respectively, of this
Guaranty unless otherwise specifically provided.
(b) In the event of any conflict or inconsistency
between the terms, conditions and provisions of this
Guaranty and the terms, conditions and provisions of the DIP
Credit Agreement, the terms, conditions and provisions of
this Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 Guaranty of the Guarantied Obligations. Subject to
the provisions of subsection 2.2(a), Guarantors jointly and
severally hereby irrevocably and unconditionally guaranty, as
primary obligors and not merely as sureties, the due and punctual
payment in full of all Guarantied Obligations when the same shall
become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C. article 362(a),
or any successor statute). The term "Guarantied Obligations" is
used herein in its most comprehensive sense and includes:
(a) any and all Obligations of Company now or
hereafter made, incurred or created, whether absolute or
contingent, liquidated or unliquidated, whether due or not
due, and however arising under or in connection with the DIP
Credit Agreement and the other Loan Documents, including
those arising under successive borrowing transactions under
the DIP Credit Agreement which shall either continue the
Obligations of Company or from time to time renew them after
they have been satisfied; and
(b) those expenses set forth in subsection 2.8 hereof.
2.2 Limitation on Amount Guarantied; Contribution by
Guarantors. (a) Anything contained in this Guaranty to the
contrary notwithstanding, if any Fraudulent Transfer Law (as
hereinafter defined) is determined by a court of competent
jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder
shall be limited to a maximum aggregate amount equal to the
largest amount that would not render its obligations hereunder
subject to avoidance as a fraudulent transfer or conveyance under
Section 548 of Title 11 of the United States Code or any
applicable provisions of the comparable laws of any state or any
foreign jurisdiction (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities
of such Guarantor, contingent or otherwise, that are relevant
under the Fraudulent Transfer Laws (specifically excluding,
however, any liabilities of such Guarantor (x) in respect of
intercompany indebtedness to Company or other affiliates of
Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder
and (y) under any guaranty of Subordinated Indebtedness which
guaranty contains a limitation as to maximum amount similar to
that set forth in this subsection 2.2(a), pursuant to which the
liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum
amount) and after giving effect as assets to the value (as
determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, reimbursement,
indemnification or contribution of such Guarantor pursuant to
applicable law or pursuant to the terms of any agreement
(including without limitation any such right of contribution
under subsection 2.2(b) or under a Related Guaranty (as
hereinafter defined) as contemplated by subsection 2.2(b)).
(b) Guarantors under this Guaranty, and each guarantor
under other guaranties, if any, relating to the DIP Credit
Agreement (the "Related Guaranties") which contain a contribution
provision similar to that set forth in this subsection 2.2(b),
together desire to allocate among themselves (collectively, the
"Contributing Guarantors"), in a fair and equitable manner, their
obligations arising under this Guaranty and the Related
Guaranties. Accordingly, in the event any payment or
distribution is made on any date by any Guarantor under this
Guaranty or a guarantor under a Related Guaranty (a "Funding
Guarantor") that exceeds its Fair Share (as defined below) as of
such date, that Funding Guarantor shall be entitled to a contri-
bution from each of the other Contributing Guarantors in the
amount of such other Contributing Guarantor's Fair Share
Shortfall (as defined below) as of such date, with the result
that all such contributions will cause each Contributing
Guarantor's Aggregate Payments (as defined below) to equal its
Fair Share as of such date. "Fair Share" means, with respect to
a Contributing Guarantor as of any date of determination, an
amount equal to (i) the ratio of (x) the Adjusted Maximum Amount
(as defined below) with respect to such Contributing Guarantor
to (y) the aggregate of the Adjusted Maximum Amounts with respect
to all Contributing Guarantors, multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty and the Related Guaranties in
respect of the obligations guarantied. "Fair Share Shortfall"
means, with respect to a Contributing Guarantor as of any date
of determination, the excess, if any, of the Fair Share of such
Contributing Guarantor over the Aggregate Payments of such
Contributing Guarantor. "Adjusted Maximum Amount" means, with
respect to a Contributing Guarantor as of any date of
determination, the maximum aggregate amount of the obligations
of such Contributing Guarantor under this Guaranty and the
Related Guaranties, determined as of such date in accordance with
subsection 2.2(a) or, if applicable, a similar provision
contained in a Related Guaranty; provided that, solely for
purposes of calculating the "Adjusted Maximum Amount" with
respect to any Contributing Guarantor for purposes of this
subsection 2.2(b), any assets or liabilities of such Contributing
Guarantor arising by virtue of any rights to subrogation,
reimbursement or indemnification or any rights to or obligations
of contribution hereunder or under any similar provision
contained in a Related Guaranty shall not be considered as assets
or liabilities of such Contributing Guarantor. "Aggregate
Payments" means, with respect to a Contributing Guarantor as of
any date of determination, an amount equal to (i) the aggregate
amount of all payments and distributions made on or before such
date by such Contributing Guarantor in respect of this Guaranty
and the Related Guaranties (including, without limitation, in
respect of this subsection 2.2(b) or any similar provision
contained in a Related Guaranty) minus (ii) the aggregate amount
of all payments received on or before such date by such
Contributing Guarantor from the other Contributing Guarantors as
contributions under this subsection 2.2(b) or any similar
provision contained in a Related Guaranty. The amounts payable
as contributions hereunder and under similar provisions in the
Related Guaranties shall be determined as of the date on which
the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Contributing Guarantors
of their obligations as set forth in this subsection 2.2(b) or
any similar provision contained in a Related Guaranty shall not
be construed in any way to limit the liability of any
Contributing Guarantor hereunder or under a Related Guaranty.
Each Contributing Guarantor under a Related Guaranty is a third
party beneficiary to the contribution agreement set forth in this
subsection 2.2(b).
2.3 Payment by Guarantors; Application of Payments.
Subject to the provisions of subsection 2.2(a), Guarantors hereby
jointly and severally agree, in furtherance of the foregoing and
not in limitation of any other right which Agent or any other
Person may have at law or in equity against any Guarantor by
virtue hereof, that upon the failure of Company to pay any of the
Guarantied Obligations when and as the same shall become due,
whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. article 362(a), or any
successor statute), Guarantors will upon demand pay, or cause to
be paid, in cash, to Agent for the ratable benefit of Lenders,
an amount equal to the sum of the unpaid principal amount of all
Guarantied Obligations then due as aforesaid, accrued and unpaid
interest on such Guarantied Obligations (including, without
limitation, interest which, but for the filing of a petition in
bankruptcy with respect to Company, would have accrued on such
Guarantied Obligations, whether or not a claim is allowed against
Company for such interest in any such bankruptcy proceeding) and
all other Guarantied Obligations then owed to Agent and/or
Lenders as aforesaid. All such payments shall be applied
promptly from time to time by Agent:
First, to the payment of the costs and expenses of any
collection or other realization under this Guaranty,
including reasonable compensation to Agent and its agents
and counsel, and all expenses, liabilities and advances made
or incurred by Agent in connection therewith;
Second, to the payment of all other Guarantied
Obligations in such order as Agent shall elect; and
Third, after payment in full of all Guarantied
Obligations, to the payment to Guarantors, or their
respective successors or assigns, or to whomsoever may be
lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then
remaining from such payments.
2.4 Liability of Guarantors Absolute. Each Guarantor
agrees that its obligations hereunder are irrevocable, absolute,
independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of
a guarantor or surety other than payment in full of the
Guarantied Obligations. In furtherance of the foregoing and
without limiting the generality thereof, each Guarantor agrees
as follows:
(a) This Guaranty is a guaranty of payment when due
and not of collectibility.
(b) Agent may enforce this Guaranty upon the
occurrence of an Event of Default under the DIP Credit
Agreement notwithstanding the existence of any dispute
between Lenders and Company with respect to the existence
of such Event of Default.
(c) The obligations of each Guarantor hereunder are
independent of the obligations of Company under the Loan
Documents and the obligations of any other guarantor
(including any other Guarantor) of the obligations of
Company under the Loan Documents, and a separate action or
actions may be brought and prosecuted against such Guarantor
whether or not any action is brought against Company or any
of such other guarantors and whether or not Company is
joined in any such action or actions.
(d) Payment by any Guarantor of a portion, but not
all, of the Guarantied Obligations shall in no way limit,
affect, modify or abridge any Guarantor's liability for any
portion of the Guarantied Obligations which has not been
paid. Without limiting the generality of the foregoing, if
Agent is awarded a judgment in any suit brought to enforce
any Guarantor's covenant to pay a portion of the Guarantied
Obligations, such judgment shall not be deemed to release
such Guarantor from its covenant to pay the portion of the
Guarantied Obligations that is not the subject of such suit,
and such judgment shall not, except to the extent satisfied
by such Guarantor, limit, affect, modify or abridge any
other Guarantor's liability hereunder in respect of the
Guarantied Obligations.
(e) Agent or any Lender, upon such terms as it deems
appropriate, without notice or demand and without affecting
the validity or enforceability of this Guaranty or giving
rise to any reduction, limitation, impairment, discharge or
termination of any Guarantor's liability hereunder, from
time to time may (i) renew, extend, accelerate, increase the
rate of interest on, or otherwise change the time, place,
manner or terms of payment of the Guarantied Obligations,
(ii) settle, compromise, release or discharge, or accept or
refuse any offer of performance with respect to, or
substitutions for, the Guarantied Obligations or any
agreement relating thereto and/or subordinate the payment
of the same to the payment of any other obligations;
(iii) request and accept other guaranties of the Guarantied
Obligations and take and hold security for the payment of
this Guaranty or the Guarantied Obligations; (iv) release,
surrender, exchange, substitute, compromise, settle,
rescind, waive, alter, subordinate or modify, with or
without consideration, any security for payment of the
Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any
Person (including any other Guarantor) with respect to the
Guarantied Obligations; (v) enforce and apply any security
now or hereafter held by or for the benefit of Agent or any
Lender in respect of this Guaranty or the Guarantied
Obligations and direct the order or manner of sale thereof,
or exercise any other right or remedy that Agent or Lenders,
or any of them, may have against any such security, as Agent
in its discretion may determine consistent with the DIP
Credit Agreement and any applicable security agreement,
including foreclosure on any such security pursuant to one
or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable, and even
though such action operates to impair or extinguish any
right of reimbursement or subrogation or other right or
remedy of any Guarantor against Company or any security for
the Guarantied Obligations; and (vi) exercise any other
rights available to it under the Loan Documents.
(f) This Guaranty and the obligations of Guarantors
hereunder shall be valid and enforceable and shall not be
subject to any reduction, limitation, impairment, discharge
or termination for any reason (other than payment in full
of the Guarantied Obligations), including without limitation
the occurrence of any of the following, whether or not any
Guarantor shall have had notice or knowledge of any of them:
(i) any failure or omission to assert or enforce or
agreement or election not to assert or enforce, or the stay
or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or
demand or any right, power or remedy (whether arising under
the Loan Documents, at law, in equity or otherwise) with
respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to any other guaranty of
or security for the payment of the Guarantied Obligations;
(ii) any rescission, waiver, amendment or modification of,
or any consent to departure from, any of the terms or
provisions (including without limitation provisions relating
to events of default) of the DIP Credit Agreement, any of
the other Loan Documents or any agreement or instrument
executed pursuant thereto, or of any other guaranty or
security for the Guarantied Obligations, in each case
whether or not in accordance with the terms of the DIP
Credit Agreement or such Loan Document or any agreement
relating to such other guaranty or security; (iii) the
Guarantied Obligations, or any agreement relating thereto,
at any time being found to be illegal, invalid or
unenforceable in any respect; (iv) the application of
payments received from any source (other than payments
received pursuant to the other Loan Documents or from the
proceeds of any security for the Guarantied Obligations,
except to the extent such security also serves as collateral
for indebtedness other than the Guarantied Obligations) to
the payment of indebtedness other than the Guarantied
Obligations, even though Agent or Lenders, or any of them,
might have elected to apply such payment to any part or all
of the Guarantied Obligations; (v) any Lender's or Agent's
consent to the change, reorganization or termination of the
corporate structure or existence of Company or any of its
Subsidiaries and to any corresponding restructuring of the
Guarantied Obligations; (vi) any failure to perfect or
continue perfection of a security interest in any collateral
which secures any of the Guarantied Obligations; (vii) any
defenses, set-offs or counterclaims which Company may allege
or assert against Agent or any Lender in respect of the
Guarantied Obligations, including but not limited to failure
of consideration, breach of warranty, payment, statute of
frauds, statute of limitations, accord and satisfaction and
usury; and (viii) any other act or thing or omission, or
delay to do any other act or thing, which may or might in
any manner or to any extent vary the risk of any Guarantor
as an obligor in respect of the Guarantied Obligations.
2.5 Waivers by Guarantors. Each Guarantor hereby waives,
for the benefit of Lenders and Agent:
(a) any right to require Agent or Lenders, as a
condition of payment or performance by such Guarantor, to
(i) proceed against Company, any other guarantor (including
any other Guarantor) of the Guarantied Obligations or any
other Person, (ii) proceed against or exhaust any security
held from Company, any other guarantor (including any other
Guarantor) of the Guarantied Obligations or any other
Person, (iii) proceed against or have resort to any balance
of any deposit account or credit on the books of Agent or
any Lender in favor of Company or any other Person, or
(iv) pursue any other remedy in the power of Agent or any
Lender whatsoever;
(b) any defense arising by reason of the incapacity,
lack of authority or any disability or other defense of
Company including, without limitation, any defense based on
or arising out of the lack of validity or the
unenforceability of the Guarantied Obligations or any
agreement or instrument relating thereto or by reason of the
cessation of the liability of Company from any cause other
than payment in full of the Guarantied Obligations;
(c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be
neither larger in amount nor in other respects more
burdensome than that of the principal;
(d) any defense based upon Agent's or any Lender's
errors or omissions in the administration of the Guarantied
Obligations, except behavior which amounts to bad faith;
(e) (i) any principles or provisions of law, statutory
or otherwise, which are or might be in conflict with the
terms of this Guaranty and any legal or equitable discharge
of such Guarantor's obligations hereunder, (ii) the benefit
of any statute of limitations affecting such Guarantor's
liability hereunder or the enforcement hereof, (iii) any
rights to set-offs, recoupments and counterclaims, and
(iv) promptness, diligence and any requirement that Agent
or any Lender protect, secure, perfect or insure any
security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices
of protest, notices of dishonor and notices of any action
or inaction, including acceptance of this Guaranty, notices
of default under the DIP Credit Agreement or any agreement
or instrument related thereto, notices of any renewal,
extension or modification of the Guarantied Obligations or
any agreement related thereto, notices of any extension of
credit to Company and notices of any of the matters referred
to in subsection 2.4 and any right to consent to any
thereof; and
(g) any defenses or benefits that may be derived from
or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms
of this Guaranty.
2.6 Guarantors' Rights of Subrogation, Contribution, Etc.
Until the Guarantied Obligations shall have been paid in full and
the Commitments shall have terminated and all Letters of Credit
shall have expired or been cancelled, each Guarantor shall
withhold exercise of (a) any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have
against Company or any of its assets in connection with this
Guaranty or the performance by such Guarantor of its obligations
hereunder, in each case whether such claim, right or remedy
arises in equity, under contract, by statute, under common law
or otherwise and including without limitation (i) any right of
subrogation, reimbursement or indemnification that such Guarantor
now has or may hereafter have against Company, (ii) any right to
enforce, or to participate in, any claim, right or remedy that
Agent or any Lender now has or may hereafter have against
Company, and (iii) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by Agent or
any Lender, and (b) any right of contribution such Guarantor may
have against any other guarantor (including any other Guarantor)
of any of the Guarantied Obligations (including without
limitation any such right of contribution under subsection 2.2(b)
or under a Related Guaranty as contemplated by subsection
2.2(b)). Each Guarantor further agrees that, to the extent the
agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth
herein is found by a court of competent jurisdiction to be void
or voidable for any reason, any rights of subrogation,
reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other
guarantor, shall be junior and subordinate to any rights Agent
or Lenders may have against Company, to all right, title and
interest Agent or Lenders may have in any such collateral or
security, and to any right Agent or Lenders may have against such
other guarantor. Agent, on behalf of Lenders, may use, sell or
dispose of any item of collateral or security as it sees fit
without regard to any subrogation rights any Guarantor may have,
and upon any such disposition or sale any rights of subrogation
such Guarantor may have shall terminate. If any amount shall be
paid to any Guarantor on account of any such subrogation,
reimbursement or indemnification rights at any time when all
Guarantied Obligations shall not have been paid in full, such
amount shall be held in trust for Agent on behalf of Lenders and
shall forthwith be paid over to Agent for the benefit of Lenders
to be credited and applied against the Guarantied Obligations,
whether matured or unmatured, in accordance with the terms
hereof.
2.7 Subordination of Other Obligations. Any indebtedness
of Company now or hereafter held by any Guarantor is hereby
subordinated in right of payment to the Guarantied Obligations,
and any such indebtedness of Company to such Guarantor collected
or received by such Guarantor after an Event of Default has
occurred and is continuing shall be held in trust for Agent on
behalf of Lenders and shall forthwith be paid over to Agent for
the benefit of Lenders to be credited and applied against the
Guarantied Obligations but without affecting, impairing or
limiting in any manner the liability of such Guarantor under any
other provision of this Guaranty.
2.8 Expenses. Guarantors jointly and severally agree to
pay, or cause to be paid, on demand, and to save Agent and
Lenders harmless against liability for, any and all costs and
expenses (including fees and disbursements of counsel and
allocated costs of internal counsel) incurred or expended by
Agent or any Lender in connection with the enforcement of or
preservation of any rights under this Guaranty.
2.9 Continuing Guaranty. This Guaranty is a continuing
guaranty and shall remain in effect until all of the Guarantied
Obligations shall have been paid in full and the Commitments
shall have terminated and all Letters of Credit shall have
expired or been cancelled. Each Guarantor hereby irrevocably
waives any right to revoke this Guaranty as to future
transactions giving rise to any Guarantied Obligations.
2.10 Authority of Guarantors or Company. It is not
necessary for Lenders or Agent to inquire into the capacity or
powers of any Guarantor or Company or the officers, directors or
any agents acting or purporting to act on behalf of any of them.
2.11 Financial Condition of Company. Any extensions of
credit may be granted to Company or continued from time to time
without notice to or authorization from any Guarantor regardless
of the financial or other condition of Company at the time of any
such grant or continuation. Lenders and Agent shall have no
obligation to disclose or discuss with any Guarantor their
assessment, or any Guarantor's assessment, of the financial
condition of Company. Each Guarantor has adequate means to
obtain information from Company on a continuing basis concerning
the financial condition of Company and its ability to perform its
obligations under the Loan Documents, and each Guarantor assumes
the responsibility for being and keeping informed of the
financial condition of Company and of all circumstances bearing
upon the risk of nonpayment of the Guarantied Obligations. Each
Guarantor hereby waives and relinquishes any duty on the part of
Agent or any Lender to disclose any matter, fact or thing
relating to the business, operations or conditions of Company now
known or hereafter known by Agent or any Lender.
2.12 Rights Cumulative. The rights, powers and
remedies given to Lenders and Agent by this Guaranty are
cumulative and shall be in addition to and independent of all
rights, powers and remedies given to Lenders and Agent by virtue
of any statute or rule of law or in any of the other Loan
Documents or any agreement between any Guarantor and Lenders
and/or Agent or between Company and Lenders and/or Agent. Any
forbearance or failure to exercise, and any delay by any Lender
or Agent in exercising, any right, power or remedy hereunder
shall not impair any such right, power or remedy or be construed
to be a waiver thereof, nor shall it preclude the further
exercise of any such right, power or remedy.
2.13 Bankruptcy; Post-Petition Interest; Reinstatement
of Guaranty. (a) So long as any Guarantied Obligations remain
outstanding, no Guarantor shall, without the prior written
consent of Agent in accordance with the terms of the DIP Credit
Agreement, commence or join with any other Person in commencing
any bankruptcy, reorganization or insolvency proceedings of or
against Company. The obligations of Guarantors under this
Guaranty shall not be reduced, limited, impaired, discharged,
deferred, suspended or terminated by any proceeding, voluntary
or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of
Company or by any defense which Company may have by reason of the
order, decree or decision of any court or administrative body
resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any
interest on any portion of the Guarantied Obligations which
accrues after the commencement of any proceeding referred to in
clause (a) above (or, if interest on any portion of the
Guarantied Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as
would have accrued on such portion of the Guarantied Obligations
if said proceedings had not been commenced) shall be included in
the Guarantied Obligations because it is the intention of
Guarantors and Agent that the Guarantied Obligations which are
guarantied by Guarantors pursuant to this Guaranty should be
determined without regard to any rule of law or order which may
relieve Company of any portion of such Guarantied Obligations.
Guarantors will permit any trustee in bankruptcy, receiver,
debtor in possession, assignee for the benefit of creditors or
similar person to pay Agent, or allow the claim of Agent in
respect of, any such interest accruing after the date on which
such proceeding is commenced.
(c) In the event that all or any portion of the
Guarantied Obligations are paid by Company, the obligations of
Guarantors hereunder shall continue and remain in full force and
effect or be reinstated, as the case may be, in the event that
all or any part of such payment(s) are rescinded or recovered
directly or indirectly from Agent or any Lender as a preference,
fraudulent transfer or otherwise, and any such payments which are
so rescinded or recovered shall constitute Guarantied Obligations
for all purposes under this Guaranty.
2.14 Notice of Events. As soon as any Guarantor
obtains knowledge thereof, such Guarantor shall give Agent
written notice of any condition or event which has resulted in
(a) a material adverse change in the financial condition of any
Guarantor or Company or (b) a breach of or noncompliance with any
term, condition or covenant contained herein or in the DIP Credit
Agreement, any other Loan Document or any other document
delivered pursuant hereto or thereto.
2.15 Set Off. In addition to any other rights any
Lender or Agent may have under law or in equity, if any amount
shall at any time be due and owing by any Guarantor to any Lender
or Agent under this Guaranty, such Lender or Agent is authorized
at any time or from time to time, without notice (any such notice
being hereby expressly waived), to set off and to appropriate and
to apply any and all deposits (general or special, including but
not limited to indebtedness evidenced by certificates of deposit,
whether matured or unmatured) and any other indebtedness of any
Lender or Agent owing to such Guarantor and any other property
of such Guarantor held by any Lender or Agent to or for the
credit or the account of such Guarantor against and on account
of the Guarantied Obligations and liabilities of such Guarantor
to any Lender or Agent under this Guaranty.
2.16 Discharge of Guaranty Upon Sale of Guarantor. If
all of the stock of any Guarantor or any of its successors in
interest under this Guaranty shall be sold or otherwise disposed
of (including by merger or consolidation) in a transaction
permitted by subsection 6.6 of the DIP Credit Agreement or
otherwise consented to by Required Lenders, the Guaranty of such
Guarantor or such successor in interest, as the case may be,
hereunder shall automatically be discharged and released without
any further action by Agent or any Lender or any other Person
effective as of the time of such sale or disposition; provided
that, as a condition precedent to such discharge and release,
Agent shall have received evidence satisfactory to it that
arrangements satisfactory to it have been made for delivery to
Agent of the Net Cash Proceeds of such sale or disposition.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders and Agent to accept this
Guaranty and to enter into the DIP Credit Agreement and to extend
credit thereunder, each Guarantor hereby represents and warrants
to Lenders that the following statements are true and correct:
3.1 Corporate Existence. Such Guarantor is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, has the
corporate power to own its assets and to transact the business
in which it is now engaged and is duly qualified as a foreign
corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, except for
failures to be so qualified, authorized or licensed that would
not in the aggregate have a material adverse effect on the
business, operations, assets or financial condition of such
Guarantor and its Subsidiaries, taken as a whole.
3.2 Corporate Power; Authorization; Enforceable
Obligations. Such Guarantor has the corporate power, authority
and legal right to execute, deliver and perform this Guaranty and
all obligations required hereunder and has taken all necessary
corporate action to authorize its Guaranty hereunder on the terms
and conditions hereof and its execution, delivery and performance
of this Guaranty and all obligations required hereunder. No
consent of any other Person including, without limitation,
stockholders and creditors of such Guarantor, and no license,
permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any
governmental authority is required by such Guarantor in
connection with this Guaranty or the execution, delivery,
performance, validity or enforceability of this Guaranty and all
obligations required hereunder. This Guaranty has been, and each
instrument or document required hereunder will be, executed and
delivered by a duly authorized officer of such Guarantor, and
this Guaranty constitutes, and each instrument or document
required hereunder when executed and delivered by such Guarantor
hereunder will constitute, the legally valid and binding
obligation of such Guarantor, enforceable against such Guarantor
in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws or equitable principles relating
to or limiting creditors' rights generally.
3.3 No Legal Bar to this Guaranty. The execution, delivery
and performance of this Guaranty and the documents or instruments
required hereunder, and the use of the proceeds of the borrowings
under the DIP Credit Agreement, will not violate any provision
of any existing law or regulation binding on such Guarantor, or
any order, judgment, award or decree of any court, arbitrator or
governmental authority binding on such Guarantor, or the
certificate of incorporation or bylaws of such Guarantor or any
securities issued by such Guarantor, or any mortgage, indenture,
lease, contract or other agreement, instrument or undertaking to
which such Guarantor is a party or by which such Guarantor or any
of its assets may be bound, the violation of which would have a
material adverse effect on the business, operations, assets or
financial condition of such Guarantor and its Subsidiaries, taken
as a whole, and will not result in, or require, the creation or
imposition of any Lien on any of its property, assets or revenues
pursuant to the provisions of any such mortgage, indenture,
lease, contract or other agreement, instrument or undertaking.
3.4 Relationship to Company. (i) Such Guarantor is a
wholly-owned Subsidiary of Company; (ii) Lenders' agreement to
extend credit to Company is of substantial and material benefit
to such Guarantor; (iii) such Guarantor is fully informed of the
Bankruptcy Filing and the actual and potential consequences
thereof and (iv) such Guarantor has reviewed and approved copies
of the DIP Credit Agreement and the Notes and is fully informed
of the remedies Lenders may pursue upon the occurrence of an
Event of Default under the DIP Credit Agreement or the Notes.
SECTION 4. AFFIRMATIVE COVENANTS
Each Guarantor covenants and agrees that, unless and
until all of the Guarantied Obligations shall have been paid in
full and the Commitments shall have terminated and all Letters
of Credit shall have expired or been cancelled, unless Required
Lenders shall otherwise consent in writing:
4.1 Corporate Existence, Etc. Such Guarantor shall at all
times preserve and keep in full force and effect its corporate
existence and all rights and franchises material to its business.
4.2 Compliance with Laws, Etc. Such Guarantor shall comply
in all material respects with all applicable laws, rules,
regulations and orders, such compliance to include, without
limitation, paying when due all taxes, assessments and
governmental charges imposed upon it or upon any of its
properties or assets or in respect of any of its franchises,
businesses, income or property before any penalty or interest
accrues thereon.
4.3 Books and Records. Such Guarantor shall keep and
maintain books of record and account with respect to its
operations in accordance with generally accepted accounting
principles and shall permit Agent or any Lender and their
respective officers, employees and authorized agents, to the
extent Agent in good faith deems necessary for the proper
administration of this Guaranty, to examine, copy and make
excerpts from the books and records of such Guarantor and its
Subsidiaries and to inspect the properties of such Guarantor and
its Subsidiaries, both real and personal, at such reasonable
times as Agent may request.
SECTION 5. MISCELLANEOUS
5.1 Survival of Warranties. All agreements, representa-
tions and warranties made herein shall survive the execution and
delivery of this Guaranty and the other Loan Documents and any
increase in the Commitments under the DIP Credit Agreement.
5.2 Notices. Any communications between Agent and any
Guarantor and any notices or requests provided herein to be given
may be given by mailing the same, postage prepaid, or by telex,
facsimile transmission or cable to each such party at its address
set forth in the DIP Credit Agreement, on the signature pages
hereof or to such other addresses as each such party may in
writing hereafter indicate. Any notice, request or demand to or
upon Agent or Lenders or any Guarantor shall not be effective
until received.
5.3 Severability. In case any provision in or obligation
under this Guaranty shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
5.4 Amendments and Waivers. No amendment, modification,
termination or waiver of any provision of this Guaranty, and no
consent to any departure by any Guarantor therefrom, shall in any
event be effective without the written concurrence of Required
Lenders under the DIP Credit Agreement and, in the case of any
such amendment or modification, each Guarantor against whom
enforcement of such amendment or modification is sought. Any
such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
5.5 Headings. Section and subsection headings in this
Guaranty are included herein for convenience of reference only
and shall not constitute a part of this Guaranty for any other
purpose or be given any substantive effect.
5.6 Applicable Law. THIS GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF GUARANTORS, AGENT AND LENDERS HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
5.7 Successors and Assigns. This Guaranty is a continuing
guaranty and shall be binding upon each Guarantor and its
respective successors and assigns. This Guaranty shall inure to
the benefit of Lenders, Agent and their respective successors and
assigns. No Guarantor shall assign this Guaranty or any of the
rights or obligations of such Guarantor hereunder without the
prior written consent of all Lenders. Any Lender may, without
notice or consent, assign its interest in this Guaranty in whole
or in part. The terms and provisions of this Guaranty shall
inure to the benefit of any transferee or assignee of any
extension of credit, and in the event of such transfer or
assignment the rights and privileges herein conferred upon
Lenders and Agent shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and
conditions hereof.
5.8 Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT
OF OR RELATING TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS GUARANTY EACH GUARANTOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY. Each
Guarantor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or
certified mail, return receipt requested, to such Guarantor at
its address provided in subsection 5.2, such service being hereby
acknowledged by such Guarantor to be sufficient for personal
jurisdiction in any action against such Guarantor in any such
court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process
in any other manner permitted by law or shall limit the right of
Agent or any Lender to bring proceedings against any Guarantor
in the courts of any other jurisdiction.
5.9 Waiver of Trial by Jury. EACH GUARANTOR AND, BY ITS
ACCEPTANCE OF THE BENEFITS HEREOF, AGENT EACH HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope
of this waiver is intended to be all encompassing of any and all
disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each Guarantor and, by its
acceptance of the benefits hereof, Agent, each (i) acknowledges
that this waiver is a material inducement for such Guarantor and
Agent to enter into a business relationship, that such Guarantor
and Agent have already relied on this waiver in entering into
this Guaranty or accepting the benefits thereof, as the case may
be, and that each will continue to rely on this waiver in their
related future dealings and (ii) further warrants and represents
that each has reviewed this waiver with its legal counsel, and
that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY
OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
GUARANTY. In the event of litigation, this Guaranty may be filed
as a written consent to a trial by the court.
5.10 No Other Writing. This writing is intended by
Guarantors and Agent as the final expression of this Guaranty and
is also intended as a complete and exclusive statement of the
terms of their agreement with respect to the matters covered
hereby. No course of dealing, course of performance or trade
usage, and no parol evidence of any nature, shall be used to
supplement or modify any terms of this Guaranty. There are no
conditions to the full effectiveness of this Guaranty.
5.11 Further Assurances. At any time or from time to
time, upon the request of Agent or Required Lenders, Guarantors
shall execute and deliver such further documents and do such
other acts and things as Agent or Required Lenders may reasonably
request in order to effect fully the purposes of this Guaranty.
5.12 Additional Guarantors. The initial Guarantors
hereunder shall be such of the Subsidiaries of Company as are
signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company
may become parties hereto, as additional Guarantors (each an
"Additional Guarantor"), by executing a counterpart of this
Guaranty. Upon delivery of any such counterpart to Agent, notice
of which is hereby waived by Guarantors, each such Additional
Guarantor shall be a Guarantor and shall be as fully a party
hereto as if such Additional Guarantor were an original signatory
hereof. Each Guarantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the
addition or release of any other Guarantor hereunder, nor by any
election of Agent not to cause any Subsidiary of Company to
become an Additional Guarantor hereunder. This Guaranty shall
be fully effective as to any Guarantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails
to become or ceases to be a Guarantor hereunder.
5.13 Counterparts; Effectiveness. This Guaranty may be
executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original for all
purposes; but all such counterparts together shall constitute but
one and the same instrument. This Guaranty shall become
effective as to each Guarantor upon the execution of a
counterpart hereof by such Guarantor (whether or not a
counterpart hereof shall have been executed by any other
Guarantor) and receipt by Agent of written or telephonic
notification of such execution and authorization of delivery
thereof.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned Guarantors
has caused this Guaranty to be duly executed and delivered by its
officer thereunto duly authorized as of the date first written
above.
SCM (UNITED KINGDOM) LIMITED
By
Name:
Title:
Address:
Telecopy:
SMITH CORONA OVERSEAS HOLDINGS, INC.
By
Name:
Title:
Address:
Telecopy:
<PAGE>
SMITH CORONA (UNITED KINGDOM) LIMITED
By
Name:
Title:
Address:
Telecopy:
O'M&M DRAFT
07/08/95
EXHIBIT K
FORM OF BORROWER PLEDGE AGREEMENT
This BORROWER PLEDGE AGREEMENT (this "Agreement") is
dated as of July 10, 1995 and entered into by and between
SMITH CORONA CORPORATION, a Delaware corporation ("Pledgor"),
and CHEMICAL BANK, as agent for and representative of (in such
capacity herein called "Secured Party") the financial
institutions ("Lenders") party to the DIP Credit Agreement (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of
(i) the shares of stock (the "Pledged Shares") described in
Part A of Schedule I annexed hereto and issued by the
corporations named therein and (ii) the indebtedness (the
"Pledged Debt") described in Part B of said Schedule I and
issued by the obligors named therein.
B. Secured Party and Lenders have entered into a
Debtor-in-Possession Credit Agreement dated as of July 10,
1995 (said Debtor-in-Possession Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from
time to time, being the "DIP Credit Agreement", the terms
defined therein and not otherwise defined herein being used
herein as therein defined) with Pledgor pursuant to which
Lenders have made certain commitments, subject to the terms
and conditions set forth in the DIP Credit Agreement, to
extend certain credit facilities to Pledgor.
C. It is a condition precedent to the initial
extensions of credit by Lenders under the DIP Credit Agreement
that Pledgor shall have granted the security interests and
undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and
in order to induce Lenders to make Loans and other extensions
of credit under the DIP Credit Agreement and for other good
and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1. Pledge of Security. Pledgor hereby
pledges and assigns to Secured Party, and hereby grants to
Secured Party a security interest in, all of Pledgor's right,
title and interest in and to the following (the "Pledged
Collateral"):
(a) the Pledged Shares and the certificates
representing the Pledged Shares and any interest of Pledgor in
the entries on the books of any financial intermediary
pertaining to the Pledged Shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distrib-
uted in respect of or in exchange for any or all of the
Pledged Shares;
(b) the Pledged Debt and the instruments evidencing
the Pledged Debt, and all interest, cash, instruments and
other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities
convertible into and warrants, options and other rights to
purchase or otherwise acquire, stock of any issuer of the
Pledged Shares from time to time acquired by Pledgor in any
manner (which shares shall be deemed to be part of the Pledged
Shares), the certificates or other instruments representing
such additional shares, securities, warrants, options or other
rights and any interest of Pledgor in the entries on the books
of any financial intermediary pertaining to such additional
shares, and all dividends, cash, warrants, rights, instruments
and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of such additional shares, securities,
warrants, options or other rights, provided, however, that in
no case shall shares of stock issued by [NAMES OF FOREIGN
SUBSIDIARIES] which constitute all or part of the Pledged
Shares exceed 66% of the total [number of] [voting power
represented by all] shares of such Subsidiary's capital stock
at any time outstanding;
(d) all additional indebtedness from time to time
owed to Pledgor by any obligor on the Pledged Debt and the
instruments evidencing such indebtedness, and all interest,
cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible
into and warrants, options and other rights to purchase or
otherwise acquire, stock of any Person that, after the date of
this Agreement, becomes, as a result of any occurrence, a
direct Subsidiary of Pledgor (which shares shall be deemed to
be part of the Pledged Shares), the certificates or other
instruments representing such shares, securities, warrants,
options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining
to such shares, and all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares, securities,
warrants, options or other rights, provided, however, that in
no case shall shares of stock issued by a Subsidiary which is
an entity organized under the laws of a jurisdiction other
than the United States or a political subdivision or territory
thereof which constitute all or part of the Pledged Shares
exceed 66% of the total [number of] [voting power represented
by all] shares of such Subsidiary's capital stock at any time
outstanding;
(f) all indebtedness from time to time owed to
Pledgor by any Person that, after the date of this Agreement,
becomes, as a result of any occurrence, a direct or indirect
Subsidiary of Pledgor, and all interest, cash, instruments and
other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of such indebtedness; and
(g) to the extent not covered by clauses (a) through
(f) above, all proceeds of any or all of the foregoing Pledged
Collateral. For purposes of this Agreement, the term
"proceeds" includes whatever is receivable or received when
Pledged Collateral or proceeds are sold, exchanged, collected
or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes, without
limitation, proceeds of any indemnity or guaranty payable to
Pledgor or Secured Party from time to time with respect to any
of the Pledged Collateral.
SECTION 2. Security for Obligations. This Agreement
secures, and the Pledged Collateral is collateral security
for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. article 362(a)), of all obligations and liabilities
of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the DIP Credit Agreement
and the other Loan Documents and all extensions or renewals
thereof, whether for principal, interest, reimbursement of
amounts drawn under Letters of Credit, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and
whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender as a
preference, fraudulent transfer or otherwise (all such
obligations and liabilities being the "Underlying Debt"), and
all obligations of every nature of Pledgor now or hereafter
existing under this Agreement (all such obligations of
Pledgor, together with the Underlying Debt, being the "Secured
Obligations").
SECTION 3. Delivery of Pledged Collateral. All
certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on
behalf of Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable,
shall be accompanied by Pledgor's endorsement, where neces-
sary, or duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to Secured
Party. Secured Party shall have the right, at any time in its
discretion and without notice to Pledgor, to transfer to or to
register in the name of Secured Party or any of its nominees
any or all of the Pledged Collateral, subject only to the
revocable rights specified in Section 7(a). In addition,
Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 4. Representations and Warranties. Pledgor
represents and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral.
All of the Pledged Shares have been duly authorized and
validly issued and are fully paid and non-assessable. All of
the Pledged Debt has been duly authorized, authenticated or
issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged
Shares constitute all of the issued and outstanding shares of
stock of each of the direct Subsidiaries of Pledgor, except as
otherwise set forth in Schedule II annexed hereto, and there
are no outstanding warrants, options or other rights to
purchase, or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that
requires the issuance or sale of, any Pledged Shares. The
Pledged Debt constitutes all of the issued and outstanding
intercompany indebtedness evidenced by a promissory note of
the respective issuers thereof owing to Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the
legal, record and beneficial owner of the Pledged Collateral
free and clear of any Lien except for the security interest
created by this Agreement.
(d) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for
either (i) the pledge by Pledgor of the Pledged Collateral
pursuant to this Agreement and the grant by Pledgor of the
security interest granted hereby, (ii) the execution, delivery
or performance of this Agreement by Pledgor, or (iii) the
exercise by Secured Party of the voting or other rights, or
the remedies in respect of the Pledged Collateral, provided
for in this Agreement (except as may be required in connection
with a disposition of Pledged Collateral by laws affecting the
offering and sale of securities generally).
(e) Perfection. The pledge of the Pledged
Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in the Pledged
Collateral, securing the payment of the Secured Obligations.
(f) Margin Regulations. The pledge of the Pledged
Collateral pursuant to this Agreement does not violate
Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
(g) Other Information. All information heretofore,
herein or hereafter supplied to Secured Party by or on behalf
of Pledgor with respect to the Pledged Collateral is accurate
and complete in all respects.
SECTION 5. Transfers and Other Liens; Additional
Pledged Collateral; etc. Pledgor shall:
(a) not, except as expressly permitted by the DIP
Credit Agreement, (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under
this Agreement, or (iii) permit any issuer of Pledged Shares
to merge or consolidate unless all the outstanding capital
stock of the surviving or resulting corporation is, upon such
merger or consolidation, pledged hereunder and no cash,
securities or other property is distributed in respect of the
outstanding shares of any other constituent corporation;
provided that in the event Pledgor sells, assigns or disposes
of any Pledged Shares in a transaction permitted by the DIP
Credit Agreement, Secured Party shall release such Pledged
Shares to Pledgor free and clear of the lien and security
interest under this Agreement concurrently with the
consummation of such sale, assignment or disposition;
provided, further that, as a condition precedent to such
release, Secured Party shall have received evidence
satisfactory to it that arrangements satisfactory to it have
been made for delivery to Secured Party of the Net Cash
Proceeds of such sale, assignment or disposition. For
purposes of this subsection 5(a), "Net Cash Proceeds" shall
mean the cash proceeds of any sale, assignment or disposition
of Pledged Shares net of bona fide direct costs thereof
including, without limitation, (i) income taxes reasonably
estimated to be actually payable as a result of such sale,
assignment or disposition within two years of the date of
receipt of such cash proceeds, (ii) transfer, sales, use and
other taxes payable in connection with such sale, assignment
or disposition, (iii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any
indebtedness (other than extensions of credit under the DIP
Credit Agreement) that is secured by a Lien on the Pledged
Shares in question and that is required to be repaid under the
terms thereof as a result of such sale, assignment or
disposition, and (iv) broker's commissions and reasonable fees
and expenses of counsel in connection with such sale,
assignment or disposition.
(b) (i) cause each issuer of Pledged Shares not to
issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer,
except to Pledgor, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of each issuer
of Pledged Shares subject in each case to the restriction set
forth in subsection 1(c) hereof, and (iii) pledge hereunder,
immediately upon its acquisition (directly or indirectly)
thereof, any and all shares of stock of any Person that, after
the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of Pledgor subject in each
case to the restriction set forth in subsection 1(e) hereof;
(c) (i) pledge hereunder, immediately upon their
issuance, any and all instruments or other evidences of
additional indebtedness from time to time owed to Pledgor by
any obligor on the Pledged Debt, and (ii) pledge hereunder,
immediately upon their issuance, any and all instruments or
other evidences of indebtedness from time to time owed to
Pledgor by any Person that after the date of this Agreement
becomes, as a result of any occurrence, a direct or indirect
Subsidiary of Pledgor;
(d) promptly notify Secured Party of any event of
which Pledgor becomes aware causing loss or depreciation in
the value of the Pledged Collateral;
(e) promptly deliver to Secured Party all written
notices received by it with respect to the Pledged Collateral;
and
(f) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims
against, the Pledged Collateral, except to the extent the
validity thereof is being contested in good faith; provided
that Pledgor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to
the date of any proposed sale under any judgement, writ or
warrant of attachment entered or filed against Pledgor or any
of the Pledged Collateral as a result of the failure to make
such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Pledgor agrees that from time to time, at the
expense of Pledgor, Pledgor will promptly execute and deliver
all further instruments and documents, and take all further
action, that may be necessary or desirable, or that Secured
Party may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or
to enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral.
Without limiting the generality of the foregoing, Pledgor
will: (i) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments
or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby
and (ii) at Secured Party's request, appear in and defend any
action or proceeding that may affect Pledgor's title to or
Secured Party's security interest in all or any part of the
Pledged Collateral.
(b) Pledgor further agrees that it will, upon
obtaining any additional shares of stock or other securities
required to be pledged hereunder as provided in Section 5(b)
or (c), promptly (and in any event within five Business Days)
deliver to Secured Party a Pledge Amendment, duly executed by
Pledgor, in substantially the form of Schedule III annexed
hereto (a "Pledge Amendment"), in respect of the additional
Pledged Shares or Pledged Debt to be pledged pursuant to this
Agreement. Pledgor hereby authorizes Secured Party to attach
each Pledge Amendment to this Agreement and agrees that all
Pledged Shares or Pledged Debt listed on any Pledge Amendment
delivered to Secured Party shall for all purposes hereunder be
considered Pledged Collateral; provided that the failure of
Pledgor to execute a Pledge Amendment with respect to any
additional Pledged Shares or Pledged Debt pledged pursuant to
this Agreement shall not impair the security interest of
Secured Party therein or otherwise adversely affect the rights
and remedies of Secured Party hereunder with respect thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have
occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose
not inconsistent with the terms of this Agreement or the
Credit Agreement; provided, however, that Pledgor shall
not exercise or refrain from exercising any such right if
Secured Party shall have notified Pledgor that, in
Secured Party's judgment, such action would have a
material adverse effect on the value of the Pledged
Collateral or any part thereof; and provided, further,
that Pledgor shall give Secured Party at least five
Business Days' prior written notice of the manner in
which it intends to exercise, or the reasons for
refraining from exercising, any such right. It is under-
stood, however, that neither (A) the voting by Pledgor of
any Pledged Shares for or Pledgor's consent to the
election of directors at a regularly scheduled annual or
other meeting of stockholders or with respect to inciden-
tal matters at any such meeting nor (B) Pledgor's consent
to or approval of any action otherwise permitted under
this Agreement and the DIP Credit Agreement shall be
deemed inconsistent with the terms of this Agreement or
the DIP Credit Agreement within the meaning of this
Section 7(a)(i), and no notice of any such voting or
consent need be given to Secured Party;
(ii) Pledgor shall be entitled to receive and
retain, and to utilize free and clear of the lien of this
Agreement, any and all dividends and interest paid in
respect of the Pledged Collateral; provided, however,
that any and all
(A) dividends and interest paid or payable
other than in cash in respect of, and instruments and
other property received, receivable or otherwise
distributed in respect of, or in exchange for, any
Pledged Collateral,
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral
in connection with a partial or total liquidation or
dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed
in respect of principal or in redemption of or in
exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Secured
Party to hold as, Pledged Collateral and shall, if
received by Pledgor, be received in trust for the benefit
of Secured Party, be segregated from the other property
or funds of Pledgor and be forthwith delivered to Secured
Party as Pledged Collateral in the same form as so
received (with all necessary indorsements); and
(iii) Secured Party shall promptly execute and
deliver (or cause to be executed and delivered) to
Pledgor all such proxies, dividend payment orders and
other instruments as Pledgor may from time to time
reasonably request for the purpose of enabling Pledgor to
exercise the voting and other consensual rights which it
is entitled to exercise pursuant to paragraph (i) above
and to receive the dividends, principal or interest
payments which it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation
of an Event of Default and upon three Business Days' prior
notice as provided in Section 7 of the DIP Credit Agreement:
(i) upon written notice from Secured Party to
Pledgor, all rights of Pledgor to exercise the voting and
other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 7(a)(i) shall
cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right
to exercise such voting and other consensual rights;
(ii) all rights of Pledgor to receive the
dividends and interest payments which it would otherwise
be authorized to receive and retain pursuant to Section
7(a)(ii) shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have
the sole right to receive and hold as Pledged Collateral
such dividends and interest payments; and
(iii) all dividends, principal and interest pay-
ments which are received by Pledgor contrary to the
provisions of paragraph (ii) of this Section 7(b) shall
be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Pledgor and shall
forthwith be paid over to Secured Party as Pledged
Collateral in the same form as so received (with any
necessary indorsements).
(c) In order to permit Secured Party to exercise the
voting and other consensual rights which it may be entitled to
exercise pursuant to Section 7(b)(i) and to receive all
dividends and other distributions which it may be entitled to
receive under Section 7(a)(ii) or Section 7(b)(ii),
(i) Pledgor shall promptly execute and deliver (or cause to be
executed and delivered) to Secured Party all such proxies,
dividend payment orders and other instruments as Secured Party
may from time to time reasonably request and (ii) without
limiting the effect of the immediately preceding clause (i),
Pledgor hereby grants to Secured Party an irrevocable proxy to
vote the Pledged Shares and to exercise all other rights,
powers, privileges and remedies to which a holder of the
Pledged Shares would be entitled (including, without
limitation, giving or withholding written consents of
shareholders, calling special meetings of shareholders and
voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action
(including any transfer of any Pledged Shares on the record
books of the issuer thereof) by any other Person (including
the issuer of the Pledged Shares or any officer or agent
thereof), upon the occurrence of an Event of Default and which
proxy shall terminate only upon the indefeasible payment in
full of the Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact.
Pledgor hereby irrevocably appoints Secured Party as Pledgor's
attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor, Secured Party or
otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured
Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:
(a) to file one or more financing or continuation
statements, or amendments thereto, relative to all or any part
of the Pledged Collateral without the signature of Pledgor;
(b) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the
Pledged Collateral;
(c) to receive, endorse and collect any instruments
made payable to Pledgor representing any dividend, principal
or interest payment or other distribution in respect of the
Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) to file any claims or take any action or
institute any proceedings that Secured Party may deem
necessary or desirable for the collection of any of the
Pledged Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Pledged Collateral.
SECTION 9. Secured Party May Perform. If Pledgor
fails to perform any agreement contained herein, Secured Party
may itself perform, or cause performance of, such agreement,
and the expenses of Secured Party incurred in connection
therewith shall be payable by Pledgor under Section 14(b).
SECTION 10. Standard of Care. The powers conferred
on Secured Party hereunder are solely to protect its interest
in the Pledged Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Pledged Collateral in
its possession and the accounting for moneys actually received
by it hereunder, Secured Party shall have no duty as to any
Pledged Collateral, it being understood that Secured Party
shall have no responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged
Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of
care set forth above to maintain possession of the Pledged
Collateral) to preserve rights against any parties with
respect to any Pledged Collateral, (c) taking any necessary
steps to collect or realize upon the Secured Obligations or
any guarantee therefor, or any part thereof, or any of the
Pledged Collateral, or (d) initiating any action to protect
the Pledged Collateral against the possibility of a decline in
market value. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of Pledged
Collateral in its possession if such Pledged Collateral is
accorded treatment substantially equal to that which Secured
Party accords its own property consisting of negotiable
securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and
be continuing, Secured Party may exercise in respect of the
Pledged Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "Code") (whether or not the Code applies to
the affected Pledged Collateral), and Secured Party may also
in its sole discretion, without notice except as specified
below or as expressly provided in Section 7 of the DIP Credit
Agreement, sell the Pledged Collateral or any part thereof in
one or more parcels at public or private sale, at any exchange
or broker's board or at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such
time or times and at such price or prices and upon such other
terms as Secured Party may deem commercially reasonable,
irrespective of the impact of any such sales on the market
price of the Pledged Collateral. Secured Party or any Lender
may be the purchaser of any or all of the Pledged Collateral
at any such sale and Secured Party, as agent for and
representative of Lenders (but not any Lender or Lenders in
its or their respective individual capacities unless Required
Lenders shall otherwise agree in writing), shall be entitled,
for the purpose of bidding and making settlement or payment of
the purchase price for all or any portion of the Pledged
Collateral sold at any such public sale, to use and apply any
of the Secured Obligations as a credit on account of the
purchase price for any Pledged Collateral payable by Secured
Party at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right
on the part of Pledgor, and Pledgor hereby waives (to the
extent permitted by applicable law) all rights of redemption,
stay and/or appraisal which it now has or may at any time in
the future have under any rule of law or statute now existing
or hereafter enacted. Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten days'
notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall
constitute reasonable notification. Secured Party shall not
be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and
place to which it was so adjourned. Pledgor hereby waives any
claims against Secured Party arising by reason of the fact
that the price at which any Pledged Collateral may have been
sold at such a private sale was less than the price which
might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such
Pledged Collateral to more than one offeree. If the proceeds
of any sale or other disposition of the Pledged Collateral are
insufficient to pay all the Secured Obligations, Pledgor shall
be liable for the deficiency and the fees of any attorneys
employed by Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as from
time to time amended (the "Securities Act"), and applicable
state securities laws, Secured Party may be compelled, with
respect to any sale of all or any part of the Pledged Collat-
eral conducted without prior registration or qualification of
such Pledged Collateral under the Securities Act and/or such
state securities laws, to limit purchasers to those who will
agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to
the distribution or resale thereof. Pledgor acknowledges that
any such private sales may be at prices and on terms less
favorable than those obtainable through a public sale without
such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the
Securities Act) and, notwithstanding such circumstances and
the registration rights granted to Secured Party by Pledgor
pursuant to Section 12, Pledgor agrees that any such private
sale shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no
obligation to engage in public sales and no obligation to
delay the sale of any Pledged Collateral for the period of
time necessary to permit the issuer thereof to register it for
a form of public sale requiring registration under the Securi-
ties Act or under applicable state securities laws, even if
such issuer would, or should, agree to so register it.
(c) If Secured Party determines to exercise its
right to sell any or all of the Pledged Collateral, upon
written request, Pledgor shall and shall cause each issuer of
any Pledged Shares to be sold hereunder from time to time to
furnish to Secured Party all such information as Secured Party
may request in order to determine the number of shares and
other instruments included in the Pledged Collateral which may
be sold by Secured Party in exempt transactions under the
Securities Act and the rules and regulations of the Securities
and Exchange Commission thereunder, as the same are from time
to time in effect.
SECTION 12. Registration Rights. If Secured Party
shall determine to exercise its right to sell all or any of
the Pledged Collateral pursuant to Section 11, Pledgor agrees
that, upon request of Secured Party (which request may be made
by Secured Party in its sole discretion), Pledgor will, at its
own expense:
(a) execute and deliver, and cause each issuer of
the Pledged Collateral contemplated to be sold and the
directors and officers thereof to execute and deliver, all
such instruments and documents, and do or cause to be done all
such other acts and things, as may be necessary or, in the
opinion of Secured Party, advisable to register such Pledged
Collateral under the provisions of the Securities Act and to
cause the registration statement relating thereto to become
effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related
prospectus which, in the opinion of Secured Party, are
necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regula-
tions of the Securities and Exchange Commission applicable
thereto;
(b) use its best efforts to qualify the Pledged
Collateral under all applicable state securities or "Blue Sky"
laws and to obtain all necessary governmental approvals for
the sale of the Pledged Collateral, as requested by Secured
Party;
(c) cause each such issuer to make available to its
security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of Section 11(a)
of the Securities Act;
(d) do or cause to be done all such other acts and
things as may be necessary to make such sale of the Pledged
Collateral or any part thereof valid and binding and in
compliance with applicable law; and
(e) bear all costs and expenses, including
reasonable attorneys' fees, of carrying out its obligations
under this Section 12.
Pledgor further agrees that a breach of any of the
covenants contained in this Section 12 will cause irreparable
injury to Secured Party, that Secured Party has no adequate
remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 12
shall be specifically enforceable against Pledgor, and Pledgor
hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a
defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their
stated maturities. Nothing in this Section 12 shall in any
way alter the rights of Secured Party under Section 11.
SECTION 13. Application of Proceeds. Except as
expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of
the Pledged Collateral may, in the discretion of Secured
Party, be held by Secured Party as Pledged Collateral for,
and/or then, or at any time thereafter, applied in full or in
part by Secured Party against, the Secured Obligations in the
following order of priority:
FIRST: To the payment of all costs and expenses of
such sale, collection or other realization, including
reasonable compensation to Secured Party and its agents
and counsel, and all other expenses, liabilities and
advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances
made by Secured Party hereunder for the account of
Pledgor, and to the payment of all costs and expenses
paid or incurred by Secured Party in connection with the
exercise of any right or remedy hereunder, all in
accordance with Section 14;
SECOND: To the payment of all other Secured
Obligations (for the ratable benefit of the holders
thereof) in such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of
Pledgor, or to whosoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such
proceeds.
SECTION 14. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Secured Party and
each Lender from and against any and all claims, losses and
liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions
contemplated hereby (including, without limitation,
enforcement of this Agreement), except to the extent such
claims, losses or liabilities result solely from Secured
Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent
jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand
the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts
and agents, that Secured Party may incur in connection with
(i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the
exercise or enforcement of any of the rights of Secured Party
hereunder, or (iv) the failure by Pledgor to perform or
observe any of the provisions hereof.
(c) In the event of any public sale described in
Section 12, Pledgor agrees to indemnify and hold harmless
Secured Party and each of Secured Party's directors, officers,
employees and agents from and against any loss, fee, cost,
expense, damage, liability or claim, joint or several, to
which Secured Party or such other persons may become subject
or for which any of them may be liable, under the Securities
Act or otherwise, insofar as such losses, fees, costs,
expenses, damages, liabilities or claims (or any litigation
commenced or threatened in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus,
registration statement, prospectus or other such document
published or filed in connection with such public sale, or any
amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse
Secured Party and such other persons for any legal or other
expenses reasonably incurred by Secured Party and such other
persons in connection with any litigation, of any nature
whatsoever, commenced or threatened in respect thereof
(including without limitation any and all fees, costs and
expenses whatsoever reasonably incurred by Secured Party and
such other persons and counsel for Secured Party and such
other persons in investigating, preparing for, defending
against or providing evidence, producing documents or taking
any other action in respect of, any such commenced or
threatened litigation or any claims asserted). This indemnity
shall be in addition to any liability which Pledgor may
otherwise have and shall extend upon the same terms and
conditions to each person, if any, that controls Secured Party
or such persons within the meaning of the Securities Act.
SECTION 15. Continuing Security Interest; Transfer
of Loans. This Agreement shall create a continuing security
interest in the Pledged Collateral and shall (a) remain in
full force and effect until the indefeasible payment in full
of all Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, (b) be binding upon Pledgor,
its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit
of Secured Party and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c),
but subject to the provisions of subsection 9.6 of the DIP
Credit Agreement, any Lender may assign or otherwise transfer
any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in
respect thereof granted to Lenders herein or otherwise. Upon
the indefeasible payment in full of all Secured Obligations,
the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of
Credit, the security interest granted hereby shall terminate
and all rights to the Pledged Collateral shall revert to
Pledgor. Upon any such termination Secured Party will, at
Pledgor's expense, execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such
termination and Pledgor shall be entitled to the return, upon
its request and at its expense, against receipt and without
recourse to Secured Party, of such of the Pledged Collateral
as shall not have been sold or otherwise applied pursuant to
the terms hereof.
SECTION 16. Secured Party as Agent.
(a) Secured Party has been appointed to act as
Secured Party hereunder by Lenders. Secured Party shall be
obligated, and shall have the right hereunder, to make
demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any
action (including, without limitation, the release or
substitution of Pledged Collateral), solely in accordance with
this Agreement and the DIP Credit Agreement.
(b) Secured Party shall at all times be the same
Person that is Agent under the Credit Agreement. Notice of
resignation by Agent pursuant to subsection 8.9 of the DIP
Credit Agreement shall also constitute notice of resignation
as Secured Party under this Agreement and appointment of a
successor Agent pursuant to subsection 8.9 of the DIP Credit
Agreement shall also constitute appointment of a successor
Secured Party under this Agreement. Upon the acceptance of
any appointment as Agent under subsection 8.9 of the DIP
Credit Agreement by a successor Agent, that successor Agent
shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or
removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly
(i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder,
together with all records and other documents necessary or
appropriate in connection with the performance of the duties
of the successor Secured Party under this Agreement, and
(ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other
actions, as may be necessary or appropriate in connection with
the assignment to such successor Secured Party of the security
interests created hereunder, whereupon such retiring or
removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it
under this Agreement while it was Secured Party hereunder.
SECTION 17. Amendments; Etc. No amendment,
modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by Pledgor
therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the
case of any such amendment or modification, by Pledgor. Any
such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
SECTION 18. Notices. Any notice or other
communication herein required or permitted to be given shall
be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or
by courier service, upon receipt of telefacsimile or telex, or
three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages
hereof or, as to either party, such other address as shall be
designated by such party in a written notice delivered to the
other party hereto.
SECTION 19. Failure or Indulgence Not Waiver;
Remedies Cumulative. No failure or delay on the part of
Secured Party in the exercise of any power, right or privilege
hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further
exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION 20. Severability. In case any provision in
or obligation under this Agreement shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations,
or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 21. Headings. Section and subsection
headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive
effect.
SECTION 22. Governing Law; Terms. THIS AGREEMENT
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE
CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless
otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 23. Consent to Jurisdiction and Service of
Process. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEX-
CLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process
in any such proceeding in any such court may be made by
registered or certified mail, return receipt requested, to
Pledgor at its address provided in Section 18, such service
being hereby acknowledged by Pledgor to be sufficient for
personal jurisdiction in any action against Pledgor in any
such court and to be otherwise effective and binding service
in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall
limit the right of Secured Party to bring proceedings against
Pledgor in the courts of any other jurisdiction.
SECTION 24. Waiver of Jury Trial. PLEDGOR AND
SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject
matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Secured
Party each acknowledge that this waiver is a material induce-
ment for Pledgor and Secured Party to enter into a business
relationship, that Pledgor and Secured Party have already
relied on this waiver in entering into this Agreement and that
each will continue to rely on this waiver in their related
future dealings. Pledgor and Secured Party further warrant
and represent that each has reviewed this waiver with its
legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. In the event of litigation,
this Agreement may be filed as a written consent to a trial by
the court.
SECTION 25. Counterparts. This Agreement may be
executed in one or more counterparts and by different parties
hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same
document.<PAGE>
IN WITNESS WHEREOF, Pledgor and Secured Party have
caused this Agreement to be duly executed and delivered by
their respective officers thereunto duly authorized as of the
date first written above.
SMITH CORONA CORPORATION
By: __________________________
Name:
Title:
Notice Address: _____________________
_____________________
_____________________
Telecopy:____________
CHEMICAL BANK
By: __________________________
Name:
Title:
Notice Address: _____________________
_____________________
_____________________
Telecopy:____________
<PAGE>
SCHEDULE I
Attached to and forming a part of the Pledge
Agreement dated as of July ___, 1995 between Smith Corona
Corporation, as Pledgor, and Chemical Bank, as Secured Party.
Part A
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
Part B
Debt Issuer Amount of Indebtedness
<PAGE>
SCHEDULE II
Attached to and forming a part of the Pledge
Agreement dated as of July ___, 1995 between Smith Corona
Corporation, as Pledgor, and Chemical Bank, as Secured Party.
<TABLE>
<CAPTION>
Percentage
Number of Represented Holders
Shares Issued by Pledged of Shares
Stock Issuer and Outstanding Shares Not Pledged
<S> <C> <C>
</TABLE>
<PAGE>
SCHEDULE III
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 19__, is
delivered pursuant to Section 6(b) of the Pledge Agreement
referred to below. The undersigned hereby agrees that this
Pledge Amendment may be attached to the Pledge Agreement dated
July ___, 1995, between the undersigned and Chemical Bank, as
Secured Party (the "Pledge Agreement," capitalized terms
defined therein being used herein as therein defined), and
that the [Pledged Shares] [Pledged Debt] listed on this Pledge
Amendment shall be deemed to be part of the [Pledged Shares]
[Pledged Debt] and shall become part of the Pledged Collateral
and shall secure all Secured Obligations.
SMITH CORONA CORPORATION
By: ___________________________
Name:
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
Debt Issuer Amount of Indebtedness
O'M&M DRAFT
07/09/95
EXHIBIT L
FORM OF GUARANTOR PLEDGE AGREEMENT
This GUARANTOR PLEDGE AGREEMENT (this "Agreement") is
dated as of July 10, 1995 and entered into by and among EACH
OF THE UNDERSIGNED PARTIES (each individually a "Pledgor" and
collectively the "Pledgors"), and CHEMICAL BANK, as agent for
and representative of (in such capacity herein called "Secured
Party") the financial institutions ("Lenders") party to the
DIP Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgors are the legal and beneficial owners of
(i) the shares of stock (the "Pledged Shares") described in
Part A of Schedule I annexed hereto and issued by the
corporations named therein and (ii) the indebtedness (the
"Pledged Debt") described in Part B of said Schedule I and
issued by the obligors named therein.
B. Secured Party and Lenders have entered into a
Debtor-in-Possession Credit Agreement dated as of July 10,
1995 (said Debtor-in-Possession Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from
time to time, being the "DIP Credit Agreement", the terms
defined therein and not otherwise defined herein being used
herein as therein defined) with Smith Corona Corporation, a
Delaware corporation ("Company"), pursuant to which Lenders
have made certain commitments, subject to the terms and
conditions set forth in the DIP Credit Agreement, to extend
certain credit facilities to Company.
C. Pledgors have executed and delivered a
Subsidiary Guaranty dated as of July 10, 1995 (said Subsidiary
Guaranty, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Subsidiary
Guaranty") in favor of Secured Party for the ratable benefit
of Lenders, pursuant to which Pledgors have guarantied the
prompt payment and performance when due of all obligations of
Company under the DIP Credit Agreement.
D. It is a condition precedent to the initial
extensions of credit by Lenders under the DIP Credit Agreement
that Pledgors shall have granted the security interests and
undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and
in order to induce Lenders to make Loans and other extensions
of credit under the DIP Credit Agreement and for other good
and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, each Pledgor hereby agrees with
Secured Party as follows:
SECTION 1. Pledge of Security. Each Pledgor hereby
pledges and assigns to Secured Party, and hereby grants to
Secured Party a security interest in, all of such Pledgor's
right, title and interest in and to the following (the
"Pledged Collateral"):
(a) the Pledged Shares and the certificates
representing the Pledged Shares and any interest of such
Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Shares, and all
dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or
all of the Pledged Shares;
(b) the Pledged Debt and the instruments evidencing
the Pledged Debt, and all interest, cash, instruments and
other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities
convertible into and warrants, options and other rights to
purchase or otherwise acquire, stock of any issuer of the
Pledged Shares from time to time acquired by such Pledgor in
any manner (which shares shall be deemed to be part of the
Pledged Shares), the certificates or other instruments
representing such additional shares, securities, warrants,
options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining
to such additional shares, and all dividends, cash, warrants,
rights, instruments and other property or proceeds from time
to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such additional
shares, securities, warrants, options or other rights,
provided, however, that in no case shall shares of stock
issued by [NAMES OF FOREIGN SUBSIDIARIES] which constitute all
or part of the Pledged Shares exceed 66% of the total [number
of] [voting power represented by all] shares of such
Subsidiary's capital stock at any time outstanding;
(d) all additional indebtedness from time to time
owed to such Pledgor by any obligor on the Pledged Debt and
the instruments evidencing such indebtedness, and all
interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of
such indebtedness;
(e) all shares of, and all securities convertible
into and warrants, options and other rights to purchase or
otherwise acquire, stock of any Person that, after the date of
this Agreement, becomes, as a result of any occurrence, a
direct Subsidiary of such Pledgor (which shares shall be
deemed to be part of the Pledged Shares), the certificates or
other instruments representing such shares, securities,
warrants, options or other rights and any interest of such
Pledgor in the entries on the books of any financial
intermediary pertaining to such shares, and all dividends,
cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of
such shares, securities, warrants, options or other rights,
provided, however, that in no case shall shares of stock
issued by a Subsidiary which is an entity organized under the
laws of a jurisdiciton other than the United States or a
political subdivision or territory thereof which constitute
all or part of the Pledged Shares exceed 66% of the total
[number of] [voting power represented by all] shares of such
Subsidiary's capital stock at any time outstanding;
(f) all indebtedness from time to time owed to such
Pledgor by any Person that, after the date of this Agreement,
becomes, as a result of any occurrence, a direct or indirect
Subsidiary of such Pledgor, and all interest, cash,
instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of such indebtedness; and
(g) to the extent not covered by clauses (a) through
(f) above, all proceeds of any or all of the foregoing Pledged
Collateral. For purposes of this Agreement, the term
"proceeds" includes whatever is receivable or received when
Pledged Collateral or proceeds are sold, exchanged, collected
or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes, without
limitation, proceeds of any indemnity or guaranty payable to
Pledgor or Secured Party from time to time with respect to any
of the Pledged Collateral.
SECTION 2. Security for Obligations. This Agreement
secures, and the Pledged Collateral is collateral security
for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. article 362(a)), of all obligations and liabilities
of every nature of Pledgors now or hereafter existing under or
arising out of or in connection with the Subsidiary Guaranty
and all extensions or renewals thereof, whether for principal,
interest, fees, expenses, indemnities or otherwise, whether
voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly
owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly
from Secured Party or any Lender as a preference, fraudulent
transfer or otherwise (all such obligations and liabilities
being the "Underlying Debt"), and all obligations of every
nature of Pledgors now or hereafter existing under this
Agreement (all such obligations of Pledgors, together with the
Underlying Debt, being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All
certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on
behalf of Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable,
shall be accompanied by the applicable Pledgor's endorsement,
where necessary, or duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to
Secured Party. Secured Party shall have the right, at any
time in its discretion and without notice to any Pledgor, to
transfer to or to register in the name of Secured Party or any
of its nominees any or all of the Pledged Collateral, subject
only to the revocable rights specified in Section 7(a). In
addition, Secured Party shall have the right at any time to
exchange certificates or instruments representing or evi-
dencing Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 4. Representations and Warranties. Each
Pledgor represents and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral.
All of the Pledged Shares have been duly authorized and
validly issued and are fully paid and non-assessable. All of
the Pledged Debt has been duly authorized, authenticated or
issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(b) Description of Pledged Collateral. The Pledged
Shares constitute all of the issued and outstanding shares of
stock of each issuer thereof, except as otherwise set forth in
Schedule II annexed hereto, and there are no outstanding
warrants, options or other rights to purchase, or other agree-
ments outstanding with respect to, or property that is now or
hereafter convertible into, or that requires the issuance or
sale of, any Pledged Shares. The Pledged Debt constitutes all
of the issued and outstanding intercompany indebtedness
evidenced by a promissory note of the respective issuers
thereof owing to any Pledgor.
(c) Ownership of Pledged Collateral. Each Pledgor
is the legal, record and beneficial owner of the Pledged
Collateral pledged by such Pledgor free and clear of any Lien
except for the security interest created by this Agreement.
(d) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for
either (i) the pledge by any Pledgor of the Pledged Collateral
pursuant to this Agreement and the grant by any Pledgor of the
security interest granted hereby, (ii) the execution, delivery
or performance of this Agreement by any Pledgor, or (iii) the
exercise by Secured Party of the voting or other rights, or
the remedies in respect of the Pledged Collateral, provided
for in this Agreement (except as may be required in connection
with a disposition of Pledged Collateral by laws affecting the
offering and sale of securities generally).
(e) Perfection. The pledge of the Pledged
Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in the Pledged
Collateral, securing the payment of the Secured Obligations.
(f) Margin Regulations. The pledge of the Pledged
Collateral pursuant to this Agreement does not violate
Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
(g) Other Information. All information heretofore,
herein or hereafter supplied to Secured Party by or on behalf
of Pledgors with respect to the Pledged Collateral is accurate
and complete in all respects.
SECTION 5. Transfers and Other Liens; Additional
Pledged Collateral; etc. Each Pledgor shall:
(a) not, except as expressly permitted by the DIP
Credit Agreement, (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under
this Agreement, or (iii) permit any issuer of Pledged Shares
to merge or consolidate unless all the outstanding capital
stock of the surviving or resulting corporation is, upon such
merger or consolidation, pledged hereunder and no cash,
securities or other property is distributed in respect of the
outstanding shares of any other constituent corporation;
provided that in the event any Pledgor sells, assigns or
disposes of any Pledged Shares in a transaction permitted by
the DIP Credit Agreement, Secured Party shall release such
Pledged Shares to Pledgor free and clear of the lien and
security interest under this Agreement concurrently with the
consummation of such sale, assignment or disposition;
provided, further that, as a condition precedent to such
release, Secured Party shall have received evidence
satisfactory to it that arrangements satisfactory to it have
been made for delivery to Secured Party of the Net Cash
Proceeds of such sale, assignment or disposition. For
purposes of this subsection 5(a), "Net Cash Proceeds" shall
mean the cash proceeds of any sale, assignment or disposition
of Pledged Shares net of bona fide direct costs thereof
including, without limitation, (i) income taxes reasonably
estimated to be actually payable as a result of such sale,
assignment or disposition within two years of the date of
receipt of such cash proceeds, (ii) transfer, sales, use and
other taxes payable in connection with such sale, assignment
or disposition, (iii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any
indebtedness (other than extensions of credit under the DIP
Credit Agreement) that is secured by a Lien on the Pledged
Shares in question and that is required to be repaid under the
terms thereof as a result of such sale, assignment or
disposition, and (iv) broker's commissions and reasonable fees
and expenses of counsel in connection with such sale,
assignment or disposition.
(b) (i) cause each issuer of Pledged Shares not to
issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer,
except to the applicable Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly)
thereof, any and all additional shares of stock or other
securities of each issuer of Pledged Shares subject in each
case to the restriction set forth in subsection 1(c) hereof,
and (iii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all shares of stock
of any Person that, after the date of this Agreement, becomes,
as a result of any occurrence, a direct Subsidiary of such
Pledgor subject in each case to the restriction set forth in
subsection 1(e) hereof;
(c) (i) pledge hereunder, immediately upon their
issuance, any and all instruments or other evidences of
additional indebtedness from time to time owed to such Pledgor
by any obligor on the Pledged Debt, and (ii) pledge hereunder,
immediately upon their issuance, any and all instruments or
other evidences of indebtedness from time to time owed to such
Pledgor by any Person that after the date of this Agreement
becomes, as a result of any occurrence, a direct or indirect
Subsidiary of such Pledgor;
(d) promptly notify Secured Party of any event of
which such Pledgor becomes aware causing loss or depreciation
in the value of the Pledged Collateral;
(e) promptly deliver to Secured Party all written
notices received by it with respect to the Pledged Collateral;
and
(f) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims
against, the Pledged Collateral, except to the extent the
validity thereof is being contested in good faith; provided
that such Pledgor shall in any event pay such taxes,
assessments, charges, levies or claims not later than five
days prior to the date of any proposed sale under any
judgement, writ or warrant of attachment entered or filed
against such Pledgor or any of the Pledged Collateral as a
result of the failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Each Pledgor agrees that from time to time, at
the expense of such Pledgor, such Pledgor will promptly
execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and
protect any security interest granted or purported to be
granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the generality of the
foregoing, each Pledgor will: (i) execute and file such
financing or continuation statements, or amendments thereto,
and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request, in order to
perfect and preserve the security interests granted or
purported to be granted hereby and (ii) at Secured Party's
request, appear in and defend any action or proceeding that
may affect such Pledgor's title to or Secured Party's security
interest in all or any part of the Pledged Collateral.
(b) Each Pledgor further agrees that it will, upon
obtaining any additional shares of stock or other securities
required to be pledged hereunder as provided in Section 5(b)
or (c), promptly (and in any event within five Business Days)
deliver to Secured Party a Pledge Amendment, duly executed by
such Pledgor, in substantially the form of Schedule III
annexed hereto (a "Pledge Amendment"), in respect of the
additional Pledged Shares or Pledged Debt to be pledged
pursuant to this Agreement. Each Pledgor hereby authorizes
Secured Party to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Shares or Pledged Debt
listed on any Pledge Amendment delivered to Secured Party
shall for all purposes hereunder be considered Pledged
Collateral; provided that the failure of Pledgor to execute a
Pledge Amendment with respect to any additional Pledged Shares
or Pledged Debt pledged pursuant to this Agreement shall not
impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured
Party hereunder with respect thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have
occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any
and all voting and other consensual rights pertaining to
the Pledged Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement
or the Credit Agreement; provided, however, that no
Pledgor shall exercise or refrain from exercising any
such right if Secured Party shall have notified such
Pledgor that, in Secured Party's judgment, such action
would have a material adverse effect on the value of the
Pledged Collateral or any part thereof; and provided,
further, that such Pledgor shall give Secured Party at
least five Business Days' prior written notice of the
manner in which it intends to exercise, or the reasons
for refraining from exercising, any such right. It is
understood, however, that neither (A) the voting by any
Pledgor of any Pledged Shares for or any Pledgor's
consent to the election of directors at a regularly
scheduled annual or other meeting of stockholders or with
respect to incidental matters at any such meeting nor
(B) any Pledgor's consent to or approval of any action
otherwise permitted under this Agreement and the DIP
Credit Agreement shall be deemed inconsistent with the
terms of this Agreement or the DIP Credit Agreement
within the meaning of this Section 7(a)(i), and no notice
of any such voting or consent need be given to Secured
Party;
(ii) Each Pledgor shall be entitled to receive
and retain, and to utilize free and clear of the lien of
this Agreement, any and all dividends and interest paid
in respect of the Pledged Collateral; provided, however,
that any and all
(A) dividends and interest paid or payable
other than in cash in respect of, and instruments and
other property received, receivable or otherwise
distributed in respect of, or in exchange for, any
Pledged Collateral,
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral
in connection with a partial or total liquidation or
dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed
in respect of principal or in redemption of or in
exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Secured
Party to hold as, Pledged Collateral and shall, if
received by any Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other
property or funds of such Pledgor and be forthwith
delivered to Secured Party as Pledged Collateral in the
same form as so received (with all necessary
indorsements); and
(iii) Secured Party shall promptly execute and
deliver (or cause to be executed and delivered) to the
applicable Pledgor all such proxies, dividend payment
orders and other instruments as such Pledgor may from
time to time reasonably request for the purpose of
enabling such Pledgor to exercise the voting and other
consensual rights which it is entitled to exercise
pursuant to paragraph (i) above and to receive the
dividends, principal or interest payments which it is
authorized to receive and retain pursuant to paragraph
(ii) above.
(b) Upon the occurrence and during the continuation
of an Event of Default and upon three days Business Day's
prior notice as provided in Section 7 of the DIP Credit
Agreement:
(i) upon written notice from Secured Party to any
Pledgor, all rights of such Pledgor to exercise the
voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section
7(a)(i) shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have
the sole right to exercise such voting and other
consensual rights;
(ii) all rights of Pledgors to receive the
dividends and interest payments which it would otherwise
be authorized to receive and retain pursuant to Section
7(a)(ii) shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have
the sole right to receive and hold as Pledged Collateral
such dividends and interest payments; and
(iii) all dividends, principal and interest pay-
ments which are received by any Pledgor contrary to the
provisions of paragraph (ii) of this Section 7(b) shall
be received in trust for the benefit of Secured Party,
shall be segregated from other funds of such Pledgor and
shall forthwith be paid over to Secured Party as Pledged
Collateral in the same form as so received (with any
necessary indorsements).
(c) In order to permit Secured Party to exercise the
voting and other consensual rights which it may be entitled to
exercise pursuant to Section 7(b)(i) and to receive all
dividends and other distributions which it may be entitled to
receive under Section 7(a)(ii) or Section 7(b)(ii), (i) each
Pledgor shall promptly execute and deliver (or cause to be
executed and delivered) to Secured Party all such proxies,
dividend payment orders and other instruments as Secured Party
may from time to time reasonably request and (ii) without
limiting the effect of the immediately preceding clause (i),
each Pledgor hereby grants to Secured Party an irrevocable
proxy to vote the Pledged Shares and to exercise all other
rights, powers, privileges and remedies to which a holder of
the Pledged Shares would be entitled (including, without
limitation, giving or withholding written consents of
shareholders, calling special meetings of shareholders and
voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action
(including any transfer of any Pledged Shares on the record
books of the issuer thereof) by any other Person (including
the issuer of the Pledged Shares or any officer or agent
thereof), upon the occurrence of an Event of Default and which
proxy shall terminate only upon the indefeasible payment in
full of the Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact.
Each Pledgor hereby irrevocably appoints Secured Party as such
Pledgor's attorney-in-fact, with full authority in the place
and stead of such Pledgor and in the name of such Pledgor,
Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any
instrument that Secured Party may deem necessary or advisable
to accomplish the purposes of this Agreement, including
without limitation:
(a) to file one or more financing or continuation
statements, or amendments thereto, relative to all or any part
of the Pledged Collateral without the signature of such
Pledgor;
(b) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the
Pledged Collateral;
(c) to receive, endorse and collect any instruments
made payable to such Pledgor representing any dividend,
principal or interest payment or other distribution in respect
of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
(d) to file any claims or take any action or
institute any proceedings that Secured Party may deem
necessary or desirable for the collection of any of the
Pledged Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Pledged Collateral.
SECTION 9. Secured Party May Perform. If any
Pledgor fails to perform any agreement contained herein,
Secured Party may itself perform, or cause performance of,
such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgors under
Section 14(b).
SECTION 10. Standard of Care. The powers conferred
on Secured Party hereunder are solely to protect its interest
in the Pledged Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Pledged Collateral in
its possession and the accounting for moneys actually received
by it hereunder, Secured Party shall have no duty as to any
Pledged Collateral, it being understood that Secured Party
shall have no responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged
Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of
care set forth above to maintain possession of the Pledged
Collateral) to preserve rights against any parties with
respect to any Pledged Collateral, (c) taking any necessary
steps to collect or realize upon the Secured Obligations or
any guarantee therefor, or any part thereof, or any of the
Pledged Collateral, or (d) initiating any action to protect
the Pledged Collateral against the possibility of a decline in
market value. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of Pledged
Collateral in its possession if such Pledged Collateral is
accorded treatment substantially equal to that which Secured
Party accords its own property consisting of negotiable
securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and
be continuing, Secured Party may exercise in respect of the
Pledged Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "Code") (whether or not the Code applies to
the affected Pledged Collateral), and Secured Party may also
in its sole discretion, without notice except as specified
below or as expressly provided in Section 7 of the DIP
Agreement, sell the Pledged Collateral or any part thereof in
one or more parcels at public or private sale, at any exchange
or broker's board or at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such
time or times and at such price or prices and upon such other
terms as Secured Party may deem commercially reasonable,
irrespective of the impact of any such sales on the market
price of the Pledged Collateral. Secured Party or any Lender
may be the purchaser of any or all of the Pledged Collateral
at any such sale and Secured Party, as agent for and
representative of Lenders (but not any Lender or Lenders in
its or their respective individual capacities unless Required
Lenders shall otherwise agree in writing), shall be entitled,
for the purpose of bidding and making settlement or payment of
the purchase price for all or any portion of the Pledged
Collateral sold at any such public sale, to use and apply any
of the Secured Obligations as a credit on account of the
purchase price for any Pledged Collateral payable by Secured
Party at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right
on the part of any Pledgor, and each Pledgor hereby waives (to
the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute
now existing or hereafter enacted. Each Pledgor agrees that,
to the extent notice of sale shall be required by law, at
least ten days' notice to such Pledgor of the time and place
of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Each Pledgor hereby
waives any claims against Secured Party arising by reason of
the fact that the price at which any Pledged Collateral may
have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if
Secured Party accepts the first offer received and does not
offer such Pledged Collateral to more than one offeree. If
the proceeds of any sale or other disposition of the Pledged
Collateral are insufficient to pay all the Secured Obliga-
tions, Pledgors shall be liable for the deficiency and the
fees of any attorneys employed by Secured Party to collect
such deficiency.
(b) Each Pledgor recognizes that, by reason of
certain prohibitions contained in the Securities Act of 1933,
as from time to time amended (the "Securities Act"), and
applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or
qualification of such Pledged Collateral under the Securities
Act and/or such state securities laws, to limit purchasers to
those who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and
not with a view to the distribution or resale thereof. Each
Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable than those obtainable
through a public sale without such restrictions (including,
without limitation, a public offering made pursuant to a
registration statement under the Securities Act) and,
notwithstanding such circumstances and the registration rights
granted to Secured Party by such Pledgor pursuant to
Section 12, such Pledgor agrees that any such private sale
shall be deemed to have been made in a commercially reasonable
manner and that Secured Party shall have no obligation to
engage in public sales and no obligation to delay the sale of
any Pledged Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would,
or should, agree to so register it.
(c) If Secured Party determines to exercise its
right to sell any or all of the Pledged Collateral, upon
written request, each Pledgor shall and shall cause each
issuer of any Pledged Shares to be sold hereunder from time to
time to furnish to Secured Party all such information as
Secured Party may request in order to determine the number of
shares and other instruments included in the Pledged
Collateral which may be sold by Secured Party in exempt
transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission
thereunder, as the same are from time to time in effect.
SECTION 12. Registration Rights. If Secured Party
shall determine to exercise its right to sell all or any of
the Pledged Collateral pursuant to Section 11, each Pledgor
agrees that, upon request of Secured Party (which request may
be made by Secured Party in its sole discretion), such Pledgor
will, at its own expense:
(a) execute and deliver, and cause each issuer of
the Pledged Collateral contemplated to be sold and the
directors and officers thereof to execute and deliver, all
such instruments and documents, and do or cause to be done all
such other acts and things, as may be necessary or, in the
opinion of Secured Party, advisable to register such Pledged
Collateral under the provisions of the Securities Act and to
cause the registration statement relating thereto to become
effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related
prospectus which, in the opinion of Secured Party, are
necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regula-
tions of the Securities and Exchange Commission applicable
thereto;
(b) use its best efforts to qualify the Pledged
Collateral under all applicable state securities or "Blue Sky"
laws and to obtain all necessary governmental approvals for
the sale of the Pledged Collateral, as requested by Secured
Party;
(c) cause each such issuer to make available to its
security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of Section 11(a)
of the Securities Act;
(d) do or cause to be done all such other acts and
things as may be necessary to make such sale of the Pledged
Collateral or any part thereof valid and binding and in
compliance with applicable law; and
(e) bear all costs and expenses, including
reasonable attorneys' fees, of carrying out its obligations
under this Section 12.
Each Pledgor further agrees that a breach of any of
the covenants contained in this Section 12 will cause
irreparable injury to Secured Party, that Secured Party has no
adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this
Section 12 shall be specifically enforceable against such
Pledgor, and such Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance
of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due
and payable prior to their stated maturities. Nothing in this
Section 12 shall in any way alter the rights of Secured Party
under Section 11.
SECTION 13. Application of Proceeds. Except as
expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of
the Pledged Collateral may, in the discretion of Secured
Party, be held by Secured Party as Pledged Collateral for,
and/or then, or at any time thereafter, applied in full or in
part by Secured Party against, the Secured Obligations in the
following order of priority:
FIRST: To the payment of all costs and expenses of
such sale, collection or other realization, including
reasonable compensation to Secured Party and its agents
and counsel, and all other expenses, liabilities and
advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances
made by Secured Party hereunder for the account of any
Pledgor, and to the payment of all costs and expenses
paid or incurred by Secured Party in connection with the
exercise of any right or remedy hereunder, all in
accordance with Section 14;
SECOND: To the payment of all other Secured
Obligations (for the ratable benefit of the holders
thereof) in such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of
Pledgors, or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such
proceeds.
SECTION 14. Indemnity and Expenses.
(a) Pledgors agree, jointly and severally, to
indemnify Secured Party and each Lender from and against any
and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without
limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from
Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent
jurisdiction.
(b) Pledgors agree, jointly and severally, to pay to
Secured Party upon demand the amount of any and all costs and
expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the
Pledged Collateral, (iii) the exercise or enforcement of any
of the rights of Secured Party hereunder, or (iv) the failure
by any Pledgor to perform or observe any of the provisions
hereof.
(c) In the event of any public sale described in
Section 12, Pledgors agree, jointly and severally, to
indemnify and hold harmless Secured Party and each of Secured
Party's directors, officers, employees and agents from and
against any loss, fee, cost, expense, damage, liability or
claim, joint or several, to which Secured Party or such other
persons may become subject or for which any of them may be
liable, under the Securities Act or otherwise, insofar as such
losses, fees, costs, expenses, damages, liabilities or claims
(or any litigation commenced or threatened in respect thereof)
arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus or
other such document published or filed in connection with such
public sale, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
will reimburse Secured Party and such other persons for any
legal or other expenses reasonably incurred by Secured Party
and such other persons in connection with any litigation, of
any nature whatsoever, commenced or threatened in respect
thereof (including without limitation any and all fees, costs
and expenses whatsoever reasonably incurred by Secured Party
and such other persons and counsel for Secured Party and such
other persons in investigating, preparing for, defending
against or providing evidence, producing documents or taking
any other action in respect of, any such commenced or
threatened litigation or any claims asserted). This indemnity
shall be in addition to any liability which any Pledgor may
otherwise have and shall extend upon the same terms and
conditions to each person, if any, that controls Secured Party
or such persons within the meaning of the Securities Act.
SECTION 15. Continuing Security Interest; Transfer
of Loans. This Agreement shall create a continuing security
interest in the Pledged Collateral and shall (a) remain in
full force and effect until the indefeasible payment in full
of all Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, (b) be binding upon each
Pledgor, its successors and assigns, and (c) inure, together
with the rights and remedies of Secured Party hereunder, to
the benefit of Secured Party and its successors, transferees
and assigns. Without limiting the generality of the foregoing
clause (c), but subject to the provisions of subsection 9.6 of
the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such
other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or
otherwise. Upon the indefeasible payment in full of all
Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest granted
hereby shall terminate and all rights to the Pledged
Collateral shall revert to Pledgors. Upon any such
termination Secured Party will, at Pledgors' expense, execute
and deliver to the applicable Pledgor such documents as such
Pledgor shall reasonably request to evidence such termination
and Pledgors shall be entitled to the return, upon their
request and at their expense, against receipt and without
recourse to Secured Party, of such of the Pledged Collateral
as shall not have been sold or otherwise applied pursuant to
the terms hereof.
SECTION 16. Secured Party as Agent.
(a) Secured Party has been appointed to act as
Secured Party hereunder by Lenders. Secured Party shall be
obligated, and shall have the right hereunder, to make
demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any
action (including, without limitation, the release or
substitution of Pledged Collateral), solely in accordance with
this Agreement and the DIP Credit Agreement.
(b) Secured Party shall at all times be the same
Person that is Agent under the Credit Agreement. Notice of
resignation by Agent pursuant to subsection 8.9 of the DIP
Credit Agreement shall also constitute notice of resignation
as Secured Party under this Agreement and appointment of a
successor Agent pursuant to subsection 8.9 of the DIP Credit
Agreement shall also constitute appointment of a successor
Secured Party under this Agreement. Upon the acceptance of
any appointment as Agent under subsection 8.9 of the DIP
Credit Agreement by a successor Agent, that successor Agent
shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or
removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly
(i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder,
together with all records and other documents necessary or
appropriate in connection with the performance of the duties
of the successor Secured Party under this Agreement, and
(ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other
actions, as may be necessary or appropriate in connection with
the assignment to such successor Secured Party of the security
interests created hereunder, whereupon such retiring or
removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it
under this Agreement while it was Secured Party hereunder.
SECTION 17. Amendments; Etc. No amendment,
modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by any Pledgor
therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the
case of any such amendment or modification, by such Pledgor.
Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it
was given.
SECTION 18. Notices. Any notice or other
communication herein required or permitted to be given shall
be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or
by courier service, upon receipt of telefacsimile or telex, or
three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages
hereof or, as to either party, such other address as shall be
designated by such party in a written notice delivered to the
other party hereto.
SECTION 19. Failure or Indulgence Not Waiver;
Remedies Cumulative. No failure or delay on the part of
Secured Party in the exercise of any power, right or privilege
hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further
exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION 20. Severability. In case any provision in
or obligation under this Agreement shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations,
or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 21. Headings. Section and subsection
headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive
effect.
SECTION 22. Governing Law; Terms. THIS AGREEMENT
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE
CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless
otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 23. Consent to Jurisdiction and Service of
Process. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT EACH PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEX-
CLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Each Pledgor hereby agrees that service of all
process in any such proceeding in any such court may be made
by registered or certified mail, return receipt requested, to
such Pledgor at its address provided in Section 18, such
service being hereby acknowledged by such Pledgor to be
sufficient for personal jurisdiction in any action against
such Pledgor in any such court and to be otherwise effective
and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner
permitted by law or shall limit the right of Secured Party to
bring proceedings against such Pledgor in the courts of any
other jurisdiction.
SECTION 24. Waiver of Jury Trial. EACH PLEDGOR AND
SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject
matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Each Pledgor and
Secured Party each acknowledge that this waiver is a material
inducement for each Pledgor and Secured Party to enter into a
business relationship, that each Pledgor and Secured Party
have already relied on this waiver in entering into this
Agreement and that each will continue to rely on this waiver
in their related future dealings. Each Pledgor and Secured
Party further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
SECTION 25. Counterparts. This Agreement may be
executed in one or more counterparts and by different parties
hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, Pledgor and Secured Party have
caused this Agreement to be duly executed and delivered by
their respective officers thereunto duly authorized as of the
date first written above.
[NAME OF PLEDGOR]
By: __________________________
Name:
Title:
Notice Address: _____________________
_____________________
_____________________
Telecopy:____________
CHEMICAL BANK
By: __________________________
Name:
Title:
Notice Address: _____________________
_____________________
_____________________
Telecopy:____________
<PAGE>
SCHEDULE I
Attached to and forming a part of the Pledge
Agreement dated as of _____________, 1995 between
_______________, as Pledgor, and Chemical Bank, as Secured
Party.
Part A
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
Part B
Debt Issuer Amount of Indebtedness
<PAGE>
SCHEDULE II
Attached to and forming a part of the Pledge
Agreement dated as of _____________, 1995 between
_______________, as Pledgor, and Chemical Bank, as Secured
Party.
Percentage
Number of Represented Holders
Shares Issued by Pledged of Shares
Stock Issuer and Outstanding Shares Not Pledged
<PAGE>
SCHEDULE III
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 19__, is
delivered pursuant to Section 6(b) of the Pledge Agreement
referred to below. The undersigned hereby agrees that this
Pledge Amendment may be attached to the Pledge Agreement dated
__________, 1995, between the undersigned and Chemical Bank,
as Secured Party (the "Pledge Agreement," capitalized terms
defined therein being used herein as therein defined), and
that the [Pledged Shares] [Pledged Debt] listed on this Pledge
Amendment shall be deemed to be part of the [Pledged Shares]
[Pledged Debt] and shall become part of the Pledged Collateral
and shall secure all Secured Obligations.
[NAME OF PLEDGOR]
By: ___________________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
Debt Issuer Amount of Indebtedness
EXHIBIT M
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected [Title] of SMITH CORONA
CORPORATION, a Delaware corporation (``Borrower'');
(2) We have reviewed the terms of that certain Debtor-
in-Possession Credit Agreement dated as of July 10, 1995, as
amended, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, supplemented or
otherwise modified, being the ``Credit Agreement'', the terms
defined therein and not otherwise defined in this Certificate
(including Attachment No. 1 annexed hereto and made a part
hereof) being used in this Certificate as therein defined),
among Borrower, as debtor and debtor-in-possession and the
lenders party thereto and Chemical Bank, as agent, and the
terms of the other Loan Documents, and we have made, or have
caused to be made under our supervision, a review in
reasonable detail of the transactions and condition of Borrowers
during the accounting period covered by the attached financial
statements; and
(3) The examination described in paragraph (2) above did
not disclose, and we have no knowledge of, the existence of
any condition or event which constitutes any Default or Event
of Default during or at the end of the accounting period
covered by the attached financial statements or as of the date
of this Certificate[, except as set forth below].
[Set forth [below] [in a separate attachment to this
Certificate] are all exceptions to paragraph (3) above listing, in detail,
the nature of the condition or event, the period during which it
has existed and the action which Borrower has taken, is taking, or
proposes to take with respect to each such condition or event:
]
The foregoing certifications, together with the computations
set forth in Attachment No. 1 annexed hereto and made a part hereof
and the financial statements delivered with this Certificate in
support hereof, are made and delivered this __________ day of
_____________, 199_ pursuant to subsection 5.1(ii) of the Credit
Agreement.
SMITH CORONA CORPORATION,
as Debtor and Debtor-in-Possession
By:
Name:
Title:
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a
Compliance Certificate dated as of ____________, 199_ and pertains
to the period from ____________, 199_ to ____________, 199_.
Subsection references herein relate to subsections of the Credit
Agreement.
A. Maximum Inventory
1. Aggregate Inventory as of _____________, 199__
$__________
2. Maximum Inventory permitted pursuant to subsec-
tion 6.1(a): $__________
B. Maximum Cash Disbursements
1. Cash disbursements for month ended , 199__
$__________
2. Maximum cash disbursements permitted pursuant to subsec-
tion 6.1(b): $_________
SMITH CORONA CORPORATION
FIRST AMENDMENT TO
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
This FIRST AMENDMENT TO DEBTOR-IN-POSSESSION CREDIT
AGREEMENT (this "Amendment") is dated as of July 24, 1995 and
entered into by and among SMITH CORONA CORPORATION, a Delaware
corporation, as debtor and debtor-in-possession (the
"Borrower"), the several banks and other financial
institutions from time to time parties thereto (the "Lenders")
and CHEMICAL BANK, a New York banking corporation, as agent
for the Lenders (in such capacity, the "Agent"), and, for
purposes of Section 7 hereof, the Credit Support Parties (as
hereinafter defined) named on the signature pages hereto, and
is made with reference to that certain Debtor-In-Possession
Credit Agreement dated as of July 10, 1995 (the "Credit
Agreement"), by and among the Borrower, the Lenders and the
Agent. Capitalized terms used herein without definition shall
have the same meanings herein as set forth in the Credit
Agreement.
RECITALS
WHEREAS, the Borrower, the Lenders and the Agent
desire to amend the Credit Agreement to provide, among other
things, that Revolving Credit Loans in an aggregate principal
amount of $3,000,000 shall be converted to, and maintained as,
term loans under the Credit Agreement in order that such term
loans may be secured by the Mortgage;
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained, the
parties hereto agree as follows:
Section 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Section 1: Definitions.
A. Section 1.1 of the Credit Agreement is hereby
amended by inserting the following definitions in proper
alphabetical order:
"`First Amendment': that certain First Amendment to
Debtor-In-Possession Credit Agreement dated as of July 24,
1995."
"`First Amendment Effective Date': the date the First
Amendment becomes effective in accordance with its terms."
"`Term Loan Commitment': as to any Lender, the
obligation of such Lender to convert Revolving Loans to, and
maintain as, Term Loans in accordance with subsection 2.25 in
an aggregate principal amount not to exceed the amount set
forth opposite such Lender's name on Schedule 1.1, as such
amount may be reduced from time to time in accordance with the
provisions of this Agreement."
"`Term Loans': the Loans converted to, and maintained
as, term loans pursuant to subsection 2.25."
"`Term Notes': as defined in subsection 2.25(b)."
"`Revolving Credit Commitment': as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to,
or issue or participate in Letters of Credit for the account
of the Borrower in an aggregate principal amount not to exceed
the amount set forth opposite such Lender's name on Schedule
1.1, as such amount may be reduced from time to time in
accordance with the provisions of this Agreement."
B. The definition of "Commitment" contained in
subsection 1.1 of the Credit Agreement is hereby amended and
restated as follows:
"`Commitment': as to any Lender, the sum of its
Term Loan Commitment and its Revolving Credit Commitment."
C. The definition of "Loans" contained in
subsection 1.1 of the Credit Agreement is hereby amended by
inserting the parenthetical "(including the Term Loans and the
Revolving Credit Loans)" immediately after the word "loan" in
such definition.
D. The definition of "Notes" contained in
subsection 1.1 of the Credit Agreement is hereby amended by
inserting the phrase "and the Term Notes" immediately after
the phrase "Revolving Credit Notes."
1.2 Amendments to Section 2: Amount and Terms of
Commitments
A. Subsection 2.1 of the Credit Agreement is hereby
amended by (i) inserting the phrase "Revolving Credit"
immediately before the word "Commitment" in clause (i) of the
first sentence thereof and immediately after the phrase
"Borrower may use the" in the second sentence thereof and (ii)
deleting the phrase "Maximum Available Credit in effect at
such time" and substituting therefor the phrase "remainder of
the Maximum Available Credit in effect at such time minus the
aggregate principal amount of Term Loans outstanding at such
time."
B. Subsection 2.2 of the Credit Agreement is hereby
amended by inserting the phrase "Revolving Credit" immediately
before the word "Commitment" in clause (a) therein.
C. Subsection 2.3 of the Credit Agreement is hereby
amended by inserting the phrase "Revolving Credit" (i)
immediately before the word "Commitments" in the first
sentence thereof and (ii) immediately after the phrase "Each
borrowing under the" in the second sentence thereof.
D. Subsection 2.5 of the Credit Agreement is hereby
amended by adding the following sentence at the end of such
subsection:
"Any reduction in the Commitments shall be
applied
first to the Revolving Credit Commitments and
then
to the Term Loan Commitments."
E. Subsection 2.6 of the Credit Agreement is hereby
amended by adding the following at the end thereof:
"(e) All payments and prepayments of the
Loans
shall be applied first to the Revolving Credit
Loans
and then to the Term Loans."
F. Section 2 of the Credit Agreement is hereby
amended by adding the following subsection 2.25 at the end
thereof:
"2.25 Term Loan. (a) Subject to
the terms and conditions hereof, each Lender hereby agrees to
convert to Term Loans, on the First Amendment Effective Date,
Revolving Credit Loans in an aggregate principal amount equal
to the amount of such Lender's Term Loan Commitment and to
maintain such Loans as Term Loans hereunder. Term Loans
repaid or prepaid may not be reborrowed. All Term Loans shall
be paid in full on the Termination Date. The amount of a
Lender's Term Loan Commitment shall be automatically reduced
on the date, and in the amount, of any payment of such
Lender's Term Loans.
(b) The Term Loans made by each
Lender shall be evidenced by a promissory note substantially
in the form of Exhibit N, with appropriate insertions as to
payee, date and principal amount (a "Term Note"), payable to
the order of such Lender and in a principal amount equal to
the lesser of (i) the initial Term Loan Commitment of such
Lender and (ii) the aggregate unpaid principal amount of all
Term Loans made by such Lender. Each Lender is hereby
authorized to record the date and amount of each payment or
prepayment of principal of the Term Loan made by such Lender
on the schedule annexed to and constituting a part of its Term
Note, and any such recordation shall constitute prima facie
evidence of the accuracy of such information so recorded;
provided that failure to make any such recordation, or any
error in such recordation, shall not affect the rights of such
Lender or the Borrower's obligations in respect of the
applicable Term Loans. Each Term Note shall (x) be dated the
First Amendment Effective Date, (y) be stated to mature on the
Termination Date and (z) provide for the payment of interest
in accordance with subsection 2.7.
Section 2. AMENDMENTS TO SCHEDULES.
Schedule 1.1 of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting in
place thereof a new Schedule 1.1 in the form of Annex I to
this Amendment.
Section 3. AMENDMENTS TO EXHIBITS.
The Credit Agreement is hereby amended by adding as
Exhibit N thereto the form of Term Note attached as Annex II
hereto.
Section 4. CONSENT.
The Lenders hereby consent to the Borrower entering
into (a) a Construction, Operation and Maintenance of Sewer
Easement and License Agreement in the form attached hereto as
Annex III, (b) a License Agreement in the form attached hereto
as Annex IV, (c) an Easement and License Agreement in the form
attached hereto as Annex V, (d) an Easement, License &
Maintenance Agreement in the form attached hereto as Annex VI,
and (e) an Easement Agreement in the form attached hereto as
Annex VII; provided that prior to, or concurrent with, the
effectiveness of such agreements, the J.M. Murray Contract
shall become effective and the sale contemplated thereby shall
have been consummated.
Section 5. CONDITIONS TO EFFECTIVENESS
Sections 1, 2 and 3 of this Amendment shall become
effective only upon the satisfaction of all of the following
conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "First Amendment
Effective Date"):
A. The Agent shall have received counterparts of
this Amendment executed by the Borrower, each Lender and the
Agent and written or telephonic notification of such execution
and authorization of delivery thereof.
B. The Agent shall have received executed term
notes, substantially in the form attached hereto as Annex II,
drawn to the order of each Lender and with appropriate
insertions.
C. The Agent shall have received a counterpart of
the Mortgage, duly executed by the Borrower.
D. The Bankruptcy Court shall have approved the
execution of this Amendment, and the consummation of the
transactions contemplated hereby, by the Borrower.
Section 6. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this
Amendment and to amend the Credit Agreement in the manner
provided herein, the Borrower represents and warrants to each
Lender that the following statements are true, correct and
complete:
A. Corporate Power and Authority. The Borrower has
all requisite corporate power and authority to enter into this
Amendment and to carry out the transactions contemplated by,
and perform its obligations under, the Credit Agreement as
amended by this Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and
delivery of this Amendment and the performance of the Amended
Agreement have been duly authorized by all necessary corporate
action on the part of the Borrower.
C. No Conflict. The execution and delivery by the
Borrower of this Amendment and the performance by the Borrower
of the Amended Agreement do not and will not (i) violate any
provision of any law or any governmental rule or regulation
applicable to the Borrower or any of its Subsidiaries, the
Certificate or Articles of Incorporation or Bylaws of the
Borrower or any of its Subsidiaries or any order, judgment or
decree of any court or other agency of government binding on
the Borrower or any of its Subsidiaries, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse
of time or both) a default under any Contractual Obligation of
the Borrower or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the
properties or assets of the Borrower or any of its
Subsidiaries (other than any Liens created under any of the
Loan Documents in favor of the Agent on behalf of the
Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual
Obligation of the Borrower or any of its Subsidiaries.
D. Governmental Consents. The execution and
delivery by the Borrower of this Amendment and the performance
by the Borrower of the Amended Agreement do not and will not
require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state
or other governmental authority or regulatory body.
E. Binding Obligation. This Amendment and the
Amended Agreement have been duly executed and delivered by the
Borrower and are the legally valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance
with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
F. Incorporation of Representations and Warranties
From Credit Agreement. The representations and warranties
contained in Section 3 of the Credit Agreement are and will be
true, correct and complete in all material respects on and as
of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an
earlier date, in which case they were true, correct and
complete in all material respects on and as of such earlier
date.
G. Absence of Default. No event has occurred and
is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would
constitute a Default.
Section 7. ACKNOWLEDGEMENT AND CONSENT
Borrower is a party to the Security Agreement and the
Borrower Pledge Agreement pursuant to which the Borrower has
created Liens in favor of the Agent on certain Collateral to
secure the Obligations. Each Subsidiary Guarantor is party to
the Subsidiary Guaranty pursuant to which the Subsidiary
Guarantors have guarantied the Obligations. The Subsidiary
Guarantors party to the Guarantor Pledge Agreement have
created Liens in favor of the Agent to secure the obligations
of such Subsidiary Guarantor under the Subsidiary Guaranty.
The Borrower and the Subsidiary Guarantors are collectively
referred to herein as the "Credit Support Parties."
Each Credit Support Party hereby acknowledges that it
has reviewed the terms and provisions of the Credit Agreement
and this Amendment and consents to the amendment of the Credit
Agreement effected pursuant to this Amendment. Each Credit
Support Party hereby confirms that each Collateral Document to
which it is a party or otherwise bound and all Collateral
encumbered thereby will continue to guaranty or secure, as the
case may be, to the fullest extent possible the payment and
performance of all "Obligations," "Guarantied Obligations" and
"Secured Obligations," as the case may be (in each case as
such terms are defined in the applicable Collateral Document),
including without limitation the payment and performance of
all such "Obligations," "Guarantied Obligations" or "Secured
Obligations," as the case may be, in respect of the
Obligations of the Borrower now or hereafter existing under or
in respect of the Amended Agreement and the Notes.
Each Credit Support Party acknowledges and agrees
that any of the Collateral Documents to which it is a party or
otherwise bound shall continue in full force and effect and
that all of its obligations thereunder shall be valid and
enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit
Support Party represents and warrants that all representations
and warranties contained in the Amended Agreement and the
Collateral Documents to which it is a party or otherwise bound
are true, correct and complete in all material respects on and
as of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an
earlier date, in which case they were true, correct and
complete in all material respects on and as of such earlier
date.
Each Credit Support Party (other than the Borrower)
acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such
Credit Support Party is not required by the terms of the
Credit Agreement or any other Loan Document to consent to the
amendments to the Credit Agreement effected pursuant to this
Amendment and (ii) nothing in the Credit Agreement, this
Amendment or any other Loan Document shall be deemed to
require the consent of such Credit Support Party to any future
amendments to the Credit Agreement.
Section 8. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement
and the Other Loan Documents.
(i) On and after the First Amendment Effective Date,
each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import
referring to the Credit Agreement, and each reference in the
other Loan Documents to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended by this
Amendment, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby ratified
and confirmed.
(iii) The execution, delivery and performance of
this Amendment shall not, except as expressly provided herein,
constitute a waiver of any provision of, or operate as a
waiver of any right, power or remedy of the Agent or any
Lender under, the Credit Agreement or any of the other Loan
Documents.
B. Fees and Expenses. The Borrower acknowledges
that all costs, fees and expenses as described in subsection
9.5 of the Credit Agreement incurred by Agent and its counsel
with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of
the Borrower.
C. Headings. Section and subsection headings in
this Amendment are included herein for convenience of
reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive
effect.
D. Applicable Law. THIS AMENDMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first written above.
SMITH CORONA CORPORATION,
as debtor and debtor-in-possession
By:
Title:
CHEMICAL BANK, as
Agent and as a Lender
By:
Title:
BANK OF AMERICA ILLINOIS
By:
Title:
SCM (UNITED KINGDOM) LIMITED,
(for purposes of Section 7 only) as a Credit Support Party
By:
Title:
SMITH CORONA OVERSEAS
HOLDINGS, INC., (for purposes of
Section 7 only) as a Credit Support Party
By:
Title:
SMITH CORONA (UNITED KINGDOM,
LIMITED, (for purposes of Section 7 only) as a Credit Support
Party
By:
Title:
<PAGE>
ANNEX I
SCHEDULE 1.1
COMMITMENTS
Revolving Credit Commitment
Term Loan Commitment
Amount Percentage Amount Percentage
Chemical Bank $13,125,000 62.50% $1,875,000 62.50%
Bank of America
Illinois 7,875,000 37.50% 1,125,000 37.50%
Total 21,000,000 100% $3,000,000 100%
<PAGE>
ANNEX II
EXHIBIT M
FORM OF
TERM NOTE
$____________ New York, New York
____________, 1995
FOR VALUE RECEIVED, the undersigned, Smith Corona
Corporation, a Delaware corporation, as debtor and debtor-
in-possession (the ``Borrower''), hereby unconditionally promises
to pay to the order of _______________ (the ``Lender'') at the
office of Chemical Bank, located at 270 Park Avenue, New York,
New York 10017, in lawful money of the United States of
America and in immediately available funds, on the Termination
Date the principal amount of (a)_____________ DOLLARS
($___________), or, if less, (b) the aggregate unpaid
principal amount of all Term Loans made by the Lender to the
Borrower pursuant to subsection 2.5 of the Credit Agreement,
as hereinafter defined. The Borrower further agrees to pay
interest in like money at such office on the unpaid principal
amount hereof from time to time outstanding at the rates and
on the dates specified in subsections 2.7 and 2.9 of such
Credit Agreement.
The holder of this Note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a
part hereof the date and amount of each payment or prepayment
of principal of the Term Loans. Each such endorsement shall
constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement
shall not affect the rights of the Lender or the obligations
of the Borrower in respect of such Term Loan.
This Note (a) is one of the Term Notes referred to in the
Debtor-in-Possession Credit Agreement dated as of July 10,
1995 (as amended to the date hereof and as further amended,
supplemented or otherwise modified from time to time, the
``Credit Agreement''), among the Borrower, the Lender, the
other banks and financial institutions from time to time
parties thereto and Chemical Bank, as agent, (b) is subject to
the provisions of the Credit Agreement and (c) is subject to
optional and mandatory prepayment in whole or in part as
provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of
Default, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable,
all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive presentment, demand, protest and all
other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to
them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
SMITH CORONA CORPORATION, as
debtor and debtor-in-possession
By:
Name:
Title:
SMITH CORONA CORPORATION
SECOND AMENDMENT TO DEBTOR-IN-POSSESSION
CREDIT AGREEMENT, FIRST AMENDMENT TO COLLATERAL
DOCUMENTS AND LIMITED WAIVER
This SECOND AMENDMENT TO DEBTOR-IN-POSSESSION CREDIT
AGREEMENT, FIRST AMENDMENT TO COLLATERAL DOCUMENTS AND LIMITED
WAIVER (this "Amendment") is dated as of August 15, 1995 and
entered into by and among SMITH CORONA CORPORATION, a Delaware
corporation, as debtor and debtor-in-possession (the
"Borrower"), the several banks and other financial
institutions from time to time parties thereto (the "Lenders")
and CHEMICAL BANK, a New York banking corporation, as agent
for the Lenders (in such capacity, the "Agent"), and, for
purposes of Section 6 hereof, the Credit Support Parties (as
hereinafter defined) named on the signature pages hereto, and
is made with reference to that certain Debtor-In-Possession
Credit Agreement dated as of July 10, 1995, as amended by that
certain First Amendment to Debtor-in-Possession Credit
Agreement dated as of July 24, 1995 (as so amended, the
"Credit Agreement"), by and among the Borrower, the Lenders
and the Agent. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in
the Credit Agreement.
RECITALS
WHEREAS, the Borrower, the Lenders and the Agent
desire to amend the Credit Agreement and certain Collateral
Documents as provided herein; and
WHEREAS, the Borrower has requested the Agent and the
Lenders to waive certain provisions of the Credit Agreement
and that certain Letter Agreement Regarding Post Closing
Covenants (the "Letter Agreement") and, subject to the terms
and conditions contained herein, the Agent and the Lenders are
willing to agree to such waiver;
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained, the
parties hereto agree as follows:
Section 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Section 2: Amounts and Terms of
Commitments
Subsection 2.7(b) of the Credit Agreement is hereby
amended by deleting the phrase "paragraph (b) of this
subsection" therefrom and substituting the phrase "the last
sentence of subsection 2.7(a) of this Agreement" therefor.
1.2 Amendments to Section 4: Conditions to Initial
Extensions of Credit
Subsection 4.1(b) of the Credit Agreement is hereby
amended by deleting the parenthetical "(subject to permitted
Liens)" therefrom and substituting the parenthetical "(subject
to Liens permitted pursuant to subsection 6.3 of this
Agreement)" therefor.
1.3 Amendments to Section 7: Events of Default
Section 7 of the Credit Agreement is hereby amended
by deleting the phrase "the Agent shall give the Borrower and
counsel to any official committees in respect of the Chapter
11 Case three Business Days' prior notice" from the second
paragraph of such Section and substituting therefor the phrase
"the Agent shall give the Borrower and counsel to any official
committees in respect of the Chapter 11 Case five Business
Days' prior notice" therefor.
1.4 Amendments to Section 9: Miscellaneous
Subsection 9.2 of the Credit Agreement is hereby
amended by adding the following proviso at the end thereof:
"; provided further, that copies of all notices,
requests or demands delivered pursuant to this subsection 9.2,
and copies of all statements delivered pursuant to subsection
9.5, shall also be delivered to:
Smith Corona Corporation Creditors'
Committee
c/o Blank, Rome, Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
Attention: Howard Glassman, Esq.
Telephone: (215) 569-5500
Telecopy: (215) 569-5555
Section 2. AMENDMENTS TO COLLATERAL DOCUMENTS
2.1 Amendments to Security Agreement
Subsection 7.4 of the Security Agreement is hereby
amended by deleting the phrase "three Business Days'" from the
second sentence thereof and substituting the phrase "five
Business Days'" therefor.
2.2 Amendments to Borrower Pledge Agreement
Section 7(b) of the Borrower Pledge Agreement is
hereby amended by deleting the phrase "three Business Days'"
therefrom and substituting the phrase "five Business Days'"
therefor.
2.3 Amendments to Guarantor Pledge Agreement
Section 7(b) of the Guarantor Pledge Agreement is
hereby amended by deleting the phrase "three Business Days'"
therefrom and substituting the phrase "five Business Days'"
therefor.
Section 3. LIMITED WAIVER
Subject to the terms and provisions of this
Amendment, the Agent and the Lenders hereby (i) waive until
August 21, 1995 compliance with the provisions of (x)
paragraph 3 of the Letter Agreement, (y) paragraph 5.16(b) of
the Credit Agreement and (z) subsection 5.16(c) of the Credit
Agreement that require SCC Singapore to execute a counterpart
of the Subsidiary Guaranty; (ii) waive until August 28, 1995
compliance with the provisions of paragraph 1 of the Letter
Agreement with respect to the stock of Smith Corona (Canada)
Limited and Smith Corona GmbH, (iii) waive until September 1,
1995 compliance with the provisions of paragraph 1 of the
Letter Agreement with respect to the stock of Smith Corona
France S.A.R.L., (iv) waive until September 1, 1995 compliance
with the provisions of subsection 4.1(g) of the Credit
Agreement that require delivery of a good standing certificate
for the Borrower certified by the Secretary of State of
Hawaii, and (v) waive compliance with the provisions of (w)
subsection 5.16(c) of the Credit Agreement that require SCC
Singapore to grant a security interest in its property,
(x) subsection 5.16(c) of the Credit Agreement that require
SCC Singapore to become a borrower, provided that the Lenders
and the Borrower shall mutually determine whether to include
SCC Singapore as a borrower under the Credit Agreement and the
other Loan Documents, (y) paragraph 1 of the Letter Agreement
with respect to Smith Corona International, Ltd., provided
that the Borrower delivers to the Agent and the Lenders on or
before August 18, 1995 an Officer's Certificate stating that
Smith Corona International, Ltd. is in liquidation and that
its only assets are cash and securities with an aggregate
value of less than $1,000 and an intercompany note that will
be cancelled in connection with the liquidation, and (z)
paragraph 1 of the Letter Agreement with respect to Smith
Corona Australia Pty. Ltd. ("SCC Australia") upon (i) the
representation by the Borrower that SCC Australia has been
placed in administrative insolvency proceedings in Australia
and (ii) the agreement of the Borrower that any distribution
upon the capital stock or equity interest of the Borrower in
SCC Australia shall be paid directly to the Agent on behalf of
the Lenders, to be held by the Agent in a segregated account
as part of the Collateral (as defined in the Security
Agreement executed as of July 10, 1995 by the Borrower) and to
be applied to the Obligations upon the occurrence and during
the continuation of an Event of Default.
Without limiting the generality of the provisions of
subsection 9.3 of the Credit Agreement, the waivers set forth
herein shall be limited precisely as written and relate solely
to the noncompliance by the Borrower with the provisions of
the Credit Agreement and the Letter Agreement set forth above
in the manner, to the extent and for the applicable periods
described above, and nothing in this Limited Waiver shall be
deemed to (a) constitute a waiver of compliance by the
Borrower with respect to (i) the provisions of the Credit
Agreement or the Letter Agreement set forth above in any other
instance or (ii) any other term, provisions or condition of
the Credit Agreement, the Letter Agreement or any other
instrument or agreement referred to therein, (b) prejudice any
right or remedy that the Agent or any Lender may now have
(except to the extent such right or remedy was based upon
existing defaults that will not exist after giving effect to
this Limited Waiver) or may have in the future under or in
connection with the Credit Agreement, the Letter Agreement or
any other instrument or agreement referred to therein or (c)
create any obligation on the part of the Agent or any Lender
to renew or extend the waiver contained herein. Except as
expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement, the Letter Agreement and
the other Loan Documents shall remain in full force and effect
and in all other respects are hereby ratified and confirmed.
Section 4. CONDITIONS TO EFFECTIVENESS
Sections 1, 2 and 3 of this Amendment shall become
effective only upon the satisfaction of all of the following
conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "Second Amendment
Effective Date"):
A. The Agent shall have received counterparts of
this Amendment executed by the Borrower, each Lender and the
Agent and written or telephonic notification of such execution
and authorization of delivery thereof.
B. The Bankruptcy Court shall have approved the
execution of this Amendment, and the consummation of the
transactions contemplated hereby, by the Borrower.
Section 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this
Amendment and to amend the Credit Agreement in the manner
provided herein, the Borrower represents and warrants to each
Lender that the following statements are true, correct and
complete:
A. Corporate Power and Authority. The Borrower has
all requisite corporate power and authority to enter into this
Amendment and to carry out the transactions contemplated by,
and perform its obligations under, the Credit Agreement as
amended by this Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and
delivery of this Amendment and the performance of the Amended
Agreement have been duly authorized by all necessary corporate
action on the part of the Borrower.
C. No Conflict. The execution and delivery by the
Borrower of this Amendment and the performance by the Borrower
of the Amended Agreement do not and will not (i) violate any
provision of any law or any governmental rule or regulation
applicable to the Borrower or any of its Subsidiaries, the
Certificate or Articles of Incorporation or Bylaws of the
Borrower or any of its Subsidiaries or any order, judgment or
decree of any court or other agency of government binding on
the Borrower or any of its Subsidiaries, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse
of time or both) a default under any Contractual Obligation of
the Borrower or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the
properties or assets of the Borrower or any of its
Subsidiaries (other than any Liens created under any of the
Loan Documents in favor of the Agent on behalf of the
Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual
Obligation of the Borrower or any of its Subsidiaries.
D. Governmental Consents. The execution and
delivery by the Borrower of this Amendment and the performance
by the Borrower of the Amended Agreement do not and will not
require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state
or other governmental authority or regulatory body.
E. Binding Obligation. This Amendment and the
Amended Agreement have been duly executed and delivered by the
Borrower and are the legally valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance
with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
F. Incorporation of Representations and Warranties
From Credit Agreement. The representations and warranties
contained in Section 3 of the Credit Agreement are and will be
true, correct and complete in all material respects on and as
of the Second Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an
earlier date, in which case they were true, correct and
complete in all material respects on and as of such earlier
date.
G. Absence of Default. No event has occurred and
is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would
constitute a Default.
Section 6. ACKNOWLEDGEMENT AND CONSENT
The Borrower is a party to the Security Agreement and
the Borrower Pledge Agreement pursuant to which the Borrower
has created Liens in favor of the Agent on certain Collateral
to secure the Obligations. Each Subsidiary Guarantor is party
to the Subsidiary Guaranty pursuant to which the Subsidiary
Guarantors have guarantied the Obligations. The Subsidiary
Guarantors party to the Guarantor Pledge Agreement have
created Liens in favor of the Agent to secure the obligations
of such Subsidiary Guarantor under the Subsidiary Guaranty.
The Borrower and the Subsidiary Guarantors are collectively
referred to herein as the "Credit Support Parties."
Each Credit Support Party hereby acknowledges that it
has reviewed the terms and provisions of the Credit Agreement
and this Amendment and consents to the amendment of the Credit
Agreement effected pursuant to this Amendment. Each Credit
Support Party hereby confirms that each Collateral Document to
which it is a party or otherwise bound and all Collateral
encumbered thereby will continue to guaranty or secure, as the
case may be, to the fullest extent possible the payment and
performance of all "Obligations," "Guarantied Obligations" and
"Secured Obligations," as the case may be (in each case as
such terms are defined in the applicable Collateral Document),
including without limitation the payment and performance of
all such "Obligations," "Guarantied Obligations" or "Secured
Obligations," as the case may be, in respect of the
Obligations of the Borrower now or hereafter existing under or
in respect of the Amended Agreement and the Notes.
Each Credit Support Party acknowledges and agrees
that any of the Collateral Documents to which it is a party or
otherwise bound shall continue in full force and effect and
that all of its obligations thereunder shall be valid and
enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit
Support Party represents and warrants that all representations
and warranties contained in the Amended Agreement and the
Collateral Documents to which it is a party or otherwise bound
are true, correct and complete in all material respects on and
as of the Second Amendment Effective Date to the same extent
as though made on and as of that date, except to the extent
such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and
complete in all material respects on and as of such earlier
date.
Each Credit Support Party (other than the Borrower)
acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such
Credit Support Party is not required by the terms of the
Credit Agreement or any other Loan Document to consent to the
amendments to the Credit Agreement effected pursuant to this
Amendment and (ii) nothing in the Credit Agreement, this
Amendment or any other Loan Document shall be deemed to
require the consent of such Credit Support Party to any future
amendments to the Credit Agreement.
Section 7. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement
and the Other Loan Documents.
(i) On and after the Second Amendment Effective
Date, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof", "herein" or words of like
import referring to the Credit Agreement, and each reference
in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the
Amended Agreement.
(ii) Except as specifically amended by this
Amendment, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby ratified
and confirmed.
(iii) The execution, delivery and performance of
this Amendment shall not, except as expressly provided herein,
constitute a waiver of any provision of, or operate as a
waiver of any right, power or remedy of the Agent or any
Lender under, the Credit Agreement or any of the other Loan
Documents.
B. Fees and Expenses. The Borrower acknowledges
that all costs, fees and expenses as described in subsection
9.5 of the Credit Agreement incurred by Agent and its counsel
with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of
the Borrower.
C. Headings. Section and subsection headings in
this Amendment are included herein for convenience of
reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive
effect.
D. Applicable Law. THIS AMENDMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first written above.
SMITH CORONA CORPORATION,
as debtor and debtor-in-possession
By:
Title:
CHEMICAL BANK, as
Agent and as a Lender
By:
Title:
BANK OF AMERICA ILLINOIS
By:
Title:
SCM (UNITED KINGDOM) LIMITED,
(for purposes of Section 6 only) as a Credit Support Party
By:
Title:
SMITH CORONA OVERSEAS
HOLDINGS, INC., (for purposes of
Section 6 only) as a Credit Support Party
By:
Title:
SMITH CORONA (UK), LIMITED, (for
purposes of Section 6 only) as a Credit Support Party
By:
Title:
June 29, 1995
Mr. Robert Van Buren
Chairman, Board of Directors
Smith Corona Corporation
65 Locust Avenue
New Canaan, Connecticut 06840
Dear Mr. Van Buren:
This letter serves to confirm the terms of the agreement
between Smith Corona Corporation ("SCC") and R.F. Stengel &
Co., Inc. ("RFS & Co.") SCC wishes to retain RFS & Co. to
provide interim management services to SCC. Specifically, SCC
wishes to retain certain members of RFS & Co. as interim
President and Chief Executive Officer and related staff to
assist it in successfully completing an operational and
financial restructuring.
Additionally, should SCC file a Chapter 11 proceeding, members
of RFS & Co. will provide the necessary leadership to guide
SCC through a Chapter 11 proceeding to the confirmation and
consummation of a Plan of Reorganization.
In the event that SCC determines to file a Chapter 11
proceeding, SCC agrees to seek a "First Day" Order of the
Bankruptcy Court, assuming this agreement or otherwise
retaining RFS & Co. in accordance with the terms and
conditions of this agreement.
RFS & Co. agrees to provide certain members of its
organization to SCC as interim President and Chief Executive
Officer and related staff, to assist it in the above
activities in a manner responsive to the current circumstances
of the company. Additionally, RFS & Co. will support as
required the information requests of, and ongoing
conversations with, Chemical Bank, as agent for the company's
bank group, and will work with the company's other outside
professionals in this area. In providing these services, RFS
& Co. will report directly to the Board of Directors.
RFS & Co. proposes to staff the engagement as follows: Ronald
F. Stengel, President of RFS & Co., will become SCC's interim
President and Chief Executive Officer. Mr. Thomas A. Cawley
will assist Mr. Stengel in the conduct of the engagement. RFS
& Co. will, as necessary, provide additional professional
staff, all of whom have experience working with companies in
similar circumstances and whom have strong functional
expertise in finance or operations. Staffing will be adjusted
according to project demands as the engagement progresses.
All such staffing adjustments will be discussed with and
agreed to by the Board of Directors prior to their
implementation.
RFS & Co. will bill SCC for services rendered at standard
daily rates plus actual out-of-pocket expenses related to the
performance of such services. The standard daily rates
reflect the training and experience of the professional
assigned to this engagement, and are as follows
R. Stengel $2,500 per day
T. Cawley $1,700 per day
Professional Staff $1,500 - $2,500 per day
Actual out-of-pocket expenses include travel, lodging, meals,
car rental, telephone, computer charges, and other necessary
expenditures. SCC will also pay RFS & Co. a retainer of
$100,000, which will be credited against final project
invoices.
Professional fees and expenses will be billed and payable as
follows: 80% of professional fees for services rendered and
100% of expenses incurred will be billed and payable monthly.
The remaining 20% of professional fees will be set aside and
accumulated as incentive compensation and will be payable
subject to the successful completion of activities and
timetables mutually agreed upon by SCC and RFS & Co. Within
thirty (30) days of the execution of this agreement, SCC and
RFS & Co. will determine, and by letter addendum to this
agreement, state in writing those conditions under which RFS &
Co. shall be entitled to all or part of the 20% of unbilled
professional fees accumulated as incentive compensation.
Our retention is subject to the following terms and
conditions:
1. Approval of SCC's Board of Directors of this
engagement letter and all of its provisions.
2. A resolution of SCC's Board of Directors appointing
Ronald F. Stengel as President and Chief Executive Officer for
the duration of this engagement.
3. Appointment of Ronald F. Stengel and Thomas A. Cawley
to the company's Board of Directors.
4. A wire transfer of the agreed-upon retainer.
5. In the event of a Chapter 11 proceeding, an Order of
the Bankruptcy Court approving the terms and conditions of
this agreement.
SCC may discharge us at any time. We may withdraw at any time
with SCC's consent or for good cause without SCC's consent.
Good cause includes SCC's breach of this agreement, SCC's
refusal or failure to cooperate with us, or any fact or
circumstance that would render our continuing representation
unlawful or unethical.
Additionally, as a condition of our retention, Smith Corona
Corporation shall indemnify and hold harmless R.F. Stengel &
Co., Inc., its respective directors, officers, employees,
affiliates, and agents of us against any losses, claims,
damages, or liabilities (or actions in respect thereof)
relating to or arising out of such engagement or our role in
connection therewith, and to reimburse us or each other party
entitled to be indemnified hereunder for all expenses,
including reasonable attorneys' fees and expenses, as they are
incurred by us or other indemnified party in connection with
investigating, preparing, or defending any such action or
claim, whether or not in connection with pending or threatened
litigation as to which we are or may be a party. Smith Corona
Corporation will not, however, be responsible for any claims,
liabilities, losses, damages, or expenses that result from our
gross negligence or intentional misconduct. The provisions of
this indemnification shall survive the termination of this
agreement.
This agreement constitutes the entire understanding between
SCC and RFS & Co. regarding our employment. By executing this
agreement you acknowledge that you have read carefully and
understand all of its terms and that you are authorized to
execute the agreement on behalf of the corporation. The
agreement cannot be modified except by further written
agreement signed by each party.
We look forward to assisting SCC in these important
activities, and are prepared to commit the resources necessary
to complete this engagement. Should this agreement be
satisfactory, please sign the attached copy and return it.
Very truly yours,
/s/Ronald F. Stengel
Ronald F. Stengel
President
Agreed to and accepted:
Smith Corona Corporation
By: /s/Robert Van Buren
Chairman, Board of Directors
Date: July 1, 1995
EXHIBIT 1.10
SMITH CORONA CORPORATION,
Landlord,
and
J. M. MURRAY CENTER, INC.,
Tenant
LEASE
For Demised Premises located at
Smith Corona Distribution Facility Plant 6
839 Route 13 South
Cortlandville, New York
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions........................................................ 1
ARTICLE 2
Demise, Term and Rent.............................................. 3
ARTICLE 3
Use .......................................................... 5
ARTICLE 4
Subordination...................................................... 5
ARTICLE 5
Assignment and Subletting.......................................... 5
ARTICLE 6
Estoppel Certificate............................................... 6
ARTICLE 7
Requirements of Law................................................ 6
ARTICLE 8
Property Loss and Indemnification.................................. 9
ARTICLE 9
Destruction - Fire and Other Casualty............................. 10
ARTICLE 10
Insurance......................................................... 11
ARTICLE 11
Condemnation...................................................... 13
ARTICLE 12
Repairs ......................................................... 14
ARTICLE 13
Alterations....................................................... 15
ARTICLE 14
Taxes ......................................................... 15
-i-
<PAGE>
ARTICLE 15
Operating Expense; Net Lease Utilities............................ 15
ARTICLE 16
Signs ......................................................... 17
ARTICLE 17
Limitation of Landlord's Liability................................ 17
ARTICLE 18
Broker ......................................................... 17
ARTICLE 19
Default - Conditions of Limitation............................... 17
ARTICLE 20
Re-Entry by Landlord.............................................. 19
ARTICLE 21
Damages ......................................................... 20
ARTICLE 22
Surrender......................................................... 22
ARTICLE 23
Access to Demised Premises........................................ 23
ARTICLE 24
Waivers ......................................................... 23
ARTICLE 25
Miscellaneous..................................................... 24
-ii-
<PAGE>
LEASE dated as of the ____ day of February, 1995 between SMITH
CORONA CORPORATION, having its address at 839 NYS 13, P.O. Box 2020, Cortland,
New York 13095 (herein called "Landlord"), and J.M. MURRAY CENTER, INC., a
corporation having an address c/o Riehlman, Shafer & Shafer, 3 Clinton Street,
Tully, New York 13159-0430 (herein called "Tenant").
W I T N E S S E T H :
Landlord and Tenant hereby covenant and agree as follows:
ARTICLE 1
Definitions
1.1 As used in this Lease, the following terms have the
meanings set forth below:
Additional Rent: All sums of money other than Fixed Rent as
shall become due and payable by Tenant in connection with this Lease, including
but not limited to the amounts set forth in Article 15. Landlord shall have the
same remedies for a default in the payment of Additional Rent as for a default
in the payment of Fixed Rent.
Applicable Law: All laws, statutes and ordinances (including
building codes and zoning ordinances) and the orders, rules, regulations,
directives and requirements of all federal, state, county, and city departments,
bureaus, boards, agencies, offices, commissions and other subdivisions thereof,
or of any official thereof, or of any other governmental, public or quasi-public
authority, whether now or hereafter in force, which are or become, or purport to
be, applicable to the Demised Premises or any part thereof or the sidewalks,
curbs or areas adjacent thereto, including without limitation the Americans With
Disabilities Act, and all requirements, obligations and conditions of all
instruments of record affecting the Demised Premises or any part thereof on the
date of this Lease or to which this Lease is or becomes subordinate.
Building: The building premises known as and by street address
Plant 6, 839 Route 13 South, Cortland, New York excluding the structure commonly
referred to as the "FCC Building".
Commencement Date: As defined in Section 2.2.
Demised Premises: Together, the Building and the
Property.
<PAGE>
Enviromental Indemnification Agreement: Shall mean that
certain Enviromental Indemnification Agreement dated as of February 28, 1995 by
and among Landlord and Tenant, a copy of which is annexed hereto as Exhibit 7.2.
Expiration Date: As defined in Section 2.2.
Fixed Rent: As defined in Section 2.3.
Force Majeure: Shall mean any and all causes beyond the
reasonable control of Landlord or Tenant, as the case may be, including delays
caused by the other party hereto, governmental restrictions, regulations or
controls (including energy and water conservation measures), labor disputes,
accidents, mechanical breakdown, shortages or inability to obtain labor, fuel,
steam, water, electricity or materials, acts of God, enemy action, civil
commotion, fire or other casualty or the process of settling insurance claims,
but shall not include lack of funds or financial inability to perform.
Insurance Requirements: All present and future requirements of
any insurance policy covering or applicable to all or any part of the Demised
Premises or the use thereof, all requirements of any administrative body
governing the underwriting standards of insurance companies issuing policies
within the State of Connecticut and having jurisdiction over all or any portion
of the Demised Premises.
Landlord: Only the owner at the time in question of the
Building or of a lease of the Building, so that in the event of any transfer of
title to the Building or of Landlord's interest in a lease of the Building, the
transferor shall be and hereby is relieved and freed of all obligations of
Landlord under this Lease accruing after such transfer, and it shall be deemed
without further agreement that such transferee has assumed and agreed to perform
and observe all obligations of Landlord herein during the period it is the
holder of Landlord's interest under this Lease.
Landlord's Agents: The agents, contractors and employees of
Landlord.
Person: The term "person" shall mean any natural person or
persons, a partnership, a corporation, and any other form of business or legal
association or entity.
Property: All of the underlying land owned by Landlord as more
particularly described on Exhibit A attached hereto and made a part hereof. The
foregoing shall include, in addition, any other parcels of land or improvements
or any facility serving the project and made available by easement, agreement or
otherwise.
-2-
<PAGE>
Purchase and Sale Agreement: Shall mean that certain purchase
and sale agreement dated February 28, 1995 by and between Landlord and Tenant,
which provides for purchase and sale of the Demised Premises.
Real Estate Taxes: As defined in Section 15.2.
Rent: As defined in Section 2.3.
Repair: The term "repair" shall be deemed to include
restoration and replacement as may be necessary to achieve and maintain good
working order and condition.
Tenant: The Tenant herein named or any assignee or successor
in interest (immediate or remote of the Tenant herein named, which at the time
in question is the owner of the Tenant's estate and interest granted by this
Lease; but the foregoing shall not be construed to permit any assignment of this
Lease or to relieve the Tenant herein named or any assignee or other successor
in interest (whether immediate or remote) of the Tenant herein named from the
full and prompt payment, performance, and observance of the covenants,
obligations and conditions to be paid, performed and observed by Tenant under
this Lease.
Tenant's Agents: The officers, employees, servants,
contractors, licensees, concessionaires, invitees and agents of Tenant.
Tenant's Property: The furniture and furnishings of Tenant and
the following which are furnished and installed by or for Tenant without expense
to Landlord and without any allowance or credit to Tenant: movable partitions,
chandeliers and other hanging, standing or projecting special lighting fixtures,
special cabinet work, other business and trade fixtures, business machines,
business equipment and communications equipment, whether or not attached to or
built into the Demised Premises and which can be removed without permanent
structural damage to, or permanent defacement of, the Building.
Term: As defined in Section 2.2.
ARTICLE 2
Demise, Term and Rent
2.1 Demise. Landlord hereby leases to Tenant, and Tenant
hereby hires from Landlord, upon and subject to the terms, covenants, provisions
and conditions of this Lease, the Demised Premises.
2.2 Term. The term of this Lease (the "Term") (a) shall
commence on February ___, 1995 (the "Commencement Date") and (b) shall terminate
(the "Expiration Date") on the date which
-3-
<PAGE>
is the earlier of (i) the "Closing Date" pursuant to the Purchase and Sale
Agreement, or (ii) the date that Landlord shall terminate the Purchase and Sale
Agreement by reason of a default by Tenant, as Purchaser thereunder, or (iii)
six (6) months following the date upon which the Purchase and Sale Agreement is
terminated for a reason other than that set forth in clause (b)(ii) of this
Section 2.2. Notwithstanding clause (b)(i), (b)(ii) or (b)(iii) of this Section
2.2, in no event shall the Expiration Date be later than June 30, 1996, except
as provided for in Article 25 of the Purchase and Sale Agreement, whereby the
Lease Term may be extended by Landlord to up to two (2) additional one (1) year
terms in order to secure a Release of the Consent Order (as defined therein), in
which case the Expiration Date may be extended through June 30, 1998.
2.3 Rent. The rents reserved under this Lease, shall be
payable throughout the Term commencing on the Commencement Date. Rent (as
defined below) shall be and consist of (a) fixed rent (herein called "Fixed
Rent"), as follows:
================================================================================
Annual Rent Monthly Rent
- --------------------------------------------------------------------------------
2/__/95 - 12/31/95 $164,000.00 $13,666.67
- --------------------------------------------------------------------------------
1/1/96 - the Expiration $164,000.00 $13,666.67
Date, which may include
extension of up to two
(2) additional one (1)
year terms pursuant to
Article 25 of the
Purchase and Sale
Agreement through
June 30, 1998
================================================================================
Fixed Rent shall be payable in equal monthly installments in the amount set
forth above, in advance on the first day of each and every calendar month during
the Term, and (b) Additional Rent. Fixed Rent and Additional Rent shall be paid
in lawful money of the United States to Landlord at the address first set forth
above, or to such other person and/or at such other place as Landlord may
designate by notice to Tenant (Fixed Rent and Additional Rent are herein
sometimes collectively called "Rent").
2.4 No Setoff. Tenant shall pay Fixed Rent and Additional Rent
promptly when due without notice or demand therefor and without any abatement,
deduction or setoff for any
-4-
<PAGE>
reason whatsoever, except as may be expressly provided in this Lease.
ARTICLE 3
Use
3.1 Tenant's Business. Tenant shall use and occupy the Demised
Premises for manufacturing and related purposes only and for no other purpose.
3.2 Permits. If any governmental license or permit, other than
a Certificate of Occupancy, shall be required for the proper and lawful conduct
of Tenant's business in the Demised Premises, or any part thereof, Tenant, at
its expense, shall duly procure and thereafter maintain such license or permit
and submit the same to inspection of Landlord. Tenant shall at all times comply
with the terms and conditions of each such license or permit.
3.3 Restrictions. Tenant shall not at any time use or occupy,
or suffer or permit anyone to use or occupy, the Demised Premises, or do
anything to be done in the Demised Premises, in any manner (a) which violates
the Certificate of Occupancy for the Building; or (b) which constitutes a
violation of Applicable Law or the Insurance Requirements.
ARTICLE 4
Subordination
4.1 Superior Mortgages. Tenant agrees that this Lease is
subordinate to any bona fide first mortgage now or in the future placed on the
Demised Premises and any renewals or extensions thereof and upon request of
Landlord Tenant agrees to execute any instrument which may be required by said
mortgagee to effectuate this subordination. As a condition of any such
subordination, Landlord agrees to obtain from any mortgagee to whose mortgage
this Lease is to be subordinated an agreement that so long as Tenant, its
successors or assigns, is in possession of the Demised Premises and not in
default in Tenant's compliance with the provisions of this Lease, the Tenant
will not be disturbed in its possession by such mortgagee. "Mortgagee" as used
herein shall include successors and assigns.
ARTICLE 5
Assignment and Subletting
5.1 Consent Required. Tenant covenants and agrees
that neither this Lease, nor the estate hereby granted, shall be
-5-
<PAGE>
assigned, mortgaged, pledged, encumbered or otherwise transferred by Tenant, the
Tenant's legal representatives, or successors in interest by operation of law or
otherwise, and that neither the Demised Premises nor any part thereof shall be
sublet, or offered or advertised for subletting, without the prior written
consent of Landlord, which consent to an assignment may be withheld by Landlord
in it sole and absolute discretion; however, Landlord shall not unreasonably
withhold its consent to a sublease which is expressly subordinate to Landlord's
interest, and which is otherwise reasonably acceptable to Landlord.
ARTICLE 6
Estoppel Certificate
6.1 Delivery of Certificate. Tenant shall, without charge at
any time and from time to time, within ten (10) days after request by Landlord,
certify by written instrument duly acknowledged and delivered to any proposed or
actual mortgagee, assignee of any mortgage or purchaser, or any other person,
firm or corporation specified by Landlord:
(a) That this Lease is unmodified and in full force and effect
(or, if there has been any modification, that the same is in full force
and effect as modified and stating the modification);
(b) Whether or not there are then existing any set-offs, or
defenses against the enforcement of any of the agreements, terms,
covenants or conditions hereof upon the part of Tenant to be performed
or complied with (and, if so specifying the same); and
(c) The dates, if any, to which the Rent has been paid
in advance.
6.2 Notice of Lease. The parties hereto agree to execute,
acknowledge, and deliver a statutory form notice of lease with respect to this
Lease, or any amendment of or other agreement supplementary to this Lease,
sufficient for recording. Such notice shall not in any circumstance be deemed to
change or otherwise affect any of the terms, covenants, and conditions of this
Lease.
ARTICLE 7
Requirements of Law
7.1 Compliance. Tenant, at Tenant's sole cost and expense,
shall at all times promptly comply with all Applicable Laws and Insurance
Requirements (collectively, "Regulations")
-6-
<PAGE>
with respect to Tenant's use or occupancy of the Demised Premises.
7.2 Environmental Provisions. During the Term of this Lease,
Landlord and Tenant shall comply with all terms and conditions of the
Enviromental Indemnification Agreement
ARTICLE 8
Property Loss and Indemnification
8.1 Limitation of Liability. Landlord or Landlord's Agents
shall not be liable for any damage to property of Tenant, nor for loss of or
damage to any property of Tenant by theft or otherwise, nor for injury or damage
to persons or property resulting from any cause of whatsoever nature, unless
caused by Landlord or Landlord's Agents, nor shall Landlord or Landlord's Agents
be liable for any such damage caused by other tenants or persons in, upon or
about the Building or caused by operations in construction of any private,
public or quasi-public work.
8.2 Tenant's Indemnification. Tenant shall indemnify and hold
harmless Landlord and Landlord's Agents from and against any and all claims
arising from or in connection with (a) the conduct or management of the Demised
Premises or of any business therein, or any work or thing whatsoever done, or
any condition created (other than by Landlord) in or about the Demised Premises
during the Term or during the period of time, if any, prior to the Commencement
Date that Tenant may have been given access to the Demised Premises; (b) any
act, omission or negligence of Tenant, Tenant's Agents or any subtenants or
licensees or their partners, officers, agents, employees or contractors; and (c)
any breach or default by Tenant in the full and prompt payment and performance
of Tenant's obligations under this Lease; together with all costs, expenses and
liabilities incurred in or in connection with each such claim or action or
proceeding brought thereon, including, without limitation, all attorneys' fees
and expenses. In case any action or proceeding be brought against Landlord or
Landlord's Agents by reason of any such claim, Tenant, upon notice from
Landlord, shall resist and defend such action or proceeding (by counsel
reasonably satisfactory to Landlord).
ARTICLE 9
Destruction - Fire and Other Casualty
9.1 Repairs. (a) If the Demised Premises or any part thereof
shall be damaged by fire or other casualty, Tenant shall give immediate notice
thereof to Landlord and this Lease shall continue in full force and effect it is
understood and agreed that the Tenant, and Purchaser pursuant to the Purchase
and Sale
-7-
<PAGE>
Agreement, has agreed to accept the Demised Premises in it condition as of the
Lease Commencement Date, and therefore any damage, deterioration or destruction
occurring on or after the Lease Commencement Date is solely the responsibility
of Tenant. Tenant hereby agrees to accept all risk of loss of all or one part of
the Demised Premises. This provision is intended to supersede the provisions of
the so-called Uniform Vendors and Purchasers Risk Act, New York General
Obligations Law Section 5- 1311.
(b) All insurance proceeds received or receivable
by Tenant for any casualty shall be paid over to Landlord and advanced to Tenant
as provided for in Section 9.3 below.
9.2 Tenant's Property. Tenant acknowledges that Landlord will
not carry insurance on Tenant's Property or on Tenant's business records or
other property of Tenant or Tenant's Agents, and Tenant agrees that Landlord
will not be obligated to repair any damage thereto or to replace the same.
9.3 Restoration. If the Demised Premises shall be damaged or
destroyed, Tenant shall with reasonable diligence cause the Demised Premises to
be repaired, restored and rebuilt to its former condition provided that, after
deduction from such insurance proceeds of the reasonable costs and expenses, if
any, incurred by Landlord in the collection of such proceeds, including without
limitation the reasonable fees and disbursements of counsel to Landlord, all net
proceeds of insurance received by Landlord with respect to the damage or
destruction shall be made available to Tenant to be used toward the payment of
repairing, rebuilding and restoring the Property so damaged or destroyed,
provided that (i) in the event such net proceeds are not adequate to cover the
cost of repair, restoration or rebuilding as determined by Landlord, Tenant
shall deposit with Landlord the amount of the difference between the net
proceeds and the estimated cost of such repair, restoration or replacement, (ii)
all liens, inchoate or perfected, which may arise for or from or result by
reason of work, materials or equipment for or in connection with such repairs,
rebuilding or restorations shall be removed by bonding, deposit or otherwise
within thirty (30) days after notice to Tenant, (iii) such net proceeds shall be
made available in each case only after the plans and specifications have been
submitted to Landlord and approved by Landlord, (iv) payments shall be made from
said insurance funds to Tenant on the terms and conditions as may be reasonably
set forth by Landlord, (v) the repairs and restorations must be completed free
of all liens for work, labor or materials, and all such work must conform to all
applicable laws, regulations, ordinances, rules, orders and requirements of the
federal, state and municipal authorities and departments having jurisdiction,
and (vi) Tenant covenants that it will receive such balance of insurance
proceeds and all advances made out of such insurance proceeds as hereinabove
mentioned and will have the right to receive the same as a trust fund to be
applied
-8-
<PAGE>
first for the purpose of paying the cost of such repair and restoration before
using any part of the same for any other purpose.
ARTICLE 10
Insurance
10.1 Casualty Insurance/"All-Risk" Coverage. (a) Tenant will,
at its sole expense, obtain and keep in force during the Term of this lease,
"all-risk" coverage insurance (including all casualties) naming Landlord and
Tenant as insured, as their interests may appear and such other parties as
Landlord or Tenant may designate as additional insureds, in the customary form
in the Town of Cortlandville for buildings and improvements of similar
character, on all buildings and improvements now or after this date located on
the Demised Premises. The amount of insurance will be designated by Landlord no
more frequently than once every twelve (12) months; will be set forth on an
"agreed amount endorsement" to the policy of insurance; will not be less than
Two Million and 00/100 ($2,000,000.00) Dollars. All policies shall provide, and
Tenant hereby agrees, that all proceeds of all insurance shall be paid over to
Landlord. Any such proceeds which are received by Tenant shall be held "in
trust" by Tenant to be immediately paid over to Landlord. Tenant shall not
compromise or settle any insurance claim without Landlord's prior written
approval.
(b) Commercial General Liability. Tenant will,
at its sole expense, obtain and keep in force during the term of this lease
commercial general liability insurance with a combined single limit of not less
than two million and 00/100 ($2,000,000.00) Dollars for injury to or death of
any one person, for injury to or death of any number of persons in one
occurrence, and for damage to property, insuring against any and all liability
of Landlord and Tenant, including without limitation coverage for contractual
liability, broad form property damage, host liquor liability, and non-owned
automobile liability, with respect to the premises or arising out of the
maintenance, use, or occupancy of the Demised Premises. Such insurance will
insure the performance by Tenant of the indemnity agreement as to liability for
injury to or death of persons and damage to property set forth in Section 8.2.
Such insurance will be noncontributing with any insurance that may be carried by
Landlord and will contain a provision that Landlord, although named as an
insured, will nevertheless be entitled to recover under the policy for any loss,
injury, or damage to Landlord, its agents, and employees, or the property of
such persons.
(c) Other Matters. All insurance required in this paragraph
and all renewals of it will be issued by companies authorized to transact
business in the State of New York reasonably acceptable to Landlord. The
"all-risk" coverage
-9-
<PAGE>
insurance and the general liability insurance will be carried in the joint names
of Tenant and Landlord as insureds, and such other parties having an interest in
the Demised Premises as Landlord and Tenant may designate. All insurance
policies will be subject to approval by Landlord and any lender as to form and
substance; will expressly provide that such policies will not be canceled or
altered without thirty (30) days' prior written notice to Landlord and any
lender, in the case of "all-risk" coverage insurance, and to Landlord, in the
case of general liability insurance; will, to the extent obtainable, provide
that no act or omission of Tenant that would otherwise result in forfeiture or
reduction of the insurance will affect or limit the obligation of the insurance
company to pay the amount of any loss sustained; and will, to the extent
obtainable, contain a waiver by the insurer of its rights of subrogation against
Landlord. Upon issuance, each insurance policy or a duplicate or certificate of
such policy will be delivered to Landlord and any lender whom Landlord
designates. Tenant may satisfy its obligation under this paragraph by
appropriate endorsements of its blanket insurance policies. If the Reba Lease
shall be in place, pursuant to said lease, Reba Properties, Inc., the landlord
thereunder, shall be named as an additional insured on all insurance policies.
10.2 Tenant's Property. Tenant agrees throughout the Term, to
maintain insurance against loss or damage by fire and such other risks and
hazards as are insurable under present and future standard forms of fire and
extended coverage insurance policies on Tenant's Property.
ARTICLE 11
Condemnation
11.1 Total Taking. If all or substantially all of the Building
or the Property shall be lawfully condemned or taken in any manner for any
public or quasi-public use, this Lease shall cease and terminate as of the date
of the vesting of title in the condemnor.
11.2 Partial Taking. If less than all of the Building or the
Property shall be so condemned or taken, but if such taking shall substantially
affect the Demised Premises or the means of access thereto, or if such
condemnation or taking shall be of a substantial part of the Demised Premises,
then Landlord or Tenant shall have the right to terminate this Lease and the
term and estate hereby granted by the delivery of written notice to the other
party within thirty (30) days following the date of actual vesting of title in
the condemnor. Such termination shall take effect as of the date of actual
vesting of title in the condemnor or thirty (30) days after the giving of such
notice of termination, whichever is later. If Landlord or Tenant shall not so
elect to terminate, this Lease shall be and remain unaffected
-10-
<PAGE>
by such condemnation or taking, except that, effective as of the date of the
vesting of title in the condemnor, Fixed Rent shall be reduced in the proportion
which the area of the part of the Demised Premises so condemned or taken bears
to the total area of the Demised Premises prior to such condemnation or taking.
11.3 Award. In the event of the termination of this Lease in
accordance with this Article, Rent shall be prorated and paid to the effective
date of the termination. Tenant, whether this Lease be canceled pursuant to this
Article, shall not be entitled to claim or receive any part of any award or
compensation which may be issued or rendered in any such condemnation proceeding
or as a result of such condemnation or taking, and shall not be entitled to
claim or receive any damages against Landlord, whether the same be for the value
of the unexpired term of this Lease or otherwise.
11.4 Purchase and Sale Agreement. Nothing in this Article 11
is intended to limit, amend or modify the terms and conditions of the Purchase
and Sale Agreement, which shall require Tenant, as Purchaser pursuant to the
Purchase and Sale Agreement, to close title to the Demised Premises
notwithstanding such condemnation, and otherwise provides for the allocation of
any award.
ARTICLE 12
Repairs
12.1 Repairs. Tenant at its sole cost and expense shall be
solely responsible for all repairs or replacement to the Demised Premises,
whether structural or nonstructural, and the fixtures and appurtenances therein
including without limitation landscaping, HVAC, roof and structural repairs
and/or replacements as needed to preserve the Demised Premises and the fixtures
and appointments therein in good working order and condition.
It is understood and agreed that this Lease has been executed
in connection with the Purchase and Sale Agreement and that pursuant to said
Purchase and Sale Agreement, the Tenant as purchaser hereunder has agreed to
accept the Demised Premises in its "as-is" condition as of the Lease
Commencement Date, and therefore as provided for above, all repair and
replacements in any connection to the Demised Premises during the term of this
Lease are the sole responsibility of Tenant.
12.2 Abatement. Neither (i) the making by Landlord, Tenant or
others of any decorations, repairs, alterations, additions or improvements in or
to the Demised Premises, nor (ii) the failure of Landlord or others to make any
such decorations, repairs, alterations, additions or improvements, nor (iii) any
damage to the Demised Premises or to the property of Tenant, nor
-11-
<PAGE>
any injury to any persons, caused by other tenants or persons in the Building,
or by operations in the construction of any private, public or quasi-public
work, or by any other cause, nor (iv) any latent defect in the Building or in
the Demised Premises, nor (v) any inconvenience or annoyance to Tenant or injury
to or interruption of Tenant's business by reason of any of the events or
occurrences referred to in the foregoing subdivisions (i) through (iv), shall
constitute an actual or constructive eviction, in whole or in part, or entitle
Tenant to any abatement or diminution of rent, or relieve Tenant from any of its
obligations under this Lease, or impose any liability upon Landlord, or
Landlord's Agents or any superior lessor or superior mortgagee other than such
liability as may be imposed upon Landlord by law for Landlord's negligence or
the negligence of Landlord's Agents in the operation or maintenance of the
Building or for the breach by Landlord of any express covenant of this Lease on
Landlord's part to be performed.
The provisions of this Article with respect to the making of
repairs shall not apply in the case of fire or other casualty which are dealt
with in Article 9.
ARTICLE 13
Alterations
13.1 Requirements. All improvements installed by Tenant which
are affixed to the Building, including, without limitation, partitions, tile
floors, hung ceilings, power lines, heating and air-conditioning ducts, plumbing
fixtures, water pipes and gas lines shall become upon their installation the
property of Landlord and shall not be removed at the end of the Term by Tenant.
Landlord shall have no obligation whatsoever to reimburse the cost thereof to
Tenant or otherwise. The location of any such improvement shall be approved by
Landlord, which approval shall not be unreasonably withheld or delayed. Further,
Tenant shall not make any improvements to the Property without Landlord's prior
written consent, which consent shall not be unreasonably withheld if Tenant
demonstrates to Landlord's reasonable satisfaction that all such improvements
shall (i) be completed in compliance with all applicable laws, rules and
regulations, and (ii) in a lien free, good and workmanlike manner.
Tenant may install such other machinery, equipment and other
property as it may need to carry out its operation in the Demised Premises and,
except as above provided, shall remove the same upon the termination of this
Lease. All such machinery equipment and other property, except as herein
otherwise specifically provided, shall be and remain the sole property of
Tenant, whether or not the same is attached to or appurtenant to the Demised
Premises. In the event that the installation or removal of any such machinery or
equipment damages the Demised
-12-
<PAGE>
Premises, Tenant shall, at its sole cost and expense, immediately repair the
same.
ARTICLE 14
Real Estate Taxes
Landlord shall pay all real estate taxes for the Demised
Premises, during the Term of this Lease.
ARTICLE 15
Operating Expense; Net Lease Utilities
15.1 Utilities. (a) Tenant shall pay the appropriate suppliers
for all water, gas, electricity, light, heat, telephone, power, and other
utilities and communications services used by Tenant on the Demised Premises
during the Term, whether or not the services are billed directly to Tenant.
Tenant shall also procure, or cause to be procured, without cost to Landlord,
any and all necessary permits, licenses, or other authorizations required for
the lawful and proper installation and maintenance upon the Demised Premises of
wires, pipes, conduits, tubes, and other equipment and appliances for use in
supplying any of the services to and upon the Demised Premises which are
installed by Tenant. Landlord, upon request of Tenant, and at the sole expense
and liability of Tenant, will join with Tenant in any application required for
obtaining or continuing any of the services.
(b) Landlord reserves the right to submeter or
otherwise estimate Tenant's usage of utilities and to bill the Tenant for
Tenant's usage in accordance with the applicable submeter readings. If Landlord
shall elect to submeter any utility, Landlord shall monthly deliver to Tenant a
bill, which bill Tenant shall pay to Landlord as Additional Rent within five (5)
calendar days of receipt thereof by Tenant. Until the sewer lines are separated,
Tenant's usage shall be based upon an estimated amount based upon 200% of
Tenant's usage of potable water.
(c) Separate Utilities. As provided for in
Article 23 of the Purchase and Sale Agreement, the Tenant shall separate (and
pay the cost thereof) all of the utilities for the Demised Premises so that
submetering shall no longer be required.
(d) Net Lease. Except for Real Estate Taxes to
be paid for by Landlord pursuant to Article 14, the Fixed Rent shall be a net
rental payment. All costs of maintenance, repairs (whether or not structural or
capital in nature), utilities, insurance and all other expenses of whatsoever
nature in connection with the operation, occupancy or maintenance of the Demised
Premises shall be paid solely by the Tenant during the Term of this Lease, all
such amounts to be regarded as Additional Rent.
-13-
<PAGE>
15.2 Tenant's use of electrical energy shall never exceed the
Building's capacity. Without the prior consent of Landlord, Tenant shall not
perform or permit any alteration to the wiring installations or other electrical
facilities in or serving the Demised Premises or any additions to the electrical
fixtures in the Demised Premises.
15.3 Landlord shall have no liability to Tenant for any loss,
damage or expense which Tenant may sustain or incur by reason of any change,
failure, inadequacy or defect in the supply or character of the utility
furnished to the Demised Premises or if the quantity or character of the utility
is no longer available or suitable for Tenant's requirements, except for any
actual damage (as opposed to consequential or punitive) suffered by Tenant by
reason of any such failure, inadequacy or defect cause by the negligence or
Landlord or Landlord's Agents, and then only after actual notice to Landlord by
Tenant pursuant to Section 25.3 of this Lease and, in such event, Tenant, and
those claiming by or through Tenant, waive, to the fullest extent permitted by
Applicable Law any consequential damages resulting therefrom.
ARTICLE 16
Signs
Tenant shall have the right to install signs on the Demised
Premises or on the building identifying Tenant's business which signs shall be
maintained by Tenant at all times in accordance with all Applicable Laws.
ARTICLE 17
Limitation of Landlord's Liability
Tenant shall look solely to the estate and interest of
Landlord in the Building for the satisfaction of Tenant's remedies for the
collection of any judgment (or other judicial process) requiring the payment of
money by Landlord in the event of any default or breach by Landlord with respect
to any of the terms, covenants and conditions of this Lease to be observed or
performed by Landlord, and no other property or assets of Landlord shall be
subject to levy, execution or other enforcement procedure for the satisfaction
of Tenant's remedies under or with respect to either this Lease, the
relationship of Landlord and Tenant hereunder or Tenant's use and occupancy of
the Demised Premises.
-14-
<PAGE>
ARTICLE 18
Broker
Tenant covenants, warrants and represents that no broker
negotiated or brought about the consummation of this Lease, and that no
discussions or negotiations were had with any other broker concerning the
leasing of space in the Building. Tenant agrees to indemnify, defend and hold
Landlord harmless from and against any claim for a brokerage commission or other
compensation arising out of any discussions or negotiations had by Tenant with
any broker.
ARTICLE 19
Default -- Conditions of Limitation
19.1 If at any time during the Term of this Lease there is
filed against Tenant in any court pursuant to any statute, either of the United
States of America or any state, a petition in bankruptcy or insolvency, or for
reorganization, or for the appointment of a receiver or trustee of all or a
portion of Tenant's property, or for other relief of debtors, and, within ninety
(90) days after such filing, Tenant fails to secure a dismissal thereof; or if
Tenant shall make a voluntary application for any of the foregoing relief, or an
assignment for the benefit of creditors or petition for or enter into an
arrangement for the benefit of creditors, or admit in writing the inability to
pay its debts; then, in any such event, this Lease, at the option of Landlord,
may be terminated by written notice to Tenant (but if any of such events occurs
prior to the Commencement Date, this Lease shall, without any obligation on the
part of the Landlord to give such notice, thereupon be terminated), and, whether
such termination occurs prior to or during the Term hereof, neither Tenant nor
any person claiming through or under Tenant by virtue of any statute or any
order of any court shall be entitled to possession or to remain in possession of
the Demised Premises, but shall forthwith quit and surrender the same. Landlord,
in addition to the other rights and remedies it may have by virtue of any other
provision herein contained (including, without limitation, Article 23 hereof) or
by virtue of any statute, judicial decision or other rule of law, may retain, to
be credited against the damages described in Article 23 below, any rent,
security deposit or monies received by it from Tenant or others on behalf of
Tenant.
19.2 Events of Default. This Lease and the Term and estate
hereby granted are subject to the further limitations that (the following events
to be sometimes referred to as "Event(s) of Default"):
-15-
<PAGE>
(a) if Tenant shall default in the payment of any
Fixed Rent or Additional Rent, and such default shall continue
for five (5) days, or
(b) if Tenant shall, whether by action or inaction,
be in default of any of its obligations under this Lease (other than a default
in the payment of Fixed Rent or Additional Rent) and such default shall continue
and not be remedied within thirty (30) days after Landlord shall have given to
Tenant a notice specifying the same, or, in the case of a default which cannot
with due diligence be cured within a period of thirty (30) days and the
continuance of which for the period required for cure will not subject Landlord
to criminal penalty or to prosecution for a crime or foreclosure of any superior
mortgage, if Tenant shall not, (i) within said thirty (30) day period advise
Landlord of Tenant's intention to take all steps necessary to remedy such
default, (ii) duly commence within said thirty (30) day period, and thereafter
diligently prosecute to completion, all steps necessary to remedy the default
and (iii) complete such remedy within a reasonable time after the date of said
notice of Landlord (not to exceed sixty (60) days in the aggregate), or
(c) if Tenant shall be in default pursuant to any of
the terms and conditions of the Purchase and Sale Agreement, or if the Purchase
and Sale Agreement shall terminate for any reason whatsoever,
(d) if an event of default occurs under the Reba
Lease due to the action or inaction of Tenant,
then this Lease and the Term hereof shall, at Landlord's option and without
further notice to Tenant, terminate and expire, and Tenant shall then quit and
surrender the Demised Premises to Landlord.
ARTICLE 20
Re-Entry by Landlord
20.1 Summary Dispossess. If (i) Tenant shall not pay Rent when
same is due and payable, or (ii) an Event of Default shall have occurred, or
(iii) if this Lease shall terminate as provided in Article 19, Landlord or
Landlord's Agents and employees may immediately or at any time thereafter
re-enter the Demised Premises, or any part thereof, either by summary dispossess
proceedings or by any suitable action or proceeding at law, or otherwise,
without being liable to indictment, prosecution or damages therefor, and may
repossess the same, and may remove any person therefrom, to the end that
Landlord may have, hold and enjoy the Demised Premises. The word "re-enter", as
used herein, is not restricted to its technical meaning. If this Lease is
terminated under the provisions of Article 19, or
-16-
<PAGE>
if Landlord shall re-enter the Demised Premises under the provisions of this
Article, or in the event of the termination of this Lease, or of re-entry, by or
under any summary dispossess or other proceeding or action or any provision of
law by reason of default hereunder of the part of Tenant, Tenant shall thereupon
pay to Landlord the Fixed Rent and Additional Rent payable up to the time of
such termination of this Lease, or of such recovery of possession of the Demised
Premises by Landlord, as the case may be, and shall also pay to Landlord damages
as provided in Article 21.
20.2 Injunctive Relief. In the event of a breach or threatened
breach by Tenant of any of its obligations under this Lease, Landlord shall also
have the right of injunction. The special remedies to which Landlord may resort
hereunder are cumulative and are not intended to be exclusive of any other
remedies to which Landlord may lawfully be entitled at any time and Landlord may
invoke any remedy allowed at law or in equity as if specific remedies were not
provided for herein.
20.3 Retention of Monies. If this Lease shall terminate under
the provisions of Article 19, or if Landlord shall re-enter the Demised Premises
under the provisions of this Article, or in the event of the termination of this
Lease, or of re-entry, by or under any summary dispossess or other proceeding or
action or any provision of law by reason of default hereunder on the part of
Tenant, Landlord shall be entitled to retain all monies, if any, paid by Tenant
to Landlord, whether as advance rent, security or otherwise, but such monies
shall be credited by Landlord against any Fixed Rent or Additional Rent due from
Tenant at the time of such termination or re-entry or, at Landlord's option,
against any damages payable by Tenant under Article 21 or pursuant to law.
ARTICLE 21
Damages
21.1 Acceleration, Reletting. If this Lease is terminated
under the provisions of Article 19, or if Landlord shall re-enter the Demised
Premises under the provisions of Article 20, or in the event of the termination
of this Lease, or of re-entry, by or under any summary dispossess or other
proceeding or action or any provision of law by reason of default hereunder on
the part of Tenant, in addition to any and all rights or remedies which Landlord
may have at law or in equity pursuant to this Lease or the Purchase and Sale
Agreement, Tenant shall pay to Landlord as damages, at the election of Landlord,
either:
(a) a sum which at the time of such termination
of this Lease or at the time of any such re-entry by Landlord, as
the case may be, represents the then value of the excess, if any,
-17-
<PAGE>
of (i) the aggregate amount of the Fixed Rent and the Additional Rent under this
Lease which would have been payable by Tenant for the period commencing with
such earlier termination of this Lease or the date of any such re-entry, as the
case may be, and ending with the date contemplated as the expiration date hereof
if this Lease had not so terminated or if Landlord had not so re-entered the
Demised Premises, over (ii) the aggregate rental value of the Demised Premises
for the same period, or
(b) sums equal to the Fixed Rent and the Additional
Rent which would have been payable by Tenant had this Lease not so terminated,
or had Landlord not so re-entered the Demised Premises, payable upon the due
dates therefor specified herein following such termination or such re-entry and
until the date contemplated as the Expiration Date hereof if this Lease had not
so terminated or if Landlord had not so re-entered the Demised Premises,
provided, however, that if Landlord shall relet the Demised Premises during said
period, Landlord shall credit Tenant with the net rents received by Landlord
from such reletting, such net rents to be determined by first deducting from the
gross rents as and when received by Landlord from such reletting the expenses
incurred or paid by Landlord in terminating this Lease or in re-entering the
Demised Premises and in securing possession thereof, as well as the expenses of
reletting, including, without limitation, altering and preparing the Demised
Premises for new tenants, brokers' commissions, legal fees, and all other
expenses properly chargeable against the Demised Premises and the rental
therefrom, it being understood that any such reletting may be for a period
shorter or longer than the remaining Term, but in no event shall Tenant be
entitled to receive any excess of such net rents over the sums payable by Tenant
to Landlord hereunder nor shall Tenant be entitled in any suit for the
collection of damages pursuant to this subdivision to a credit in respect of any
net rents from reletting, except to the extent that such net rents are actually
received by Landlord. If the Demised Premises or any part thereof should be
relet in combination with other space, then proper apportionment on a square
foot basis shall be made of the rent received from such reletting and of the
expenses of reletting.
If the Demised Premises or any part thereof be relet by Landlord for the
unexpired portion of the Term, or any part thereof, before presentation of proof
of such damages to any court, commission or tribunal, the amount of rent
reserved upon such reletting shall, prima facie, be the fair and reasonable
rental value for the Demised Premises, or part thereof, so relet during the term
of the reletting. Landlord shall not be liable in any way whatsoever for its
failure or refusal to relet the Demised Premises or any part thereof, or if the
Demised Premises or any part thereof are relet, for its failure to collect the
rent under such reletting, and no such refusal or failure to relet or failure to
collect rent shall release or affect Tenant's liability for damages or otherwise
under this Lease.
-18-
<PAGE>
21.2 Successive Suits, etc. Suit or suits for the recovery of
such damages, or any installments thereof, may be brought by Landlord from time
to time at its election, and nothing contained herein shall be deemed to require
Landlord to postpone suit until the date when the Term of this Lease would have
expired if it had not been so terminated under the provisions of Article 19, or
under any provision of law, or had Landlord not re-entered the Demised Premises.
Nothing herein contained shall be construed to limit or preclude recovery by
Landlord against Tenant of any sums or damages to which, in addition to the
damages particularly provided above, Landlord may lawfully be entitled by reason
of any default hereunder on the part of Tenant. Nothing herein contained shall
be construed to limit or prejudice the right of Landlord to prove for and obtain
as damages by reason of the termination of this Lease or re-entry on the Demised
Premises for the default of Tenant under this Lease an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, such damages are to be proved whether or not
such amount be greater, equal to, or less than any of the sums referred to in
Section 21.1.
21.3 Interest. In addition to any other remedies Landlord may
have under this Lease, and without reducing or adversely affecting any of
Landlord's rights and remedies under Article 19, if any Fixed Rent, Additional
Rent or damages payable hereunder by Tenant to Landlord is not paid within
thirty (30) days after demand therefor, the same shall bear interest at the rate
of one and one-half percent (1-1/2%) per month or the maximum rate permitted by
law, whichever is less, from the due date thereof until paid, and the amount of
such interest shall be Additional Rent hereunder.
21.4 Purchase and Sale Agreement. Nothing in this Lease is
intended to or shall in manner whatsoever limit any remedies of either party to
the Purchase and Sale Agreement, which shall be cumulative with any supplement
any remedies set forth in this Lease.
ARTICLE 22
Surrender
22.1 Condition of Demised Premises. (a) On the last day of the
Term or upon any earlier termination of this Lease, or upon any re-entry by
Landlord upon the Demised Premises, Tenant shall, at its own expense, quit and
surrender the Demised Premises to Landlord broom clean, in good order, condition
and repair, except for ordinary wear and tear and such damage or destruction as
Landlord is required to repair or restore under this Lease. Tenant shall remove
from the Demised Premises all of Tenant's Property and all personal property and
personal effects of all persons claiming through of under Tenant, and shall pay
-19-
<PAGE>
the cost of repairing all damage to the Building and the Demised Premises
occasioned by such removal.
(b) Tenant shall not be obligated, at or before
quitting and surrendering the Demised Premises, to restore the Demised Premises,
or any part thereof, to the state or condition of the Demised Premises, or such
part, existing at any time prior to the Commencement Date, but at the option of
Landlord, Tenant shall be obligated at or before quitting or surrendering the
Demised Premises to restore the same to their state or condition existing prior
to the making of Alterations by Tenant. If Tenant does not perform the
restoration Tenant is obligated to perform pursuant to this Section, Landlord
may (but shall not be obligated to) perform such restoration at the expense of
Tenant and Tenant shall pay Landlord the restoration expense upon rendition of
Landlord's bill.
22.2 Tenant's Property. Any Tenant's Property or other
personal property (other than money, securities, documents, or other valuables)
which shall remain in the Demised Premises after the termination of this Lease
shall be deemed to have been abandoned and either may be retained by Landlord as
its property or may be disposed of in such manner as Landlord may see fit;
provided, however, that, notwithstanding the foregoing, Tenant will, upon
request of Landlord made not later than thirty (30) days after the date of
termination of this Lease, promptly remove from the Demised Premises any
Tenant's Property or other personal property at Tenant's own expense. If such
Tenant's Property or other personal property or any part thereof shall be sold,
Landlord may receive and retain the proceeds of such sale and apply the same, at
its option, against the expenses of the sale, cost of moving and storage, any
arrears of Fixed Rent or Additional Rent and damages to which landlord may be
entitled hereunder or pursuant to law. Any excess proceeds shall be the property
of Landlord. Any expense incurred by Landlord in removing or disposing of such
Tenant's Property or other personal property shall be reimbursed to Landlord by
Tenant on demand.
22.3 Survival. Tenant's obligations under this Article shall
survive the termination of this Lease.
ARTICLE 23
Access to Demised Premises
23.1 Landlord's Rights. Landlord and Landlord's Agents shall
have the following rights in and about the Demised Premises: (i) to enter the
Demised Premises upon prior notice (except in the case of emergency) to Tenant
at all reasonable times to examine the Demised Premises or for any of the
purposes set forth in this Article, the Purchase and Sale Agreement or the
Enviromental Indemnification Agreement or for the purpose of performing any
obligation of Landlord under this Lease or
-20-
<PAGE>
exercising any right or remedy reserved to Landlord in this Lease; (ii) to
exhibit the Demised Premises to others; and (iii) in connection with any of
Landlord's obligations under this Lease.
23.2 No Eviction. The exercise by Landlord or Landlord's
Agents of any right reserved to Landlord in this Article shall not constitute an
actual or construction eviction, in whole or in part, or entitle Tenant to any
abatement or diminution of rent, or relieve Tenant from any of its obligations
under this Lease, or impose any liability upon Landlord, or Landlord's Agents,
or upon any Superior Lessor or Superior Mortgagee by reason of inconvenience or
annoyance to Tenant, or injury to or interruption of Tenant's business, or
otherwise.
ARTICLE 24
Waivers
24.1 Order of Payment. If Tenant is in arrears in payment of
Fixed Rent or Additional Rent, Tenant waives Tenant's right, if any, to
designate the items which any payments made by Tenant are to be credited, and
Tenant agrees that Landlord may apply any payments made by Tenant to such items
as Landlord sees fit, irrespective of and notwithstanding any designation or
request by Tenant as to the items which any such payments shall be credited.
ARTICLE 25
Miscellaneous.
25.1 Delivery of Keys, etc. No act or thing done by Landlord
or Landlord's Agents during the Term shall constitute a valid acceptance of a
surrender of the Demised Premises or any remaining portion of the Term except a
written instrument accepting such surrender, executed by Landlord. The failure
of Landlord to seek redress for breach or violation of, or to insist upon the
strict performance of, any term, covenant or condition of this Lease on Tenant's
part to be observed or performed shall not prevent a subsequent act or omission
which would have originally constituted a breach or violation of any such term,
covenant or condition from having all the force and effect of an original breach
or violation. The receipt by Landlord of Rent with knowledge of the breach or
violation by Tenant of any term, covenant or condition of this Lease on Tenant's
part to be observed or performed shall not be deemed a waiver of such breach or
violation. No provision of this Lease shall be deemed to have been waived by
Landlord unless such waiver shall be set forth in a written instrument executed
by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than
the aggregate of all Fixed Rent and Additional Rent then due, no endorsement or
-21-
<PAGE>
statement on any check or no letter accompanying any check or other Rent payment
in any such lesser amount and no acceptance of any such check or other such
payment by Landlord shall constitute an accord and satisfaction and Landlord may
accept any such check or payment without prejudice to landlord's right to
recover the balance of such Rent or to pursue any other legal remedy.
25.2 Right to Cure. If Tenant shall default in the performance
of any of Tenant's obligations under this Lease, Landlord, without thereby
waiving such default, may (but shall not be obligated to) perform the same for
the account and at the expense of Tenant, without notice in a case of emergency,
and in any other case only if such default continues after the expiration of ten
(10) days from the date Landlord gives Tenant notice of the default. All costs
and expenses incurred by Landlord under this Section shall be payable by Tenant
immediately upon demand of Landlord.
25.3. Notices. Any notice, statement, request, demand,
consent, approval or other communication required or permitted to be given,
rendered or made by either party to the other, pursuant to this Lease or
pursuant to any applicable law or requirement of public authority, shall be in
writing (whether or not so stated elsewhere in this Lease) and shall be deemed
to have been properly given, rendered or made only if (i) delivered by hand; or
(ii) sent by reputable overnight delivery service addressed to the other party
at the address set forth above; or (iii) sent by registered or certified mail,
return receipt requested, posted in a United States post office station or
letter box in the continental United States, addressed to the other party at the
address hereinabove set forth (except that after the Commencement Date, Tenant's
address, unless Tenant shall give notice to the contrary, shall be the
Building), and in the event notice is given pursuant to (iii) above shall be
deemed to have been given, rendered or made on the day so mailed, unless mailed
outside of the State of Connecticut, in which case it shall be deemed to have
been given, rendered or made on the first business day after the day so mailed.
Either party may, by notice as aforesaid, designate a different address or
addresses for notices, statements, demands, consents, approvals or other
communications intended for it.
25.4 No Representations, Entire Agreement. Tenant expressly
acknowledges and agrees that Landlord has not made and is not making, and
Tenant, in executing and delivering this Lease, is not relying upon, any
warranties, representations, promises or statements, except to the extent that
the same are expressly set forth in this Lease or in any other written agreement
which may be made between the parties concurrently with the execution and
delivery of this Lease and shall expressly refer to this Lease. Except as set
forth in the Purchase and Sale Agreement, all understandings and agreements
heretofore had between the parties are merged in this Lease and any other
written agreement(s) made concurrently herewith, which alone
-22-
<PAGE>
fully and completely express the agreement of the parties and which are entered
into after full investigation, neither party relying upon any statement or
representation not embodied in this Lease or any other written agreement(s) made
concurrently herewith.
25.5 Changes and Modifications. No agreement shall be
effective to change, modify, waive, release, discharge, terminate or effect an
abandonment of this Lease, in whole or in part, unless such agreement is in
writing, refers expressly to this Lease and is signed by the party against whom
enforcement of the change, modification, waiver, release, discharge, termination
or effectuation of the abandonment is sought.
25.6 Successors and Assigns. Except as otherwise expressly
provided in this Lease, the obligations of this Lease shall bind and benefit the
successors and assigns of the parties hereto with the same effect as if
mentioned in each instance where a party is named or referred to; provided,
however, that (a) no violation of the provisions of Article 5 shall operate to
vest any rights in any successor or assignee of Tenant and (b) the provisions of
this Article shall not be construed as modifying the conditions of limitation
contained in Article 20.
25.7 Inability to Perform. The obligations of Tenant hereunder
shall be in no wise affected, impaired or excused, nor shall Landlord have any
liability whatsoever to Tenant, because (a) Landlord is unable to fulfill, or is
delayed in fulfilling, any of its obligations under this Lease by reason of
Force Majeure; or (b) of any failure or defect in the supply, quantity or
character of electricity or water furnished to the Demised Premises by reason of
any requirement, act or omission of the public utility or others serving the
Building with electric energy, steam, oil, gas or water, or for any other reason
whether similar or dissimilar, beyond Landlord's reasonable control.
25.8 Notice of Accidents. Tenant shall give notice to
Landlord, promptly after Tenant learns thereof, of (a) any accident in or about
the Demised Premises or the Building for which Landlord might be liable, (b) any
fire in the Demised Premises, (c) all damage to or defects in the Demised
Premises including the fixtures, equipment and appurtenances thereof for the
repair of which Landlord might be responsible, and (d) all damage to or defects
in any parts or appurtenances of the air-conditioning, elevator, plumbing,
electrical, sanitary, mechanical or other service or utility systems located in
or passing through the Demised Premises.
25.9 Corporate Tenant. In the event Tenant is a corporation:
(i) the parties executing this Lease on behalf of Tenant hereby covenant and
warrant that Tenant is a duly organized Delaware corporation or foreign
corporation duly qualified to do business in Connecticut and all franchise and
corporate taxes have been paid; (ii) all forms, reports, fees and
-23-
<PAGE>
other documents necessary to comply with applicable law and maintain good
standing will be filed when due; (iii) each individual executing this Lease on
behalf of Tenant represents and warrants that he is duly authorized to execute
and deliver this Lease on behalf of Tenant in accordance with its by-laws and
that this Lease is binding upon Tenant in accordance with its terms; and (iv)
Tenant shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of a resolution of its Board of Directors authorizing
or ratifying the execution of this Lease.
25.10 Purchase and Sale Agreement. The terms and conditions of
the Purchase and Sale Agreement shall survive the termination or expiration of
this Lease. In the event that terms and conditions of the Purchase and Sale
Agreement expressly contradict the terms and conditions of the Lease, the terms
and conditions of the Purchase and Sale Agreement shall be controlling. Landlord
and Tenant agree that the terms of the easements and licenses granted pursuant
to the Purchase and Sale Agreement which are stated to be effective during the
Term of this Lease are hereby incorporated herein by reference.
25.11 Quiet Enjoyment. If and so long as Tenant pays the Fixed
Rent and Additional Rent and performs and observes all the terms, covenants and
conditions hereof on the part of Tenant to be performed and observed, Tenant
shall quietly enjoy the Demised Premises during the Term without hindrance or
molestation by any one claiming by, through or under Landlord, subject, however,
to the terms of this Lease.
25.12 Governing Law, Severability, Captions. Irrespective of
the place of execution or performance, this Lease shall be governed by and
construed in accordance with the Laws of the State of New York. If any provision
of this Lease or the application thereof to any person or circumstances shall,
for any reason and to any extent, be invalid or unenforceable, the remainder of
this Lease and the application of that provision to other persons or
circumstances shall not be affected but rather shall be enforced to the extent
permitted by law. The table of contents, captions, headings and titles in this
Lease are solely for convenience of reference and shall not affect its
interpretation. This Lease shall be construed without regard to any presumption
or other rule requiring construction against the party causing this Lease to be
drafted. Each covenant, agreement, obligation or other provision of this Lease
on Tenant's part to be performed shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any other provision of this
Lease. All terms and words used in this Lease, regardless of the number or
gender in which they are used, shall be deemed to include any other number and
any other gender as the context may require.
25.13 Sublease. It is understood and agreed that
Landlord is a tenant of a portion of the Demised Premises
-24-
<PAGE>
pursuant to that certain lease agreement by and between Reba Properties, Inc.
and SCM Corporation dated June 15, 1990 (the "Reba Lease"), and that this Lease
shall be subject and subordinate in all respects to the Reba Lease. Tenant
hereby acknowledges that it has received a copy of and reviewed the Reba Lease,
and Tenant hereby agrees that if Tenant shall cause a default pursuant to the
Reba Lease, said default shall be regarded as a default pursuant to this Lease,
and Landlord shall have all rights and remedies for such default as set forth in
this Lease.
-25-
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Lease as of he day and year first above written.
LANDLORD:
SMITH CORONA CORPORATION
By_____________________________
Name:
Its:
Duly Authorized
TENANT:
J.M. MURRAY CENTER, INC.
By_____________________________
Name:
Its:
Duly Authorized
-26-
<PAGE>
Exhibit A
[Legal Description of Property]
<PAGE>
EXHIBIT 8.1(d)
ENVIRONMENTAL
INDEMNIFICATION AGREEMENT
THIS ENVIRONMENTAL INDEMNIFICATION AGREEMENT, dated as of
February 28, 1995 ("Agreement"), is by and among the Smith Corona Corporation, a
New York corporation having its a place of business at 839 NYS Route 13,
Cortland, New York 13045 ("SCC"), and J.M. Murray Center, Inc. (sheltered
workshop for handicapped), a New York not-for-profit corporation with an office
at West Road, Cortland, New York 13045, ( "JMMC").
W I T N E S S E T H:
WHEREAS, JMMC has entered into a Purchase and Sale Agreement with SCC,
dated as of February 28, 1995 ("Purchase Agreement"), to lease from SCC a 12.704
acres parcel of land located on the south side of SCC's property at 839 NYS
Route 13, in the Town of Cortlandville, New York (the "Land"), and as a
condition to said Purchase Agreement, prior to closing title pursuant to said
Purchase Agreement, JMMC shall lease said Land from SCC, and sublease the
building and the other improvements located on the Land now owned by Mary M.
Gemelli and under lease to SCC (the "Office Building"), as more particularly
described in Exhibit A attached hereto (the Office Building and the Land are
collectively referred to herein as the "Property"); and
WHEREAS, SCC intends to purchase the Office Building from Mary M.
Gemelli and, pursuant to the Purchase Agreement, reconvey the entire Property to
JMMC thereafter; and
WHEREAS, pursuant to the Purchase Agreement, JMMC intends to
purchase the Property from SCC; and
WHEREAS, SCC intends to petition shortly after the date hereof the New
York State Department of Environmental Conservation to change the boundary
description in the New York State Registry of Inactive Hazardous Waste Disposal
Sites of the "SCM; Cortlandville State Superfund Site" so that the Property no
longer falls within the description of that Site or is otherwise de-listed from
the Registry; and
WHEREAS, JMMC and SCC require, as a condition and an inducement for
each to enter into the contemplated Purchase Agreement, that the parties enter
into, execute, deliver and perform this Environmental Indemnification Agreement.
NOW THEREFORE, the parties hereby agree as follows:
Section 1. Definitions. All capitalized terms used in this
Agreement and not hereafter defined shall have the meanings set
forth below.
<PAGE>
(a) "Disposal" has the same meaning as given to that term in
the Solid Waste Disposal Act as amended by the Resource Conservation and
Recovery Act, (42 U.S.C. Section 6901 et seq.)
(b) "Environment" means any water or water vapor, any land,
including land surface or subsurface, air, fish, wildlife, flora, fauna, biota
and all other natural resources.
(c) "Environmental Laws" mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection, conservation or
remediation of the Environment and/or governing the use, storage, treatment,
generation, transportation, processing, handling, production or Disposal of
Hazardous Substances or solid waste, and the rules, regulations, guidelines,
decisions, orders and directives of federal, state and local governmental
agencies, courts and authorities with respect thereto.
(d) "Environmental Permits" mean all permits, licenses,
approvals, authorizations, consents or registrations required by any applicable
Environmental Law in connection with: (i) the ownership, construction,
equipping, use and/or operation of the Property, (ii) the storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances or solid wastes, or (iii) the sale, transfer or conveyance
of the Property.
(e) "Hazardous Substance" means, without limitation, any
flammable, explosive or radioactive materials, radon, asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, oil, petroleum,
petroleum products, methane, hazardous materials, hazardous wastes, hazardous or
toxic substances or related materials, pollutants, and toxic pollutants, as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the
Solid Waste Disposal Act as amended by the Resource Conservation and Recovery
Act, (42 U.S.C. Sections 6901, et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. Sections 2601, et seq.), the Federal Water Pollution Control
Act, as amended, (33 U.S.C. Sections 1251, et seq.), the Oil Pollution Control
Act of 1990(33 U.S.C. 2701, et seq.), the Occupational Safety and Health Act of
1970, as amended (29 U.S.C. Sections 651, et seq.), Article 12 of the New York
State Navigation Law, Articles 17 and 27 of the New York State Environmental
Conservation Law or any other applicable Environmental Law.
(f) "JMMC Indemnitees" mean the JMMC, its successors, and all
of their directors, officers, board members, employees, agents and
representatives, acting in their official capacity.
<PAGE>
(g) "Lease" means that certain lease by and between JMMC, as
tenant, and SCC, as landlord, as more particularly described in the Purchase
Agreement.
(h) "SCC Indemnitees" mean SCC, its parent, affiliates and
successors, and all of their directors, officers, shareholders, employees,
agents and representatives, acting in their official capacity.
(i) "Release" has the same meaning as given to that term in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S.C. Section 9601, et seq.), and the regulations
promulgated thereunder.
Section 2. SCC's Representations and Warranties. Except as set forth in
Exhibit B, SCC hereby represents and warrants to the JMMC Indemnitees that, to
the best of SCC's knowledge:
(a) The Property is not being and has not been used in
violation of any applicable Environmental Law for: (i) the storage, treatment,
generation, transportation, processing, handling, production or disposal of any
Hazardous Substance, (ii) a landfill or other waste management or disposal site,
(iii) military, manufacturing or industrial purposes, or (iv) the storage of
petroleum or petroleum based products.
(b) Underground storage tanks are not and have not
been located on the Property.
(c) The soil, subsoil, bedrock, surface water and groundwater
of the Property are free of Hazardous Substances, other than any such substances
that occur naturally, at levels above applicable standards, criteria and
guidance of the New York State Department of Environmental Conservation set for
the protection of human health and the environment.
(d) There has been no Release or threat of a Release of any
Hazardous Substance on, at, to or from the Property which through soil, subsoil,
bedrock, surface water or groundwater migration could come to be located on or
at the Property, and SCC has not received any form of notice or inquiry from any
federal, state or local governmental agency or authority, any prior operator,
owner, tenant, subtenant, licensee or occupant of the Property or any other
person with regard to a Release or the threat of a Release of any Hazardous
Substance on, at, to or from the Property.
(e) These representations and warranties shall survive the
signing of this Agreement, and continue and remain in full force and effect,
until JMMC takes possession of the Property.
Section 3. JMMC's Representations and Warranties. Except
for conditions or actions that were caused by SCC, JMMC hereby
<PAGE>
represents and warrants to SCC Indemnitees that, to the best of
JMMC's knowledge:
(a) All Environmental Permits necessary for the proposed use
and operation of the Property by JMMC will be obtained and will be in full force
and effect by the time JMMC occupies the Property.
(b) This representations and warranties shall survive the
signing of this Agreement, and continue and remain in full force and effect,
until JMMC takes possession of the Property.
Section 4. Covenants of SCC. SCC hereby covenants and agrees with the
JMMC Indemnitees as follows:
(a) SCC shall promptly provide the JMMC with a copy of all
notifications, written complaints, claims, citations, demands, inquiries or
reports which it gives to or receives with respect to (i) environmental
conditions at or affecting the Property, or (ii) any past or present Release or
the threat of a Release of any Hazardous Substance on, at, to or from the
Property. If SCC receives or becomes aware of any such notification which is not
in writing or otherwise capable of being copied, SCC shall promptly advise the
JMMC of such verbal, telephonic or electronic notification and confirm such
notice in writing.
(b) SCC shall petition, at its sole expense and at no cost or
expense to JMMC, shortly after the date hereof, the New York State Department of
Environmental Conservation to change the boundary description in the New York
State Registry of Inactive Hazardous Waste Disposal Sites ("Registry") of the
"SCM; Cortlandville State Superfund Site" so that the Property no longer falls
within the description of that site or to otherwise delist the Property from the
Registry.
Section 5. Indemnification by SCC.
(a) SCC hereby covenants and agrees, at its sole cost and
expense, to indemnify, protect, defend, save and hold harmless the JMMC
Indemnitees from and against any and all damages (other than consequential
damages or lost profits), losses, liabilities, obligations, fines, amounts in
contribution, penalties, claims, litigation, demands, defenses, judgments,
suits, actions, proceedings, costs, disbursements or expenses (including,
without limitation, reasonable attorneys' and experts' fees, expenses and
disbursements) of any kind or nature whatsoever which may at any time be imposed
upon, incurred by or asserted or awarded against any or all of the JMMC
Indemnitees relating to, resulting from or arising out of: (i) the equipping,
operation or use of the Property prior to the date of this Agreement in
violation of any applicable Environmental Law for the storage, treatment,
generation, transportation, processing, handling, management, production or
disposal of any Hazardous Substance or solid waste,
<PAGE>
(ii) a material misrepresentation or inaccuracy in any
of SCC's representations or warranties contained in this Agreement, or a
material breach of or failure to perform any of SCC's covenants contained
herein, (iii) the presence of any Hazardous Substance at, on or in the Property
as of the date of this Agreement, (iv) the presence of any Hazardous Substance
as of the date of this Agreement in the Environment adjacent to or in the
vicinity of the Property due to an act or omission of SCC, its officers,
directors, agents, representatives, employees, contractors, subcontractors,
invitees or licensees which later migrates onto the Property, (v) the Release,
threat of Release, or Disposal, of any Hazardous Substance or solid waste on,
at, to or from the Property or to the Environment adjacent to or in the vicinity
of the Property which later migrates onto the Property, after the date of this
Agreement, caused by an act or omission of SCC, its officers, directors, agents,
representatives, employees, contractors, subcontractors, invitees, or licensees,
(vi) a violation of any applicable Environmental Law at or affecting the
Property by SCC, its officers, directors, agents, representatives, employees,
contractors, subcontractors, invitees, or licensees, or (vii) non-compliance
with any Environmental Permit at or affecting the Property by SCC, its officers,
directors, agents, representatives, employees, contractors, subcontractors,
invitees, or licensees, (collectively, the "SCC Indemnified Matters"); provided,
however, that SCC Indemnified Matters shall in no respect include any action or
condition to the extent that it was caused by one or all of the JMMC
Indemnitees, or their licensees, contractors, subcontractors, invitees,
subtenants or occupants.
(b) The liability of SCC to the JMMC Indemnitees hereunder
shall in no way be limited, abridged, impaired or otherwise affected by (i) any
amendment or modification of the Purchase Agreement by or for the benefit of the
JMMC, unless said amendment or modification so states, (ii) the purchase of the
Property by JMMC, (iii) any exculpatory provision contained in the Purchase
Agreement limiting JMMC's recourse to SCC, (iv) any applicable statute of
limitations, (v) any investigation or inquiry conducted by or on the behalf of
JMMC Indemnitees or any information which the JMMC Indemnitees may have or
obtain with respect to the environmental or ecological condition of the
Property, (vi) the sale, assignment, subleasing, transfer or conveyance of all
or part of the Property or SCC's interests and rights in, to, and under the
Purchase Agreement, (vii) the termination of the Purchase Agreement, or (viii)
the release or discharge, in whole or in part, of SCC, in any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding.
(c) The indemnification contained herein is wholly independent
of and in addition to any obligation which SCC may have to any or all of the
JMMC Indemnitees as a matter of law or regulation or under other agreement or
instrument.
<PAGE>
Section 6. Covenants of JMMC. The JMMC hereby covenants and agrees with
SCC Indemnitees as follows:
(a) The JMMC shall promptly provide SCC with a copy of any and
all notifications, written complaints, claims, citations, demands, inquiries or
reports which it gives to or receives with respect to (i) environmental
conditions at or affecting the Property, or (ii) any past or present Release or
the threat of a Release of any Hazardous Substance on, at, to or from the
Property. If the JMMC receives or becomes aware of any such notification which
is not in writing or otherwise capable of being copied, the JMMC shall promptly
advise SCC of such verbal, telephonic or electronic notification and confirm
such notice in writing.
(b) Prior to JMMC's purchase of the Property, and to the
extent caused by JMMC's activities at the Property or the activities of JMMC's
operators, subtenants, licensees, invitees and occupants at the Property, the
JMMC shall, at its sole expense and at no cost or expense to SCC, undertake and
complete, with due care so as not to unreasonably interfere with the conduct of
SCC's business, all investigations, studies, sampling and testing and all
removal or remedial actions necessary to contain, remove and clean up all
Releases or threats of Releases of Hazardous Substances at the Property as
required by applicable Environmental Laws. If JMMC fails to promptly remove or
otherwise cleanup such Hazardous Substances, SCC may undertake such removal or
cleanup, and the costs and expenses thereof shall be borne by JMMC and will be
paid as additional rent under the Lease Agreement.
(c) Prior to JMMC's purchase of the Property, JMMC shall keep,
and shall require all operators, subtenants, licensees, invitees and occupants
of the Property to keep, the Property free of all Hazardous Substances other
than those Hazardous Substances used in the course of JMMC's business.
(d) Prior to JMMC's purchase of the Property, JMMC shall
notify SCC within 30 days of the existence at the Property of any hazardous
materials used, handled, produced, stored, treated or disposed, in regulated
quantities or quantities greater than 55 gallons or 200 kg., at any one time,
for which records, manifests, material safety data sheets or periodic reports
are to be kept or filed by JMMC according to applicable Environmental Laws.
(e) Prior to JMMC's purchase of the Property, JMMC shall
comply with, and shall require all operators, subtenants, licensees, invitees
and occupants of the Property to comply with, all applicable Environmental Laws
and shall obtain and comply with, and shall require all operators, tenants,
subtenants, licensees, invitees and occupants of the Property to obtain and
comply with, all applicable Environmental Permits.
<PAGE>
(f) Prior to JMMC's purchase of the Property, JMMC shall not
cause or permit any change to be made in the present or intended use of the
Property which would (i) involve the storage, treatment, generation,
transportation, processing, handling, production or disposal of any Hazardous
Substance, other than those Hazardous Substances used in the course of JMMC's
business, (ii) involve the use of the Property for a landfill, any other waste
disposal site, or military purposes, (iii) involve the use of the Property for
the storage of petroleum or petroleum based products other than those used in
the course of JMMC's business, (iv) violate any applicable Environmental Law,
(v) constitute non-compliance with any Environmental Permit, or (vi), without
SCC's express written prior approval, substantially increase the risk of a
Release of a Hazardous Substance by changing the nature or manner in which JMMC
conducts its business as of the date JMMC takes possession of the Property.
(g) Prior to JMMC's purchase of the Property, JMMC shall at
all times allow SCC Indemnitees and their officers, employees, agents,
representatives, contractors and subcontractors reasonable access to the
Property for the purpose of ascertaining environmental conditions and
compliance, including, but not limited to, any soil or groundwater
investigations deemed necessary by SCC or the performance of an environmental
audit or assessment, upon the condition that due care is exercised so as not to
unreasonably interfere with the conduct of JMMC's business ("Audit"). If a
breach of any other covenant in this Section 6 is discovered during the course
of the Audit, the fees and expenses of such Audit shall be borne by JMMC and
will be paid as additional rent under the Lease Agreement.
(h) After the purchase, JMMC shall give SCC, the DEC and other
appropriate governmental authorities, and their employees, contractors,
subcontractors and consultants, access to the Property, at reasonable times and
upon reasonable notice, for the purposes of monitoring and sampling pursuant to
the Settlement Agreement, a copy of which is attached as Exhibit B.
(i) JMMC shall not Release, nor permit its operators,
subtenants, licensees, invitees and occupants to Release, any Hazardous
Substance to the Environment at the Property except pursuant to all applicable
Environmental Permits.
Section 7. Indemnification by JMMC of SCC Indemnitees.
(a) JMMC hereby covenants and agrees, at its sole cost and
expense, to indemnify, protect, defend, save and hold harmless the SCC
Indemnitees from and against any and all damages (other than consequential
damages or lost profits), losses, liabilities, obligations, fines, amounts in
contribution, penalties, claims, litigation, demands, defenses, judgments,
suits, actions, proceedings, costs, disbursements or expenses (including,
without limitation, reasonable attorneys' and experts' fees, expenses and
disbursements) of any kind or nature
<PAGE>
whatsoever which may at any time be imposed upon, incurred by or asserted or
awarded against any or all of the SCC Indemnitees relating to, resulting from or
arising out of: (i) the equipping, operation or use of the Property after the
date of this Agreement in violation of any applicable Environmental Law for the
storage, treatment, generation, transportation, processing, handling,
management, production or disposal of any Hazardous Substance or solid waste,
(ii) a material misrepresentation or inaccuracy in any of JMMC's representations
or warranties contained in this Agreement, or a material breach of or failure to
perform any of JMMC's covenants contained herein, (iii) the presence of any
Hazardous Substance at, on or in the Property as of the date of this Agreement,
(iv) the Release, threat of Release, or Disposal, of any Hazardous Substance or
solid waste on, at, to or from the Property or to the Environment adjacent to or
in the vicinity of the Property which later migrates onto the Property, after
the date of this Agreement, caused by an act or omission of JMMC, its officers,
directors, agents, representatives, employees, contractors, subcontractors,
invitees, subtenants, occupants or licensees, (v) a violation of any applicable
Environmental Law at or affecting SCC's adjacent real property by JMMC, its
officers, directors, agents, representatives, employees, contractors,
subcontractors, invitees, subtenants, occupants or licensees, or (vi)
non-compliance with any Environmental Permit at or affecting the Property by
JMMC, its officers, directors, agents, representatives, employees, contractors,
subcontractors, invitees, subtenants, occupants or licensees, (collectively, the
"JMMC Indemnified Matters"); provided, however, that JMMC Indemnified Matters
shall in no respect include any action or condition to the extent that it was
caused by one or all of the SCC Indemnitees, or their licensees, contractors,
subcontractors, invitees, subtenants or occupants.
(b) The liability of the JMMC to the SCC Indemnitees hereunder
shall in no way be limited, abridged, impaired or otherwise affected by (i) any
amendment or modification of the Purchase Agreement by or for the benefit of
SCC, unless said amendment or modification so states, (ii) the purchase of the
Property by JMMC, (iii) any exculpatory provision contained the Purchase
Agreement limiting SCC's recourse to JMMC, (iv) any applicable statute of
limitations, (v) the sale, assignment, subleasing, transfer or conveyance of all
or part of the Property or the JMMC's interests and rights in, to and under the
Purchase Agreement, (vi) the termination of the Purchase Agreement, (vii) the
release or discharge, in whole or in part, of JMMC in any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding, or (ix) any other circumstances which might otherwise
constitute a legal or equitable release or discharge, in whole or in part, of
JMMC under the Lease Agreement.
(c) The indemnification contained herein is wholly
independent of and in addition to any obligation which JMMC may
<PAGE>
have to any or all of the SCC Indemnitees as a matter of law or
regulation or under other agreement or instrument.
Section 8. Independence. The indemnifications contained herein are
wholly independent of and in addition to any obligation which the Parties may
have to each other as a matter of law or regulation or under any other agreement
or instrument.
Section 9. Governing Law. This Agreement shall be governed by,
construed in accordance with and enforceable under the laws of the State of New
York, without regard or reference to its conflict of laws and principles.
Section 10. Notices. All notices, certificates and other communications
hereunder shall be in writing and shall be either delivered personally or sent
by certified mail, postage prepaid, return receipt requested, or by Federal
Express, addressed as follows or to such other address as any party may specify
in writing to the other:
To SCC: Attn: Michael Chernago
Smith Corona Corporation
839 NYS Route 13
Cortland, New York 13045
To JMMC: J. M. Murray Center, Inc.
c/o Riehlman, Shafer and Shafer
3 Clinton Street
Tully, New York 13159-0430
Section 11. Binding Effect. This Agreement shall inure to
the benefit of and shall be binding upon the parties.
Section 12. Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 13. Amendments, Changes and Modifications. This
Agreement may not be amended, changed, modified, altered or
terminated except in a writing executed by both Parties.
Section 14. Execution of Counterparts. This Agreement may
be executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same
instrument.
Section 15. This Agreement Controlling. JMMC and SCC hereby agree that,
in the event there is a conflict between the terms of this Agreement, the Lease
and the Purchase Agreement, the terms of this Agreement shall be controlling.
Section 16. Survival. This Agreement shall survive: (i) an
extension of the Purchase Agreement and/or Lease, (ii) closing of
<PAGE>
title pursuant to the Purchase Agreement, (iii) termination of the Purchase
Agreement, (iv) sublease or assignment of the Lease, and/or (v) transfer of the
Property by JMMC.
Section 17. Recording. Either party shall have the right to
record this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
SMITH CORONA CORPORATION
By:_______________________________
Its ______________________________
J.M. MURRAY CENTER, INC.
By:________________________________
Its________________________________
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF CORTLAND)
On the _____ day of __________, 1995 personally appeared
________________________ to me personally known and known to me to be the
same person described in and who executed the foregoing instrument, and he duly
acknowledged to me that he executed the same.
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF CORTLAND)
On the ____ day of _________, 1995 personally appeared
________________________ to me personally known and known to me to be the
same person described in and who executed the foregoing instrument, and he duly
acknowledged to me that he executed the same.
------------------------
Notary Public
<PAGE>
Exhibit A
PROPOSED CONVEYANCE TO MURRAY CENTER:
BEGINNING at a point marked by a #5 rebar with plastic cap stamped "RJ STOCKWIN
PLS 049012" set in the westerly line of NEW YORK STATE ROUTE 13, said point
being in the southeasterly corner of a small cemetery, said point also being
located NORTH 83 degrees, 59 minutes, 50 seconds WEST a distance of 50.06 feet
from the centerline of the existing pavement of said NEW YORK STATE ROUTE 13,
said point in the centerline being located SOUTH 31 degrees, 33 minutes, 10
seconds WEST as measured along said centerline a distance of 1834.99 feet from
the intersection of said centerline of NEW YORK STATE ROUTE 13 and the
centerline of LIME HOLLOW ROAD;
THENCE running SOUTH 31 degrees, 14 minutes, 11 seconds WEST along said westerly
line of NEW YORK STATE ROUTE 13 and passing through a #5 rebar with plastic cap
stamped "RJ STOCKWIN/PLS 049012" found at 74.01 feet, a total distance of 653.85
feet to a point marked by a #5 rebar with plastic cap stamped "RJ STOCKWIN/PLS
049012" found in said westerly line of NEW YORK STATE ROUTE 13;
THENCE running NORTH 57 degrees, 55 minutes, 53 seconds WEST along the southerly
edge of an existing asphalt driveway, a distance of 236.00 feet to a point
marked by a #5 rebar with plastic cap stamped "RJ STOCKWIN/PLS 049012" set at an
angle point in said asphalt paving;
THENCE running SOUTH 77 degrees, 49 minutes, 00 seconds WEST along the
southeasterly line of asphalt paving a distance of 61.00 feet to a point marked
by a #5 rebar with plastic cap stamped "RJ STOCKWIN/PLS 049012";
THENCE running SOUTH 35 degrees, 39 minutes, 16 seconds WEST along the easterly
line of asphalt paving and a gravel parking lot a distance of 458.00 feet to a
point marked by a #5 rebar with plastic cap stamped "RJ STOCKWIN/PLS 049012";
THENCE running NORTH 57 degrees, 02 minutes, 34 seconds WEST along the southerly
line of the gravel parking lot a distance of 272.47 feet to a point marked by a
#5 rebar with plastic cap stamped "RJ STOCKWIN/PLS 049012";
THENCE running NORTH 31 degrees, 10 minutes, 21 seconds EAST along the westerly
line of the gravel parking lot and the westerly line of asphalt paving a
distance of 495.51 feet to a point marked by a #5 rebar with plastic cap stamped
"RJ STOCKWIN/PLS 049012";
<PAGE>
THENCE running NORTH 57 degrees, 55 minutes, 53 seconds WEST a distance of
108.00 feet to a point marked by a #5 rebar with plastic cap stamped "RJ
STOCKWIN/PLS 049012";
THENCE running NORTH 32 degrees, 00 minutes, 17 seconds EAST a distance of
579.39 feet to a point marked by a #5 rebar with plastic cap stamped "RJ
STOCKWIN/PLS 049012";
THENCE running SOUTH 57 degrees, 55 minutes, 53 seconds EAST a distance of
536.39 feet to a point marked by a #5 rebar with plastic cap stamped "RJ
STOCKWIN/PLS 049012" set for a new corner;
THENCE running SOUTH 83 degrees, 59 minutes, 50 seconds EAST and passing through
a #5 rebar with plastic cap stamped 'RJ STOCKWIN/PLS 049012" found in the
southwesterly corner of a small cemetery at a distance of 2.42 feet, a total
distance of 168.41 feet as measured along the southerly line of said small
cemetery to the PLACE of BEGINNING and CONTAINING 12.704 acres (554,379 square
feet) more or less of land.
THE ABOVE DESCRIBED PARCEL OF LAND IS ALSO SHOWN ON A SURVEY MAP
BY STOCKWIN SURVEYING DATED 02/16/95, AND ENTITLED "LANDS OF:
HSCM-10, INC., (reputed owner)" AND LABELED AS FILE NO. 9501-JMC-
R, SIGNED AND CERTIFIED BY R. JAMES STOCKWIN, PLS LICENSE NO.
049012.
<PAGE>
Exhibit B
This is Exhibit B to the Environmental Indemnification
Agreement, dated as of February 28, 1995, by and among the Smith
Corona Corporation ("SCC") and J. M. Murray Center, Inc.
SCC hereby discloses that the Property is part of a site which the New
York State Department of Environmental Conservation has listed on the New York
State Registry of Inactive Hazardous Waste Disposal Sites as the "SCM;
Cortlandville State Superfund Site", Site No. 712006. In addition, the
Department of Environmental Conservation has classified Site No. 712006 as a
"Class 2" site indicating that it is a site at which the Department believes
that the hazardous wastes present constitute a significant threat to the public
health or environmental and that action is required.
An investigation has been performed to determine the quality of the
groundwater beneath Site No. 712006, including, among other things, the quality
of the groundwater beneath the Property. The results of that investigation with
regard to the Property, as well as SCC's settlement with the governmental
authorities regarding the cleanup of the Site are set forth in the attached:
(a) Settlement Agreement, State of New York et al. v. Smith
Corona Corporation, Index No. 87 CV 0190, dated January 18, 1989.
(b) Supplemental Site Investigation Report, dated February
1990, prepared by O'Brien & Gere Engineers, Inc. for Smith Corona
Corporation.
(c) Letter Report - Phase I environmental liability
assessment, dated December 12, 1994, prepared by O'Brien & Gere
Engineers, Inc. for Smith Corona Corporation.
PURCHASE AND SALE AGREEMENT
by and between
SMITH CORONA CORPORATION
(as "Seller")
and
J.M. MURRAY CENTER, INC.
(as "Purchaser")
For Property Known As
Smith Corona Distribution Facility Plant 6
839 Route 13 South
Cortlandville, New York
Prepared by:
Winthrop, Stimson, Putnam & Roberts
Financial Centre
695 East Main Street
P. O. Box 6760
Stamford, Connecticut 06904-6760
Tel.: (203) 348-2300
<PAGE>
TABLE OF CONTENTS
Page
1. DEFINITIONS........................................................... 2
2. PURCHASE PRICE........................................................ 5
3. MATTERS TO WHICH THE SALE IS SUBJECT.................................. 6
4. OUTSTANDING INTEREST OR UNMARKETABLE TITLE............................ 7
5. ADJUSTMENTS........................................................... 9
5.1 Items to Be Apportioned between the Parties...................... 9
5.2 Tax Rate........................................................ 11
5.3 Water Meter..................................................... 11
6. CASUALTY/CONDEMNATION................................................ 11
6.1 Casualty........................................................ 12
6.2 Condemnation.................................................... 14
7. SELLER'S WARRANTIES AND REPRESENTATIONS.............................. 15
8. SELLER'S INSTRUMENTS AT CLOSING...................................... 18
9. PURCHASER'S REPRESENTATIONS AND WARRANTIES........................... 21
10. PURCHASER'S INSTRUMENTS AT CLOSING................................... 22
11. CONTRACT PERIOD...................................................... 24
12. BROKERAGE............................................................ 26
13. CLOSING.............................................................. 27
14. NOTICES.............................................................. 28
15. DEFAULT.............................................................. 29
15.1 Purchaser's Default............................................ 29
15.2 Seller's Default............................................... 29
15.3 Attorney's Fee............................................. 30
16. "AS IS".............................................................. 30
17. ASSIGNMENT........................................................... 31
18. COUNTERPARTS......................................................... 32
<PAGE>
19. FRANCHISE TAXES AND MECHANICS LIENS.................................. 32
20. FURTHER ASSURANCES................................................... 32
21. MISCELLANEOUS........................................................ 33
22. LEASE................................................................ 35
23. SEPARATION OF UTILITIES/Fire Protection System
MAINTENANCE.......................................................... 36
24. SUBDIVISION.......................................................... 37
25. ENVIRONMENTAL COMPLIANCE............................................. 38
<PAGE>
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT (this "Agreement") made as of this
28th day of February, 1995 by and between SMITH CORONA CORPORATION, a Delaware
corporation (hereinafter "Seller"), and J.M. MURRAY CENTER, INC., a New York
corporation (hereinafter "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase from Seller, subject to the terms and conditions of
this Agreement, all those certain plots, pieces or parcels of land situated on
12.704+/- acres, commonly known as Smith Corona Distribution Facility Plant 6,
839 Route 13 South, in the Town of Cortlandville, County of Cortland and State
of New York, more particularly described in Schedule A hereto, together with the
buildings and improvements thereon erected, and other interests of Seller
relating thereto all as provided for in this Agreement excepting therefrom that
certain structure commonly referred to as the FCC Building and identified as
such on Schedule B hereto (the "FCC Building").
Seller and Purchaser further agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following definitions
shall apply:
<PAGE>
1.1 The "Agreement" shall mean this Purchase and Sale
Agreement together with all Exhibits attached hereto.
1.2 "Applicable Authorities" shall mean such governmental
agencies or authorities having jurisdiction over building, planning, zoning or
construction matters.
1.3 The "Buildings" shall be the buildings and structures
erected or situated upon the Land including without limitation all improvements,
fixtures, equipment and machinery attached to, located on, appurtenant to or
used in connection therewith except the FCC Building.
1.4 "Business Day" shall mean any day which is not a Saturday,
Sunday or a State of New York or Federal legal holiday.
1.5 The "Closing Date" shall be the date when title to the
Property is conveyed to Purchaser in accordance with the terms and conditions of
this Agreement.
1.6 The "Contracts" shall have the meaning set forth in
Section 1.15(e).
1.7 The "Contract Period" shall have the meaning set forth in
Article 11.
1.8 The "Land" shall be those certain plots, pieces or parcels
of land more particularly described in Schedule A hereto.
1.9 "Lease" shall mean that certain lease to be executed by
and between Purchaser and Seller on the Lease Commencement Date substantially in
the form attached hereto as Exhibit 1.10.
1.10 "Lease Commencement Date" shall mean March 1, 1995.
-2-
<PAGE>
1.11 [Intentionally Omitted]
1.12 The "Permitted Encumbrances" shall be those restrictions,
covenants, agreements, easements, matters and things of record affecting title
to the Property designated as such on Exhibit 1.12 hereto.
1.13 The "Property" shall be the Land, Site Improvements,
Buildings, Seller's Other Interests and the Easements and Other Rights.
1.14 The "Seller's Other Interests" shall be all of Seller's
interests in and to the Property, or appertaining thereto, together with all the
singular tenements, hereditaments and appurtenances thereunto belonging or in
anywise appertaining, including without limitation:
(a) All of the right, title and interest of Seller in and
to any easements, grants of right or other agreements affecting the Property, or
comprising the "Permitted Encumbrances", including any structures or
improvements erected pursuant to such easements, grants of right or other
agreements, whether or not situate upon the Land.
(b) All of the right, title and interest of Seller in and
to any personal property owned by Seller appurtenant or affixed to and used in
connection with the Property, including, without limitation, the personal
property described on Exhibit 1.14(b)(1), and expressly excluding those items
set forth on Exhibit 1.14(b)(2).
(c) All of the right, title and interest, if any, of
Seller in and to any land lying in the bed of any street, road
-3-
<PAGE>
or avenue opened or proposed in front of or adjoining the Land to the center
line thereof and all right, title and interest of Seller in and to any award
made or to be made in lieu thereof and in and to any unpaid award for damages to
said premises by reason of change of grade of any street; and Seller shall
execute and deliver to Purchaser at Closing (as hereinafter defined) or
thereafter on demand all proper instruments for the conveyance of such title and
the assignment and collection of any such award.
(d) All of the rights and interest of Seller in and to
all permits, licenses and approvals of whatsoever nature affecting the Property
including but not limited to, if assignable, cafeteria licenses and permits, as
Purchaser may designate by written notice to Seller on or before thirty (30)
days prior to Closing.
(e) All of the rights and interest of Seller in and to
such of the contracts relating to or affecting the use or operation of the
Property (including without limitation the service, maintenance, labor and
similar agreements set forth in Exhibit 1.14(e) hereto) as Purchaser designates
by written notice to Seller on or before thirty (30) days prior to the Closing
Date, that Purchaser desires Seller to assign to it (such designated contracts
are herein called the "Contracts" and, subject to the terms hereof, to the
extent same are assignable, shall be assigned by Seller pursuant to the
assignment and assumption agreement reasonably satisfactory to Seller and
Purchaser.
-4-
<PAGE>
(f) The "Easements and Other Rights", which shall include
that certain Easement, License and Maintenance Agreement substantially in the
form attached hereto as Exhibit 23.2-2, that certain License Agreement
substantially in the form attached hereto as Exhibit 8.1(j), and that certain
Construction, Operation and Maintenance of Sewer Easement and License Agreement
attached hereto as Exhibit 23.1.
1.15 The "Site Improvements" shall be all of the parking lots,
driveway paving, access cuts, parking lot striping, parking lot lighting and
parking lot bumpers situate upon the Land, including all fixtures now or in the
future appurtenant to or used in connection with the Land.
2. PURCHASE PRICE AND DEFERRED PURCHASE PRICE
The purchase price (the "Purchase Price") for the Property
shall be Two Million and 00/100 ($2,000,000.00) Dollars payable as follows:
At Closing, Purchaser shall pay to Seller the "Balance of
the Purchase Price", which shall equal Two Million and 00/100 Dollars
(2,000,000.00). The "Balance of the Purchase Price" shall be paid on the
Closing Date to Seller by Federal Funds or other immediate clearance funds.
3. MATTERS TO WHICH THE SALE IS SUBJECT
Seller shall assign and convey or cause to be assigned and
conveyed to Purchaser or its assigns title to the Property free and clear of any
and all mortgages, liens, leases, encumbrances and easements, except:
-5-
<PAGE>
3.1 All taxes, water meter and water charges and sewer rents,
accrued or unaccrued, fixed or not fixed, becoming due and payable after the
Closing Date;
3.2 Any restrictions, limitations, regulations, ordinances,
rules and statutes of any municipal, county, state or federal governmental or
municipal board, bureau, commission, body, and/or entity having jurisdiction
over the Property including without limitation, the planning, zoning, building
and wetlands laws, rules and regulations of the Town of Cortlandville, provided
same permit the current use of the Property and same have not been violated as
of the Closing Date, or, if violated, same have become legally non-conforming;
3.3 That certain Easement and License Agreement attached
hereto as Exhibit 3.3 which provides for an express reservation of right of
Seller to enter upon the Property to use, maintain and/or demolish and remove
the FCC Building; in addition to the foregoing, the rights set forth in the
Easement and License Agreement and this Section 3.3 shall be applicable during
the Lease term as well as following the Closing, and it shall be deemed that the
Lease shall be subject to such rights;
3.4 All defects in title caused by Purchaser;
3.5 That certain Easement Agreement attached hereto as Exhibit
3.5-1 which provides Seller with (i) the right to use for ingress and egress
(both for vehicular and pedestrian traffic), maintain, pave, stripe, relocate
and expand that certain road way as shown on Exhibit 3.5-2; (ii) the right to
install and maintain utilities (below ground) within the utility
-6-
<PAGE>
easement area shown on Exhibit 3.5-2; and (iii) the right of entry to the
Property to permit any governmental and municipal entities and agencies to
perform inspections of the Property, which inspections relate to any potential
liabilities of Seller; in addition to the foregoing, the rights set forth in the
Easement Agreement and this Section 3.5 shall be applicable during the Lease
term as well as following the Closing, and it shall be deemed that the Lease
shall be subject to such rights; and
3.6 The Permitted Encumbrances respecting the Property as
shown on Exhibit 1.12 hereto.
4. OUTSTANDING INTEREST OR UNMARKETABLE TITLE
If Seller conveys the Property to Purchaser in accordance with
Article 3 and Purchaser is able to obtain, at Seller's cost, a policy of title
insurance issued by First American Title Insurance Company (or other title
insurance company licensed to do business in New York State, and mutually
acceptable to the parties) dated as of the Closing Date, insuring fee title to
the Property subject only to the Permitted Encumbrances, then Seller shall have
fully complied with its obligations respecting title to the Property. Subject to
the provisions of this Article, if Seller shall be unable to convey the fee
interest in the Property in accordance with the terms of this Agreement (other
than by reason of (i) Seller's refusal to close or willful default, or (ii)
objection to title caused by the voluntary acts or omission to act of Seller;
those matters set forth in Articles 24 and 25 below shall not fall within said
-7-
<PAGE>
clause (i) or clause (ii)), Seller shall have the right to terminate this
Agreement, and Purchaser shall be granted six (6) months to vacate the Property,
not to extend beyond June 30, 1996, during which period Purchaser shall fully
comply with the terms and conditions of the Lease. Upon such termination of this
Agreement, this Agreement shall be deemed canceled and the parties hereto shall
be released of all obligations and liabilities hereunder and Purchaser shall
have no rights of action against Seller or any other party hereto, at law or in
equity, for damages, specific performance or otherwise. Notwithstanding the
foregoing, Purchaser shall have the right to accept such title as Seller can
convey, in which event Seller shall make the deliveries provided in this
Agreement to Purchaser to the extent that Seller is able so to do; provided,
however that if there shall be one or more liens or encumbrances against the
Property which can be discharged by the payment of a sum of money, then Seller
shall remove, discharge, bond, escrow or obtain affirmative title insurance
coverage reasonably satisfactory to Purchaser for such lien or encumbrance
(provided, however, that as to liens or encumbrances, other than mortgage(s) and
real estate taxes (which mortgages and real estate taxes Seller shall be
required to pay without limitation), Seller shall not be obligated to pay an
amount in excess of Two Hundred Thousand and 00/100 ($200,000.00) Dollars in the
aggregate relating thereto). Except as hereinabove provided, Seller shall have
no duty nor shall Seller be required to take any action, institute any
proceedings or incur any expense in order to remedy
-8-
<PAGE>
or remove any objections to title or otherwise to render title in accordance
with the terms of this Agreement, and if Seller shall elect not to take any
action, institute any proceeding or incur any expense to remedy or remove any
objection to title or otherwise render title in accordance with the terms of
this Agreement, then, for the purposes of this Article 4, Seller shall be deemed
unable to convey the Property in accordance with the terms of this Agreement.
5. ADJUSTMENTS
5.1 Items to Be Apportioned between the Parties. The following
items of income and expense (the "Adjustments") relating to the Property shall
be apportioned between the parties as of midnight of the day immediately
preceding the Closing Date so that Seller shall be charged with and have the
benefit of such items accrued through the day immediately preceding the Closing
Date, and Purchaser shall be charged with or have the benefit of such items from
and after the Closing Date (it being understood and agreed that Purchaser, as
tenant pursuant to the Lease, shall be required to pay all amounts due
thereunder through and including the Closing Date, and that the hereinafter set
forth adjustments shall not limit Purchaser's obligation pursuant to the Lease):
(a) Real estate taxes, personal property taxes (as to any
personal property included in this sale) and municipal improvement assessments,
if any, for the tax year which includes the Closing Date;
-9-
<PAGE>
(b) Water and sewer charges and rents for the assessment
period which includes the Closing Date; but if any such charges shall be payable
on the basis of meter readings, then such charges shall be apportioned as
provided in Section 5.3;
(c) Utilities, including, without limitation, telephone,
steam, electricity and gas, on the basis of the most recently issued bills
therefor, with a subsequent reapportionment of such utilities promptly after
issuance of bills for the same for the period which includes the Closing Date;
(d) Fuel, if any, at the last invoice price and based
upon the supplier's written statement measuring the same not more than three (3)
days prior to the Closing Date;
(e) Any charges, advance payments and deposits paid or
payable under the Contracts to the extent Purchaser has elected to have same
transferred and/or assigned; and
(f) Fees for transferable licenses and permits pertaining
to the Property, or any part thereof, or any other property included in this
sale to the extent Purchaser has elected to have same assigned.
Except as otherwise provided in this Agreement, the
Adjustments shall be made in accordance with the customs in respect to title
closing recommended by the local bar association.
The provisions of this Article 5 shall survive the Closing.
Any errors in calculations or apportionments shall be corrected or adjusted as
soon as practicable after the Closing.
-10-
<PAGE>
5.2 Tax Rate. If the Closing shall occur before the tax rate
is fixed, the apportionment of real estate taxes shall be upon the basis of the
tax rate for the next preceding tax year applied to the latest assessed
valuation, subject to further and final adjustment when the tax rate is fixed
for the tax year in which the Closing takes place and subject to Seller's right
to contest such taxes as hereinafter provided in the Agreement. The provisions
of this Section shall survive the Closing.
5.3 Water Meter. If there are any water meters on the
Property, Seller shall furnish readings to a date not more than five (5) days
prior to the date of the Closing, and the unfixed meter charges and the unfixed
sewer rents, if any, based thereon for the intervening time shall be apportioned
on the basis of such last readings.
6. CASUALTY/CONDEMNATION
It is understood and agreed that as of the Lease Commencement
Date, Purchaser shall assume all risk with respect to the Property, which shall
include any casualty or condemnation of whatsoever nature. This agreement of
Purchaser and Seller shall be regarded as an express agreement contrary to the
so-called Uniform Vendor and Purchaser Risk Act, New York General Obligations
Law Section 5-1311. Therefore:
6.1 Casualty.
(a) Prior to the Lease Commencement Date, all or a
"material part" (as defined below) of the Property shall be damaged or destroyed
by fire or other casualty, then, in any such event, Purchaser may, at its
option, either (i) cancel this
-11-
<PAGE>
Agreement, and the parties hereto shall be released of all obligations and
liabilities of whatsoever nature in connection with this Agreement, or (ii)
proceed to close the transactions contemplated by this Agreement, in which event
all of the provisions of Section 6.1(b)(i) and Section 6.1(b)(ii) below shall
apply.
(b) Prior to the Lease Commencement Date, if less than a
material part of the Property shall be destroyed or damaged by fire or other
casualty, Purchaser shall nevertheless enter into the Lease and perform all of
the terms and conditions of this Agreement pursuant to all the terms and
conditions of this Agreement, subject to the following: (i) Seller shall not (a)
adjust and settle any insurance claims, or (b) enter into any construction or
other contract for the repair or restoration of the Property in excess of One
Hundred Thousand and 00/100 ($100,000.00) Dollars in the aggregate, without
Purchaser's prior written consent, which consent shall not be unreasonably
withheld or delayed, and (ii) at the Lease Commencement Date, Seller shall pay
over to Purchaser in installments, as repairs are made, the amount of any
insurance proceeds, to the extent collected by Seller in connection with such
casualty, less the amount of the actual expenses incurred by Seller in making
repairs to the Property occasioned by such casualty pursuant to any contract
(provided that such contract was reasonably approved by Purchaser as required by
this Section); the repairs shall be completed by Purchaser, based upon the
reasonable rules and requests of Seller, and in accordance with the terms and
conditions of the
-12-
<PAGE>
Lease. Seller shall reasonably cooperate with Purchaser in the collection of
such proceeds. However notwithstanding the foregoing, Seller shall have the sole
and exclusive right to settle and/or compromise any insurance claims. This
Section 6.1(b) shall survive the Lease Commencement Date and, if applicable, the
Closing.
(c) From and after the Lease Commencement Date, Purchaser
shall bear the risk of loss. As noted above, this provision shall be regarded as
an express agreement concerning the so-called Uniform Vendor and Purchaser Risk
Act, New York General Obligations Law Section 5-1311. Therefore if a casualty,
whether or not material, shall occur from and after the Lease Commencement Date,
Purchaser shall be required to close title to the Property as if no such
casualty had occurred, with no offset, deduction or reduction to the Purchase
Price. Prior to Closing, all insurance proceeds shall be paid over to Seller,
and advanced to Purchaser in installments, as repairs and/or restoration are
completed pursuant to the reasonable rules and regulations of Seller and subject
to the terms and conditions of the Lease. At Closing, Seller shall assign to
Purchaser any right, title or interest Seller has or may have in and to any
insurance proceeds relating to such casualty to the Property, and shall
reasonably cooperate with Purchaser to collect all such proceeds; said
obligation to cooperate with Purchaser shall survive the Closing.
(d) For the purpose of this Section, the phrase "a
material part" of the Property shall mean that (i) the cost of repair or
restoration is estimated by a reputable contractor
-13-
<PAGE>
selected by Seller and reasonably satisfactory to Purchaser, to be in excess of
Two Hundred Fifty Thousand and 00/100 ($250,000.00) Dollars, or (ii) the length
of time required for the repair or restoration is estimated by a reputable
contractor selected by Seller and reasonably satisfactory to Purchaser, to be in
excess of six (6) months.
6.2 Condemnation. If, prior to the Lease Commencement Date,
all or any "material part" (as defined below) of the Property is taken by
eminent domain or is the subject of a pending taking which has not been
consummated (collectively, a "Taking"), Purchaser shall have the right, within
five (5) "Business Days" of receiving notice of such Taking, to terminate this
Agreement upon written notice to Seller. If this Agreement is terminated, as
aforesaid, this Agreement shall be deemed canceled and the parties hereto shall
have no further obligations or liabilities of whatsoever nature in connection
with this Agreement. For the purpose of this Section 6.2, a "material part"
means a substantial portion of the Property or the access thereto such that the
Property remaining after such a taking cannot reasonably be used and operated as
a warehouse/manufacturing facility of not less than 80,000 square feet of
rentable warehouse/manufacturing space. If (i) the taking or condemnation shall
occur after the Lease Commencement Date, or (ii) if Purchaser does not elect to
terminate this Agreement as aforesaid, or (iii) if the Taking is of a
"non-material part" (i.e., anything other than a "material part") of the
Property, Purchaser shall nevertheless close title to the Property and
-14-
<PAGE>
fully perform the terms and conditions of this Agreement, and there shall be no
abatement of the Purchase Price, and at the Closing Seller shall (1) pay over to
Purchaser the amount of any awards to the extent collected by Seller in
connection with such Taking, and (2) assign to Purchaser all of Seller's right,
title and interest in and to any awards that are uncollected at the time of the
Closing and that may be paid in respect of such Taking. Seller shall reasonably
cooperate with Purchaser in the collection of such proceeds, which obligation
shall survive the Closing. However, notwithstanding the foregoing, Seller shall
have the sole and exclusive right to settle and/or compromise any such
condemnation or other similar claim and receive any and all proceeds of such
condemnation award subject to adjustment at Closing as provided hereinabove.
7. SELLER'S WARRANTIES AND REPRESENTATIONS
To induce Purchaser to enter into this Agreement and to
purchase the Property from Seller, Seller makes the following representations,
all of which Seller represents are true as of the date hereof (unless otherwise
indicated) and shall be true as of the Closing Date and shall be deemed remade
as of that date; however, Seller shall not be required to remake as of the
Closing Date any representation or warranty to the extent that a breach or
violation of such representation or warranty occurred on or after the Lease
Commencement Date and such breach or violation of such representation or
warranty was caused or permitted in whole or in part by Purchaser, as tenant:
-15-
<PAGE>
7.1 Subject to Seller's acquisition of the REBA Property (as
defined below), and subject to the terms and conditions of this Agreement, as of
the Closing Date Seller shall be the sole owner of the Property.
7.2 (a) Seller is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to own and sell the Property and to take all actions
required of Seller by this Agreement and properly qualified to transact business
in New York.
(b) Subject to Seller's acquisition of the REBA Property
(as defined below), and subject to the terms and conditions of this Agreement,
the execution, delivery and performance of this Agreement and consummation of
the transaction hereby contemplated in accordance with the terms of this
Agreement will not violate the certificate of incorporation or by-laws of Seller
or any contract, agreement, commitment, order, judgment or decree to which
Seller is a party or by which it or the Property is bound, and no consent of any
other party is required.
(c) Subject to the terms and conditions of this
Agreement, the party or parties executing this Agreement on behalf of Seller
have been duly authorized and are empowered to bind Seller to this Agreement and
to take all actions required by this Agreement. Upon acquiring title to the REBA
Property, Seller shall have the full right, power and authority to sell and
-16-
<PAGE>
convey the Property to Purchaser as provided herein and to carry
out its obligations hereunder.
(d) No action, suit or proceeding is pending or, to the
best of Seller's knowledge, threatened against Seller which would materially
affect Seller's ability to fully perform its obligations pursuant to this
Agreement.
7.3 Except as disclosed in Article 25, Seller has received no
notice of violation of any applicable federal, state or local law and there are
no pending or threatened appeals, revocations or suspensions of any permits,
approvals or consents relating to the current use or proposed use of the
Property.
7.4 All personal property owned by Seller and located in or
upon the Property or used in connection with the operation and maintenance of
the Property which is included in this sale, and which is owned by Seller, on
the Closing Date, shall be free and clear of any conditional bills of sale,
chattel mortgages, security agreements, financing statements or other
encumbrances of any nature.
7.5 There are no existing or pending litigation, claims,
condemnations or sales in lieu thereof with respect to any aspect of the
Property nor, to the knowledge of Seller, have any actions, suits, proceedings
or claims been threatened or asserted except as disclosed elsewhere in this
Agreement.
7.6 Exhibit 7.6 hereto correctly and completely sets forth all
insurance of Seller covering the Property or any portion thereof.
-17-
<PAGE>
7.7 Seller is not a foreign entity subject to withholding
pursuant to I.R.C. Section 1445. Seller agrees to indemnify and hold Purchaser
harmless from any and all claims brought against Purchaser pursuant to I.R.C.
Section 1445 by reason of a breach by Seller of the foregoing representation,
which indemnification shall survive the Closing.
7.8 Except as set forth on Exhibit 7.8, Seller represents that
there are no leased fixtures on the Property, and the systems on the Property,
including but not limited to the furnace and heating system, plumbing and water
pipes, water systems, sewer system, electrical systems and air conditioning
system are now in working order and will be in the same condition at the
Closing.
All representations, warranties and covenants of Seller
contained in this Agreement or in any affidavit or other document delivered in
connection herewith shall, except as otherwise agreed, be true and correct at
Closing but shall not survive the Closing.
8. SELLER'S INSTRUMENTS AT CLOSING
8.1 Seller shall execute and deliver to Purchaser on the
Closing Date:
(a) a bargain and sale deed with covenants against
grantor's acts in the form attached hereto as Exhibit 8.1(a); and
(b) [Intentionally Omitted]
(c) [Intentionally Omitted]
-18-
<PAGE>
(d) Environmental indemnity agreement in the form
attached hereto as Exhibit 8.1(d); and
(e) all such usual and customary affidavits of title as
may be reasonably required by Purchaser's title insurance company, including an
indemnification agreement, if necessary; and
(f) a certificate of a duly authorized officer of Seller
stating that all representations and warranties made by Seller in this Agreement
are true as of the Closing Date as if made on such date; and
(g) duly executed real estate conveyance or transfer tax
(and transfer gains tax) forms and/or other documents for the Property. Seller
shall at Closing by certified or bank check pay all real estate transfer and
conveyance taxes and/or transfer gains taxes payable to the appropriate state
and/or local governmental and/or municipal authorities; Purchaser shall bear the
expense of recording the deed; and
(h) a duly executed affidavit as may be required pursuant
to Section 1445 of the Internal Revenue Code, it being understood and agreed
that Seller shall fully comply with all rules, regulations and requirements
promulgated, issued or mandated by the Internal Revenue Code or the Secretary of
the Treasury Department of the United States as to the deduction and withholding
of tax imposed on the disposition of any United States real property interest by
a foreign person; and
(i) the Easement, License and Maintenance Agreement in
the form attached hereto as Exhibit 23.2-2; and
-19-
<PAGE>
(j) the License Agreement in the form attached hereto as
Exhibit 8.1(j); and
(k) the Construction, Operation and Maintenance of Sewer
Easement and License in the form attached hereto as Exhibit 23.1; and
(l) the Easement and License Agreement in the form
attached hereto as Exhibit 3.3; and
(m) the Easement Agreement in the form attached hereto as
Exhibit 3.5-1; and
(n) a letter confirming the termination of the Lease; and
(o) copies of the certificates of occupancy for the
Buildings, if available.
8.2 Seller shall deliver or cause to be delivered to Purchaser
on the Closing Date:
(a) appropriate resolutions and certificates reasonably
satisfactory to Purchaser;
(b) to the extent Seller may have the same in its
possession, all assignable warranties, maintenance records and related material
with respect to the Property;
(c) all transferable permits and licenses with respect to
the Property and all certificates of occupancy or equivalent governmental
instruments required for the Property;
(d) to the extent same are in Seller's possession, all
operating documents, maintenance and other records necessary for the continued
operation of the Property exclusive of documents necessary to be retained by
Seller. As to
-20-
<PAGE>
any documents retained by Seller, Purchaser shall have the right of reasonable
access upon reasonable advance notice to examine and make copies thereof, which
rights shall survive the Closing;
(e) all existing keys, garage door openers, lock
combinations and alarm codes;
(f) a copy of the Phase 1 Audit of the Property prepared
by O'Brien & Gere Engineers, Inc., together with a reliance letter from O'Brien
& Gere Engineers, Inc.; no representation or warranty is made by Seller
concerning any matter included within such Audit or otherwise; and
(g) such other usual and customary documents,
instruments, and other material reasonably requested by Purchaser as may be
necessary to effect the transfer of title hereunder.
9. PURCHASER'S REPRESENTATIONS AND WARRANTIES
To induce Seller to enter into this Agreement, Purchaser
makes, to the best of Purchaser's knowledge and belief, the following
representations, all of which Purchaser represents are true as of the date
hereof.
9.1 (a) Purchaser is a corporation duly organized and validly
existing and in good standing under the laws of the State of New York with full
power and authority to purchase the Property and to take all actions required of
Purchaser by this Agreement.
(b) The execution, delivery and performance of this
Agreement and consummation of the transaction hereby contemplated in accordance
with the terms of this Agreement will not violate the By-laws of Purchaser or
any contract, agreement,
-21-
<PAGE>
commitment, order, judgment or decree to which Purchaser is a party or by which
it is bound, and no consent of any other party is required.
(c) The party or parties executing this Agreement on
behalf of Purchaser have been duly authorized and are empowered to bind
Purchaser to this Agreement and to take all actions required of Purchaser by
this Agreement.
(d) No action, suit or proceeding is pending or, to the
best of Purchaser's knowledge, threatened against Purchaser which would
materially affect it's ability to fully perform its obligations pursuant to this
Agreement.
(e) [Intentionally Omitted]
All representations, warranties and covenants of Purchaser
contained in this Agreement or in any affidavit or other document delivered in
connection herewith shall be true and correct at Closing but shall not survive
the Closing.
10. PURCHASER'S INSTRUMENTS AT CLOSING
10.1 Purchaser shall execute and deliver to Seller at Closing
the following:
(a) a certificate of a duly authorized officer of
Purchaser stating that all representations and warranties made by Purchaser in
this Agreement are true as of the Closing Date as if made on such date; and
(b) [INTENTIONALLY DELETED]
10.2 Purchaser shall deliver or cause to be delivered to
Seller on the Closing Date:
-22-
<PAGE>
(a) appropriate resolutions and certificates reasonably
satisfactory to Seller that the actions taken by Purchaser have been duly
authorized;
(b) the Purchase Price in the manner provided for in
Article 2 hereof; and
(c) the Easement, License and Maintenance Agreement in
the form attached hereto as Exhibit 23.2-2; and
(d) the License Agreement in the form attached hereto as
Exhibit 8.1(j); and
(e) the Construction, Operation and Maintenance of Sewer
Easement and License in the form attached hereto as Exhibit 23.1; and
(f) the Easement and License Agreement in the form
attached hereto as Exhibit 3.3; and
(g) the Easement Agreement in the form attached hereto as
Exhibit 3.5-1; and
(h) a letter confirming the termination of the Lease; and
(i) evidence reasonably satisfactory to Seller that
Purchaser has completed the separation of all the Utilities as provided for in
Article 23 or if such seperation has not been completed, financial security
satisfactory to Seller, in its sole discretion, in an amount sufficient to
assure that the Utilities shall be separated within fifteen (15) months of the
Closing Date pursuant to Article 23; and
(j) the environmental indemnity agreement in the form
attached hereto as Exhibit 8.1(d); and
-23-
<PAGE>
(k) such other usual and customary documents,
instruments, and other material necessary to effect the transfer of title
hereunder and reasonably requested by Seller.
11. CONTRACT PERIOD
11.1 After execution of this Agreement and prior to the Lease
Commencement Date (the "Contract Period"), Seller shall continue to operate the
Property in the same manner as it is
currently being operated by Seller.
11.2 Purchaser and its agents, employees, consultants and
contractors shall have the right to enter the Property at all reasonable times,
upon reasonable advance notice, to perform such tests, measurements and studies
as may be reasonably necessary. Seller shall reasonably cooperate with Purchaser
and shall make Seller's personnel reasonably available to Purchaser to assist
Purchaser. If Purchaser exercises its rights hereunder, Purchaser shall comply
with the reasonable requirements of Seller, and shall hold Seller harmless for
any liability, loss, cost or expense of whatsoever nature caused directly by
such testing, measurement or study by Purchaser. Further, Purchaser shall repair
any damage caused directly by such testing, measurement or study and shall
reasonably restore the Property to its former condition and shall hold Seller
harmless for any liability, loss, cost or expense arising therefrom. The
obligations of Purchaser pursuant to this Section shall survive the termination
of this Agreement.
11.3 During the Contract Period, Seller shall not without the
written consent of Purchaser enter into any
-24-
<PAGE>
management or service contracts or any other agreements of any nature for the
Property unless such contract(s) shall be fully cancelable or terminable prior
to the Closing Date.
11.4 Seller may make ordinary repairs during the Contract
Period but shall make no extraordinary repairs during such period without the
written consent of Purchaser. Extraordinary repairs for purposes of this
Agreement shall mean a repair the cost of which is more than One Hundred
Thousand and 00/100 ($100,000.00) Dollars. During the Contract Period Seller
shall make no expenditures for the Property which are capital in nature and
which require an expenditure in excess of One Hundred Thousand and 00/100
($100,000.00) Dollars, without the consent of Purchaser, which consent shall not
be unreasonably withheld or delayed.
11.5 During the Contract Period, Seller shall:
(a) Comply with all federal, state and municipal laws,
ordinances, regulations and orders relating to the Property;
(b) Comply with all the material terms, conditions and
provisions of any leases, liens, mortgages, agreements and other contractual
arrangements referred to herein and make all payments required to be paid
thereunder and suffer no default therein;
(c) Operate, manage and maintain the Property in the same
general manner as the same has been operated by Seller to the date hereof; and
-25-
<PAGE>
(d) Maintain in effect all insurance coverages listed in
Exhibit 7.6 hereto.
11.6 During the Contract Period, and except for the Easements
and Other Rights, Seller shall not grant any easement, license or other right or
impose restriction affecting all or any part of the Property without the express
consent of Purchaser.
11.7 Upon reasonable prior notice, prior to closing Purchaser
shall have the right to perform a final inspection of the Property.
12. BROKERAGE
Purchaser and Seller represent and warrant to each other that
this Agreement was not brought about by any broker and that no broker was in any
way instrumental or had any part in bringing about this transaction. Purchaser
agrees that, should any claim be made for commissions by any broker or person
arising by, through or on account of any act of Purchaser or Purchaser's
representatives, or if by reason of, through or on account of any act of
Purchaser or Purchaser's representatives a broker claims commissions or other
compensation, Purchaser shall indemnify and hold Seller harmless from and
against any and all claim, liability, cost or expense (including reasonable
attorneys' fees) in connection therewith. Seller agrees that should any claim be
made for commissions by any broker or person arising by, through or on account
of any act of Seller or Seller's representatives, Seller shall indemnify and
hold Purchaser harmless from and against any and all claim, liability, cost or
expense (including reasonable attorneys' fees) in connection therewith. The
-26-
<PAGE>
provisions of this Article shall survive delivery of the deed, but the
provisions hereof shall not be deemed or construed as a covenant for the benefit
of any third party. Notwithstanding the foregoing, Seller hereby discloses that
a separate agreement with Corporate Partners, Ltd. may exist, which entity may
be paid a commission in connection with this sale, and that Seller shall pay any
such commission pursuant to a separate agreement.
13. CLOSING
Subject to Article 25 below, the closing of title to the
Property (the "Closing") shall take place on the date that is one (1) year and
seven (7) days following the date upon which (i) Seller acquires title (as
evidenced by the date of recordation of a deed) to that real property and
improvements (the "REBA Property") covered by that certain lease date June 15,
1970 by and between REBA Properties, Inc. and SCM Corporation (the "REBA
Lease"), and (ii) all ground leases affecting the Property have been terminated;
the closing shall take place at 10:00 a.m. at the Property or at such other
location as the parties mutually agree to. Except as provided for in Article 25
below, in no event shall the Closing take place on a date later than June 30,
1996. Notwithstanding the foregoing, at Seller's sole option, upon written
notice to Purchaser, Seller shall have the right to accelerate the Closing Date
to a date which is not less than one hundred twenty (120) days following the
date upon which the Release as described in Article 25 shall be issued.
-27-
<PAGE>
14. NOTICES
All notices, requests and demands to be made hereunder to the
parties hereto shall be in writing (at the addresses set forth below) and shall
be given by any of the following means: (a) personal service (including, without
limitation, overnight delivery, courier or messenger services); (b) electronic
communication, whether by telex, telegram or telecopying (if confirmed in
writing sent by registered or certified, first-class mail, postage prepaid,
return receipt requested), or (c) registered or certified, first-class United
States mail, postage prepaid, return receipt requested. Such addresses may be
changed by notice to the other parties given in the same manner as provided
above. Any notice, demand or request sent (x) pursuant to subsection (a) shall
be deemed received upon such personal service, (y) pursuant to subsection (b)
shall be deemed received one (1) day after dispatch by electronic means, and (z)
pursuant to subsection (c) shall be deemed received five (5) days following
deposit in the mail.
If to Seller: SMITH CORONA CORPORATION
839 NYS 13 P.O. Box 2020
Cortland, New York 13045
Attention: W. Michael Driscoll
Telecopy: (607) 753-8531
With a copy to: Winthrop, Stimson, Putnam & Roberts
The Financial Centre
695 East Main Street
P. O. Box 6760
Stamford, Connecticut 06904-6760
Attention: Kent S. Nevins, Esq.
Telecopy: (203) 965-8226
-28-
<PAGE>
If to Purchaser: J.M. MURRAY CENTER, INC.
c/o Riehlman, Shafer & Shafer
3 Clinton Street
Tully, New York 13159-0430
Attention: Rick Shafer, Esq.
Telecopy: (315) 696-6019
With a copy to: Riehlman, Shafer & Shafer
3 Clinton Street
Tully, New York 13159-0430
Attention: Rick Shafer, Esq.
Telecopy: (315) 696-6019
15. DEFAULT
15.1 Purchaser's Default. If Purchaser shall be in default,
then Seller shall have the right to treat this Agreement as having been breached
by Purchaser five (5) Business Days after receipt by Purchaser's attorney of
written notice of such default and the failure by Purchaser to cure said default
within said five (5) day period, and Seller's remedy on account of such breach
shall be the right to terminate this Agreement and the Lease by written notice
to Purchaser and Purchaser's attorney, and, upon such termination, Purchaser
shall forfeit all rights and claims with respect to the Property pursuant to
this Agreement and the Lease, whereupon Seller may pursue any remedies at law or
in equity for such default of this Agreement; nothing whatsoever in this
Agreement shall in any manner limit any remedies available to Seller, as
Landlord pursuant to the Lease.
15.2 Seller's Default. In the event that all of the
preconditions to Seller's obligation to close have been satisfied and/or waived
by Seller and/or Purchaser, as the case may be, and the sale of the Property
fails or Seller refuses to close or otherwise materially breaches or is in
default of its obligations and agreements pursuant to this Agreement (except,
that, Seller's
-29-
<PAGE>
failure to obtain the Release (as defined below) or the Subdivision Approval (as
defined below) shall not be regarded as a default hereunder), as its sole
remedy, Purchaser may at its option (a) bring suit to specifically enforce this
Agreement to compel Seller to perform the terms and conditions of this
Agreement, and Purchaser shall have no right to seek damages, or (b) in the
alternative, terminate this Agreement by written notice, whereupon Seller shall
have no further obligation pursuant to this Agreement.
15.3 Attorney's Fee. In any action between Seller and
Purchaser pursuant to Section 15.1 or Section 15.2 of this Agreement, in
addition to all other remedies available pursuant to said Section 15.1 or 15.2,
as applicable, the prevailing party shall be entitled to recover legal fees and
expenses from the non-prevailing party.
16. "AS IS"
Purchaser has examined the Property and any other property to
be sold hereunder and is familiar with the physical condition thereof. Purchaser
agrees and represents that Purchaser is purchasing the Property and any other
such property "As Is With All Faults" and in their present condition, as of the
date hereof, subject to reasonable use, wear and tear between the date hereof
and the Lease Commencement Date; Purchaser is assuming all risk whatsoever for
wear and tear, casualty and condemnation occurring on or after the Lease
Commencement Date. In making and executing this Agreement, Purchaser has not
relied upon or been induced by any statements or representations of any
-30-
<PAGE>
person (other than those, if any, set forth expressly in this Agreement) in
respect of the title to, or the physical condition of, the Property or other
property, or the income, expenses, operation or any other matter or thing
affecting or relating to the Property or to this transaction, which might be
pertinent in considering the making or the execution of this Agreement. Seller
has not made and does not make any representation as to the physical condition,
rents, leases, expenses, operation, legality of occupancy or any other matter or
thing affecting or relating to the Property, except as herein specifically set
forth, and Purchaser hereby expressly acknowledges that no such representations
have been made. Purchaser has relied solely on such representations, if any, as
are expressly made herein and on such investigations, examinations and
inspections as Purchaser has chosen to make or has made.
17. ASSIGNMENT
Purchaser shall not assign any of Purchaser's rights hereunder
in whole or in part without Seller's prior written consent, which consent shall
not be unreasonably withheld if, in Seller's sole discretion, the proposed
assignee is creditworthy. Further, Seller shall have the right to reject any
proposed assignment unless a cash deposit of not less than Two Hundred Fifty
Thousand and 00/100 ($250,000.00) Dollars is posted, which deposit shall be
non-refundable except in the case of a Seller default, or if Seller terminates
this Agreement for a reason other than as a result of a Purchaser default.
-31-
<PAGE>
18. COUNTERPARTS
This Agreement may be executed in counterparts. The signatures
of the parties who sign different counterparts of this Agreement or any of the
instruments executed to effectuate the purposes of this Agreement shall have the
same effect as if those parties had signed the same counterparts of this
Agreement or of any such instrument.
19. FRANCHISE TAXES AND MECHANICS LIENS
Unpaid franchise taxes of any corporation in the chain of
title and mechanics liens with respect to the Property shall not be an objection
to title provided that the title company insuring Purchaser affirmatively
insures Purchaser against the collection thereof from the Property, and provided
further that the title company omits such objection for the CDA's mortgage
policy.
20. FURTHER ASSURANCES
Purchaser and Seller each agree to execute and deliver to the
other such further documents or instruments as may be reasonable and necessary
in furtherance of the performance of the terms, covenants and conditions of this
Agreement. This Article shall survive the Closing.
21. MISCELLANEOUS
21.1 In connection with the sale of the Property pursuant to
this Agreement, Seller agrees to pay the fees and disbursements for any surveys
of the Property. Purchaser shall bear all costs in connection with the creation
of any mortgage on
-32-
<PAGE>
the Property. All expenses incurred by Purchaser on account of this Agreement,
including those listed in the preceding sentence, are hereby made liens on the
Property, but such liens shall not continue after default by Purchaser under
this Agreement. This Section shall survive the termination of this Agreement.
Each party shall pay its own counsel fees in connection with the negotiation and
execution of this Agreement.
21.2 This Agreement shall be binding upon and shall inure to
the benefit of Seller and Purchaser and their respective successors and assigns.
21.3 This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. This Agreement shall be
construed without regard to any presumption or other rule requiring construction
against the party causing this Agreement to be drafted. If any words or phrases
in this Agreement shall have been stricken out or otherwise eliminated, whether
or not any other words or phrases have been added, this Agreement shall be
construed as if the words or phrases so stricken out or otherwise eliminated
were never included in this Agreement and no implication or inference shall be
drawn from the fact that said words or phrases were so stricken out or otherwise
eliminated. All terms and words used in this Agreement, regardless of the number
or gender in which they are used, shall be deemed to include any other number
and any other gender as the context may require.
21.4 The headings of the several Sections contained in this
Agreement are inserted only as a matter of convenience and
-33-
<PAGE>
for reference and in no way define, limit or describe the scope of this
Agreement or the intent of any provision thereof.
21.5 The invalidity or unenforceability of any provision of
this Agreement shall not affect or impair any other provision of this Agreement.
21.6 This Agreement contains the entire agreement among Seller
and Purchaser and any and all prior understandings and dealings heretofore had
are merged herein and any agreement shall be ineffective to change, modify or
discharge this Agreement in whole or in part unless such agreement is in writing
and signed by Seller and Purchaser.
21.7 After the Lease Commencement Date, Purchaser or Seller
shall be permitted to cause this Agreement or a memorandum of this Agreement to
be recorded or filed in any public record in a form approved by Seller. The
memorandum shall not disclose the purchase price or any financial terms or
conditions. Upon the termination of this Agreement by reason of a default by
Purchaser or otherwise, Purchaser shall immediately release the memorandum from
the public record. Purchaser hereby irrevocably appoints Seller its
attorney-in-fact for Purchaser for such purpose. If Purchaser shall violate any
of the provisions of this Section, Purchaser shall be liable to Seller for any
damages caused by or resulting from such violation, including without limitation
reasonable legal fees and expenses.
21.8 This Agreement shall not be binding until signed and
unconditionally delivered by Purchaser and Seller.
-34-
<PAGE>
21.9 The terms "herein", "hereof" and "hereunder" and similar
terms used in this contract each refer to this Agreement in its entirety and not
to the particular provision or section in which such term is used.
21.10 Seller and Purchaser agree that Purchaser's attorneys
(named in Article 14 of this Agreement) are hereby designated as the "real
estate broker", with respect to the transaction contemplated in this Agreement,
pursuant to proposed regulation 1.6045-4 of the United States Internal Revenue
Code.
21.11 Notwithstanding anything in this Agreement to the
contrary, it is understood and agreed that the documents attached hereto as
Exhibits are substantially in the form to be executed and delivered in
accordance with this Agreement, and that the parties hereto shall in good faith
complete the Exhibits prior to execution and delivery.
21.12 At or before Closing, Purchaser shall timely deliver all
required or requested tax returns or other documents or affidavits reasonably
required by Seller in connection with Article 31B of the Tax Law or the
regulations promulgated in connection therewith.
22. LEASE
In order to facilitate the purchase and sale contemplated by
this Agreement, Purchaser has requested, and
-35-
<PAGE>
Seller has agreed, that Purchaser shall have the right to lease the Property
from Seller for the period commending on March 1, 1995 in accordance with the
terms and conditions of that certain Lease in the form attached hereto as
Exhibit 1.10. Purchaser's right to lease the Property shall not be independent
of its obligations pursuant to this Agreement and, therefore, if for any reason
whatsoever this Agreement shall terminate or shall not be in full force and
effect, the Lease shall automatically terminate.
23. SEPARATION OF UTILITIES/FIRE PROTECTION SYSTEM MAINTENANCE
23.1 It is understood and agreed that the utilities serving
the Property may not be separate from utilities servicing Seller's contiguous
property. Purchaser shall not later than fifteen (15) months following the
Closing Date, TIME BEING DEEMED TO BE OF THE ESSENCE, (i) obtain governmental
and municipal approval for and (ii) commence, complete and pay the cost of
separating all such utilities and restoring all disturbed property, all pursuant
to plans and specifications reasonably approved by Seller and in a manner which
is not disruptive to the operation of business at Seller's contiguous property.
At Closing, the parties shall enter into an agreement, mutually acceptable to
all parties, permitting Purchaser access to Seller's contiguous property for the
purpose of separating said Utilities within said fifteen (15) month period,
which may include, if necessary, an easement over Seller's contiguous property
lines servicing the Property, which easement shall be upon terms and conditions
mutually agreeable to Seller and Purchaser. The form of the easement attached
hereto as Exhibit 23.1 shall be completed and recorded prior to Closing. It is
understood and agreed that Seller shall
-36-
<PAGE>
in the exercise of its commercial reasonable judgment have the sole and
exclusive right to review and approve all plans and specifications for
separating the utilities and for fixing easement areas, with the intent being
that such separation of utilities and such easements shall not be detrimental to
the current or reasonably contemplated use and development of Seller's
contiguous property. All easements shall be located within the areas established
pursuant to Exhibit 23.1. Further, at Closing Purchaser shall deliver to Seller
security and assurances satisfactory to Seller to assure completion of said
separation of said utilities. The Seller shall have the right to draw upon such
security at any time following the expiration of said fifteen (15) months in
order to complete said work. This provision shall survive the Closing.
23.2 It is further understood and agreed that the Fire Tower
as noted on Exhibit 23.2-1 shall be used to service both the Property and
Seller's contiguous property and that the parties shall simultaneously with the
execution of this Agreement enter into the Easement, License and Maintenance
Agreement in the form attached hereto as Exhibit 23.2-2. Seller shall have the
sole and exclusive right to determine and fix the method for the sharing of the
use of such Fire Tower, and Seller shall determine the location and maintenance
of any lines to and from the Fire Tower.
23.3 [INTENTIONALLY OMITTED]
24. SUBDIVISION
This Agreement, and the parties' obligations pursuant to this
Agreement, shall be conditioned upon Seller obtaining, prior to the Closing
Date, all governmental and municipal approvals, including
-37-
<PAGE>
but not limited to subdivision and/or zoning approvals, to permit the Property
to stand as a separate legal lot in full compliance with all applicable
governmental and municipal laws, rules and regulations (the "Subdivision
Approval"). Purchaser hereby waives any right to raise an objection to the
Subdivision Approval, notwithstanding the fact that same may be the subject of
an appeal or otherwise appealable.
Seller shall make application for and diligently pursue said
approvals, and Purchaser shall fully cooperate with Seller and join in such
application if so requested by Seller. If Seller shall not have obtained the
approvals on or before the Closing Date, then upon written notice to Purchaser,
this Agreement and the Lease shall terminate. Purchaser shall be granted six (6)
months from the date of such notice to vacate the Property, not to extend beyond
June 30, 1996, during which time Purchaser shall comply with the terms and
conditions of the Lease. Upon Purchaser's vacation of the Property and settling
all obligations due pursuant to the Lease, neither party hereto shall have any
further liability in connection with this Agreement.
25. ENVIRONMENTAL COMPLIANCE
It is understood and agreed that the Property is the subject
of a Settlement Agreement with the State of New York, a copy of which is
attached hereto as Exhibit 25. As a condition to Seller's and Purchaser's
obligations to close title to the Property, the appropriate authorities will
modify the description of the Smith Corona Corporation Cortlandville site, New
York State Registry of Inactive Hazardous Waste Disposal Site No. 712006, to
exclude the Property and thereby release the Property from the effects of said
-38-
<PAGE>
Settlement Agreement other than the obligation to give the appropriate
authorities and their employees, contractors and consultants access to the
Property at reasonable times and upon reasonable notice for the purpose of
monitoring and sampling at the Property (the "Release").
Seller shall notify the appropriate authorities and shall
diligently pursue the required Release. If on or prior to said scheduled Closing
Date said Release has not been obtained and Purchaser shall not waive said
condition, Seller shall have the right to extend the term of the Lease and the
Closing Date for up to two (2) additional one (1) year terms in order to
diligently pursue obtaining said Release. In no event shall the Closing Date be
on a date later than June 30, 1998. It is understood and agreed that during each
such extended term, the Closing shall occur not later than one hundred twenty
(120) days following the date upon which the Release shall be issued by the
appropriate authorities. If (i) the appropriate authorities shall deny the
issuance or refuse to issue the Release, or (ii) the second extension period
shall expire without the issuance of said Release, and provided that Purchaser
shall not waive the delivery of the Release as a condition to the Closing, then
this Agreement and the Lease shall terminate and Purchaser shall vacate the
Property. During each extension term, Purchaser shall fully comply with the
terms and conditions of the Lease, including without limitation the payment of
all Rent and Additional Rent.
-39-
<PAGE>
IN WITNESS WHEREOF, Seller and Purchaser have executed this
Agreement as of the day and year first above written.
SELLER
ATTEST:
SMITH CORONA CORPORATION
By:
--------------------------------
Name:
Its:
Duly Authorized
PURCHASER
J.M. MURRAY CENTER, INC.
By:
--------------------------------
Name:
Its:
Duly Authorized
Exhibit List
------------
Schedule A - Metes and Bounds of Property
Schedule B - Survey Showing FCC Building
Exhibit 1.10 - Lease
Exhibit 1.12 - Permitted Encumbrances
Exhibit 1.14(b)(1) - Personal Property Included in Sale
Exhibit 1.14(b)(2) - Personal Property Excluded from Sale
Exhibit 1.14(e) - Contracts
Exhibit 3.3 - Easement and License Agreement (FCC)
Exhibit 3.5-1 - Easement Agreement
Exhibit 3.5-2 - Survey Showing Utility and Roadway
License Areas
Exhibit 7.6 - Insurance
Exhibit 7.8 - Leased Fixtures
Exhibit 8.1(a) - Deed
Exhibit 8.1(d) - Environmental Indemnity Agreement
Exhibit 8.1(j) - License Agreement
Exhibit 23.1 - Construction, Operation and
Maintenance of Sewer Easement and
License Agreement
Exhibit 23.2-1 - Survey Showing Fire Tower
Exhibit 23.2-2 - Easement License and Maintenance
-40-
<PAGE>
Agreement
Exhibit 25 - Settlement Agreement
-41-
<PAGE>
SCHEDULE A
LEGAL DESCRIPTION
<PAGE>
SCHEDULE B
SURVEY SHOWING FCC BUILDING
<PAGE>
EXHIBIT 1.10
LEASE
<PAGE>
EXHIBIT 1.12
PERMITTED ENCUMBRANCES
<PAGE>
EXHIBIT 1.14(b)(1)
PERSONAL PROPERTY INCLUDED IN SALE
<PAGE>
EXHIBIT 1.14(b)(2)
PERSONAL PROPERTY EXCLUDED FROM SALE
<PAGE>
EXHIBIT 1.14(e)
CONTRACTS
<PAGE>
EXHIBIT 3.3
EASEMENT AND LICENSE AGREEMENT
<PAGE>
EXHIBIT 3.5-1
EASEMENT AGREEMENT
<PAGE>
EXHIBIT 3.5-2
SURVEY SHOWING UTILITY AND
ROADWAY EASEMENT AREAS
<PAGE>
EXHIBIT 7.6
INSURANCE
<PAGE>
EXHIBIT 7.8
LEASED FIXTURES
<PAGE>
EXHIBIT 8.1(a)
DEED
<PAGE>
EXHIBIT 8.1(d)
ENVIRONMENTAL INDEMNITY AGREEMENT
<PAGE>
EXHIBIT 8.1(j)
LICENSE AGREEMENT
<PAGE>
EXHIBIT 23.1
CONSTRUCTIONN, OPERATION AND MAINTENANCE
OF SEWER EASEMENT AND LICENSE AGREEMENT
-57-
<PAGE>
EXHIBIT 23.2-1
SURVEY SHOWING FIRE TOWER
<PAGE>
EXHIBIT 23.2-2
EASEMENT LICENSE AND MAINTENANCE AGREEMENT
<PAGE>
EXHIBIT 25
SETTLEMENT AGREEMENT
<PAGE>
EXHIBIT 1.10
SMITH CORONA CORPORATION,
Landlord,
and
J. M. MURRAY CENTER, INC.,
Tenant
LEASE
For Demised Premises located at
Smith Corona Distribution Facility Plant 6
839 Route 13 South
Cortlandville, New York
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions........................................................ 1
ARTICLE 2
Demise, Term and Rent.............................................. 3
ARTICLE 3
Use .......................................................... 5
ARTICLE 4
Subordination...................................................... 5
ARTICLE 5
Assignment and Subletting.......................................... 5
ARTICLE 6
Estoppel Certificate............................................... 6
ARTICLE 7
Requirements of Law................................................ 6
ARTICLE 8
Property Loss and Indemnification.................................. 9
ARTICLE 9
Destruction - Fire and Other Casualty............................. 10
ARTICLE 10
Insurance......................................................... 11
ARTICLE 11
Condemnation...................................................... 13
ARTICLE 12
Repairs ......................................................... 14
ARTICLE 13
Alterations....................................................... 15
ARTICLE 14
Taxes ......................................................... 15
-i-
<PAGE>
ARTICLE 15
Operating Expense; Net Lease Utilities............................ 15
ARTICLE 16
Signs ......................................................... 17
ARTICLE 17
Limitation of Landlord's Liability................................ 17
ARTICLE 18
Broker ......................................................... 17
ARTICLE 19
Default - Conditions of Limitation............................... 17
ARTICLE 20
Re-Entry by Landlord.............................................. 19
ARTICLE 21
Damages ......................................................... 20
ARTICLE 22
Surrender......................................................... 22
ARTICLE 23
Access to Demised Premises........................................ 23
ARTICLE 24
Waivers ......................................................... 23
ARTICLE 25
Miscellaneous..................................................... 24
-ii-
<PAGE>
LEASE dated as of the ____ day of February, 1995 between SMITH
CORONA CORPORATION, having its address at 839 NYS 13, P.O. Box 2020, Cortland,
New York 13095 (herein called "Landlord"), and J.M. MURRAY CENTER, INC., a
corporation having an address c/o Riehlman, Shafer & Shafer, 3 Clinton Street,
Tully, New York 13159-0430 (herein called "Tenant").
W I T N E S S E T H :
Landlord and Tenant hereby covenant and agree as follows:
ARTICLE 1
Definitions
1.1 As used in this Lease, the following terms have the
meanings set forth below:
Additional Rent: All sums of money other than Fixed Rent as
shall become due and payable by Tenant in connection with this Lease, including
but not limited to the amounts set forth in Article 15. Landlord shall have the
same remedies for a default in the payment of Additional Rent as for a default
in the payment of Fixed Rent.
Applicable Law: All laws, statutes and ordinances (including
building codes and zoning ordinances) and the orders, rules, regulations,
directives and requirements of all federal, state, county, and city departments,
bureaus, boards, agencies, offices, commissions and other subdivisions thereof,
or of any official thereof, or of any other governmental, public or quasi-public
authority, whether now or hereafter in force, which are or become, or purport to
be, applicable to the Demised Premises or any part thereof or the sidewalks,
curbs or areas adjacent thereto, including without limitation the Americans With
Disabilities Act, and all requirements, obligations and conditions of all
instruments of record affecting the Demised Premises or any part thereof on the
date of this Lease or to which this Lease is or becomes subordinate.
Building: The building premises known as and by street address
Plant 6, 839 Route 13 South, Cortland, New York excluding the structure commonly
referred to as the "FCC Building".
Commencement Date: As defined in Section 2.2.
Demised Premises: Together, the Building and the
Property.
<PAGE>
Enviromental Indemnification Agreement: Shall mean that
certain Enviromental Indemnification Agreement dated as of February 28, 1995 by
and among Landlord and Tenant, a copy of which is annexed hereto as Exhibit 7.2.
Expiration Date: As defined in Section 2.2.
Fixed Rent: As defined in Section 2.3.
Force Majeure: Shall mean any and all causes beyond the
reasonable control of Landlord or Tenant, as the case may be, including delays
caused by the other party hereto, governmental restrictions, regulations or
controls (including energy and water conservation measures), labor disputes,
accidents, mechanical breakdown, shortages or inability to obtain labor, fuel,
steam, water, electricity or materials, acts of God, enemy action, civil
commotion, fire or other casualty or the process of settling insurance claims,
but shall not include lack of funds or financial inability to perform.
Insurance Requirements: All present and future requirements of
any insurance policy covering or applicable to all or any part of the Demised
Premises or the use thereof, all requirements of any administrative body
governing the underwriting standards of insurance companies issuing policies
within the State of Connecticut and having jurisdiction over all or any portion
of the Demised Premises.
Landlord: Only the owner at the time in question of the
Building or of a lease of the Building, so that in the event of any transfer of
title to the Building or of Landlord's interest in a lease of the Building, the
transferor shall be and hereby is relieved and freed of all obligations of
Landlord under this Lease accruing after such transfer, and it shall be deemed
without further agreement that such transferee has assumed and agreed to perform
and observe all obligations of Landlord herein during the period it is the
holder of Landlord's interest under this Lease.
Landlord's Agents: The agents, contractors and employees of
Landlord.
Person: The term "person" shall mean any natural person or
persons, a partnership, a corporation, and any other form of business or legal
association or entity.
Property: All of the underlying land owned by Landlord as more
particularly described on Exhibit A attached hereto and made a part hereof. The
foregoing shall include, in addition, any other parcels of land or improvements
or any facility serving the project and made available by easement, agreement or
otherwise.
-2-
<PAGE>
Purchase and Sale Agreement: Shall mean that certain purchase
and sale agreement dated February 28, 1995 by and between Landlord and Tenant,
which provides for purchase and sale of the Demised Premises.
Real Estate Taxes: As defined in Section 15.2.
Rent: As defined in Section 2.3.
Repair: The term "repair" shall be deemed to include
restoration and replacement as may be necessary to achieve and maintain good
working order and condition.
Tenant: The Tenant herein named or any assignee or successor
in interest (immediate or remote of the Tenant herein named, which at the time
in question is the owner of the Tenant's estate and interest granted by this
Lease; but the foregoing shall not be construed to permit any assignment of this
Lease or to relieve the Tenant herein named or any assignee or other successor
in interest (whether immediate or remote) of the Tenant herein named from the
full and prompt payment, performance, and observance of the covenants,
obligations and conditions to be paid, performed and observed by Tenant under
this Lease.
Tenant's Agents: The officers, employees, servants,
contractors, licensees, concessionaires, invitees and agents of Tenant.
Tenant's Property: The furniture and furnishings of Tenant and
the following which are furnished and installed by or for Tenant without expense
to Landlord and without any allowance or credit to Tenant: movable partitions,
chandeliers and other hanging, standing or projecting special lighting fixtures,
special cabinet work, other business and trade fixtures, business machines,
business equipment and communications equipment, whether or not attached to or
built into the Demised Premises and which can be removed without permanent
structural damage to, or permanent defacement of, the Building.
Term: As defined in Section 2.2.
ARTICLE 2
Demise, Term and Rent
2.1 Demise. Landlord hereby leases to Tenant, and Tenant
hereby hires from Landlord, upon and subject to the terms, covenants, provisions
and conditions of this Lease, the Demised Premises.
2.2 Term. The term of this Lease (the "Term") (a) shall
commence on February ___, 1995 (the "Commencement Date") and (b) shall terminate
(the "Expiration Date") on the date which
-3-
<PAGE>
is the earlier of (i) the "Closing Date" pursuant to the Purchase and Sale
Agreement, or (ii) the date that Landlord shall terminate the Purchase and Sale
Agreement by reason of a default by Tenant, as Purchaser thereunder, or (iii)
six (6) months following the date upon which the Purchase and Sale Agreement is
terminated for a reason other than that set forth in clause (b)(ii) of this
Section 2.2. Notwithstanding clause (b)(i), (b)(ii) or (b)(iii) of this Section
2.2, in no event shall the Expiration Date be later than June 30, 1996, except
as provided for in Article 25 of the Purchase and Sale Agreement, whereby the
Lease Term may be extended by Landlord to up to two (2) additional one (1) year
terms in order to secure a Release of the Consent Order (as defined therein), in
which case the Expiration Date may be extended through June 30, 1998.
2.3 Rent. The rents reserved under this Lease, shall be
payable throughout the Term commencing on the Commencement Date. Rent (as
defined below) shall be and consist of (a) fixed rent (herein called "Fixed
Rent"), as follows:
================================================================================
Annual Rent Monthly Rent
- --------------------------------------------------------------------------------
2/__/95 - 12/31/95 $164,000.00 $13,666.67
- --------------------------------------------------------------------------------
1/1/96 - the Expiration $164,000.00 $13,666.67
Date, which may include
extension of up to two
(2) additional one (1)
year terms pursuant to
Article 25 of the
Purchase and Sale
Agreement through
June 30, 1998
================================================================================
Fixed Rent shall be payable in equal monthly installments in the amount set
forth above, in advance on the first day of each and every calendar month during
the Term, and (b) Additional Rent. Fixed Rent and Additional Rent shall be paid
in lawful money of the United States to Landlord at the address first set forth
above, or to such other person and/or at such other place as Landlord may
designate by notice to Tenant (Fixed Rent and Additional Rent are herein
sometimes collectively called "Rent").
2.4 No Setoff. Tenant shall pay Fixed Rent and Additional Rent
promptly when due without notice or demand therefor and without any abatement,
deduction or setoff for any
-4-
<PAGE>
reason whatsoever, except as may be expressly provided in this Lease.
ARTICLE 3
Use
3.1 Tenant's Business. Tenant shall use and occupy the Demised
Premises for manufacturing and related purposes only and for no other purpose.
3.2 Permits. If any governmental license or permit, other than
a Certificate of Occupancy, shall be required for the proper and lawful conduct
of Tenant's business in the Demised Premises, or any part thereof, Tenant, at
its expense, shall duly procure and thereafter maintain such license or permit
and submit the same to inspection of Landlord. Tenant shall at all times comply
with the terms and conditions of each such license or permit.
3.3 Restrictions. Tenant shall not at any time use or occupy,
or suffer or permit anyone to use or occupy, the Demised Premises, or do
anything to be done in the Demised Premises, in any manner (a) which violates
the Certificate of Occupancy for the Building; or (b) which constitutes a
violation of Applicable Law or the Insurance Requirements.
ARTICLE 4
Subordination
4.1 Superior Mortgages. Tenant agrees that this Lease is
subordinate to any bona fide first mortgage now or in the future placed on the
Demised Premises and any renewals or extensions thereof and upon request of
Landlord Tenant agrees to execute any instrument which may be required by said
mortgagee to effectuate this subordination. As a condition of any such
subordination, Landlord agrees to obtain from any mortgagee to whose mortgage
this Lease is to be subordinated an agreement that so long as Tenant, its
successors or assigns, is in possession of the Demised Premises and not in
default in Tenant's compliance with the provisions of this Lease, the Tenant
will not be disturbed in its possession by such mortgagee. "Mortgagee" as used
herein shall include successors and assigns.
ARTICLE 5
Assignment and Subletting
5.1 Consent Required. Tenant covenants and agrees
that neither this Lease, nor the estate hereby granted, shall be
-5-
<PAGE>
assigned, mortgaged, pledged, encumbered or otherwise transferred by Tenant, the
Tenant's legal representatives, or successors in interest by operation of law or
otherwise, and that neither the Demised Premises nor any part thereof shall be
sublet, or offered or advertised for subletting, without the prior written
consent of Landlord, which consent to an assignment may be withheld by Landlord
in it sole and absolute discretion; however, Landlord shall not unreasonably
withhold its consent to a sublease which is expressly subordinate to Landlord's
interest, and which is otherwise reasonably acceptable to Landlord.
ARTICLE 6
Estoppel Certificate
6.1 Delivery of Certificate. Tenant shall, without charge at
any time and from time to time, within ten (10) days after request by Landlord,
certify by written instrument duly acknowledged and delivered to any proposed or
actual mortgagee, assignee of any mortgage or purchaser, or any other person,
firm or corporation specified by Landlord:
(a) That this Lease is unmodified and in full force and effect
(or, if there has been any modification, that the same is in full force
and effect as modified and stating the modification);
(b) Whether or not there are then existing any set-offs, or
defenses against the enforcement of any of the agreements, terms,
covenants or conditions hereof upon the part of Tenant to be performed
or complied with (and, if so specifying the same); and
(c) The dates, if any, to which the Rent has been paid
in advance.
6.2 Notice of Lease. The parties hereto agree to execute,
acknowledge, and deliver a statutory form notice of lease with respect to this
Lease, or any amendment of or other agreement supplementary to this Lease,
sufficient for recording. Such notice shall not in any circumstance be deemed to
change or otherwise affect any of the terms, covenants, and conditions of this
Lease.
ARTICLE 7
Requirements of Law
7.1 Compliance. Tenant, at Tenant's sole cost and expense,
shall at all times promptly comply with all Applicable Laws and Insurance
Requirements (collectively, "Regulations")
-6-
<PAGE>
with respect to Tenant's use or occupancy of the Demised Premises.
7.2 Environmental Provisions. During the Term of this Lease,
Landlord and Tenant shall comply with all terms and conditions of the
Enviromental Indemnification Agreement
ARTICLE 8
Property Loss and Indemnification
8.1 Limitation of Liability. Landlord or Landlord's Agents
shall not be liable for any damage to property of Tenant, nor for loss of or
damage to any property of Tenant by theft or otherwise, nor for injury or damage
to persons or property resulting from any cause of whatsoever nature, unless
caused by Landlord or Landlord's Agents, nor shall Landlord or Landlord's Agents
be liable for any such damage caused by other tenants or persons in, upon or
about the Building or caused by operations in construction of any private,
public or quasi-public work.
8.2 Tenant's Indemnification. Tenant shall indemnify and hold
harmless Landlord and Landlord's Agents from and against any and all claims
arising from or in connection with (a) the conduct or management of the Demised
Premises or of any business therein, or any work or thing whatsoever done, or
any condition created (other than by Landlord) in or about the Demised Premises
during the Term or during the period of time, if any, prior to the Commencement
Date that Tenant may have been given access to the Demised Premises; (b) any
act, omission or negligence of Tenant, Tenant's Agents or any subtenants or
licensees or their partners, officers, agents, employees or contractors; and (c)
any breach or default by Tenant in the full and prompt payment and performance
of Tenant's obligations under this Lease; together with all costs, expenses and
liabilities incurred in or in connection with each such claim or action or
proceeding brought thereon, including, without limitation, all attorneys' fees
and expenses. In case any action or proceeding be brought against Landlord or
Landlord's Agents by reason of any such claim, Tenant, upon notice from
Landlord, shall resist and defend such action or proceeding (by counsel
reasonably satisfactory to Landlord).
ARTICLE 9
Destruction - Fire and Other Casualty
9.1 Repairs. (a) If the Demised Premises or any part thereof
shall be damaged by fire or other casualty, Tenant shall give immediate notice
thereof to Landlord and this Lease shall continue in full force and effect it is
understood and agreed that the Tenant, and Purchaser pursuant to the Purchase
and Sale
-7-
<PAGE>
Agreement, has agreed to accept the Demised Premises in it condition as of the
Lease Commencement Date, and therefore any damage, deterioration or destruction
occurring on or after the Lease Commencement Date is solely the responsibility
of Tenant. Tenant hereby agrees to accept all risk of loss of all or one part of
the Demised Premises. This provision is intended to supersede the provisions of
the so-called Uniform Vendors and Purchasers Risk Act, New York General
Obligations Law Section 5- 1311.
(b) All insurance proceeds received or receivable
by Tenant for any casualty shall be paid over to Landlord and advanced to Tenant
as provided for in Section 9.3 below.
9.2 Tenant's Property. Tenant acknowledges that Landlord will
not carry insurance on Tenant's Property or on Tenant's business records or
other property of Tenant or Tenant's Agents, and Tenant agrees that Landlord
will not be obligated to repair any damage thereto or to replace the same.
9.3 Restoration. If the Demised Premises shall be damaged or
destroyed, Tenant shall with reasonable diligence cause the Demised Premises to
be repaired, restored and rebuilt to its former condition provided that, after
deduction from such insurance proceeds of the reasonable costs and expenses, if
any, incurred by Landlord in the collection of such proceeds, including without
limitation the reasonable fees and disbursements of counsel to Landlord, all net
proceeds of insurance received by Landlord with respect to the damage or
destruction shall be made available to Tenant to be used toward the payment of
repairing, rebuilding and restoring the Property so damaged or destroyed,
provided that (i) in the event such net proceeds are not adequate to cover the
cost of repair, restoration or rebuilding as determined by Landlord, Tenant
shall deposit with Landlord the amount of the difference between the net
proceeds and the estimated cost of such repair, restoration or replacement, (ii)
all liens, inchoate or perfected, which may arise for or from or result by
reason of work, materials or equipment for or in connection with such repairs,
rebuilding or restorations shall be removed by bonding, deposit or otherwise
within thirty (30) days after notice to Tenant, (iii) such net proceeds shall be
made available in each case only after the plans and specifications have been
submitted to Landlord and approved by Landlord, (iv) payments shall be made from
said insurance funds to Tenant on the terms and conditions as may be reasonably
set forth by Landlord, (v) the repairs and restorations must be completed free
of all liens for work, labor or materials, and all such work must conform to all
applicable laws, regulations, ordinances, rules, orders and requirements of the
federal, state and municipal authorities and departments having jurisdiction,
and (vi) Tenant covenants that it will receive such balance of insurance
proceeds and all advances made out of such insurance proceeds as hereinabove
mentioned and will have the right to receive the same as a trust fund to be
applied
-8-
<PAGE>
first for the purpose of paying the cost of such repair and restoration before
using any part of the same for any other purpose.
ARTICLE 10
Insurance
10.1 Casualty Insurance/"All-Risk" Coverage. (a) Tenant will,
at its sole expense, obtain and keep in force during the Term of this lease,
"all-risk" coverage insurance (including all casualties) naming Landlord and
Tenant as insured, as their interests may appear and such other parties as
Landlord or Tenant may designate as additional insureds, in the customary form
in the Town of Cortlandville for buildings and improvements of similar
character, on all buildings and improvements now or after this date located on
the Demised Premises. The amount of insurance will be designated by Landlord no
more frequently than once every twelve (12) months; will be set forth on an
"agreed amount endorsement" to the policy of insurance; will not be less than
Two Million and 00/100 ($2,000,000.00) Dollars. All policies shall provide, and
Tenant hereby agrees, that all proceeds of all insurance shall be paid over to
Landlord. Any such proceeds which are received by Tenant shall be held "in
trust" by Tenant to be immediately paid over to Landlord. Tenant shall not
compromise or settle any insurance claim without Landlord's prior written
approval.
(b) Commercial General Liability. Tenant will,
at its sole expense, obtain and keep in force during the term of this lease
commercial general liability insurance with a combined single limit of not less
than two million and 00/100 ($2,000,000.00) Dollars for injury to or death of
any one person, for injury to or death of any number of persons in one
occurrence, and for damage to property, insuring against any and all liability
of Landlord and Tenant, including without limitation coverage for contractual
liability, broad form property damage, host liquor liability, and non-owned
automobile liability, with respect to the premises or arising out of the
maintenance, use, or occupancy of the Demised Premises. Such insurance will
insure the performance by Tenant of the indemnity agreement as to liability for
injury to or death of persons and damage to property set forth in Section 8.2.
Such insurance will be noncontributing with any insurance that may be carried by
Landlord and will contain a provision that Landlord, although named as an
insured, will nevertheless be entitled to recover under the policy for any loss,
injury, or damage to Landlord, its agents, and employees, or the property of
such persons.
(c) Other Matters. All insurance required in this paragraph
and all renewals of it will be issued by companies authorized to transact
business in the State of New York reasonably acceptable to Landlord. The
"all-risk" coverage
-9-
<PAGE>
insurance and the general liability insurance will be carried in the joint names
of Tenant and Landlord as insureds, and such other parties having an interest in
the Demised Premises as Landlord and Tenant may designate. All insurance
policies will be subject to approval by Landlord and any lender as to form and
substance; will expressly provide that such policies will not be canceled or
altered without thirty (30) days' prior written notice to Landlord and any
lender, in the case of "all-risk" coverage insurance, and to Landlord, in the
case of general liability insurance; will, to the extent obtainable, provide
that no act or omission of Tenant that would otherwise result in forfeiture or
reduction of the insurance will affect or limit the obligation of the insurance
company to pay the amount of any loss sustained; and will, to the extent
obtainable, contain a waiver by the insurer of its rights of subrogation against
Landlord. Upon issuance, each insurance policy or a duplicate or certificate of
such policy will be delivered to Landlord and any lender whom Landlord
designates. Tenant may satisfy its obligation under this paragraph by
appropriate endorsements of its blanket insurance policies. If the Reba Lease
shall be in place, pursuant to said lease, Reba Properties, Inc., the landlord
thereunder, shall be named as an additional insured on all insurance policies.
10.2 Tenant's Property. Tenant agrees throughout the Term, to
maintain insurance against loss or damage by fire and such other risks and
hazards as are insurable under present and future standard forms of fire and
extended coverage insurance policies on Tenant's Property.
ARTICLE 11
Condemnation
11.1 Total Taking. If all or substantially all of the Building
or the Property shall be lawfully condemned or taken in any manner for any
public or quasi-public use, this Lease shall cease and terminate as of the date
of the vesting of title in the condemnor.
11.2 Partial Taking. If less than all of the Building or the
Property shall be so condemned or taken, but if such taking shall substantially
affect the Demised Premises or the means of access thereto, or if such
condemnation or taking shall be of a substantial part of the Demised Premises,
then Landlord or Tenant shall have the right to terminate this Lease and the
term and estate hereby granted by the delivery of written notice to the other
party within thirty (30) days following the date of actual vesting of title in
the condemnor. Such termination shall take effect as of the date of actual
vesting of title in the condemnor or thirty (30) days after the giving of such
notice of termination, whichever is later. If Landlord or Tenant shall not so
elect to terminate, this Lease shall be and remain unaffected
-10-
<PAGE>
by such condemnation or taking, except that, effective as of the date of the
vesting of title in the condemnor, Fixed Rent shall be reduced in the proportion
which the area of the part of the Demised Premises so condemned or taken bears
to the total area of the Demised Premises prior to such condemnation or taking.
11.3 Award. In the event of the termination of this Lease in
accordance with this Article, Rent shall be prorated and paid to the effective
date of the termination. Tenant, whether this Lease be canceled pursuant to this
Article, shall not be entitled to claim or receive any part of any award or
compensation which may be issued or rendered in any such condemnation proceeding
or as a result of such condemnation or taking, and shall not be entitled to
claim or receive any damages against Landlord, whether the same be for the value
of the unexpired term of this Lease or otherwise.
11.4 Purchase and Sale Agreement. Nothing in this Article 11
is intended to limit, amend or modify the terms and conditions of the Purchase
and Sale Agreement, which shall require Tenant, as Purchaser pursuant to the
Purchase and Sale Agreement, to close title to the Demised Premises
notwithstanding such condemnation, and otherwise provides for the allocation of
any award.
ARTICLE 12
Repairs
12.1 Repairs. Tenant at its sole cost and expense shall be
solely responsible for all repairs or replacement to the Demised Premises,
whether structural or nonstructural, and the fixtures and appurtenances therein
including without limitation landscaping, HVAC, roof and structural repairs
and/or replacements as needed to preserve the Demised Premises and the fixtures
and appointments therein in good working order and condition.
It is understood and agreed that this Lease has been executed
in connection with the Purchase and Sale Agreement and that pursuant to said
Purchase and Sale Agreement, the Tenant as purchaser hereunder has agreed to
accept the Demised Premises in its "as-is" condition as of the Lease
Commencement Date, and therefore as provided for above, all repair and
replacements in any connection to the Demised Premises during the term of this
Lease are the sole responsibility of Tenant.
12.2 Abatement. Neither (i) the making by Landlord, Tenant or
others of any decorations, repairs, alterations, additions or improvements in or
to the Demised Premises, nor (ii) the failure of Landlord or others to make any
such decorations, repairs, alterations, additions or improvements, nor (iii) any
damage to the Demised Premises or to the property of Tenant, nor
-11-
<PAGE>
any injury to any persons, caused by other tenants or persons in the Building,
or by operations in the construction of any private, public or quasi-public
work, or by any other cause, nor (iv) any latent defect in the Building or in
the Demised Premises, nor (v) any inconvenience or annoyance to Tenant or injury
to or interruption of Tenant's business by reason of any of the events or
occurrences referred to in the foregoing subdivisions (i) through (iv), shall
constitute an actual or constructive eviction, in whole or in part, or entitle
Tenant to any abatement or diminution of rent, or relieve Tenant from any of its
obligations under this Lease, or impose any liability upon Landlord, or
Landlord's Agents or any superior lessor or superior mortgagee other than such
liability as may be imposed upon Landlord by law for Landlord's negligence or
the negligence of Landlord's Agents in the operation or maintenance of the
Building or for the breach by Landlord of any express covenant of this Lease on
Landlord's part to be performed.
The provisions of this Article with respect to the making of
repairs shall not apply in the case of fire or other casualty which are dealt
with in Article 9.
ARTICLE 13
Alterations
13.1 Requirements. All improvements installed by Tenant which
are affixed to the Building, including, without limitation, partitions, tile
floors, hung ceilings, power lines, heating and air-conditioning ducts, plumbing
fixtures, water pipes and gas lines shall become upon their installation the
property of Landlord and shall not be removed at the end of the Term by Tenant.
Landlord shall have no obligation whatsoever to reimburse the cost thereof to
Tenant or otherwise. The location of any such improvement shall be approved by
Landlord, which approval shall not be unreasonably withheld or delayed. Further,
Tenant shall not make any improvements to the Property without Landlord's prior
written consent, which consent shall not be unreasonably withheld if Tenant
demonstrates to Landlord's reasonable satisfaction that all such improvements
shall (i) be completed in compliance with all applicable laws, rules and
regulations, and (ii) in a lien free, good and workmanlike manner.
Tenant may install such other machinery, equipment and other
property as it may need to carry out its operation in the Demised Premises and,
except as above provided, shall remove the same upon the termination of this
Lease. All such machinery equipment and other property, except as herein
otherwise specifically provided, shall be and remain the sole property of
Tenant, whether or not the same is attached to or appurtenant to the Demised
Premises. In the event that the installation or removal of any such machinery or
equipment damages the Demised
-12-
<PAGE>
Premises, Tenant shall, at its sole cost and expense, immediately repair the
same.
ARTICLE 14
Real Estate Taxes
Landlord shall pay all real estate taxes for the Demised
Premises, during the Term of this Lease.
ARTICLE 15
Operating Expense; Net Lease Utilities
15.1 Utilities. (a) Tenant shall pay the appropriate suppliers
for all water, gas, electricity, light, heat, telephone, power, and other
utilities and communications services used by Tenant on the Demised Premises
during the Term, whether or not the services are billed directly to Tenant.
Tenant shall also procure, or cause to be procured, without cost to Landlord,
any and all necessary permits, licenses, or other authorizations required for
the lawful and proper installation and maintenance upon the Demised Premises of
wires, pipes, conduits, tubes, and other equipment and appliances for use in
supplying any of the services to and upon the Demised Premises which are
installed by Tenant. Landlord, upon request of Tenant, and at the sole expense
and liability of Tenant, will join with Tenant in any application required for
obtaining or continuing any of the services.
(b) Landlord reserves the right to submeter or
otherwise estimate Tenant's usage of utilities and to bill the Tenant for
Tenant's usage in accordance with the applicable submeter readings. If Landlord
shall elect to submeter any utility, Landlord shall monthly deliver to Tenant a
bill, which bill Tenant shall pay to Landlord as Additional Rent within five (5)
calendar days of receipt thereof by Tenant. Until the sewer lines are separated,
Tenant's usage shall be based upon an estimated amount based upon 200% of
Tenant's usage of potable water.
(c) Separate Utilities. As provided for in
Article 23 of the Purchase and Sale Agreement, the Tenant shall separate (and
pay the cost thereof) all of the utilities for the Demised Premises so that
submetering shall no longer be required.
(d) Net Lease. Except for Real Estate Taxes to
be paid for by Landlord pursuant to Article 14, the Fixed Rent shall be a net
rental payment. All costs of maintenance, repairs (whether or not structural or
capital in nature), utilities, insurance and all other expenses of whatsoever
nature in connection with the operation, occupancy or maintenance of the Demised
Premises shall be paid solely by the Tenant during the Term of this Lease, all
such amounts to be regarded as Additional Rent.
-13-
<PAGE>
15.2 Tenant's use of electrical energy shall never exceed the
Building's capacity. Without the prior consent of Landlord, Tenant shall not
perform or permit any alteration to the wiring installations or other electrical
facilities in or serving the Demised Premises or any additions to the electrical
fixtures in the Demised Premises.
15.3 Landlord shall have no liability to Tenant for any loss,
damage or expense which Tenant may sustain or incur by reason of any change,
failure, inadequacy or defect in the supply or character of the utility
furnished to the Demised Premises or if the quantity or character of the utility
is no longer available or suitable for Tenant's requirements, except for any
actual damage (as opposed to consequential or punitive) suffered by Tenant by
reason of any such failure, inadequacy or defect cause by the negligence or
Landlord or Landlord's Agents, and then only after actual notice to Landlord by
Tenant pursuant to Section 25.3 of this Lease and, in such event, Tenant, and
those claiming by or through Tenant, waive, to the fullest extent permitted by
Applicable Law any consequential damages resulting therefrom.
ARTICLE 16
Signs
Tenant shall have the right to install signs on the Demised
Premises or on the building identifying Tenant's business which signs shall be
maintained by Tenant at all times in accordance with all Applicable Laws.
ARTICLE 17
Limitation of Landlord's Liability
Tenant shall look solely to the estate and interest of
Landlord in the Building for the satisfaction of Tenant's remedies for the
collection of any judgment (or other judicial process) requiring the payment of
money by Landlord in the event of any default or breach by Landlord with respect
to any of the terms, covenants and conditions of this Lease to be observed or
performed by Landlord, and no other property or assets of Landlord shall be
subject to levy, execution or other enforcement procedure for the satisfaction
of Tenant's remedies under or with respect to either this Lease, the
relationship of Landlord and Tenant hereunder or Tenant's use and occupancy of
the Demised Premises.
-14-
<PAGE>
ARTICLE 18
Broker
Tenant covenants, warrants and represents that no broker
negotiated or brought about the consummation of this Lease, and that no
discussions or negotiations were had with any other broker concerning the
leasing of space in the Building. Tenant agrees to indemnify, defend and hold
Landlord harmless from and against any claim for a brokerage commission or other
compensation arising out of any discussions or negotiations had by Tenant with
any broker.
ARTICLE 19
Default -- Conditions of Limitation
19.1 If at any time during the Term of this Lease there is
filed against Tenant in any court pursuant to any statute, either of the United
States of America or any state, a petition in bankruptcy or insolvency, or for
reorganization, or for the appointment of a receiver or trustee of all or a
portion of Tenant's property, or for other relief of debtors, and, within ninety
(90) days after such filing, Tenant fails to secure a dismissal thereof; or if
Tenant shall make a voluntary application for any of the foregoing relief, or an
assignment for the benefit of creditors or petition for or enter into an
arrangement for the benefit of creditors, or admit in writing the inability to
pay its debts; then, in any such event, this Lease, at the option of Landlord,
may be terminated by written notice to Tenant (but if any of such events occurs
prior to the Commencement Date, this Lease shall, without any obligation on the
part of the Landlord to give such notice, thereupon be terminated), and, whether
such termination occurs prior to or during the Term hereof, neither Tenant nor
any person claiming through or under Tenant by virtue of any statute or any
order of any court shall be entitled to possession or to remain in possession of
the Demised Premises, but shall forthwith quit and surrender the same. Landlord,
in addition to the other rights and remedies it may have by virtue of any other
provision herein contained (including, without limitation, Article 23 hereof) or
by virtue of any statute, judicial decision or other rule of law, may retain, to
be credited against the damages described in Article 23 below, any rent,
security deposit or monies received by it from Tenant or others on behalf of
Tenant.
19.2 Events of Default. This Lease and the Term and estate
hereby granted are subject to the further limitations that (the following events
to be sometimes referred to as "Event(s) of Default"):
-15-
<PAGE>
(a) if Tenant shall default in the payment of any
Fixed Rent or Additional Rent, and such default shall continue
for five (5) days, or
(b) if Tenant shall, whether by action or inaction,
be in default of any of its obligations under this Lease (other than a default
in the payment of Fixed Rent or Additional Rent) and such default shall continue
and not be remedied within thirty (30) days after Landlord shall have given to
Tenant a notice specifying the same, or, in the case of a default which cannot
with due diligence be cured within a period of thirty (30) days and the
continuance of which for the period required for cure will not subject Landlord
to criminal penalty or to prosecution for a crime or foreclosure of any superior
mortgage, if Tenant shall not, (i) within said thirty (30) day period advise
Landlord of Tenant's intention to take all steps necessary to remedy such
default, (ii) duly commence within said thirty (30) day period, and thereafter
diligently prosecute to completion, all steps necessary to remedy the default
and (iii) complete such remedy within a reasonable time after the date of said
notice of Landlord (not to exceed sixty (60) days in the aggregate), or
(c) if Tenant shall be in default pursuant to any of
the terms and conditions of the Purchase and Sale Agreement, or if the Purchase
and Sale Agreement shall terminate for any reason whatsoever,
(d) if an event of default occurs under the Reba
Lease due to the action or inaction of Tenant,
then this Lease and the Term hereof shall, at Landlord's option and without
further notice to Tenant, terminate and expire, and Tenant shall then quit and
surrender the Demised Premises to Landlord.
ARTICLE 20
Re-Entry by Landlord
20.1 Summary Dispossess. If (i) Tenant shall not pay Rent when
same is due and payable, or (ii) an Event of Default shall have occurred, or
(iii) if this Lease shall terminate as provided in Article 19, Landlord or
Landlord's Agents and employees may immediately or at any time thereafter
re-enter the Demised Premises, or any part thereof, either by summary dispossess
proceedings or by any suitable action or proceeding at law, or otherwise,
without being liable to indictment, prosecution or damages therefor, and may
repossess the same, and may remove any person therefrom, to the end that
Landlord may have, hold and enjoy the Demised Premises. The word "re-enter", as
used herein, is not restricted to its technical meaning. If this Lease is
terminated under the provisions of Article 19, or
-16-
<PAGE>
if Landlord shall re-enter the Demised Premises under the provisions of this
Article, or in the event of the termination of this Lease, or of re-entry, by or
under any summary dispossess or other proceeding or action or any provision of
law by reason of default hereunder of the part of Tenant, Tenant shall thereupon
pay to Landlord the Fixed Rent and Additional Rent payable up to the time of
such termination of this Lease, or of such recovery of possession of the Demised
Premises by Landlord, as the case may be, and shall also pay to Landlord damages
as provided in Article 21.
20.2 Injunctive Relief. In the event of a breach or threatened
breach by Tenant of any of its obligations under this Lease, Landlord shall also
have the right of injunction. The special remedies to which Landlord may resort
hereunder are cumulative and are not intended to be exclusive of any other
remedies to which Landlord may lawfully be entitled at any time and Landlord may
invoke any remedy allowed at law or in equity as if specific remedies were not
provided for herein.
20.3 Retention of Monies. If this Lease shall terminate under
the provisions of Article 19, or if Landlord shall re-enter the Demised Premises
under the provisions of this Article, or in the event of the termination of this
Lease, or of re-entry, by or under any summary dispossess or other proceeding or
action or any provision of law by reason of default hereunder on the part of
Tenant, Landlord shall be entitled to retain all monies, if any, paid by Tenant
to Landlord, whether as advance rent, security or otherwise, but such monies
shall be credited by Landlord against any Fixed Rent or Additional Rent due from
Tenant at the time of such termination or re-entry or, at Landlord's option,
against any damages payable by Tenant under Article 21 or pursuant to law.
ARTICLE 21
Damages
21.1 Acceleration, Reletting. If this Lease is terminated
under the provisions of Article 19, or if Landlord shall re-enter the Demised
Premises under the provisions of Article 20, or in the event of the termination
of this Lease, or of re-entry, by or under any summary dispossess or other
proceeding or action or any provision of law by reason of default hereunder on
the part of Tenant, in addition to any and all rights or remedies which Landlord
may have at law or in equity pursuant to this Lease or the Purchase and Sale
Agreement, Tenant shall pay to Landlord as damages, at the election of Landlord,
either:
(a) a sum which at the time of such termination
of this Lease or at the time of any such re-entry by Landlord, as
the case may be, represents the then value of the excess, if any,
-17-
<PAGE>
of (i) the aggregate amount of the Fixed Rent and the Additional Rent under this
Lease which would have been payable by Tenant for the period commencing with
such earlier termination of this Lease or the date of any such re-entry, as the
case may be, and ending with the date contemplated as the expiration date hereof
if this Lease had not so terminated or if Landlord had not so re-entered the
Demised Premises, over (ii) the aggregate rental value of the Demised Premises
for the same period, or
(b) sums equal to the Fixed Rent and the Additional
Rent which would have been payable by Tenant had this Lease not so terminated,
or had Landlord not so re-entered the Demised Premises, payable upon the due
dates therefor specified herein following such termination or such re-entry and
until the date contemplated as the Expiration Date hereof if this Lease had not
so terminated or if Landlord had not so re-entered the Demised Premises,
provided, however, that if Landlord shall relet the Demised Premises during said
period, Landlord shall credit Tenant with the net rents received by Landlord
from such reletting, such net rents to be determined by first deducting from the
gross rents as and when received by Landlord from such reletting the expenses
incurred or paid by Landlord in terminating this Lease or in re-entering the
Demised Premises and in securing possession thereof, as well as the expenses of
reletting, including, without limitation, altering and preparing the Demised
Premises for new tenants, brokers' commissions, legal fees, and all other
expenses properly chargeable against the Demised Premises and the rental
therefrom, it being understood that any such reletting may be for a period
shorter or longer than the remaining Term, but in no event shall Tenant be
entitled to receive any excess of such net rents over the sums payable by Tenant
to Landlord hereunder nor shall Tenant be entitled in any suit for the
collection of damages pursuant to this subdivision to a credit in respect of any
net rents from reletting, except to the extent that such net rents are actually
received by Landlord. If the Demised Premises or any part thereof should be
relet in combination with other space, then proper apportionment on a square
foot basis shall be made of the rent received from such reletting and of the
expenses of reletting.
If the Demised Premises or any part thereof be relet by Landlord for the
unexpired portion of the Term, or any part thereof, before presentation of proof
of such damages to any court, commission or tribunal, the amount of rent
reserved upon such reletting shall, prima facie, be the fair and reasonable
rental value for the Demised Premises, or part thereof, so relet during the term
of the reletting. Landlord shall not be liable in any way whatsoever for its
failure or refusal to relet the Demised Premises or any part thereof, or if the
Demised Premises or any part thereof are relet, for its failure to collect the
rent under such reletting, and no such refusal or failure to relet or failure to
collect rent shall release or affect Tenant's liability for damages or otherwise
under this Lease.
-18-
<PAGE>
21.2 Successive Suits, etc. Suit or suits for the recovery of
such damages, or any installments thereof, may be brought by Landlord from time
to time at its election, and nothing contained herein shall be deemed to require
Landlord to postpone suit until the date when the Term of this Lease would have
expired if it had not been so terminated under the provisions of Article 19, or
under any provision of law, or had Landlord not re-entered the Demised Premises.
Nothing herein contained shall be construed to limit or preclude recovery by
Landlord against Tenant of any sums or damages to which, in addition to the
damages particularly provided above, Landlord may lawfully be entitled by reason
of any default hereunder on the part of Tenant. Nothing herein contained shall
be construed to limit or prejudice the right of Landlord to prove for and obtain
as damages by reason of the termination of this Lease or re-entry on the Demised
Premises for the default of Tenant under this Lease an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, such damages are to be proved whether or not
such amount be greater, equal to, or less than any of the sums referred to in
Section 21.1.
21.3 Interest. In addition to any other remedies Landlord may
have under this Lease, and without reducing or adversely affecting any of
Landlord's rights and remedies under Article 19, if any Fixed Rent, Additional
Rent or damages payable hereunder by Tenant to Landlord is not paid within
thirty (30) days after demand therefor, the same shall bear interest at the rate
of one and one-half percent (1-1/2%) per month or the maximum rate permitted by
law, whichever is less, from the due date thereof until paid, and the amount of
such interest shall be Additional Rent hereunder.
21.4 Purchase and Sale Agreement. Nothing in this Lease is
intended to or shall in manner whatsoever limit any remedies of either party to
the Purchase and Sale Agreement, which shall be cumulative with any supplement
any remedies set forth in this Lease.
ARTICLE 22
Surrender
22.1 Condition of Demised Premises. (a) On the last day of the
Term or upon any earlier termination of this Lease, or upon any re-entry by
Landlord upon the Demised Premises, Tenant shall, at its own expense, quit and
surrender the Demised Premises to Landlord broom clean, in good order, condition
and repair, except for ordinary wear and tear and such damage or destruction as
Landlord is required to repair or restore under this Lease. Tenant shall remove
from the Demised Premises all of Tenant's Property and all personal property and
personal effects of all persons claiming through of under Tenant, and shall pay
-19-
<PAGE>
the cost of repairing all damage to the Building and the Demised Premises
occasioned by such removal.
(b) Tenant shall not be obligated, at or before
quitting and surrendering the Demised Premises, to restore the Demised Premises,
or any part thereof, to the state or condition of the Demised Premises, or such
part, existing at any time prior to the Commencement Date, but at the option of
Landlord, Tenant shall be obligated at or before quitting or surrendering the
Demised Premises to restore the same to their state or condition existing prior
to the making of Alterations by Tenant. If Tenant does not perform the
restoration Tenant is obligated to perform pursuant to this Section, Landlord
may (but shall not be obligated to) perform such restoration at the expense of
Tenant and Tenant shall pay Landlord the restoration expense upon rendition of
Landlord's bill.
22.2 Tenant's Property. Any Tenant's Property or other
personal property (other than money, securities, documents, or other valuables)
which shall remain in the Demised Premises after the termination of this Lease
shall be deemed to have been abandoned and either may be retained by Landlord as
its property or may be disposed of in such manner as Landlord may see fit;
provided, however, that, notwithstanding the foregoing, Tenant will, upon
request of Landlord made not later than thirty (30) days after the date of
termination of this Lease, promptly remove from the Demised Premises any
Tenant's Property or other personal property at Tenant's own expense. If such
Tenant's Property or other personal property or any part thereof shall be sold,
Landlord may receive and retain the proceeds of such sale and apply the same, at
its option, against the expenses of the sale, cost of moving and storage, any
arrears of Fixed Rent or Additional Rent and damages to which landlord may be
entitled hereunder or pursuant to law. Any excess proceeds shall be the property
of Landlord. Any expense incurred by Landlord in removing or disposing of such
Tenant's Property or other personal property shall be reimbursed to Landlord by
Tenant on demand.
22.3 Survival. Tenant's obligations under this Article shall
survive the termination of this Lease.
ARTICLE 23
Access to Demised Premises
23.1 Landlord's Rights. Landlord and Landlord's Agents shall
have the following rights in and about the Demised Premises: (i) to enter the
Demised Premises upon prior notice (except in the case of emergency) to Tenant
at all reasonable times to examine the Demised Premises or for any of the
purposes set forth in this Article, the Purchase and Sale Agreement or the
Enviromental Indemnification Agreement or for the purpose of performing any
obligation of Landlord under this Lease or
-20-
<PAGE>
exercising any right or remedy reserved to Landlord in this Lease; (ii) to
exhibit the Demised Premises to others; and (iii) in connection with any of
Landlord's obligations under this Lease.
23.2 No Eviction. The exercise by Landlord or Landlord's
Agents of any right reserved to Landlord in this Article shall not constitute an
actual or construction eviction, in whole or in part, or entitle Tenant to any
abatement or diminution of rent, or relieve Tenant from any of its obligations
under this Lease, or impose any liability upon Landlord, or Landlord's Agents,
or upon any Superior Lessor or Superior Mortgagee by reason of inconvenience or
annoyance to Tenant, or injury to or interruption of Tenant's business, or
otherwise.
ARTICLE 24
Waivers
24.1 Order of Payment. If Tenant is in arrears in payment of
Fixed Rent or Additional Rent, Tenant waives Tenant's right, if any, to
designate the items which any payments made by Tenant are to be credited, and
Tenant agrees that Landlord may apply any payments made by Tenant to such items
as Landlord sees fit, irrespective of and notwithstanding any designation or
request by Tenant as to the items which any such payments shall be credited.
ARTICLE 25
Miscellaneous.
25.1 Delivery of Keys, etc. No act or thing done by Landlord
or Landlord's Agents during the Term shall constitute a valid acceptance of a
surrender of the Demised Premises or any remaining portion of the Term except a
written instrument accepting such surrender, executed by Landlord. The failure
of Landlord to seek redress for breach or violation of, or to insist upon the
strict performance of, any term, covenant or condition of this Lease on Tenant's
part to be observed or performed shall not prevent a subsequent act or omission
which would have originally constituted a breach or violation of any such term,
covenant or condition from having all the force and effect of an original breach
or violation. The receipt by Landlord of Rent with knowledge of the breach or
violation by Tenant of any term, covenant or condition of this Lease on Tenant's
part to be observed or performed shall not be deemed a waiver of such breach or
violation. No provision of this Lease shall be deemed to have been waived by
Landlord unless such waiver shall be set forth in a written instrument executed
by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than
the aggregate of all Fixed Rent and Additional Rent then due, no endorsement or
-21-
<PAGE>
statement on any check or no letter accompanying any check or other Rent payment
in any such lesser amount and no acceptance of any such check or other such
payment by Landlord shall constitute an accord and satisfaction and Landlord may
accept any such check or payment without prejudice to landlord's right to
recover the balance of such Rent or to pursue any other legal remedy.
25.2 Right to Cure. If Tenant shall default in the performance
of any of Tenant's obligations under this Lease, Landlord, without thereby
waiving such default, may (but shall not be obligated to) perform the same for
the account and at the expense of Tenant, without notice in a case of emergency,
and in any other case only if such default continues after the expiration of ten
(10) days from the date Landlord gives Tenant notice of the default. All costs
and expenses incurred by Landlord under this Section shall be payable by Tenant
immediately upon demand of Landlord.
25.3. Notices. Any notice, statement, request, demand,
consent, approval or other communication required or permitted to be given,
rendered or made by either party to the other, pursuant to this Lease or
pursuant to any applicable law or requirement of public authority, shall be in
writing (whether or not so stated elsewhere in this Lease) and shall be deemed
to have been properly given, rendered or made only if (i) delivered by hand; or
(ii) sent by reputable overnight delivery service addressed to the other party
at the address set forth above; or (iii) sent by registered or certified mail,
return receipt requested, posted in a United States post office station or
letter box in the continental United States, addressed to the other party at the
address hereinabove set forth (except that after the Commencement Date, Tenant's
address, unless Tenant shall give notice to the contrary, shall be the
Building), and in the event notice is given pursuant to (iii) above shall be
deemed to have been given, rendered or made on the day so mailed, unless mailed
outside of the State of Connecticut, in which case it shall be deemed to have
been given, rendered or made on the first business day after the day so mailed.
Either party may, by notice as aforesaid, designate a different address or
addresses for notices, statements, demands, consents, approvals or other
communications intended for it.
25.4 No Representations, Entire Agreement. Tenant expressly
acknowledges and agrees that Landlord has not made and is not making, and
Tenant, in executing and delivering this Lease, is not relying upon, any
warranties, representations, promises or statements, except to the extent that
the same are expressly set forth in this Lease or in any other written agreement
which may be made between the parties concurrently with the execution and
delivery of this Lease and shall expressly refer to this Lease. Except as set
forth in the Purchase and Sale Agreement, all understandings and agreements
heretofore had between the parties are merged in this Lease and any other
written agreement(s) made concurrently herewith, which alone
-22-
<PAGE>
fully and completely express the agreement of the parties and which are entered
into after full investigation, neither party relying upon any statement or
representation not embodied in this Lease or any other written agreement(s) made
concurrently herewith.
25.5 Changes and Modifications. No agreement shall be
effective to change, modify, waive, release, discharge, terminate or effect an
abandonment of this Lease, in whole or in part, unless such agreement is in
writing, refers expressly to this Lease and is signed by the party against whom
enforcement of the change, modification, waiver, release, discharge, termination
or effectuation of the abandonment is sought.
25.6 Successors and Assigns. Except as otherwise expressly
provided in this Lease, the obligations of this Lease shall bind and benefit the
successors and assigns of the parties hereto with the same effect as if
mentioned in each instance where a party is named or referred to; provided,
however, that (a) no violation of the provisions of Article 5 shall operate to
vest any rights in any successor or assignee of Tenant and (b) the provisions of
this Article shall not be construed as modifying the conditions of limitation
contained in Article 20.
25.7 Inability to Perform. The obligations of Tenant hereunder
shall be in no wise affected, impaired or excused, nor shall Landlord have any
liability whatsoever to Tenant, because (a) Landlord is unable to fulfill, or is
delayed in fulfilling, any of its obligations under this Lease by reason of
Force Majeure; or (b) of any failure or defect in the supply, quantity or
character of electricity or water furnished to the Demised Premises by reason of
any requirement, act or omission of the public utility or others serving the
Building with electric energy, steam, oil, gas or water, or for any other reason
whether similar or dissimilar, beyond Landlord's reasonable control.
25.8 Notice of Accidents. Tenant shall give notice to
Landlord, promptly after Tenant learns thereof, of (a) any accident in or about
the Demised Premises or the Building for which Landlord might be liable, (b) any
fire in the Demised Premises, (c) all damage to or defects in the Demised
Premises including the fixtures, equipment and appurtenances thereof for the
repair of which Landlord might be responsible, and (d) all damage to or defects
in any parts or appurtenances of the air-conditioning, elevator, plumbing,
electrical, sanitary, mechanical or other service or utility systems located in
or passing through the Demised Premises.
25.9 Corporate Tenant. In the event Tenant is a corporation:
(i) the parties executing this Lease on behalf of Tenant hereby covenant and
warrant that Tenant is a duly organized Delaware corporation or foreign
corporation duly qualified to do business in Connecticut and all franchise and
corporate taxes have been paid; (ii) all forms, reports, fees and
-23-
<PAGE>
other documents necessary to comply with applicable law and maintain good
standing will be filed when due; (iii) each individual executing this Lease on
behalf of Tenant represents and warrants that he is duly authorized to execute
and deliver this Lease on behalf of Tenant in accordance with its by-laws and
that this Lease is binding upon Tenant in accordance with its terms; and (iv)
Tenant shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of a resolution of its Board of Directors authorizing
or ratifying the execution of this Lease.
25.10 Purchase and Sale Agreement. The terms and conditions of
the Purchase and Sale Agreement shall survive the termination or expiration of
this Lease. In the event that terms and conditions of the Purchase and Sale
Agreement expressly contradict the terms and conditions of the Lease, the terms
and conditions of the Purchase and Sale Agreement shall be controlling. Landlord
and Tenant agree that the terms of the easements and licenses granted pursuant
to the Purchase and Sale Agreement which are stated to be effective during the
Term of this Lease are hereby incorporated herein by reference.
25.11 Quiet Enjoyment. If and so long as Tenant pays the Fixed
Rent and Additional Rent and performs and observes all the terms, covenants and
conditions hereof on the part of Tenant to be performed and observed, Tenant
shall quietly enjoy the Demised Premises during the Term without hindrance or
molestation by any one claiming by, through or under Landlord, subject, however,
to the terms of this Lease.
25.12 Governing Law, Severability, Captions. Irrespective of
the place of execution or performance, this Lease shall be governed by and
construed in accordance with the Laws of the State of New York. If any provision
of this Lease or the application thereof to any person or circumstances shall,
for any reason and to any extent, be invalid or unenforceable, the remainder of
this Lease and the application of that provision to other persons or
circumstances shall not be affected but rather shall be enforced to the extent
permitted by law. The table of contents, captions, headings and titles in this
Lease are solely for convenience of reference and shall not affect its
interpretation. This Lease shall be construed without regard to any presumption
or other rule requiring construction against the party causing this Lease to be
drafted. Each covenant, agreement, obligation or other provision of this Lease
on Tenant's part to be performed shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any other provision of this
Lease. All terms and words used in this Lease, regardless of the number or
gender in which they are used, shall be deemed to include any other number and
any other gender as the context may require.
25.13 Sublease. It is understood and agreed that
Landlord is a tenant of a portion of the Demised Premises
-24-
<PAGE>
pursuant to that certain lease agreement by and between Reba Properties, Inc.
and SCM Corporation dated June 15, 1990 (the "Reba Lease"), and that this Lease
shall be subject and subordinate in all respects to the Reba Lease. Tenant
hereby acknowledges that it has received a copy of and reviewed the Reba Lease,
and Tenant hereby agrees that if Tenant shall cause a default pursuant to the
Reba Lease, said default shall be regarded as a default pursuant to this Lease,
and Landlord shall have all rights and remedies for such default as set forth in
this Lease.
-25-
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Lease as of he day and year first above written.
LANDLORD:
SMITH CORONA CORPORATION
By_____________________________
Name:
Its:
Duly Authorized
TENANT:
J.M. MURRAY CENTER, INC.
By_____________________________
Name:
Its:
Duly Authorized
-26-
<PAGE>
Exhibit A
[Legal Description of Property]
<PAGE>
EXHIBIT 1.12
PERMITTED ENCUMBRANCES
----------------------
1. Right of Way granted by H.C. and Vera Griswold to The
Cortland County Traction Co. recorded October 25, 1929 in Liber 161 of Deeds, at
page 240;
2. Easement granted by Harland J. and M. Viola Gridley to New
York Telephone Co. and American Telephone & Telegraph Co. recorded September 29,
1936 in Liber 176 of Deeds, at page 560;
3. Easement granted by L.W. Rorapaugh to The Syracuse
Lighting Company recorded June 8, 1934 in Liber 172 of Deeds, at page 100;
4. Easement for sewer granted by Smith-Corona Marchant Inc.
to Town of Cortlandville recorded September 25, 1959 in Liber 266 of Deeds, at
page 185;
5. Easement granted by Smith-Corona to New York Telephone Co.
recorded November 14, 1969 in Liber 280 of Deeds, at page 96;
6. Easement granted by SCM Corporation to New York State
Electric & Gas Corporation recorded November 9, 1967 in Liber 309 of Deeds, at
page 352;
7. Any matters disclosed on that certain survey made by
R. James Stockwin, dated October 28, 1994;
8. That certain Easement and License Agreement dated the date
hereof between Grantor, as licensor, and Grantor, as licensee, which License
Agreement is intended to be recorded in the land records of Cortland County in
the State of New York; and
9. That certain Easement Agreement dated the date hereof
between Grantor, as grantor, and Grantee, as grantee, which Easement Agreement
is also intended to be recorded in the land records of Cortland County in the
State of New York.
<PAGE>
EXHIBIT 3.3
THIS EASEMENT AND LICENSE AGREEMENT dated as of the ___ day of
_____, 199__ between J.M. Murray Center, Inc., having an address of
__________________________ ("Licensor") and Smith Corona Corporation, having an
address of ___________________ ("Licensee").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution of this License
Agreement, Licensee has transferred all of Licensor's right, title and interest
in and to the that certain real property (the "Property") located in the County
of Cortland, State of New York more particularly described on Exhibit A annexed
hereto;
WHEREAS, Licensee is the owner of that certain real property
adjacent to the Property (the "Dominant Estate") also located in the County of
Cortland, State of New York more particularly described on Exhibit B annexed
hereto;
WHEREAS, Licensee did not include in the sale of the Property
that certain building with appurtenant improvements identified as the FCC
Building (the "Building") on Exhibit C annexed hereto, which Building and
appurtenances shall remain the property of Licensee; and
WHEREAS, as further consideration for such transfer to
Licensor of the Property, Licensor has agreed to (i) grant Licensor an easement
to enter upon the Property in order to gain access to the Building and (ii) a
license to use, occupy, maintain, demolish, alter, restore, remove, and/or
rebuild the Building upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by Licensor, and in consideration of the mutual covenants,
promises and agreements contained herein, Licensor and Licensee hereby agree as
follows:
1. Licensor hereby grants to Licensee, its successors and
assigns (i) a non-exclusive easement over the Property for pedestrian and
vehicular ingress and egress, including without limitation, the right to park
said vehicles, for purposes of gaining access to and use of the Building and
(ii) an exclusive license to use, occupy, maintain, demolish, alter, restore,
remove and/or rebuild the Building.
2. Licensor agrees that Licensor shall have no rights to use,
occupy or otherwise with respect to the Building during the term of this License
Agreement.
<PAGE>
3. Licensee hereby agrees to maintain and repair the Building
in a condition so as to not cause a safety hazard until the expiration or
earlier termination of this Agreement.
4. Licensor shall supply electricity to the Building. Licensee
shall pay to Licensor an amount which Licensor reasonably and in good faith
determines to represent the actual cost to Licensor of electricity consumed by
Licensee at the Building at the rate paid by Licensor to the company supply
electricity to the Property (without profit to Licensor). Licensor shall submit
an invoice to Licensee in such amount and payment of the same shall be remitted
by Licensee to Licensor within fifteen (15) days of Licensee's receipt of such
invoice. Licensee shall have no obligation to pay any other tax, charge, cost or
expense of whatsoever nature, to Licensor or on account of the Building.
5. Licensee shall at all times hereafter exercise its rights
afforded herein in a manner which shall not unreasonably hinder, burden or
prevent the use and enjoyment by Licensor of the Property.
6. The easement and license granted herein shall be for a term
of ten (10) years from the date hereof. Notwithstanding the foregoing, the
easement and license may be terminated by (i) Licensee at any time upon notice
to Licensor, or (ii) Licensor provided that Licensor, at Licensor's sole cost
and expense, demolishes the Building and constructs upon the parcel of land
adjoining the Property owned or leased by Licensee, as the case may be, a
building of similar size and construction to the Building and otherwise
reasonably acceptable to Licensee.
7. Except in the event of a termination of this Agreement by
Licensor, Licensee shall have the right, but not the obligation, at Licensee's
sole cost and expense, to demolish the Building upon the expiration or earlier
termination of this Agreement. Said demolition shall be performed in accordance
with all applicable rules and regulations. Licensee shall also be responsible
for the removal and disposal of any debris.
8. Licensor shall not grant any easements or other rights in
and to the Property which are inconsistent with the rights herein granted.
9. Any notice under this Agreement must be in writing and sent
by registered or certified mail to the last address of the party whom such
notice is to be given, as designated by such party in writing.
10. Licensor shall, on demand of Licensee, do, execute,
acknowledge and deliver all further acts, deeds, conveyances, assignments,
transfers and assurances as Licensee shall from time to time reasonably
require for carrying out the intention or facilitating the performance of the
terms of this Agreement or for the recording of this Agreement.
11. This Agreement shall be governed by the laws of the
State of New York.
-2-
<PAGE>
12. This Agreement shall run with and be a burden upon
the Property and shall run with and be benefit to the Dominant
Estate.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
LICENSOR:
J.M. MURRAY CENTER, INC.
By:_____________________
Name:
Title:
SMITH CORONA CORPORATION
By:_____________________
Name:
Title:
-4-
<PAGE>
[NEW YORK ACKNOWLEDGEMENTS]
-5-
<PAGE>
EXHIBIT A
[LEGAL DESCRIPTION OF J.M. MURRAY PROPERTY]
-6-
<PAGE>
EXHIBIT B
[LEGAL DESCRIPTION OF SMITH CORONA PROPERTY]
-7-
<PAGE>
EXHIBIT C
[DIAGRAM SHOWING BUILDING]
-8-
<PAGE> EXHIBIT 3.5-1
THIS EASEMENT AGREEMENT (this "Agreement") dated as of the ___
day of _____, 199__ between J.M. Murray Center, Inc., having an address of
__________________________ ("Grantor") and Smith Corona Corporation, having an
address of ___________________ ("Grantee"). Grantor and/or Grantee sometimes
herein referred to individually as a "Party" and collectively as the "Parties."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Grantor is the owner of that certain real property
(the "Servient Estate") located in the County of Cortland, State of New York
more particularly described on Exhibit A annexed hereto; and
WHEREAS, Grantee is the owner of that certain real property
(the "Dominant Estate") adjoining the Servient Estate and located in the County
of Cortland, State of New York more particularly described on Exhibit B annexed
hereto;
WHEREAS, Grantor has agreed to grant to Grantee, its
successors and assigns, upon the terms and conditions set forth herein (i) a
license for purposes of pedestrian and vehicle traffic over that portion of the
Servient Estate identified as Roadway License Area on Exhibit C annexed hereto,
(ii) an easement for purposes of the installation and maintenance of utilities
within that portion of the Servient Estate identified as the Utility Easement
Area on Exhibit C, and (iii) an easement of the entirety of the Servient Estate
for purposes of inspecting the Servient Estate in connection with the compliance
with requirements of applicable laws, rules and regulations to which Grantee may
be bound;
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by Grantor, and in consideration of the mutual covenants,
promises and agreements contained herein, Grantor and Grantee hereby agree as
follows:
1. Grantor hereby grants to Grantee, its successors and
assigns, a license for purposes of pedestrian and vehicle traffic over the
Roadway License Area in common with Grantor, upon the following terms and
conditions:
a. Nothing herein shall obligate the Grantee to use,
illuminate, maintain, pave, repave or otherwise take any action with respect to
the Roadway License Area; and
b. Grantor shall maintain the Roadway License Area in a
good and safe manner. If Grantor shall fail to so maintain the Roadway License
Area, Grantee shall have the right, but not the obligation, to repair and/or
maintain the Roadway
<PAGE>
License Area. Any repairs or maintenance so performed by Grantor or Grantee, as
the case may be, shall be completed in a good and workmanlike, lien-free manner
and in compliance with all applicable laws, rules and regulations. The
herein-granted right shall include such temporary and other rights as are
reasonably necessary to effectuate all such repairs and maintenance, including
the right to store materials and to maintain equipment, as well as the right to
ingress and egress for both pedestrian and vehicles, on portions of the Servient
Estate outside of the Roadway License Area. In no event shall the Grantee's
right to repair and maintain be deemed to release Grantor from its obligation to
so maintain and repair the Roadway License Area.
2. Grantor hereby grants to Grantee, its successors and
assigns, an easement for purposes of the installation, maintenance and
replacement of any and all utilities whether above or below ground, including,
without limitation, water, sewer, electric, telephone and natural gas (herein,
collectively, "Utilities") within that portion of the Servient Estate identified
as the Utility Easement Area on Exhibit B, upon the following terms and
conditions:
a. During construction, clean-up, maintenance, repair and
restoration operations within the Utility Easement Area, Grantee shall have the
right to a temporary construction easement as may be reasonably necessary not to
exceed an additional ten (10) feet on either side of said Utility Easement Area.
However, after the completion of such operations, Grantee shall have no further
right to such temporary working space, and Grantee's rights shall be limited
solely to the Utility Easement Area;
b. Grantee, its employees, contractors and/or
representatives and its and their respective successors and assigns shall have
the permanent right of ingress and egress to and from said Utility Easement Area
for the purposes of laying, constructing, operating, inspecting, maintaining,
repairing and replacing above and/or below ground Utilities. Such ingress and
egress shall be limited to such easement and to existing roads or paths, if any,
on the Servient Estate;
c. Grantor shall have the right to full use and enjoyment
of the Utility Easement Area except for such use as may unreasonably interfere
with the exercise by Grantee of the rights granted herein. Grantee shall not
construct or permit to be constructed any house, structure or obstruction on or
over or interfering with the operation of any Utilities constructed pursuant to
this Agreement. Grantor further agrees that it will not materially change the
ground elevation of the Utility Easement Area without the prior written consent
of Grantee, which shall not be unreasonably withheld; and
d. After the installation of the Utilities or any
subsequent maintenance thereof, Grantee, its employees, representatives or
contractors, its and their successors and assigns, shall remove all equipment
and other property placed on
-2-
<PAGE>
the Servient Estate by or for Grantee, fill and level all ditches, ruts and
depressions caused by construction or removal operations and remove all debris
resulting therefrom. Grantor will generally restore the surface of the Servient
Estate as near to its original condition as possible where lawn areas are
damaged as a result of the construction.
3. Grantor hereby grants to Grantee, its successors and
assigns and its contractors, employees, agents, governmental and municipal
agents, officers, experts and others a non-exclusive easement over the entirety
of the Servient Estate for purposes of inspecting the Servient Estate in
connection with the compliance with requirements of applicable laws, rules and
regulations to which Grantee may be bound.
4. Each of the Grantor and Grantee, as the case may be, shall
indemnify and hold the other harmless (except for loss or damage resulting from
the tortious acts of such other party) from and against any actual damages,
liability actions, claims and expenses (including attorneys' fees in a
reasonable amount) in connection with the loss of life, personal injury and/or
damage to property arising from or out of the rights and easements covered by
this Agreement (herein the "Rights and Easements") or occasioned wholly or in
part by any act or omission of said Grantor or Grantee, as the case may be, its
tenants, agents, contractors, employees or licensees (expressly excluding
consequential and/or punitive damages).
5. Each of Grantor and Grantee shall maintain or cause to be
maintained public liability insurance insuring against claims on account of loss
of life, bodily injury or property damage that may arise from, or be occasioned
by the condition, use or occupancy of the Rights and Easements covered by this
Agreement. Said insurance shall be carried by a reputable insurance company or
companies qualified to do business in the State of New York and having a single
limit for loss of life or bodily injury and for property damage of not less than
Two Million Dollars ($2,000,000.00) as same may be increased from time to time
as may be reasonably agreed to by the Parties based upon customary requirements
for similar Rights and Easements in the vicinity.
6. If at any time Grantor or Grantee shall default in the
performance of an obligation pursuant to this Agreement of such Party (such
defaulting Party being herein called a "Defaulting Party"), which default
affects the non-defaulting Party (an "Affected Party"), such Affected Party, in
addition to all other remedies it may have at law or in equity, after ten (10)
days' prior written notice to the Defaulting Party, shall have the right to
perform such obligation on behalf of the Defaulting Party. In such event, the
Defaulting Party shall promptly reimburse the Affected Party the cost thereof,
together with interest thereon from the date of outlay at a rate equal to
-3-
<PAGE>
the lesser of (A) fifteen percent (15%) per annum, or (B) the maximum rate
permitted by applicable law.
7. In the event of a breach by any Party hereto of any
obligation pursuant to this Agreement, the other Party shall be entitled to
obtain an injunction specifically enforcing the performance of such obligation;
the parties hereto hereby acknowledge the inadequacy of legal remedies from the
consequences of such breach. Any action taken or document executed in violation
of this Agreement shall be void and may be set aside upon the petition of the
other Party. Any costs and expenses of any such proceeding, including attorneys'
fees in a reasonable amount, shall be paid by the Defaulting Party.
8. No delay or omission of any Party in the exercise of any
right accruing upon any default of any other Party shall impair such right or be
construed to be waiver thereof, and every such right may be exercised at any
time during the continuance of such default. A waiver by any Party of a breach
of, or a default in, any of the terms and conditions of this Agreement by any
other Party shall not be construed to be a waiver of any subsequent breach of or
default in the same or any other provision of this Agreement. Except as
otherwise specifically provided in this Agreement, (i) no remedy provided in
this Agreement shall be exclusive but each shall be cumulative with all other
remedies provided in this Agreement and (ii) all remedies at law or in equity
shall be available.
9. No breach of the provisions of this Agreement shall
entitle any Party hereto or any other Party to cancel, rescind or otherwise
terminate this Agreement, but such limitation shall not affect, in any manner,
any other rights or remedies which any Party may have hereunder by reason of any
breach of the provisions of this Agreement. No breach of the provisions of this
Agreement shall defeat or render invalid the lien of any mortgage or deed of
trust made in good faith for value covering any part of the Premises or the
herein-stated Right and Easements or any improvements thereon.
10. In the event any Party hereto or any other Party shall be
delayed or hindered in or prevented from the performance of any act required to
be performed by such Party by reason of Acts of God, strikes, lockouts,
unavailability of materials, failure of power, prohibitive governmental laws or
regulations, riots, insurrections, the act or failure to act of the other Party,
adverse weather conditions preventing the performance of work as certified to by
an architect, war or other reason beyond such Party's control, then the time for
performance of such act shall be extended for a period equivalent to the period
of such delay. Lack of adequate funds or financial inability to perform shall
not be deemed to be a cause beyond the control of such Party.
-4-
<PAGE>
11. This Agreement shall run with and be a burden upon the
Servient Estate and shall run with and be benefit to the Dominant Estate.
12. Grantee shall have the right to terminate any one of the
Easements and Rights granted in this Agreement upon notice to Grantor. The
termination of any one Easement and Right shall not effect the validity and
enforceability of any of the remaining easements.
13. Except as otherwise provided hereinabove the
herein-reserved rights are intended to be and shall be perpetual Rights and
Easements. However, if and to the extent any such Rights or Easements shall be
unenforceable in whole or in part for any reason whatsoever, said Rights and
Easements shall to the maximum extent permitted by law be enforceable.
14. Grantor shall not grant any easements or other rights
which are inconsistent with the Rights and Easements herein granted.
15. Grantor shall, on demand of Grantee, do, execute,
acknowledge and deliver all further acts, deeds, conveyances, assignments,
transfers and assurances as Grantee shall from time to time reasonably require
for carrying out the intention or facilitating the performance of the terms of
this Agreement or for the recording of this Agreement.
16. Any notice under this Agreement must be in writing and
sent by registered or certified mail to the last address of the party whom such
notice is to be given, as designated by such party in writing.
17. This Agreement shall be governed by the laws of the State
of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
GRANTOR:
J.M. MURRAY CENTER, INC.
By:_____________________
Name:
Title:
GRANTEE:
SMITH CORONA CORPORATION
-5-
<PAGE>
By:_____________________
Name:
Title:
STATE OF NEW YORK )
)
) ss:
)
COUNTY OF NEW YORK )
On the ___ day of ________________, 199__, before me
personally came ______________________ to me known, who, being by me duly sworn,
did depose and say that he resides at _______________, that he is the
________________ of J.M. MURRAY CENTER, INC., the corporation described in and
which executed the foregoing instrument, and that he has signed his name thereto
by order of the board of directors of said corporation.
-----------------------------
Notary Public
STATE OF NEW YORK )
)
) ss:
)
COUNTY OF NEW YORK )
On the ___ day of ________________, 199__, before me
personally came ______________________ to me known, who, being by me duly sworn,
did depose and say that he resides at _______________, that he is the
________________ of SMITH CORONA CORPORATION, the corporation described in and
which executed the foregoing instrument, and that he has signed his name thereto
by order of the board of directors of said corporation.
-----------------------------
Notary Public
-6-
<PAGE>
EXHIBIT A
[LEGAL DESCRIPTION OF J.M. MURRAY PROPERTY]
-7-
<PAGE>
EXHIBIT B
[LEGAL DESCRIPTION OF THE SMITH CORONA PROPERTY]
-8-
<PAGE>
EXHIBIT C
[SURVEY SHOWING EASEMENT AREAS]
-9-
<PAGE>
EXHIBIT 8.1(a)
BARGAIN AND SALE DEED
THIS INDENTURE, made the ___ day of ___________, 199__,
between SMITH CORONA CORPORATION, a Delaware corporation (the "Grantor"), and
THE J.M. MURRAY CENTER, INC., a New York corporation (the "Grantee").
WITNESSETH, that Grantor, in consideration of Ten Dollars
($10.00) lawful money of the United States and other good and valuable
consideration paid by the Grantee, the receipt and sufficiency of which is
hereby acknowledged, Grantor hereby grants and releases unto Grantee all that
certain real property, together with all buildings and improvements thereon (the
"Premises"), together with all appurtenances and all the estate and rights of
the Grantor in and to that Premises as are described on Exhibit A annexed hereto
and made a part hereof by this reference, said Premises being conveyed subject
to all those matters stated on said Exhibit A.
TO HAVE AND TO HOLD the above-granted Premises unto the
Grantee, its successors and assigns forever.
Grantor covenants that Grantor has not done or suffered
anything whereby the Premises have been encumbered in any way whatever, except
as aforesaid.
Grantor, in compliance with Section 13 of the Lien Law,
covenants that Grantor will receive the consideration for this conveyance and
will hold the right to receive such consideration as a trust fund to be applied
first for the purpose of paying the cost of the improvement and will apply the
same first to the cost of the improvement before using any part of the total of
the same for any other purpose.
IN WITNESS WHEREOF, the Grantor has hereunto set his hand and
seal the day and year first above written.
In the presence of: SMITH CORONA CORPORATION
_________________________ By:___________________________
Its
Duly authorized
<PAGE>
STATE OF )
)
) ss:
)
COUNTY OF )
On this ___ day of __________, 199___, before me personally
came ______________________, to me known, who by me being duly sworn does depose
and say that he resides at _______________________, that he is the
___________________ of SMITH CORONA CORPORATION, the corporation described in
and which executed the foregoing instrument, that he signed is name thereto by
order of the board of directors of said corporation.
---------------------------------
Notary Public
-2-
<PAGE>
Exhibit A
ALL THAT CERTAIN real property described as follows:
[LEGAL DESCRIPTION]
The Premises is conveyed subject to the following:
1. Right of Way granted by H.C. and Vera Griswold to The
Cortland County Traction Co. recorded October 25, 1929 in Liber 161 of Deeds, at
page 240;
2. Easement granted by Harland J. and M. Viola Gridley to New
York Telephone Co. and American Telephone & Telegraph Co. recorded September 29,
1936 in Liber 176 of Deeds, at page 560;
3. Easement granted by L.W. Rorapaugh to The Syracuse Lighting
Company recorded June 8, 1934 in Liber 172 of Deeds, at page 100;
4. Easement for sewer granted by Smith-Corona Marchant Inc. to
Town of Cortlandville recorded September 25, 1959 in Liber 266 of Deeds, at page
185;
5. Easement granted by Smith-Corona to New York Telephone Co.
recorded November 14, 1969 in Liber 280 of Deeds, at page 96;
6. Easement granted by SCM Corporation to New York State
Electric & Gas Corporation recorded November 9, 1967 in Liber 309 of Deeds, at
page 352;
7. Any matters disclosed on that certain survey made by R.
James Stockwin, dated October 28, 1994;
8. That certain License Agreement dated the date hereof
between Grantee, as licensor, and Grantor, as licensee, which License Agreement
is intended to be recorded in the land records of Cortland County in the State
of New York; and
9. That certain Easement Agreement dated the date hereof
between Grantor, as grantor, and Grantee, as grantee, which Easement Agreement
is also intended to be recorded in the land records of Cortland County in the
State of New York.
-3-
<PAGE> EXHIBIT 8.1(d)
ENVIRONMENTAL
INDEMNIFICATION AGREEMENT
THIS ENVIRONMENTAL INDEMNIFICATION AGREEMENT, dated as of
February 28, 1995 ("Agreement"), is by and among the Smith Corona Corporation, a
New York corporation having its a place of business at 839 NYS Route 13,
Cortland, New York 13045 ("SCC"), and J.M. Murray Center, Inc. (sheltered
workshop for handicapped), a New York not-for-profit corporation with an office
at West Road, Cortland, New York 13045, ( "JMMC").
W I T N E S S E T H:
WHEREAS, JMMC has entered into a Purchase and Sale Agreement with SCC,
dated as of February 28, 1995 ("Purchase Agreement"), to lease from SCC a 12.704
acres parcel of land located on the south side of SCC's property at 839 NYS
Route 13, in the Town of Cortlandville, New York (the "Land"), and as a
condition to said Purchase Agreement, prior to closing title pursuant to said
Purchase Agreement, JMMC shall lease said Land from SCC, and sublease the
building and the other improvements located on the Land now owned by Mary M.
Gemelli and under lease to SCC (the "Office Building"), as more particularly
described in Exhibit A attached hereto (the Office Building and the Land are
collectively referred to herein as the "Property"); and
WHEREAS, SCC intends to purchase the Office Building from Mary M.
Gemelli and, pursuant to the Purchase Agreement, reconvey the entire Property to
JMMC thereafter; and
WHEREAS, pursuant to the Purchase Agreement, JMMC intends to
purchase the Property from SCC; and
WHEREAS, SCC intends to petition shortly after the date hereof the New
York State Department of Environmental Conservation to change the boundary
description in the New York State Registry of Inactive Hazardous Waste Disposal
Sites of the "SCM; Cortlandville State Superfund Site" so that the Property no
longer falls within the description of that Site or is otherwise de-listed from
the Registry; and
WHEREAS, JMMC and SCC require, as a condition and an inducement for
each to enter into the contemplated Purchase Agreement, that the parties enter
into, execute, deliver and perform this Environmental Indemnification Agreement.
NOW THEREFORE, the parties hereby agree as follows:
Section 1. Definitions. All capitalized terms used in this
Agreement and not hereafter defined shall have the meanings set
forth below.
<PAGE>
(a) "Disposal" has the same meaning as given to that term in
the Solid Waste Disposal Act as amended by the Resource Conservation and
Recovery Act, (42 U.S.C. Section 6901 et seq.)
(b) "Environment" means any water or water vapor, any land,
including land surface or subsurface, air, fish, wildlife, flora, fauna, biota
and all other natural resources.
(c) "Environmental Laws" mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection, conservation or
remediation of the Environment and/or governing the use, storage, treatment,
generation, transportation, processing, handling, production or Disposal of
Hazardous Substances or solid waste, and the rules, regulations, guidelines,
decisions, orders and directives of federal, state and local governmental
agencies, courts and authorities with respect thereto.
(d) "Environmental Permits" mean all permits, licenses,
approvals, authorizations, consents or registrations required by any applicable
Environmental Law in connection with: (i) the ownership, construction,
equipping, use and/or operation of the Property, (ii) the storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances or solid wastes, or (iii) the sale, transfer or conveyance
of the Property.
(e) "Hazardous Substance" means, without limitation, any
flammable, explosive or radioactive materials, radon, asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, oil, petroleum,
petroleum products, methane, hazardous materials, hazardous wastes, hazardous or
toxic substances or related materials, pollutants, and toxic pollutants, as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the
Solid Waste Disposal Act as amended by the Resource Conservation and Recovery
Act, (42 U.S.C. Sections 6901, et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. Sections 2601, et seq.), the Federal Water Pollution Control
Act, as amended, (33 U.S.C. Sections 1251, et seq.), the Oil Pollution Control
Act of 1990(33 U.S.C. 2701, et seq.), the Occupational Safety and Health Act of
1970, as amended (29 U.S.C. Sections 651, et seq.), Article 12 of the New York
State Navigation Law, Articles 17 and 27 of the New York State Environmental
Conservation Law or any other applicable Environmental Law.
(f) "JMMC Indemnitees" mean the JMMC, its successors, and all
of their directors, officers, board members, employees, agents and
representatives, acting in their official capacity.
<PAGE>
(g) "Lease" means that certain lease by and between JMMC, as
tenant, and SCC, as landlord, as more particularly described in the Purchase
Agreement.
(h) "SCC Indemnitees" mean SCC, its parent, affiliates and
successors, and all of their directors, officers, shareholders, employees,
agents and representatives, acting in their official capacity.
(i) "Release" has the same meaning as given to that term in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S.C. Section 9601, et seq.), and the regulations
promulgated thereunder.
Section 2. SCC's Representations and Warranties. Except as set forth in
Exhibit B, SCC hereby represents and warrants to the JMMC Indemnitees that, to
the best of SCC's knowledge:
(a) The Property is not being and has not been used in
violation of any applicable Environmental Law for: (i) the storage, treatment,
generation, transportation, processing, handling, production or disposal of any
Hazardous Substance, (ii) a landfill or other waste management or disposal site,
(iii) military, manufacturing or industrial purposes, or (iv) the storage of
petroleum or petroleum based products.
(b) Underground storage tanks are not and have not
been located on the Property.
(c) The soil, subsoil, bedrock, surface water and groundwater
of the Property are free of Hazardous Substances, other than any such substances
that occur naturally, at levels above applicable standards, criteria and
guidance of the New York State Department of Environmental Conservation set for
the protection of human health and the environment.
(d) There has been no Release or threat of a Release of any
Hazardous Substance on, at, to or from the Property which through soil, subsoil,
bedrock, surface water or groundwater migration could come to be located on or
at the Property, and SCC has not received any form of notice or inquiry from any
federal, state or local governmental agency or authority, any prior operator,
owner, tenant, subtenant, licensee or occupant of the Property or any other
person with regard to a Release or the threat of a Release of any Hazardous
Substance on, at, to or from the Property.
(e) These representations and warranties shall survive the
signing of this Agreement, and continue and remain in full force and effect,
until JMMC takes possession of the Property.
Section 3. JMMC's Representations and Warranties. Except
for conditions or actions that were caused by SCC, JMMC hereby
<PAGE>
represents and warrants to SCC Indemnitees that, to the best of
JMMC's knowledge:
(a) All Environmental Permits necessary for the proposed use
and operation of the Property by JMMC will be obtained and will be in full force
and effect by the time JMMC occupies the Property.
(b) This representations and warranties shall survive the
signing of this Agreement, and continue and remain in full force and effect,
until JMMC takes possession of the Property.
Section 4. Covenants of SCC. SCC hereby covenants and agrees with the
JMMC Indemnitees as follows:
(a) SCC shall promptly provide the JMMC with a copy of all
notifications, written complaints, claims, citations, demands, inquiries or
reports which it gives to or receives with respect to (i) environmental
conditions at or affecting the Property, or (ii) any past or present Release or
the threat of a Release of any Hazardous Substance on, at, to or from the
Property. If SCC receives or becomes aware of any such notification which is not
in writing or otherwise capable of being copied, SCC shall promptly advise the
JMMC of such verbal, telephonic or electronic notification and confirm such
notice in writing.
(b) SCC shall petition, at its sole expense and at no cost or
expense to JMMC, shortly after the date hereof, the New York State Department of
Environmental Conservation to change the boundary description in the New York
State Registry of Inactive Hazardous Waste Disposal Sites ("Registry") of the
"SCM; Cortlandville State Superfund Site" so that the Property no longer falls
within the description of that site or to otherwise delist the Property from the
Registry.
Section 5. Indemnification by SCC.
(a) SCC hereby covenants and agrees, at its sole cost and
expense, to indemnify, protect, defend, save and hold harmless the JMMC
Indemnitees from and against any and all damages (other than consequential
damages or lost profits), losses, liabilities, obligations, fines, amounts in
contribution, penalties, claims, litigation, demands, defenses, judgments,
suits, actions, proceedings, costs, disbursements or expenses (including,
without limitation, reasonable attorneys' and experts' fees, expenses and
disbursements) of any kind or nature whatsoever which may at any time be imposed
upon, incurred by or asserted or awarded against any or all of the JMMC
Indemnitees relating to, resulting from or arising out of: (i) the equipping,
operation or use of the Property prior to the date of this Agreement in
violation of any applicable Environmental Law for the storage, treatment,
generation, transportation, processing, handling, management, production or
disposal of any Hazardous Substance or solid waste,
<PAGE>
(ii) a material misrepresentation or inaccuracy in any
of SCC's representations or warranties contained in this Agreement, or a
material breach of or failure to perform any of SCC's covenants contained
herein, (iii) the presence of any Hazardous Substance at, on or in the Property
as of the date of this Agreement, (iv) the presence of any Hazardous Substance
as of the date of this Agreement in the Environment adjacent to or in the
vicinity of the Property due to an act or omission of SCC, its officers,
directors, agents, representatives, employees, contractors, subcontractors,
invitees or licensees which later migrates onto the Property, (v) the Release,
threat of Release, or Disposal, of any Hazardous Substance or solid waste on,
at, to or from the Property or to the Environment adjacent to or in the vicinity
of the Property which later migrates onto the Property, after the date of this
Agreement, caused by an act or omission of SCC, its officers, directors, agents,
representatives, employees, contractors, subcontractors, invitees, or licensees,
(vi) a violation of any applicable Environmental Law at or affecting the
Property by SCC, its officers, directors, agents, representatives, employees,
contractors, subcontractors, invitees, or licensees, or (vii) non-compliance
with any Environmental Permit at or affecting the Property by SCC, its officers,
directors, agents, representatives, employees, contractors, subcontractors,
invitees, or licensees, (collectively, the "SCC Indemnified Matters"); provided,
however, that SCC Indemnified Matters shall in no respect include any action or
condition to the extent that it was caused by one or all of the JMMC
Indemnitees, or their licensees, contractors, subcontractors, invitees,
subtenants or occupants.
(b) The liability of SCC to the JMMC Indemnitees hereunder
shall in no way be limited, abridged, impaired or otherwise affected by (i) any
amendment or modification of the Purchase Agreement by or for the benefit of the
JMMC, unless said amendment or modification so states, (ii) the purchase of the
Property by JMMC, (iii) any exculpatory provision contained in the Purchase
Agreement limiting JMMC's recourse to SCC, (iv) any applicable statute of
limitations, (v) any investigation or inquiry conducted by or on the behalf of
JMMC Indemnitees or any information which the JMMC Indemnitees may have or
obtain with respect to the environmental or ecological condition of the
Property, (vi) the sale, assignment, subleasing, transfer or conveyance of all
or part of the Property or SCC's interests and rights in, to, and under the
Purchase Agreement, (vii) the termination of the Purchase Agreement, or (viii)
the release or discharge, in whole or in part, of SCC, in any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding.
(c) The indemnification contained herein is wholly independent
of and in addition to any obligation which SCC may have to any or all of the
JMMC Indemnitees as a matter of law or regulation or under other agreement or
instrument.
<PAGE>
Section 6. Covenants of JMMC. The JMMC hereby covenants and agrees with
SCC Indemnitees as follows:
(a) The JMMC shall promptly provide SCC with a copy of any and
all notifications, written complaints, claims, citations, demands, inquiries or
reports which it gives to or receives with respect to (i) environmental
conditions at or affecting the Property, or (ii) any past or present Release or
the threat of a Release of any Hazardous Substance on, at, to or from the
Property. If the JMMC receives or becomes aware of any such notification which
is not in writing or otherwise capable of being copied, the JMMC shall promptly
advise SCC of such verbal, telephonic or electronic notification and confirm
such notice in writing.
(b) Prior to JMMC's purchase of the Property, and to the
extent caused by JMMC's activities at the Property or the activities of JMMC's
operators, subtenants, licensees, invitees and occupants at the Property, the
JMMC shall, at its sole expense and at no cost or expense to SCC, undertake and
complete, with due care so as not to unreasonably interfere with the conduct of
SCC's business, all investigations, studies, sampling and testing and all
removal or remedial actions necessary to contain, remove and clean up all
Releases or threats of Releases of Hazardous Substances at the Property as
required by applicable Environmental Laws. If JMMC fails to promptly remove or
otherwise cleanup such Hazardous Substances, SCC may undertake such removal or
cleanup, and the costs and expenses thereof shall be borne by JMMC and will be
paid as additional rent under the Lease Agreement.
(c) Prior to JMMC's purchase of the Property, JMMC shall keep,
and shall require all operators, subtenants, licensees, invitees and occupants
of the Property to keep, the Property free of all Hazardous Substances other
than those Hazardous Substances used in the course of JMMC's business.
(d) Prior to JMMC's purchase of the Property, JMMC shall
notify SCC within 30 days of the existence at the Property of any hazardous
materials used, handled, produced, stored, treated or disposed, in regulated
quantities or quantities greater than 55 gallons or 200 kg., at any one time,
for which records, manifests, material safety data sheets or periodic reports
are to be kept or filed by JMMC according to applicable Environmental Laws.
(e) Prior to JMMC's purchase of the Property, JMMC shall
comply with, and shall require all operators, subtenants, licensees, invitees
and occupants of the Property to comply with, all applicable Environmental Laws
and shall obtain and comply with, and shall require all operators, tenants,
subtenants, licensees, invitees and occupants of the Property to obtain and
comply with, all applicable Environmental Permits.
<PAGE>
(f) Prior to JMMC's purchase of the Property, JMMC shall not
cause or permit any change to be made in the present or intended use of the
Property which would (i) involve the storage, treatment, generation,
transportation, processing, handling, production or disposal of any Hazardous
Substance, other than those Hazardous Substances used in the course of JMMC's
business, (ii) involve the use of the Property for a landfill, any other waste
disposal site, or military purposes, (iii) involve the use of the Property for
the storage of petroleum or petroleum based products other than those used in
the course of JMMC's business, (iv) violate any applicable Environmental Law,
(v) constitute non-compliance with any Environmental Permit, or (vi), without
SCC's express written prior approval, substantially increase the risk of a
Release of a Hazardous Substance by changing the nature or manner in which JMMC
conducts its business as of the date JMMC takes possession of the Property.
(g) Prior to JMMC's purchase of the Property, JMMC shall at
all times allow SCC Indemnitees and their officers, employees, agents,
representatives, contractors and subcontractors reasonable access to the
Property for the purpose of ascertaining environmental conditions and
compliance, including, but not limited to, any soil or groundwater
investigations deemed necessary by SCC or the performance of an environmental
audit or assessment, upon the condition that due care is exercised so as not to
unreasonably interfere with the conduct of JMMC's business ("Audit"). If a
breach of any other covenant in this Section 6 is discovered during the course
of the Audit, the fees and expenses of such Audit shall be borne by JMMC and
will be paid as additional rent under the Lease Agreement.
(h) After the purchase, JMMC shall give SCC, the DEC and other
appropriate governmental authorities, and their employees, contractors,
subcontractors and consultants, access to the Property, at reasonable times and
upon reasonable notice, for the purposes of monitoring and sampling pursuant to
the Settlement Agreement, a copy of which is attached as Exhibit B.
(i) JMMC shall not Release, nor permit its operators,
subtenants, licensees, invitees and occupants to Release, any Hazardous
Substance to the Environment at the Property except pursuant to all applicable
Environmental Permits.
Section 7. Indemnification by JMMC of SCC Indemnitees.
(a) JMMC hereby covenants and agrees, at its sole cost and
expense, to indemnify, protect, defend, save and hold harmless the SCC
Indemnitees from and against any and all damages (other than consequential
damages or lost profits), losses, liabilities, obligations, fines, amounts in
contribution, penalties, claims, litigation, demands, defenses, judgments,
suits, actions, proceedings, costs, disbursements or expenses (including,
without limitation, reasonable attorneys' and experts' fees, expenses and
disbursements) of any kind or nature
<PAGE>
whatsoever which may at any time be imposed upon, incurred by or asserted or
awarded against any or all of the SCC Indemnitees relating to, resulting from or
arising out of: (i) the equipping, operation or use of the Property after the
date of this Agreement in violation of any applicable Environmental Law for the
storage, treatment, generation, transportation, processing, handling,
management, production or disposal of any Hazardous Substance or solid waste,
(ii) a material misrepresentation or inaccuracy in any of JMMC's representations
or warranties contained in this Agreement, or a material breach of or failure to
perform any of JMMC's covenants contained herein, (iii) the presence of any
Hazardous Substance at, on or in the Property as of the date of this Agreement,
(iv) the Release, threat of Release, or Disposal, of any Hazardous Substance or
solid waste on, at, to or from the Property or to the Environment adjacent to or
in the vicinity of the Property which later migrates onto the Property, after
the date of this Agreement, caused by an act or omission of JMMC, its officers,
directors, agents, representatives, employees, contractors, subcontractors,
invitees, subtenants, occupants or licensees, (v) a violation of any applicable
Environmental Law at or affecting SCC's adjacent real property by JMMC, its
officers, directors, agents, representatives, employees, contractors,
subcontractors, invitees, subtenants, occupants or licensees, or (vi)
non-compliance with any Environmental Permit at or affecting the Property by
JMMC, its officers, directors, agents, representatives, employees, contractors,
subcontractors, invitees, subtenants, occupants or licensees, (collectively, the
"JMMC Indemnified Matters"); provided, however, that JMMC Indemnified Matters
shall in no respect include any action or condition to the extent that it was
caused by one or all of the SCC Indemnitees, or their licensees, contractors,
subcontractors, invitees, subtenants or occupants.
(b) The liability of the JMMC to the SCC Indemnitees hereunder
shall in no way be limited, abridged, impaired or otherwise affected by (i) any
amendment or modification of the Purchase Agreement by or for the benefit of
SCC, unless said amendment or modification so states, (ii) the purchase of the
Property by JMMC, (iii) any exculpatory provision contained the Purchase
Agreement limiting SCC's recourse to JMMC, (iv) any applicable statute of
limitations, (v) the sale, assignment, subleasing, transfer or conveyance of all
or part of the Property or the JMMC's interests and rights in, to and under the
Purchase Agreement, (vi) the termination of the Purchase Agreement, (vii) the
release or discharge, in whole or in part, of JMMC in any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding, or (ix) any other circumstances which might otherwise
constitute a legal or equitable release or discharge, in whole or in part, of
JMMC under the Lease Agreement.
(c) The indemnification contained herein is wholly
independent of and in addition to any obligation which JMMC may
<PAGE>
have to any or all of the SCC Indemnitees as a matter of law or
regulation or under other agreement or instrument.
Section 8. Independence. The indemnifications contained herein are
wholly independent of and in addition to any obligation which the Parties may
have to each other as a matter of law or regulation or under any other agreement
or instrument.
Section 9. Governing Law. This Agreement shall be governed by,
construed in accordance with and enforceable under the laws of the State of New
York, without regard or reference to its conflict of laws and principles.
Section 10. Notices. All notices, certificates and other communications
hereunder shall be in writing and shall be either delivered personally or sent
by certified mail, postage prepaid, return receipt requested, or by Federal
Express, addressed as follows or to such other address as any party may specify
in writing to the other:
To SCC: Attn: Michael Chernago
Smith Corona Corporation
839 NYS Route 13
Cortland, New York 13045
To JMMC: J. M. Murray Center, Inc.
c/o Riehlman, Shafer and Shafer
3 Clinton Street
Tully, New York 13159-0430
Section 11. Binding Effect. This Agreement shall inure to
the benefit of and shall be binding upon the parties.
Section 12. Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 13. Amendments, Changes and Modifications. This
Agreement may not be amended, changed, modified, altered or
terminated except in a writing executed by both Parties.
Section 14. Execution of Counterparts. This Agreement may
be executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same
instrument.
Section 15. This Agreement Controlling. JMMC and SCC hereby agree that,
in the event there is a conflict between the terms of this Agreement, the Lease
and the Purchase Agreement, the terms of this Agreement shall be controlling.
Section 16. Survival. This Agreement shall survive: (i) an
extension of the Purchase Agreement and/or Lease, (ii) closing of
<PAGE>
title pursuant to the Purchase Agreement, (iii) termination of the Purchase
Agreement, (iv) sublease or assignment of the Lease, and/or (v) transfer of the
Property by JMMC.
Section 17. Recording. Either party shall have the right to
record this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
SMITH CORONA CORPORATION
By:_______________________________
Its ______________________________
J.M. MURRAY CENTER, INC.
By:________________________________
Its________________________________
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF CORTLAND)
On the _____ day of __________, 1995 personally appeared
________________________ to me personally known and known to me to be the
same person described in and who executed the foregoing instrument, and he duly
acknowledged to me that he executed the same.
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF CORTLAND)
On the ____ day of _________, 1995 personally appeared
________________________ to me personally known and known to me to be the
same person described in and who executed the foregoing instrument, and he duly
acknowledged to me that he executed the same.
------------------------
Notary Public
<PAGE>
Exhibit A
PROPOSED CONVEYANCE TO MURRAY CENTER:
BEGINNING at a point marked by a #5 rebar with plastic cap stamped "RJ STOCKWIN
PLS 049012" set in the westerly line of NEW YORK STATE ROUTE 13, said point
being in the southeasterly corner of a small cemetery, said point also being
located NORTH 83 degrees, 59 minutes, 50 seconds WEST a distance of 50.06 feet
from the centerline of the existing pavement of said NEW YORK STATE ROUTE 13,
said point in the centerline being located SOUTH 31 degrees, 33 minutes, 10
seconds WEST as measured along said centerline a distance of 1834.99 feet from
the intersection of said centerline of NEW YORK STATE ROUTE 13 and the
centerline of LIME HOLLOW ROAD;
THENCE running SOUTH 31 degrees, 14 minutes, 11 seconds WEST along said westerly
line of NEW YORK STATE ROUTE 13 and passing through a #5 rebar with plastic cap
stamped "RJ STOCKWIN/PLS 049012" found at 74.01 feet, a total distance of 653.85
feet to a point marked by a #5 rebar with plastic cap stamped "RJ STOCKWIN/PLS
049012" found in said westerly line of NEW YORK STATE ROUTE 13;
THENCE running NORTH 57 degrees, 55 minutes, 53 seconds WEST along the southerly
edge of an existing asphalt driveway, a distance of 236.00 feet to a point
marked by a #5 rebar with plastic cap stamped "RJ STOCKWIN/PLS 049012" set at an
angle point in said asphalt paving;
THENCE running SOUTH 77 degrees, 49 minutes, 00 seconds WEST along the
southeasterly line of asphalt paving a distance of 61.00 feet to a point marked
by a #5 rebar with plastic cap stamped "RJ STOCKWIN/PLS 049012";
THENCE running SOUTH 35 degrees, 39 minutes, 16 seconds WEST along the easterly
line of asphalt paving and a gravel parking lot a distance of 458.00 feet to a
point marked by a #5 rebar with plastic cap stamped "RJ STOCKWIN/PLS 049012";
THENCE running NORTH 57 degrees, 02 minutes, 34 seconds WEST along the southerly
line of the gravel parking lot a distance of 272.47 feet to a point marked by a
#5 rebar with plastic cap stamped "RJ STOCKWIN/PLS 049012";
THENCE running NORTH 31 degrees, 10 minutes, 21 seconds EAST along the westerly
line of the gravel parking lot and the westerly line of asphalt paving a
distance of 495.51 feet to a point marked by a #5 rebar with plastic cap stamped
"RJ STOCKWIN/PLS 049012";
<PAGE>
THENCE running NORTH 57 degrees, 55 minutes, 53 seconds WEST a distance of
108.00 feet to a point marked by a #5 rebar with plastic cap stamped "RJ
STOCKWIN/PLS 049012";
THENCE running NORTH 32 degrees, 00 minutes, 17 seconds EAST a distance of
579.39 feet to a point marked by a #5 rebar with plastic cap stamped "RJ
STOCKWIN/PLS 049012";
THENCE running SOUTH 57 degrees, 55 minutes, 53 seconds EAST a distance of
536.39 feet to a point marked by a #5 rebar with plastic cap stamped "RJ
STOCKWIN/PLS 049012" set for a new corner;
THENCE running SOUTH 83 degrees, 59 minutes, 50 seconds EAST and passing through
a #5 rebar with plastic cap stamped 'RJ STOCKWIN/PLS 049012" found in the
southwesterly corner of a small cemetery at a distance of 2.42 feet, a total
distance of 168.41 feet as measured along the southerly line of said small
cemetery to the PLACE of BEGINNING and CONTAINING 12.704 acres (554,379 square
feet) more or less of land.
THE ABOVE DESCRIBED PARCEL OF LAND IS ALSO SHOWN ON A SURVEY MAP
BY STOCKWIN SURVEYING DATED 02/16/95, AND ENTITLED "LANDS OF:
HSCM-10, INC., (reputed owner)" AND LABELED AS FILE NO. 9501-JMC-
R, SIGNED AND CERTIFIED BY R. JAMES STOCKWIN, PLS LICENSE NO.
049012.
<PAGE>
Exhibit B
This is Exhibit B to the Environmental Indemnification
Agreement, dated as of February 28, 1995, by and among the Smith
Corona Corporation ("SCC") and J. M. Murray Center, Inc.
SCC hereby discloses that the Property is part of a site which the New
York State Department of Environmental Conservation has listed on the New York
State Registry of Inactive Hazardous Waste Disposal Sites as the "SCM;
Cortlandville State Superfund Site", Site No. 712006. In addition, the
Department of Environmental Conservation has classified Site No. 712006 as a
"Class 2" site indicating that it is a site at which the Department believes
that the hazardous wastes present constitute a significant threat to the public
health or environmental and that action is required.
An investigation has been performed to determine the quality of the
groundwater beneath Site No. 712006, including, among other things, the quality
of the groundwater beneath the Property. The results of that investigation with
regard to the Property, as well as SCC's settlement with the governmental
authorities regarding the cleanup of the Site are set forth in the attached:
(a) Settlement Agreement, State of New York et al. v. Smith
Corona Corporation, Index No. 87 CV 0190, dated January 18, 1989.
(b) Supplemental Site Investigation Report, dated February
1990, prepared by O'Brien & Gere Engineers, Inc. for Smith Corona
Corporation.
(c) Letter Report - Phase I environmental liability
assessment, dated December 12, 1994, prepared by O'Brien & Gere
Engineers, Inc. for Smith Corona Corporation.
EXHIBIT 8.1(j)
LICENSE AGREEMENT
LICENSE AGREEMENT dated as of the ___ day of _________, 1995,
by and between SMITH CORONA CORPORATION, a __________ corporation, having an
office at _____________________________ ("Licensor"), and J.M. MURRAY CENTER,
INC., a _____________ corporation, having an office at _____________________
("Licensee").
W I T N E S S E T H:
WHEREAS, Licensor is the owner of that certain parcel of land
(the "Property") described on Exhibit A annexed hereto and the improvements
erected thereon;
WHEREAS, Licensor and Licensee have entered into that certain
Purchase and Sale Agreement dated ______________ (the "Purchase Agreement")
pursuant to which Licensee has agreed to purchase that certain parcel of land
(the "Adjoining Property") described on Exhibit B annexed hereto and the
improvements erected thereon;
WHEREAS, pursuant to the terms of the Purchase Agreement,
Licensee shall have the right to use and occupy the Adjoining Property prior to
the closing (the "Closing") of the transactions contemplated in the Purchase
Agreement; and
WHEREAS, Licensor has agreed to permit Licensee to use the
Property during its occupancy of the Adjoining Property and to continue to use
the Property following the Closing, subject to the terms and conditions of this
License Agreement.
NOW THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, Licensor and Licensee hereby agree as
follows:
1. Licensor hereby grants to Licensee, its employees and
invitees, a revocable license (the "License") to enter upon the Property for the
purpose of playing baseball, including the holding of formal or informal
baseball games which may be attended, and/or participated in, by invitees of
Licensee.
2. Licensee agrees to give to an individual designated by
Licensor not less than three business days' notice of any intended use of the
Property pursuant to this License. Within one (1) business day of Licensor's
receipt of Licensee's notice, Licensor may deny Licensee access to and use of
the Property if Licensor intends to use the Property at such time or if, in
Licensor's reasonable judgment, Licensee's use of the Property would interfere
with the maintenance or repair of the
<PAGE>
Property or the conduct of Licensor's business on the Adjoining Property.
3. Licensee agrees to abide by any rules and regulations
instituted by Licensor from time to time with respect to the Property and the
use thereof.
4. Licensor agrees to maintain and repair the Property.
Notwithstanding the foregoing, Licensee agrees to repair or restore any damage
to the Property caused by or as a result of any act or omission of Licensee, its
employees or invitees.
5. Licensee shall defend, indemnify and save Licensor harmless
from and against all claims, damages, losses and expenses (including reasonable
attorneys' fees) suffered or incurred as a result of any act or omission of
Licensee, its employees and invitees, in connection with Licensee's use of the
Property pursuant to this License. Licensee agrees to maintain, or cause to be
maintained, general liability and property damage insurance in an amount per
occurrence, of not less than ________________, naming Licensor as an additional
insured.
6. Licensee shall at all times hereafter use the Property in a
manner which shall not unreasonably interfere with Licensor's business conducted
on the Adjoining Property.
7. This License may be revoked by Licensor with or without
cause upon five (5) days notice to Licensee. Without limiting the generality of
the foregoing, if the Purchase Agreement shall terminate pursuant to its terms,
this License shall simultaneously terminate and be of no further force and
effect.
8. All notices, requests and demands to be made hereunder to
the parties hereto shall be in writing (at the addresses set forth above) and
shall be given by any of the following means (a) personal service (including,
without limitation, overnight delivery, courier or messenger services) or (b)
registered or certified, first-class Untied States mail, postage prepaid, return
receipt requested. Such addresses may be changed by notice to the other parties
given in the same manner as provided above. Any notice, demand or request sent
(x) pursuant to subsection (a) shall be deemed received upon such personal
service and (y) pursuant to subsection (b) shall be deemed received five (5)
days following deposit in the mail.
If to Licensor: Smith Corona Corporation
839 NYS 13 P.O. Box 2020
Cortland, New York 13045
Attention: W. Michael Driscoll
-2-
<PAGE>
With a copy to: Winthrop, Stimson, Putnam & Roberts
The Financial Centre
695 East Main Street
P.O. Box 6760
Stamford, CT 06904-6760
Attention: Kent Nevins, Esq.
If to Licensee: J.M. Murray Center, Inc.
Attention:______________
With a copy to: Riehlman, Shafer & Shafer
3 Clinton Street
Tully, New York 13159-0430
Attention: Rick Shafer, Esq.
9. This License shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have duly executed this
License as of the date and year first above written.
SMITH CORONA CORPORATION
By:__________________
Name:
Title:
J.M. MURRAY CENTER, INC.
By:_____________________
Name:
Title:
-3-
<PAGE>
STATE OF )
)
) ss:
)
COUNTY OF )
On the ____ day of _____________, 199__, before me
personally came _______________________ to me known, who, being by me duly
sworn, did depose and say that he resides at ____________________, that he is
the _____________ of SMITH CORONA CORPORATION, the corporation described in and
which executed the foregoing instrument, and that he has signed his name thereto
by order of the board of directors of said corporation.
------------------------------
Notary Public
STATE OF )
)
) ss:
)
COUNTY OF )
On the ____ day of _____________, 199__, before me
personally came _______________________ to me known, who, being by me duly
sworn, did depose and say that he resides at ____________________, that he is
the _____________ of J.M. MURRAY CENTER, INC., the corporation described in and
which executed the foregoing instrument, and that he has signed his name thereto
by order of the board of directors of said corporation.
------------------------------
Notary Public
-4-
<PAGE> EXHIBIT 23.1
CONSTRUCTION, OPERATION AND MAINTENANCE
OF SEWER EASEMENT AND LICENSE AGREEMENT
CONSTRUCTION, OPERATION AND MAINTENANCE OF SEWER EASEMENT
AGREEMENT (this "Agreement") made this ________ day of ___________, 1995 between
SMITH CORONA CORPORATION, Grantor, hereinafter referred to as "Owner", whether
one or more, and J.M. MURRAY CENTER, INC., Grantee, a public corporation
organized under the laws of the State of New York, having its principal office
located at ____________________________________________, hereinafter referred to
as "Grantee".
1. CONSIDERATION AND DESCRIPTION. In consideration of the sum
of Ten and 00/100 ($10.00) Dollars, and other good and valuable consideration,
receipt of which is acknowledged, Owner hereby grants, sells and conveys to
Grantee, its successors and assigns, (i) a license to use the sewer lines and
distribution box owned by Owner and located within the Easement Area and (ii) an
easement and a right-of-way for the purposes of laying, constructing, operating,
inspecting, maintaining, repairing and replacing a manhole and sewer
distribution box for the conveyance of wastewater from the real property owned
by Grantee and adjoining the Premises (the "Adjoining Property") described on
Schedule A annexed hereto, in and over lands owned by Owner situate in the
__________________________________ known and designated as Lot ________, Block
_________ and more particularly described on Schedule B annexed hereto (the
"Premises"). The "Easement Area" shall be as shown on Schedule C attached
hereto.
2. TERM OF LICENSE AND EASEMENT. (a) The license granted
herein shall be possessed and enjoyed by Grantee, its successors and assigns,
until the earlier to occur of (i) fifteen months from the date hereof or (ii)
the installation by Grantee of a separate manhole and sewer distribution box and
system within the Easement Area for the conveyance of wastewater from the
Adjoining Property over the Premises. During such license period, Grantee shall
pay Owner for Grantee's sewage usage. Such payment shall be made within ten (10)
days of Grantee's receipt of an invoice from Owner and shall be in an amount
reasonably estimated by Owner to reflect Grantee's sewage usage. Grantor shall
estimate such sewage useage by Grnatee based upon two times the water usage of
Grantee as reasonably determined by Owner.
(b) The term of the Easement granted herein shall commence on
the date hereof and shall be continue until such time as the sewer distribution
box and appurtenances installed within the Easement Areas are abandoned by
Grantee or this Agreement is terminated by the parties hereto.
3. MAINTENANCE OF IMPROVEMENTS. The sewer distribution
box and appurtenances constructed pursuant hereto shall be maintained and
operated by Grantee, its successors or
<PAGE>
assigns. Grantee shall repair any damage caused to Owner's sewer distribution
box, lines and system by the exercise by Grantee of the rights granted herein.
4. TEMPORARY CONSTRUCTION EASEMENT. During construction,
cleanup and restoration operations, Grantee shall have the right to a temporary
construction easement as laid out on a survey prepared by
____________________________, licensed land surveyors, attached hereto as
Schedule A and made a part hereof. However, after the completion of such
operations, Grantee shall have no further right to such temporary working space,
and Grantee's rights shall be limited solely to the Easement Area, and all
interceptor lines, the sewer distribution box and manhole constructed pursuant
to this Agreement shall be confined to the Easement Area.
It is understood, however, that after the completion
of such construction, Grantee shall have the right to enter the Premises of
Owner for the sole purpose of making any necessary connection or reconnection of
the Adjoining Property to the new sewer distribution and shall have the further
right to enter the Premises for the sole purpose of further work as may be
necessary to accomplish the disconnection of the Adjoining Property from the
original sewer system located on the Premises.
5. INGRESS, EGRESS AND MAINTENANCE. Subject to paragraph
below, Grantee, its employees, contractors or representatives shall have the
permanent right of ingress and egress to and from the Easement Area for the
purposes of laying, constructing, operating, inspecting, maintaining, repairing
and replacing a sewer distribution box and manholes, if they are located
therein. Such ingress and egress shall be limited to such Easement Area and to
existing public roads, if any, on the Premises. All activities of Grantee on the
Premises shall be limited to the Easement Area.
6. FENCES. Owner reserves the right to fence the whole or any
part of the boundaries of the Easement Area and the right to build fences
crossing such Easement Area provided that Owner shall install gates not less
than ______ feet in width wherever said fences shall cross the Easement Area.
Grantee, at its expense, will provide Owner with locks and keys to secure said
gates. Grantee will retain a key for its own use. Grantee shall have the right
to open said gates on the Premises whenever a crossing shall be necessary in the
construction, maintenance or operation of its sewer distribution box and
appurtenances on the Premises.
7. IMPROVEMENTS BY OWNER. Subject to the prior written consent
of Grantee, which shall not be unreasonably withheld, Owner shall have the right
to place along, across and over the Easement Area as many roads, streets,
sidewalks, passageways, electric light and power lines, water lines, sewer
lines, gas lines, telephone poles and telephone lines, and other
-2-
<PAGE>
utilities as Owner may desire, provided that said installations shall not
interfere with the sewer distribution box or its appurtenances. If any utility
line is placed parallel to the Easement Area, such line shall not be placed
directly over any sewer distribution box and connecting lines.
8. RIGHTS AND RESTRICTIONS OF OWNER. Owner shall have the
right to full use and enjoyment of the Premises except for such use as may
unreasonably interfere with the exercise by Grantee of the rights granted
herein. Owner shall not construct or permit to be constructed any house,
structure or obstruction on or over or interfering with the construction,
maintenance or other operation of any interceptor sewer or appurtenance
constructed pursuant to this Agreement. Owner further agrees that he will not
materially change the ground elevation above such interceptor sewer without the
prior written consent of Grantee, which shall not be unreasonably withheld.
9. RESTORATION OF PREMISES. After the installation of the
sewer distribution box and manhole or any subsequent maintenance thereof,
Grantee, its employees, representatives or contractors shall remove all
equipment and other property placed on the Premises by or for Grantee, fill and
level all ditches, ruts and depressions caused by construction or removal
operations, and remove all debris resulting therefrom. Grantee will generally
restore the surface of the Premises as near to its original condition as
possible where lawn areas are damaged as a result of the construction.
10. COVENANT OF OWNERSHIP. Owner covenants that he is
the owner of the Premises and has the right, title and capacity to grant the
easement and license granted herein.
11. EFFECT UPON SUBSEQUENT PARTIES. This Agreement
shall be binding upon the heirs, legal representatives, successors and assigns
of the parties hereto.
12. INDEMNITY/HAZARDOUS SUBSTANCES. Grantee shall indemnify
and hold Owner harmless from any loss, cost or expense of whatsoever nature,
including all legal fees and disbursements, resulting from the construction,
use, maintenance and/or operation of the sewer distribution box and its
appurtenances and the easement herein granted, including without limitation, all
usuage charges and/or fees inposed by any governmental and/or municipal
authority, or private company. Further, Grantee shall at no time whatsoever
dispose of, or permit to be disposed of, used Hazardous Substances. The term
"Hazardous Substances" shall mean, without limitation, any flammable, explosive
or radioactive materials, radon, asbestos, urea formaldehyde foam insulation,
polycholorinated biphenyls, oil, petroleum, petroleum products, methane,
hazardous materials, hazardous wastes, hazardous or toxic substances or related
materials, pollutants, and toxic pollutants, as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
-3-
<PAGE>
U.S.C. Sections 9601, et seq.), Hazardous Materials Transportation Act, as
amended (49 U.S.C. Sections 1801, et seq.), the Solid Waste Disposal Act as
amended by the Resource Conservation and Recovery Act, (42 U.S.C. Sections 6901,
et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Sections 2601,
et seq.), the Federal Water Pollution Control Act, as amended (33 U.S.C. 1251 et
seq.), the Oil Pollution Control Act of 1990 (33 U.S.C. 2701 et seq.), the
Occupational Safety and Health Act of 1970, as amended (29 U.S.C. Sections 651
et seq.), Article 12 of the New York State Navigation Law, Articles 17 and 27 of
the New York State Environmental Conservation Law or any other applicable
federal, state and local environmental, land use, zoning, health, chemical use,
safety and sanitation laws, statutes, ordinance and codes.
13. Owner and Grantee shall do, execute, acknowledge and
deliver all further acts, deeds, conveyances, assignments, transfers and
assurances as the other shall from time to time reasonably require for carrying
out the intention or facilitating the performance of the terms of this Agreement
or for the recording of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
OWNER:
SMITH CORONA CORPORATION
By:________________
Name:
Title:
GRANTEE:
J.M. MURRAY CENTER, INC.
By:_____________________
Name:
Title:
-4-
<PAGE>
STATE OF )
)
) ss:
)
COUNTY OF )
On the ___ day of ____________, 199___, before me personally
came __________________ to me known, who, being by me duly sworn, did depose and
say that he resides at _____________________, that he is the _____________ of
SMITH CORONA CORPORATION, the corporation described in and which executed the
foregoing instrument, and that he has signed his name thereto by order of the
board of directors of said corporation.
--------------------------------
Notary Public
STATE OF )
)
) ss:
)
COUNTY OF )
On the ___ day of ____________, 199___, before me personally
came __________________ to me known, who, being by me duly sworn, did depose and
say that he resides at _____________________, that he is the _____________ of
J.M. MURRAY CENTER, INC., the corporation described in and which executed the
foregoing instrument, and that he has signed his name thereto by order of the
board of directors of said corporation.
--------------------------------
Notary Public
-5-
<PAGE>
SCHEDULE A
[LEGAL DESCRIPTION OF ADJOINING PROPERTY]
-6-
<PAGE>
SCHEDULE B
[LEGAL DESCRIPTION OF PREMISES]
-7-
<PAGE>
SCHEDULE C
[DIAGRAM SHOWING EASEMENT AREA]
-8-
<PAGE> EXHIBIT 23.2-2
EASEMENT, LICENSE & MAINTENANCE AGREEMENT
THIS EASEMENT, LICENSE AND MAINTENANCE AGREEMENT (this
"Agreement") is made and entered into as of the ___ day of _________________,
1995, by and between SMITH CORONA CORPORATION, a Delaware corporation
("Grantor") and J.M. MURRAY CENTER, INC., a public corporation organized under
the laws of the State of New York ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantor is the owner of that certain real property
located in the State of New York, County of Cortland and more particularly
described on Exhibit A annexed hereto and made a part hereof (the "Servient
Estate");
WHEREAS, Grantor is also the owner of that certain real
property immediately adjacent to, and contiguous with, the Servient Estate which
property is also located in the State of New York, County of Cortland and more
particularly described on Exhibit B annexed hereto and made a part hereof ("the
Dominant Estate");
WHEREAS, Grantor and Grantee have simultaneously with
execution of this Agreement entered into that certain Purchase and Sale
Agreement dated the date hereof (the "Purchase Agreement") pursuant to which
Grantee agreed to purchase the Dominant Estate from Grantor in accordance with
the terms thereof;
WHEREAS, pursuant to the terms of the Purchase Agreement,
Grantee has the right to occupy and use the Dominant Estate during the period
(the "Contract Period") commencing on the date hereof through and including the
date on which title to the Servient Estate is transferred by Grantor to Grantee;
WHEREAS, a fire protection water supply system (the "System")
currently exists on the Servient Estate which System provides water to both the
Dominant Estate and the Servient Estate for purposes of fire protection and
control;
WHEREAS, Grantee desires to utilize the System together with
Grantor during and after the Contract Period;
WHEREAS, in order for Grantee to assure the continued use of
the System, Grantee requires (a) an easement over the Servient Estate (i) for
access to the supply lines identified on Exhibit C servicing the Dominant Estate
(the "Supply Lines") and the water tower identified on Exhibit C (the "Water
Tower") and
<PAGE>
(ii) to transport water from the Water Tower over the Supply Lines to the
Dominant Estate and (b) a license to remove water from the Water Tower for
purposes of fire protection or control (the Supply Lines and the Water Tower
collectively, the "Easement Areas"); and
WHEREAS, Grantor has agreed to permit Grantee to use the
System and to grant such easements and license on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by Grantor, and in consideration of the mutual covenants,
promises and agreements contained herein, Grantor and Grantee hereby agree as
follows:
GRANT OF EASEMENT
1. Subject to the terms and conditions hereinafter set forth,
Grantor does hereby give, grant and convey to Grantee, its successors and
assigns:
a. a non-exclusive easement to permit access over and
across those portions of the Servient Estate identified on Exhibit C as (i) the
Access Easement Area and (ii) the Easement Area. Such easements are granted as
an appurtenance to and for the benefit of the Dominant Estate; and
b. a license, coupled with an interest, to remove
water from the Water Tower for purposes of fire protection or control on the
Dominant Estate not in excess of a percentage of the water in the Water Tower at
any one time. This percentage is to be agreed to by the parties within ten (10)
days from the date of the Purchase Agreement.
2. Grantee shall maintain, repair and replace the Supply Lines
at Grantee's sole cost and expense. All such maintenance, repairs, and
replacements shall be performed in a lien-free, good and workmanlike manner and
in accordance with applicable laws, rules and regulations. Grantee acknowledges
that Grantor shall have no obligation whatsoever with respect to the
maintenance, repair or replacement of the Supply Lines. Grantee shall give
Grantor thirty (30) days' prior notice (except in the event of an emergency) of
any intended replacement of the Supply Lines and shall deliver to Grantee plans
and specifications detailing the intended work. In no event shall any of the
Supply Lines be relocated outside of the Easement Areas without Grantor's prior
written consent which consent may be withheld by Grantor in its sole and
absolute discretion. If Grantee shall fail to so maintain the Supply Lines,
Grantor shall have the right to discontinue the supply of water from the Water
Tower to the Supply Lines. In the event Grantor exercises its right to so
discontinue the supply of water, Grantor shall not be liable for any damage to
the improvements or property located on
-2-
<PAGE>
the Dominant Estate by virtue of the lack of water from the Water Tower.
3. Grantor, its successors and assignees, shall at all times
hereafter use the Easement Area and the Access Easement Area in a manner which
shall not unreasonably hinder, burden or prevent the use and enjoyment by
Grantee of the Easement Areas and the Access Easement Areas. Grantee, its
successors and assigns, shall at all times use the Easement Area and the Access
Easement Area in a manner which shall not unreasonably hinder, burden or prevent
the use and enjoyment by Grantor of the Easement Area, the Access Easement Area,
the Servient Estate and the System.
4. Grantor and Grantee further agree that except as expressly
provided herein to the contrary, Grantor shall have the right, but no
obligation, to maintain, repair and replace the System (including, without
limitation, capital repairs and/or improvements). Notwithstanding anything in
this Agreement to the contrary, Grantor shall have no liability whatsoever for
the operation of or the failure of the operation of the System, nor shall
Grantor have any liability whatsoever for its failure to maintain, repair or
replace the System. If Grantor fails to so maintain, repair or replace the
System, Grantee shall have the right, but not the obligation, upon thirty (30)
days' prior written notice to Grantor (or without prior notice in the event of
an emergency), to enter upon the Servient Estate and perform such maintenance,
repair or replacement at Grantee's sole cost and expense.
5. Grantee shall reimburse Grantor for twenty percent (20%) of
all costs and expenses incurred by Grantor in connection with the operation,
maintenance and repair of the System as such items are listed on Exhibit D
annexed hereto and shall also include the cost of casualty and liability
insurance, a reasonable administrative fee not to exceed five percent (5%) of
the total cost of the operation, maintenance and repair of the System. Grantor
shall deliver to Grantee invoices on a quarterly basis for such costs, payment
of which invoices shall be remitted by Grantee within ten (10) days of Grantee's
receipt of such invoice. If Grantee fails to pay such amount within the time
provided, Grantor shall have the right to terminate this Agreement without any
liability to Grantee.
6. In addition to all other amounts due to Grantor pursuant to
this Agreement, Grantee shall indemnify Grantor and save Grantor harmless from
all liabilities, obligations, damages, penalties, claims costs and expenses,
including reasonable attorneys' fees and disbursements paid, suffered or
incurred as a result of any act or omission of Grantee, its tenants, agents,
employees, business invitees and guests in connection with Grantor's use of the
Easement Area, the Access Easement Area and the System.
-3-
<PAGE>
* Allocation of liability insurance to be agreed to by Grantor
and Grantee within ten (10) days from the date of the Purchase Agreement.
7. Grantor shall have the right to terminate this Agreement
upon not less than twelve (12) months' prior notice to Grantee if (i) the use of
the System by Grantor and Grantee pursuant to the terms and conditions of this
Agreement are no longer commercially practical for Grantor as determined by
Grantor in its sole discretion, (ii) Grantor's insurance provider, as a result
of the existence of this Agreement, increases the insurance premiums payable by
Grantor or cancels or threatens to cancel Grantor's insurance coverage, or (iii)
Grantor shall cease to use the System.
8. This Agreement shall run with and be a burden upon the
Servient Estate and shall run with and be benefit to the Dominant Estate.
9. Grantor and Grantee shall execute, acknowledge and deliver
all further acts, deeds, conveyances, assignments, transfers and assurances as
the other party shall from time to time reasonably require for carrying out the
intention or facilitating the performance of the terms of this Agreement or for
the recording of this Agreement.
10. Any notice under this Agreement must be in writing and
sent by registered or certified mail to the last address of the party to whom
such notice is to be given, as designated by such party in writing.
11. This Agreement shall be governed and interpreted under the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
GRANTOR:
SMITH CORONA CORPORATION
By:________________________
Name:
Title:
J.M. MURRAY CENTER, INC.
By:______________________
Name:
Title:
-4-
<PAGE>
STATE OF )
)
) ss:
)
COUNTY OF )
On the ____ day of __________, 199__, before me
personally came __________________ to me known, who, being by me duly sworn, did
depose and say that he resides at _____________________, that he is the
_________________ of J.M. MURRAY CENTER, INC., the corporation described in the
foregoing instrument, and that he signed his name thereto by order of the board
of directors of said corporation.
---------------------------
Notary Public
STATE OF )
)
) ss:
)
COUNTY OF )
On the ____ day of __________, 199__, before me
personally came __________________ to me known, who, being by me duly sworn, did
depose and say that he resides at _____________________, that he is the
_________________ of SMITH CORONA CORPORATION, the corporation described in the
foregoing instrument, and that he signed his name thereto by order of the board
of directors of said corporation.
---------------------------
Notary Public
-5-
<PAGE>
EXHIBIT A
[LEGAL DESCRIPTION OF SMITH CORONA PROPERTY]
-6-
<PAGE>
EXHIBIT B
[LEGAL DESCRIPTION OF J.M. MURRAY PROPERTY]
-7-
<PAGE>
EXHIBIT C
[DIAGRAM OF SERVIENT ESTATE SHOWING EASEMENT AREAS]
-8-
<PAGE> Exhibit 25
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
- ------------------------------
STATE OF NEW YORK, et al.,
Plaintiffs, SETTLEMENT AGREEMENT
v.
Index No. 87 CV 0190
SMITH CORONA CORPORATION, (Munson)
Defendant.
- -------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions......................................... 3
2. Payment............................................. 6
3. Dismissal of Related Litigation..................... 8
4. On-Site Investigation and Remediation............... 8
5. Review of Remedial Plan............................ 10
6. Technical Impracticability and New
Technology................................ ....... 10
7. Cortlandville's Lime Hollow Road Water Supply
Well.............................................. 11
8. Acknowledgement.................................... 12
9. Contractors........................................ 12
10. Reports............................................ 13
11. Approvals.......................................... 14
12. Access to Data at the Site......................... 14
13. Trade Secret Confidentiality....................... 15
14. Publicity.......................................... 16
15. Contribution Protection............................ 16
16. Releases from Liability............................ 17
17. Covenant Not to Sue................................ 19
18. Reopener........................................... 20
19. Indemnification.................................... 22
20. Delisting of Site.................................. 22
21. Continuing Liability............................... 23
-i-
<PAGE>
22. Waiver of Notice................................... 23
23. State Reservation of Rights........................ 23
24. Force Majeure...................................... 24
25. Environmental Audit................................ 25
26. Dispute Resolution................................. 26
27. Enforcement of Agreement........................... 27
28. Costs.............................................. 27
29. Notices............................................ 27
30. Public Participation............................... 28
31. Separability....................................... 29
32. Applicable Law..................................... 29
33. Settlement Date.................................... 29
34. Authority.......................................... 29
35. Liability.......................................... 29
36. Appendices......................................... 30
37. Modifications...................................... 30
38. Admissibility of Data.............................. 30
-ii-
<PAGE>
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
- ------------------------------------
STATE OF NEW YORK, et al.,
Plaintiffs, SETTLEMENT AGREEMENT
v.
Index No. 87 CV 0190
SMITH CORONA CORPORATION, (Munson)
Defendant.
- -------------------------------------
The STATE OF NEW YORK in its capacity as a sovereign body politic, as
representative of the citizens and residents of the State, and as Trustee of the
natural resources of the State of New York; the COUNTY OF CORTLAND and the
CORTLAND COUNTY BOARD OF HEALTH, public agencies organized under the laws of the
State of New York; the TOWN OF CORTLANDVILLE, a municipal corporation authorized
under the laws of the State of New York; the CITY OF CORTLAND, a municipal
corporation organized under the laws of the State of New York, acting through
the WATER BOARD OF THE CITY OF CORTLAND; and the SMITH CORONA CORPORATION, a
Delaware Corporation authorized to do business in the State of New York, hereby
recite as follows:
WHEREAS, the Attorney General of the State of New York filed this
action alleging claims pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. ss. 9601 et seq., as
amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA)
Public Law No. 99-499, 100 Stat. 1613; Article 17, Titles 5 and 8 and Article
27, Titles 13 and 9 of the New York State Environmental Conservation Law (ECL);
the New York Real Property Actions and
<PAGE>
Proceedings Law (RPAPL) ss. 841; and the New York State common laws of nuisance
and restitution, in which Pleadings the Cortland County Board of Health
("County"), the City of Cortland ("City") acting through the Water Board of the
City of Cortland, and the Town of Cortlandville ("Town") joined as plaintiffs;
WHEREAS, the Pleadings seek damages and other relief, including the
recovery of response costs that allegedly have been and will be incurred by the
State, the County, the City, and the Town and the recovery of damages for
alleged damage to natural resources resulting from alleged releases and
threatened releases of hazardous substances and hazardous wastes as defined in
CERCLA ss. 9601(14) and ECL ss. 27-1301(l) ("Hazardous Substances") (including
specifically Trichloroethylene, 1,1,1 Tricholoroethane,
Trans-l,2-dichloroethene, and xylene) from the facility and property owned by
the Smith Corona Corporation ("Smith Corona") at Route 13 South in the Town of
Cortlandville;
WHEREAS, the site has been designated an inactive hazardous waste
disposal site (Registry No. 712006) by the New York State Department of
Environmental Conservation ("DEC") pursuant to ECL ss. 27-1305 based on
conditions at the site which the State alleges pose a significant threat to the
environment;
WHEREAS, Smith Corona disputes the allegations and claims made by the
State, the County, the City, the Town, and each of them, and Smith Corona has
moved to dismiss the Pleadings, which Motion has not been determined by the
Court, and each party understands that entering into this Settlement Agreement
shall not be construed in any way as an admission of liability for any
<PAGE>
purpose, nor an acknowledgement that the alleged releases constitute a
significant or substantial and imminent threat to the environment or an
assumption of responsibility for the conditions present at the site or off-site,
which Smith Corona expressly denies; and that this Agreement is a compromise and
full settlement of claims, and that payment of any monies hereunder is intended
by Smith Corona merely and solely as an expedient to terminate litigation and to
avoid future litigation expense, and, this Agreement is intended by the
plaintiffs to expedite remediation and minimize damage to the environment; and
that payment and acceptance of monies hereunder are not acquiescence by any
party in the claims and allegations of any other party; nor shall the fact of
participation in this agreement be used by a party against any other party in
any judicial or administrative proceeding except to enforce the terms of the
Agreement.
NOW, THEREFORE, Smith Corona, and the State, the County, the City, and
the Town enter into this Agreement upon the following terms and conditions:
1. Definitions
Unless otherwise explicitly stated, the following definitions shall
control the meaning of the terms used in this Settlement Agreement (hereinafter
"Agreement"):
(a) "Hazardous Substances" - means those substances referred
to as hazardous substances in CERCLA ss. 9601(14) and as hazardous wastes in ECL
ss. 27-1301(l), and including specifically Trichloroethylene, 1,1,1
Trichloroethane, Trans-l,2-dichloroethene, and xylene, to the extent
those substances originate at the site.
(b) "Smith Corona" or "Releasees" - means the Smith Corona
Corporation, its parents, predecessors, successors, affiliates and subsidiaries,
including officers, representatives, and employees.
(c) "Plaintiffs" - means the State of New York, the County of
Cortland and the Cortland County Board of Health, the City of Cortland and the
Water Board of the City of Cortland, and the Town of Cortlandville.
(d) "Contractors" - means the person(s) retained by Smith
Corona to undertake and implement its obligations under this Agreement, the Work
Plan or the Remedial Plan.
(e) "Site" - means the property owned and operated by Smith
Corona at Route 13 South in the Town of Cortlandville, County of Cortland, State
of New York, as more particularly defined by the boundary lines on the diagram
and legal description attached as Exhibit A.
(f) "Off-Site" - means any property other than the Site which
has allegedly become contaminated with or affected by Hazardous Substances which
are alleged to have migrated from or originated on, or to have been released
from or potentially released to the environment at or from, the Site.
(g) "Release" - shall have the meaning as in CERCLA ss.
9601(22) when used in the context of a discharge of contaminants, but shall have
the meaning of a relinquishment of a right, claim or privilege when used in the
context of claims of liability.
<PAGE>
(h) "Settling Parties" - means the Plaintiffs and
Smith Corona.
(i) "State" - means the State of New York and all of its
departments, divisions and bureaus, including specifically the New York State
Department of Law ("DOL") and the Attorney General, the New York State
Department of Environmental Conservation ("DEC") and its Commissioner, the New
York State Department of Health ("DOH") and its Commissioner.
(j) "Municipal Plaintiffs" - means the County of Cortland and
the Cortland County Board of Health, the City of Cortland and the Water Board of
the City of Cortland, and the Town of Cortlandville.
(k) "Work Plan" - means that program implemented by Smith
Corona and approved by the State for the investigation of conditions at the
Site.
(l) "Settlement Date" shall be the date this Agreement
is approved by the Court.
(m) "Site Investigation" means a detailed investigation
conducted by Smith Corona of the environmental conditions existing at the Site.
(n) "Off-Site Investigation" - means a thorough investigation
of contamination and environmental conditions in the aquifer Off-Site (as
defined in paragraph "f" above), and, if necessary, remediation of any
contamination which is detected by the investigation.
(o) "Remedial Plan" - means a program approved by the
State and carried out by Smith Corona for the treatment,
<PAGE>
containment or removal of Hazardous Substances identified by the
Work Plan at the Site.
2. Payment
(a) Smith Corona will pay, on behalf of Releasees, the
sum of One Million Dollars ($1,000,000.00) to Plaintiffs to be
deposited into a fund (as described in paragraph (b), below) as
follows:
Settlement Date, plus ten days $ 600,000.00
("first payment"):
Settlement Date, plus 375 days $ 400,000.00
-------------
("second payment")
TOTAL $1,000,000.00
Payments made under this paragraph are not, and shall not be considered as,
payments of a civil or criminal fine or penalty. Said payments will be made
subject to the following terms and conditions:
(b) A fund shall be created and titled the Otter/Dry Creek
Reimbursement, Assessment and Remediation Fund ("Fund").
The Fund shall be created for:.
(i) Funding a thorough Off-Site environmental
contamination investigation;
(ii) Funding an investigation of other potential
sources of Off-Site contamination;
(iii) Funding remedial action, if necessary, of
Off-Site conditions that have not been or will not otherwise be
adequately addressed;
(iv) Reimbursing the Municipal Plaintiffs for
their costs and expenses.
<PAGE>
(c) Simultaneously with the entry of this Agreement,
Plaintiffs shall enter into a separate agreement among themselves under which an
allocation of the money paid by Smith Corona Corporation shall be made. That
agreement shall provide, inter alia, that a portion of the funds be allocated
for implementation of Off-Site Investigation and remediation work, a portion
shall be paid to the City of Cortland to partially reimburse it for the cost of
constructing its air stripper, and that at least $135,000 of the aforesaid
payment shall be applied to costs or expenses incurred by the Town of
Cortlandville.
(d) Plaintiffs shall implement the Off-Site Investigation/
remediation work. The Settling Parties have received information that other
entities or individuals may be responsible for contributing contaminants to the
Off-Site area. If the Off-Site Investigation indicates that there are parties
potentially responsible for Off-Site environmental contamination, Plaintiffs may
take appropriate action to seek contributions from these parties to the Fund.
The Fund shall not be used for actions taken or to be taken at the Smith Corona
Site except for monitoring compliance with the Work plan.
(e) All monies held by the Fund shall be retained in an
interest-bearing account, and accrued interest shall be paid to the Fund.
(f) Except as provided in Section 2.(c), the Plaintiffs shall
provide notice to Smith Corona and an opportunity to comment (of no less than 15
days) on all proposed Off-Site investigatory and remedial activities causing
<PAGE>
expenditures of Fund monies. The notices to Smith Corona shall reasonably
describe the purposes of the proposed expenditure and the basis for the
proposal, and shall reference or be accompanied by copies of all non-privileged
documents relied upon by the Plaintiffs in deciding to make the proposal. The
Plaintiffs shall reasonably consider the comments of Smith Corona.
(g) All expenditures of Smith Corona's contributions to the
Fund not accounted for under paragraph (c) of this section shall be necessary,
cost-effective, and not inconsistent with the National Contingency Plan (NCP)
created by CERCLA ss. 105, 42 U.S.C. ss. 9605, and as defined by 40 CFR Part
300. The Plaintiffs represent that all costs incurred by them for which a claim
is made pursuant to paragraph (b) of this Section were necessary,
cost-effective, and not inconsistent with the NCP with regard to State
expenditures and consistent with the NCP with regard to the Municipal Plaintiffs
expenditures.
3. Dismissal of Related Litigation
The action styled State of New York, et al. v. HSCM-20,
Inc., 86 CV-1404, commenced by the Plaintiffs in the United States District
Court, Northern District of New York, shall be dismissed with prejudice by the
Plaintiffs upon entry of this Agreement by the court clerk.
4. On-Site Investigation and Remediation
(a) Smith Corona has carried out an investigation of
the distribution of Hazardous Substances alleged to be present at
the Site and has undertaken initial remediation of the Site.
Smith Corona submitted a Site Investigation and Interim Remedial
<PAGE>
Action Report which discussed the Site's history and reported the results of all
investigations completed as of the date of the Report and described the initial
remedial measures taken at the Site. Simultaneously with the submission of the
Site Investigation and Interim Remedial Action Plan Report, Smith Corona
submitted a Focused Feasibility Study Report which reviewed remedial options for
the Site based on all available data and selected the remedial measures to be
undertaken at the Site. Smith Corona also submitted a Supplemental Site
Investigation Work Plan which described additional investigatory work necessary
to complete the investigation of the Site. The additional investigatory work may
be carried out concurrently with the remedial measures. Copies of the Site
Investigation and Interim Remedial Action Plan Report, the Focused Feasibility
Study Report and the Supplemental Site Investigation Work Plan are attached to
this Agreement as Appendices 1A, 1B and 2, respectively, and are incorporated
herein by reference.
(b) The Remedial Plan includes a schedule for the
implementation of the remedial and additional investigatory work. The schedule
provides for a Supplemental Investigatory Report to be submitted by Smith Corona
which shall discuss the results of the supplemental investigation and which may
make recommendations for additional remedial work, depending upon the results of
the supplemental investigation. Disputes arising under this paragraph shall be
resolved in accordance with the provisions of Section 26, Dispute Resolution. A
copy of the Supplemental Investigatory Report shall be attached to this
Agreement as Appendix 3 when completed and shall be incorporated
herein by reference.
5. Review of Remedial Plan
The Plaintiffs have reviewed the Remedial Plan in detail and conclude
as follows:
(a) The Remedial Plan is approved as technically sound and is
a legally appropriate response to Hazardous Substances alleged to have been
released at the Site; and
(b) Performance of the Remedial Plan is necessary and
consistent with the National Contingency Plan.
6. Technical Impracticability and New Technology
(a) The groundwater extraction and treatment system to
be installed by Smith Corona pursuant to this Agreement shall be operated for a
minimum of three (3) years. After the initial three year operational period,
Smith Corona may petition the State to modify one of more of the operational or
cleanup standards set forth in the Work Plan based on a demonstration that
achievement of the operational or cleanup standard(s) using the remedial system
approved in the Work Plan is technically impracticable from an engineering
perspective, or that the standard of performance which is being achieved by, or
is the goal of, the remedial system may be equally achieved through the use of
another method or approach or by new technology.
(b) The State may review and consider the information in the
Petition submitted pursuant to paragraph (a) of this Section, and make a
determination, in accordance with applicable laws and regulations in effect at
the time of the Petition.
<PAGE>
(c) Smith Corona may challenge the State's determination under
paragraph (b) of this Section in accordance with the Dispute Resolution
provisions of Section 26 of this Agreement.
(d) In the event that the State determines that any Petition
submitted pursuant to paragraph (a) of this Section shall be granted in whole or
in part, it shall be acting on behalf of all Plaintiffs, who shall be kept
informed by the State, of actions being taken under this provision.
7. Cortlandville's Lime Hollow Road Water Supply Well
(a) In the event that Smith Corona can establish that
the installation or operation of Cortlandville's Lime Hollow Road water supply
well interferes with the effectiveness or efficiency of Smith Corona's proposed
Remedial Plan and that such interference has caused or will cause Smith Corona
to expend additional sums over and above its demonstrated baseline operating
costs or to expend costs which Smith Corona would not have had to expend but for
the interference of the Lime Hollow Road Well, the Town of Cortlandville shall,
at its option, either modify the operation of its water supply system to
eliminate the interference with Smith Corona's Remedial Plan or reimburse Smith
Corona for reasonable additional costs incurred by Smith Corona due to the
operation of Cortlandville's Lime Hollow Road well for the duration of the
operation of the remedial treatment system. Any claims for reimbursement of
additional costs by Smith Corona under this paragraph shall include all data
relied on by Smith Corona to assert its claim.
<PAGE>
(b) By entering into this Agreement, the Town of Cortlandville
covenants not to construct any additional water supply wells adjacent to or in a
proximity in which the well(s) may impact or be impacted by the remedial system
at the Site until DEC certifies that Smith Corona has fulfilled all of the
requirements of the Remedial plan.
8. Acknowledgement
(a) Each of the Plaintiffs agrees that in any civil, judicial,
or administrative proceeding instituted by any person or entity against any of
the Settling Parties, or instituted by any of the Settling Parties against any
other person or entity, arising from or relating to activities carried out under
the Work Plan or Remedial Plan or pursuant to Section 2.(d), each will
acknowledge the appropriateness of the Work Plan and Remedial Plan, that both
Plans are consistent with the NCP, and that the Plans fully and adequately
address the concerns raised by each of the Settling Parties.
(b) Each of the Plaintiffs agrees to notify the U.S.
Environmental Protection Agency in writing of this Agreement and to acknowledge
that the Work Plan and Remedial Plan are appropriate, are consistent with the
NCP, and that the Plans fully and adequately address hazardous substance
conditions alleged to exist at the Site.
9. Contractors
The Remedial Plan will be carried out by Contractors or Subcontractors,
chosen by Smith Corona and approved by the State, and who are qualified to
perform and implement the technical,
<PAGE>
engineering and analytical obligations of the Remedial Plan for which each such
Contractor or Subcontractor is retained.
10. Reports
(a) Smith Corona shall provide the Plaintiffs with monthly
reports (on the first business day of each month) detailing the progress made in
the performance of the Remedial Plan and including all data received by Smith
Corona during the preceding month. Such reports shall be mailed to the
designated representatives of the Parties.
(b) The obligation to file monthly reports shall continue
until the requirements of the Remedial Plan have been fulfilled. Such monthly
reports shall contain all data generated hereunder related to activity at the
Site pursuant to the Work Plan or Remedial Plan. The State shall notify Smith
Corona as soon as possible, and no later than ten (10) working days after
submission of any report, of any concerns with or objections to the report that
the Plaintiffs may have. The State's comments on the reports shall include all
comments submitted by or on behalf of Plaintiffs.
(c) During the Off-Site Investigation and/or remediation, the
Plaintiffs shall make periodic reports to the public regarding the investigation
and/or remedial work that has taken place and that is planned and, in addition,
shall hold annual public meetings to report on the investigation and/or
<PAGE>
remedial work and to solicit comments from the public.
11. Approvals
This Agreement shall act as the sole required authorization
and approval for the implementation and operation of the Work
Plan or Remedial Plan.
12. Access to Data at the Site
(a) Each of the Parties hereto shall have access to, and shall
share, all data, field notes, logs and chemical analyses generated, previously
generated, or considered by each of them or their Contractors, in the
performance of their obligations under the Work Plan or Remedial Plan, or in
carrying out activities using Fund monies.
(b) On or after the Settlement Date, the Plaintiffs and their
employees, contractor and consultants shall have authority to enter the Site, at
reasonable times and upon reasonable notice, for the purpose of monitoring and
overseeing the performance of the Work or Remedial Plan. Such authority includes
conducting sampling for comparative analysis or other actions reasonably
calculated to assess environmental conditions at the Site, and including the
right to obtain split samples of all substances and materials sampled by Smith
Corona pursuant to this Settlement Agreement, provided that Smith Corona is
notified of the analyses the Plaintiffs intend to perform and is provided
one-half of any samples obtained and a copy of the analytical results thereon,
and provided that such activity on the Site does not interfere with the
performance of the Work or Remedial Plan. As used herein, "split samples" shall
mean whole samples divided into aliquots to be tested by the Plaintiffs
for the purpose of comparative analysis.
(c) Smith Corona shall give at least five working days notice
to Plaintiffs prior to the commencement of any excavating, drilling, sampling or
remedial activity at the Site.
13. Trade Secret Confidentiality
(a) In performing this Agreement, Smith Corona may disclose to
the Plaintiffs certain information which Smith Corona considers to be
confidential information because it constitutes a trade secret or other
privileged matter. Such information shall be designated as "confidential" by
Smith Corona or its representatives. Confidential information shall not include:
the terms and conditions of this Agreement, the Work or Remedial Plans, all
samples obtained pursuant to the Work or Remedial Plans, test results analyses,
and technical reports required pursuant to this Agreement.
(b) With respect to information designated as
"confidential", the Plaintiffs agree at all times:
(i) Not to disclose to others, except as required by
law, any of the confidential information to which the parties, or their
employees, contractors, subcontractors parties, or their employees, or
agents may gain access as a result of this Agreement; and
(ii) To reward this provision as an assertion of
confidentiality pursuant to the Freedom of Information Law, Public
Officer's Law ss. 87 et seq. This provision shall survive termination
of this Agreement.
<PAGE>
14. Publicity
The Municipal Plaintiffs shall provide reasonable notice to Smith
Corona by telephone in advance of any press conference or release concerning the
subject matter of this Agreement arranged, or held by, any of the Municipal
Plaintiffs.
15. Contribution Protection
(a) Smith Corona's payments and implementation of a Work or
Remedial Plan shall not be deemed a waiver of Smith Corona's right to
contribution from any other person or entity other than Plaintiffs, nor do the
payments, Work Plan, Remedial Plan or this Agreement, preclude Smith Corona from
pursuing claims for contribution or indemnification against any party
responsible for the incurrence of investigatory or remedial expenditures to it
or damages to the natural resources in the Otter Creek/Dry Creek Aquifer.
(b) Further, subject only to Smith Corona's continued
compliance with the terms of this Agreement, Smith Corona shall be deemed to
have resolved its alleged liability to the State, the County, the City, and the
Town, and Smith Corona shall not be liable to them, or any of them, for any
claim for contribution or any obligation or payment in addition to the amount
paid pursuant to this Agreement. Smith Corona shall also be protected against
any claim for contribution which might arise if the law of joint and several
liability is applied in any litigation relating to any matters that are the
subject of this Agreement. To this end, if in any action brought by one or more
of the Plaintiffs against an entity other than Smith Corona relating to any
matters that are the subject of this Agreement, any court of
competent jurisdiction enters a final judgment requiring
Smith Corona to pay an amount in any way related to the subjects of this
Agreement in addition to the amounts paid or obligated to be
paid hereunder, then the amount of such judgment shall be adjusted so that Smith
Corona shall not be required to pay all or any part of said additional amount.
(c) The provisions of this Section shall not apply to third
party claims for property damage, personal injury or wrongful death, nor shall
this Section apply to claims brought by the State under the authority of Section
18. Nothing in this paragraph shall in any way diminish the protections provided
to Smith Corona by paragraph (b) of this section.
(d) This provision shall survive termination of this
Agreement.
16. Releases from Liability
(a) Effective upon approval of this Agreement by the Court,
and except as provided in Section 18, Reopeners, this Agreement shall constitute
a full discharge and release by the Plaintiffs of Releasees of all claims of
whatsoever kind or character, including, without limitation, claims for property
damage, natural resources damage, nuisance, public nuisance, nuisance per se,
trespass, or statutory violations and specifically including, without
limitation, claims relating to Plaintiffs' public water supply wells, whether or
not such wells are in existence on the Settlement Date, whether civil or
criminal, or for damages, penalties, fees or fines which arise
<PAGE>
out of or relate to (i) any activities alleged, or which if known by Plaintiffs
could have been alleged, in the Complaint, (ii) the lawful, non-negligent
implementation of the investigation and approved Work Plan or Remedial Plan at
the Site, or (iii) any alleged release or threat of release of a substance,
including a Hazardous Substance, from or at the Site which is (A) alleged or
which, if known by Plaintiffs, could have been alleged in the complaint, (B)
addressed by the Work Plan or Remedial Plan, (C) detected at the Site or
Off-Site as of the Settlement Date, or (D) capable of being remediated by the
remedial measures carried out or committed to by Smith Corona or others as of
the Settlement Date, or those to be carried out pursuant to the Remedial Plan or
funded wholly or partially by any contribution made by Smith Corona pursuant to
this Agreement, from the beginning of time.
(b) The application of the foregoing release to the claims
made in the Seventh Cause of Action of the Complaint (public nuisance), is, in
addition, contingent upon completion by Smith Corona of the Remedial Plan.
(c) Nothing herein is to be regarded as a waiver of any claims
for response costs or natural resource damages which Plaintiffs or Smith Corona
may have against persons not parties to this Agreement.
(d) This provision shall survive termination of this
agreement.
17. Covenant Not to Sue
(a) Effective on the Settlement Date, and contingent only upon
Smith Corona's compliance with its payment obligations under this Agreement, the
Plaintiffs hereby covenant not to sue, execute judgment, or take any judicial or
administrative action under federal or State common law, equity jurisdiction, or
statutes against Releasees which arises out of or relates to, or may in the
future arise out of or relate to, (i) any activities alleged, or which, if known
by Plaintiffs, could have been alleged, in the Complaint, (ii) the lawful,
non-negligent implementation of the investigation and approved Remedial Plan at
the Site, or (iii) any alleged release or threat of release of a substance,
including a Hazardous Substance, from or at the Site which is (A) alleged or
which if known by plaintiffs could have been alleged in the Complaint, (B)
addressed by the Work Plan or Remedial Plan, (C) detected at the Site or
Off-Site as of the Settlement Date, (D) or capable of being remediated by the
remedial measures carried out or committed to by Smith Corona or others as of
the Settlement Date, or those to be carried out pursuant to the Work Plan or
Remedial Plan or funded wholly or partially by any contribution made by Smith
Corona pursuant to this Agreement, from the beginning of time.
(b) The continuing application of the foregoing covenant not
to sue to the claims made in the Seventh Cause of Action of the Complaint
(public nuisance), is, in addition, contingent upon the completion by Smith
Corona of the remedial measures defined in the Remedial Plan.
<PAGE>
(c) Effective on the Settlement Date, the Plaintiffs hereby
covenant not to sue, execute judgment, or take any judicial or administrative
action under federal, State or local common law, equity jurisdiction, statutes
or ordinances, against Releases which arise out of or relate to, or may in the
future arise out of or relate to, any alleged release of Hazardous Substances at
or from the Site which occurred prior to Settlement Date, upon the Town of
Cortlandville's Lime Hollow Road water supply well.
(d) So long as the foregoing Release and Covenant Not to Sue
remain in effect, Smith Corona hereby releases and forever discharges the
Plaintiffs and their employees and agents from any and all claims and
counter-claims raised and which could, if known, have been raised by Smith
Corona in this litigation.
(e) Nothing herein is to be regarded as a waiver of any claims
for response costs or natural resource damages which Plaintiffs or Smith Corona
may have against persons not a party to this Agreement.
(f) This provision shall survive termination of this
Agreement.
18. Reopener
Nothing in Sections 16 and 17 above shall in any way constitute a
release of liability or covenant not to sue for injunctive relief or money
damages in any civil, judicial or administrative action under federal or State
common law, equity jurisdiction or statutory provisions against Smith Corona for
claims arising from the following circumstances:
<PAGE>
(a) After completion of the Remedial Plan at the Site,
Hazardous Substances not discovered by the investigation of the Site by
Plaintiffs or by Smith Corona which are not addressed by any on-Site remedial
action taken or committed to by Smith Corona are found to have been released at
the Site (other than pursuant to a federal or State permit), and to be causing a
significant threat to the environment, or to the public health, based on the use
of groundwater for domestic purposes.
(b) After completion of the Remedial Plan at the site, except
for any follow-up monitoring, (a) new groundwater and/or drinking water quality
standards are promulgated for Hazardous Substances encompassed in the Release
and Covenant Not to Sue, (b) those Hazardous Substances are found to have been
released at the Site (other than pursuant to a federal or State permit), (c) the
new standards for those Hazardous Substances indicate that the remedial actions
taken or committed to by Smith Corona on- Site, when considered in conjunction
with remedial actions taken by any other entity, no longer constitute acceptable
protection of the public health and environment from conditions at the Site, and
(d) those Hazardous Substances at the Site pose a significant threat to the
environment, or to the public health, based on the use of groundwater for
domestic purposes. For the following substances only, this paragraph is limited
solely to claims related to the carrying out of additional on-Site work, and not
to Off-Site work: Trichloroethylene, 1,1,1 Trichloroethane, Trans-l,2
Dichloroethylene, 1,1 Dichloroethylene, and Vinyl Chloride.
<PAGE>
(c) Paragraph (a) of this Section shall not apply under any
circumstances to the Covenant Not to Sue contained in paragraph (b) of Section
17, above.
19. Indemnification
Smith Corona shall indemnify and hold harmless the Plaintiffs and their
officers, employees and representatives, for claims, suits, actions, damages,
and costs of every name and description arising out of or resulting from the
performance or attempted performance by Smith Corona of its obligations under
this Agreement or the Remedial Plan. The Plaintiffs, and each of them, hereby
indemnify and hold harmless Smith Corona for claims, suits, actions, damages,
and costs of every name and description arising out of or resulting from the
performance or attempted performance by the Plaintiffs, or any of them, of
Off-Site investigations of the aquifer, or for uses of monies of the Fund for
any purpose.
20. Delisting of Site
Upon the fulfillment of all of the requirements of the Remedial plan,
except any follow-up monitoring, DEC shall approve a petition by Smith Corona to
reclassify the Site from Class 2 to Class 4 on the Registry of New York State
Inactive Hazardous Waste Disposal Sites. If, after periodic monitoring, the Site
shows no additional degradation of groundwater quality, Smith Corona may
petition DEC to reclassify the Site as a Class 5. If, after one year, no
additional degradation is shown, DEC shall, upon proper petition by Smith
Corona, remove the Site from the
<PAGE>
Registry. This provision shall survive termination of this
Settlement Agreement.
21. Continuing Liability
In the event that Smith Corona proposes to convey or relinquish the
whole or any part of its interest in the Site, Smith Corona shall notify the
Plaintiffs in writing not less than 30 days prior to the consummation of the
conveyance. Such notice shall include the nature and date of the proposed
conveyance, and the identity of the acquiring person or entity. Notwithstanding
the foregoing, Smith Corona shall remain solely and exclusively liable to
Plaintiffs for performance of the obligations of this Settlement Agreement or
the Remedial Plan.
22. Waiver of Notice
In order to avoid additional delay in carrying out the objectives of
the Remedial Plan, the State hereby expressly waives the 60-day written notice
requirement provided in 6 NYCRR ss. 375.9(a), provided that Smith Corona
notifies the State five (5) working days in advance of any Site excavation, well
drilling, or sampling to be conducted pursuant to the approved Plan. Such notice
shall be provided telephonically to DEC within the stated time period, with
immediate written confirmation.
23. State Reservation of Rights
Nothing contained in this Agreement shall be construed as barring,
diminishing, adjudicating or in any way affecting any legal or equitable rights
or claims, actions, suits, causes of action or demands whatsoever that the State
may have against anyone other than Smith Corona.
<PAGE>
24. Force Majeure
(a) Notwithstanding the above provisions, if by reason of
force majeure Smith Corona shall be unable in whole or in part to carry out its
obligations under this Agreement and if Smith Corona gives notice as soon as
practicable following such event(s) and full particulars of such force majeure
in writing to the State within a reasonable time after the occurrence of the
event or cause relied upon, Smith Corona's obligations under this Agreement, so
far as they are affected by such force majeure, shall be suspended during
continuance of the inability, which shall include a reasonable time for the
removal of the effect thereof. If such period of inability continues for more
than seven (7) days, the State shall have the right to reasonably object in
writing. The suspension of such obligations for such period, including any
period of dispute pursuant to this Section, shall not be deemed a default under
this Agreement.
(b) The term "force majeure" as used herein shall include,
without limitation, acts of God, strikes, lockouts or other industrial
disturbances, acts of public enemies, acts, priorities or orders of any kind of
the government of the United States of America or of the State or any of their
departments, agencies, governmental subdivisions, or officials, any civil or
military authority, insurrections, riots, epidemics, landslides, lightning,
earthquakes, fire, hurricanes, storms, floods, washouts, droughts, arrests,
restraint of government and people, civil disturbances, explosions, partial or
entire failure of utilities, shortage of energy or any other cause or event not
<PAGE>
reasonably within the control of Smith Corona and not due to its fault. Smith
Corona shall remove the cause for the same with all reasonable promptness.
(c) It is agreed that the settlement of strikes, lockouts and
other industrial disturbances shall be entirely within the discretion of Smith
Corona, who shall not be required to settle any strike, lockout and other
industrial disturbances by acceding to the demands of the opposing party or
parties. If any strike, lockout, or other industrial disturbance causing a
period of inability hereunder continues for more than seven (7) days, the State
shall have the right to reasonably object in writing. The State's objection or
failure to object shall not be construed as the State taking any position with
respect to such labor dispute.
25. Environmental Audit
Plaintiffs acknowledge that a comprehensive environmental compliance
audit of the Smith Corona facility has been conducted by an independent
qualified auditor. The audit included a review of the facility's compliance with
all applicable State and federal environmental laws and regulations. This audit
included, but was not limited to, a review of facility operating records, waste
profile sheets, waste receiving logs, analytical data, records of intrafacility
movement of wastes generated on-Site, waste treatment storage and disposal
records, facility policies, guidelines, operations, recordkeeping, employee
training, emergency response and spill prevention plans, effluent data,
discharges to water and all State, federal and local permits.
<PAGE>
26. Dispute Resolution
(a) Any dispute that arises with respect to the meaning or
application of this Agreement or any action, plan, schedule or modification of
the Remedial Plan under this Agreement (other than disputes related to alleged
non-compliance addressed in Section 27), shall, in the first instance, be the
subject of informal negotiations between the Plaintiffs and Smith Corona. Such
period of informal negotiations shall not extend beyond 30 days, unless the
Parties agree in writing otherwise. All Parties attending any informal
negotiations shall bring to the negotiations a written proposal to address the
disputed issue(s). During the period of any dispute, including during informal
negotiations, all obligations hereunder not necessarily dependent on the
disputed issue, (or issue which, though originally disputed, has been resolved
through informal negotiations) shall be performed according to the schedule
contained in the Remedial Plan. The performance of all reasonably disputed
issues, and matters necessarily dependent thereon, shall be deferred without
penalty during the pendency of efforts at dispute resolution, or during
subsequent proceedings thereon.
(b) At the termination of unsuccessful informal negotiations,
any party to the dispute may file with the Court a petition which shall describe
the nature of the dispute (along with any supporting documents) and include a
proposal for its resolution. The Court may hold an evidentiary hearing to aid in
resolving the dispute. The determination rendered by the Court
<PAGE>
shall be binding on all Parties to this Settlement Agreement, regardless of
whether all Parties participated in the judicial proceeding.
(c) In resolving disputes pursuant to this Section, the Court
shall apply an arbitrary and capricious standard not inconsistent with the goals
of this Agreement.
27. Enforcement of Agreement
If any Party to this Agreement considers that any other Party has
failed to comply with the terms and conditions of the Agreement or the
Appendices hereto, the Party alleging noncompliance may seek relief from the
Court which shall have exclusive jurisdiction to hear such matters. The Parties
hereby waive all objections to the jurisdiction of the Court for the purposes of
constructing, implementing or enforcing this Agreement. The Parties agree that,
in the first instance, a request for relief shall be limited to an order for
specific performance of the alleged non-compliance and that contempt sanctions
shall be sought only after an order from the Court has been obtained and has not
been complied with.
28. Costs
Except as otherwise provided in this Agreement, the Settling Parties
hereby agree that they will each bear their own costs and disbursements,
including attorneys fees.
29. Notices
Except as otherwise provided herein, all notices are required to be
given hereunder shall be served either personally or by mail and addressed to
designated representatives of the Parties contained in Appendix 4.
<PAGE>
Each Party shall notify all other parties in writing of any changes
in its designated representatives or address.
30. Public Participation
(a) As soon as practicable after approval of this Agreement by
the parties, the State shall publish a notice in the Environmental Notice
Bulletin that Smith Corona has submitted a Remedial Plan for the Site to the
State, that the Remedial Plan is available for public review at the Cortland
Public Library and from DEC, and announcing a thirty-day public comment period
on the Remedial Plan. The notice shall also provide that the Plaintiffs will
hold a public meeting in Cortland during the comment period to explain the terms
of this Agreement and to accept comments on the Remedial Plan.
(b) All comments received by the State will be made available
to all other parties and copies of the comments, along with any responses by the
Parties, shall be filed with the Court along with this Agreement and the
Remedial plan. If any comment raises an issue that any Party believes may
require revision of the Remedial Plan, the issue shall be brought to the
attention of the other Parties. If the Parties are unable to agree on an
appropriate resolution of the issue, the issue may, upon agreement of all the
Parties, be resolved through the dispute resolution mechanism contained in
Section 26, Dispute Resolution, or, in the event any Party does not wish to use
the dispute resolution mechanism, any of the Parties may withdraw from the
Agreement.
<PAGE>
31. Separability
Invalidation by judgment or court order of any of the terms, conditions
or provisions contained in this Agreement shall in no way affect any of the
other terms, conditions or provisions herein, which shall remain in full force
and effect unless such invalid provision goes to the essence of this Agreement.
32. Applicable Law
This Agreement, its validity, construction, and all rights hereunder,
shall be governed by the laws of the State of New York and the laws of the
United States.
33. Settlement Date
The Agreement shall not be effective as against any Party until every
Party named in the Agreement has executed a counterpart, and the Agreement has
been approved by Court.
34. Authority
Each undersigned representative of the Settling Parties certifies that
he or she is fully authorized to enter into the terms and conditions of this
Agreement and to execute and legally bind such Party, including all divisions,
bureaus, and departments thereof.
35. Liability
No party shall be liable for any injuries or damages to persons or
property resulting from any acts or omissions of any other Party, their
officers, employees, agents, receivers, trustees, successors, assigns,
Contractors, Subcontractors, or any other person acting on behalf of a Party in
carrying out any activities pursuant to the terms of this Settlement Agreement.
<PAGE>
36. Appendices
(a) Appendices annexed hereto are an integral part of this
Agreement and are hereby incorporated by reference as though they were set forth
verbatim.
(b) The State, by entering into this Agreement does not
necessarily accept the validity or accuracy of any opinions or conclusions
contained in any written materials prepared by Smith Corona or its consultants
except to the extent that it specifically accepts or approves them in writing.
37. Modifications
This constitutes the entire Agreement of the Settling Parties. Any
modification to this Agreement, except as otherwise provided by the terms of the
Remedial Plan, must be in writing signed by all the Parties hereto.
38. Admissibility of Data
The Parties expressly reserve all objections to the admissibility of
data collected in performing the obligations of this Agreement, except in an
action to enforce this Agreement.
Smith Corona Corporation
839 Route 13 South
P.O. Box 2020
Cortland, New York 13045
(607) 753-6011
Dated: ___________________ By: /s/ Richard M. Cogen
______________________
Richard M. Cogen, Esq.
Nixon, Hargrave, Devans & Doyle
Attorneys for Defendant
Smith Corona Corporation
1 Key Corp. Plaza
Albany, New York 12207
Robert Abrams
Attorney General of the State of
New York
The Capitol
Albany, New York 12224
(518) 473-6486
Dated: ___________________ By: /s/ John J. Privitera
____________________________
John J. Privitera, Esq.
Assistant Attorney General
Dated: ___________________ By: /s/ Albert M. Bronson
____________________________
Albert M. Bronson, Esq.
Assistant Attorney General
Dated: ___________________ By: /s/ Dean S. Sommer
________________________
Dean S. Sommer, Esq.
Assistant Attorney General
City of Cortland Water
Board City Hall
25 Court Street
Cortland, New York 13045
(607) 753-3327
Dated: ___________________ By: /s/ Emerson Avery
_______________________
Emerson Avery, Esq.
Attorney for City of Cortland
Water Board
Town of Cortlandville
25 South Main Street
P.O. Box 310
Homer, New York 13077
(607) 749-7296
Dated: ___________________ By: /s/ Phillip Rumsey
________________________
Phillip Rumsey, Esq.
Attorney for Town of
Cortlandville
County of Cortland and
Cortland County Board of Health
60 Central Avenue
P.O. Box 5590
Cortland, New York 13045
(607) 753-5095
Dated: ___________________ By: /s/ James J. Baranello
____________________________
James J. Baranello, Esq.
Attorney for County of Cortland
and Cortland County Board of
Health
SO ORDERED
Dated: ___________________
- --------------------------
U.S.D.J.
<PAGE>
June 13, 1994
PRIVILEGED AND CONFIDENTIAL
John A. Cutrone
55 Beachside Avenue
P.O. Box 601
Green Farms, CT 06436
Dear John:
In order to assure the continuity of your contribution to
Smith Corona Corporation (the "Company"), the Company will provide
you with the following severance benefits in the event that your
employment with the Company is terminated as described herein:
1. Following your Involuntary Termination of Employment (as
hereinafter defined) with the Company, the Company shall pay you an
amount equal to your annual rate of base pay in effect on the date
of cessation of employment (the "Termination Date") for a period of
two (2) years following such termination of employment with the
Company ("Severance Pay"). Such Severance Pay shall be paid to you
in accordance with the established pay periods for salaried
employees of the Company in effect from time to time. For purposes
hereof, the terms "Involuntary Termination of Employment" shall
mean your termination of employment with the Company for any reason
other than for "cause" or by reason of your death, permanent
disability or voluntary retirement or resignation, and "cause"
shall mean a material breach of, or willful misconduct in, the
performance of your duties as an employee of the Company;
employment by a firm not affiliated with the Company while you are
employed by the Company; theft, embezzlement, bribery or other act
of comparable dishonesty or disloyalty or breach of trust against
the Company; or the conviction of a felony. "Voluntary Termination
of Employment" shall mean voluntary retirement or resignation.
2. Upon your Voluntary or Involuntary Termination of
Employment, the Company shall pay you for all accrued vacation time
in the current year calculated in accordance with Company policy.
Such vacation pay shall be paid to you by the Company in one lump
sum in the pay period immediately following the Termination Date.
Additional vacation time shall not accrue for the period you are
receiving Severance Pay from the Company.
- 2 -
3. Your participation in the Company's Group Major Medical
Insurance Program and Group Life Insurance Program shall continue
following your Involuntary Termination of Employment during the
period that you are receiving Severance Pay from the Company, until
you are covered by another employer's major medical program or
group life program, if sooner, subject to the provisions of such
Company Programs, including provisions relating to COBRA.
4. Upon your Voluntary or Involuntary Termination of
Employment, you will be entitled to receive pension benefits under
the Company's pension plan for salaried employees in accordance
with the provisions of that plan. For the purpose of service and
credited service under such plan, service attributable to the
severance period shall be counted only for the period for which you
would have received severance in accordance with the terms of the
Company's Corporate Policy on Termination Allowance for Company
salaried employees generally. Your participation in all other
benefits plan and programs of the Company shall cease as of the
Termination Date, except as specifically provided in paragraph 3
above.
5. The Company will provide you, at its sole cost and
expense up to a maximum of $10,000, with outplacement assistance at
a firm selected by the Company following your Involuntary
Termination of Employment during the period that you are receiving
Severance Pay from the Company.
6. Notwithstanding anything in the foregoing to the
contrary, if any of the payments provided for in this Agreement,
together with any other payments which you have the right to
receive from the Company or any corporation which is a member of an
"affiliated group" (as defined in Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), without regard to
Section 1504(b) of the Code) of which the Company is a member,
would constitute a "parachute payment" (as defined in Section
280(G)(2) of the Code), the Severance Pay to be made pursuant to
this Agreement shall be reduced to the largest amount as will
result in no portion of such payments being subject to the excise
tax imposed by Section 4999 of the Code; provided, however, that
the determination as to whether any reduction in the payments under
this Agreement pursuant to this provision is necessary shall be
made by the Company in good faith.
The terms of this letter will expire on June 30, 1995.
- 3 -
As the terms described above exceed normal Company policy
regarding employee separation, it is understood that this Agreement
sets forth the entire agreement between the Company and you and
supersedes any and all prior agreements and understandings, whether
oral or written, relating to the subject matter hereof; that your
acceptance of these arrangements is a compromise and settlement of
any and all claims which you may have against the Company; and that
you release the Company from any liability other than that which
the Company has agreed to above.
If the foregoing is acceptable to you, please sign and
date both copies of this Agreement in the space indicated below and
return one executed copy to the undersigned at your earliest
convenience.
Very truly yours,
SMITH CORONA CORPORATION
By: ________________________________
G. Lee Thompson
Chairman/Chief Executive Officer
Agreed and Accepted: _________________________
Date: ______________
April 3, 1995
PERSONAL AND CONFIDENTIAL
TO BE OPENED BY ADDRESSEE ONLY
Mr. John A. Cutrone
55 Beachside Avenue
P. O. Box 601
Green Farms, CT 06436
Dear John:
I am happy to inform you that the Board of Directors
has extended your Severance Agreement which was due to
expire on June 30, 1995 to June 30, 1996.
Conditions remain the same as outlined in your
original agreement.
Please sign the extra copy of this letter indicating
your understanding and acceptance and return it to my
attention by return mail.
Best regards,
Robert Van Buren
AGREED AND ACCEPTED:
_________________________
John A. Cutrone
_________________________
Date
cc: D. P. Verostko
June 13, 1994
PRIVILEGED AND CONFIDENTIAL
W. Michael Driscoll
529 Cayuga Heights Road
Ithaca, NY 14850
Dear Michael:
In order to assure the continuity of your contribution to
Smith Corona Corporation (the "Company"), the Company will provide
you with the following severance benefits in the event that your
employment with the Company is terminated as described herein:
1. Following your Involuntary Termination of Employment (as
hereinafter defined) with the Company, the Company shall pay you an
amount equal to your annual rate of base pay in effect on the date
of cessation of employment (the "Termination Date") for a period of
two (2) years following such termination of employment with the
Company ("Severance Pay"). Such Severance Pay shall be paid to you
in accordance with the established pay periods for salaried
employees of the Company in effect from time to time. For purposes
hereof, the terms "Involuntary Termination of Employment" shall
mean your termination of employment with the Company for any reason
other than for "cause" or by reason of your death, permanent
disability or voluntary retirement or resignation, and "cause"
shall mean a material breach of, or willful misconduct in, the
performance of your duties as an employee of the Company;
employment by a firm not affiliated with the Company while you are
employed by the Company; theft, embezzlement, bribery or other act
of comparable dishonesty or disloyalty or breach of trust against
the Company; or the conviction of a felony. "Voluntary Termination
of Employment" shall mean voluntary retirement or resignation.
2. Upon your Voluntary or Involuntary Termination of
Employment, the Company shall pay you for all accrued vacation time
in the current year calculated in accordance with Company policy.
Such vacation pay shall be paid to you by the Company in one lump
sum in the pay period immediately following the Termination Date.
Additional vacation time shall not accrue for the period you are
receiving Severance Pay from the Company.
- 2 -
3. Your participation in the Company's Group Major Medical
Insurance Program and Group Life Insurance Program shall continue
following your Involuntary Termination of Employment during the
period that you are receiving Severance Pay from the Company, until
you are covered by another employer's major medical program or
group life program, if sooner, subject to the provisions of such
Company Programs, including provisions relating to COBRA.
4. Upon your Voluntary or Involuntary Termination of
Employment, you will be entitled to receive pension benefits under
the Company's pension plan for salaried employees in accordance
with the provisions of that plan. For the purpose of service and
credited service under such plan, service attributable to the
severance period shall be counted only for the period for which you
would have received severance in accordance with the terms of the
Company's Corporate Policy on Termination Allowance for Company
salaried employees generally. Your participation in all other
benefits plan and programs of the Company shall cease as of the
Termination Date, except as specifically provided in paragraph 3
above.
5. The Company will provide you, at its sole cost and
expense up to a maximum of $10,000, with outplacement assistance at
a firm selected by the Company following your Involuntary
Termination of Employment during the period that you are receiving
Severance Pay from the Company.
6. Notwithstanding anything in the foregoing to the
contrary, if any of the payments provided for in this Agreement,
together with any other payments which you have the right to
receive from the Company or any corporation which is a member of an
"affiliated group" (as defined in Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), without regard to
Section 1504(b) of the Code) of which the Company is a member,
would constitute a "parachute payment" (as defined in Section
280(G)(2) of the Code), the Severance Pay to be made pursuant to
this Agreement shall be reduced to the largest amount as will
result in no portion of such payments being subject to the excise
tax imposed by Section 4999 of the Code; provided, however, that
the determination as to whether any reduction in the payments under
this Agreement pursuant to this provision is necessary shall be
made by the Company in good faith.
The terms of this letter will expire on June 30, 1995.
- 3 -
As the terms described above exceed normal Company policy
regarding employee separation, it is understood that this Agreement
sets forth the entire agreement between the Company and you and
supersedes any and all prior agreements and understandings, whether
oral or written, relating to the subject matter hereof; that your
acceptance of these arrangements is a compromise and settlement of
any and all claims which you may have against the Company; and that
you release the Company from any liability other than that which
the Company has agreed to above.
If the foregoing is acceptable to you, please sign and
date both copies of this Agreement in the space indicated below and
return one executed copy to the undersigned at your earliest
convenience.
Very truly yours,
SMITH CORONA CORPORATION
By: ________________________________
G. Lee Thompson
Chairman/Chief Executive Officer
Agreed and Accepted: _________________________
Date: ______________
April 3, 1995
PERSONAL AND CONFIDENTIAL
TO BE OPENED BY ADDRESSEE ONLY
W. Michael Driscoll
529 Cayuga Heights Road
Ithaca, NY 14850
Dear Michael:
I am happy to inform you that the Board of Directors
has extended your Severance Agreement which was due to
expire on June 30, 1995 to June 30, 1996.
Conditions remain the same as outlined in your
original agreement.
Please sign the extra copy of this letter indicating
your understanding and acceptance and return it to my
attention by return mail.
Best regards,
Robert Van Buren
AGREED AND ACCEPTED:
_________________________
W. Michael Driscoll
_________________________
Date
cc: D. P. Verostko
April 3, 1995
PRIVILEGED AND CONFIDENTIAL
John A. Piontkowski
Six November Trail
Weston, CT 06883
Dear John:
In order to assure the continuity of your contribution to Smith
Corona Corporation (the "Company"), the Company will provide you
with the following severance benefits in the event that your
employment with the Company is terminated as described herein:
1. Following your Involuntary Termination of Employment (as
hereinafter defined) with the Company, the Company shall pay you an
amount equal to your annual rate of base pay in effect on the date
of cessation of employment (the "Termination Date") for a period of
two (2) years following such termination of employment with the
Company ("Severance Pay"). Such Severance Pay shall be paid to you
in accordance with the established pay periods for salaried
employees of the Company in effect from time to time. For purposes
hereof, the terms "Involuntary Termination of Employment" shall mean
your termination of employment with the Company for any reason other
than for "cause" or by reason of your death, permanent disability
or voluntary retirement or resignation, and "cause" shall mean a
material breach of, or willful misconduct in, the performance of
your duties as an employee of the Company; employment by a firm not
affiliated with the Company while you are employed by the Company;
theft, embezzlement, bribery or other act of comparable dishonesty
or disloyalty or breach of trust against the Company; or the
conviction of a felony. "Voluntary Termination of Employment" shall
mean voluntary retirement or resignation.
2. Upon your Voluntary or Involuntary Termination of
Employment, the Company shall pay you for all accrued vacation time
in the current year calculated in accordance with Company policy.
Such vacation pay shall be paid to you by the Company in one lump
sum in the pay period immediately following the Termination Date.
Additional vacation time shall not accrue for the period you are
receiving Severance Pay from the Company.
- 2 -
3. Your participation in the Company's Group Major Medical
Insurance Program and Group Life Insurance Program shall continue
following your Involuntary Termination of Employment during the
period that you are receiving Severance Pay from the Company, until
you are covered by another employer's major medical program or group
life program, if sooner, subject to the provisions of such Company
Programs, including provisions relating to COBRA.
4. Upon your Voluntary or Involuntary Termination of
Employment, you will be entitled to receive pension benefits under
the Company's pension plan for salaried employees in accordance with
the provisions of that plan. For the purpose of service and
credited service under such plan, service attributable to the
severance period shall be counted only for the period for which you
would have received severance in accordance with the terms of the
Company's Corporate Policy on Termination Allowance for Company
salaried employees generally. Your participation in all other
benefits plan and programs of the Company shall cease as of the
Termination Date, except as specifically provided in paragraph 3
above.
5. The Company will provide you, at its sole cost and expense
up to a maximum of $10,000, with outplacement assistance at a firm
selected by the Company following your Involuntary Termination of
Employment during the period that you are receiving Severance Pay
from the Company.
6. Notwithstanding anything in the foregoing to the contrary,
if any of the payments provided for in this Agreement, together with
any other payments which you have the right to receive from the
Company or any corporation which is a member of an "affiliated
group" (as defined in Section 1504(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), without regard to Section 1504(b)
of the Code) of which the Company is a member, would constitute a
"parachute payment" (as defined in Section 280(G)(2) of the Code),
the Severance Pay to be made pursuant to this Agreement shall be
reduced to the largest amount as will result in no portion of such
payments being subject to the excise tax imposed by Section 4999 of
the Code; provided, however, that the determination as to whether
any reduction in the payments under this Agreement pursuant to this
provision is necessary shall be made by the Company in good faith.
The terms of this letter will expire on June 30, 1996.
- 3 -
As the terms described above exceed normal Company policy
regarding employee separation, it is understood that this Agreement
sets forth the entire agreement between the Company and you and
supersedes any and all prior agreements and understandings, whether
oral or written, relating to the subject matter hereof; that your
acceptance of these arrangements is a compromise and settlement of
any and all claims which you may have against the Company; and that
you release the Company from any liability other than that which the
Company has agreed to above.
If the foregoing is acceptable to you, please sign and
date both copies of this Agreement in the space indicated below and
return one executed copy to the undersigned at your earliest
convenience.
Very truly yours,
SMITH CORONA CORPORATION
By: __________________________________
Robert Van Buren
AGREED AND ACCEPTED:
_________________________
John A. Piontkowski
_________________________
Date
SMITH CORONA CORPORATION
65 Locust Avenue
New Canaan, Connecticut 06840
June __, 1995
PRIVILEGED AND CONFIDENTIAL
John A. Piontkowski
Six November Trail
Weston, CT 06883
Dear John:
This will confirm our mutual agreement to amend the
severance agreement (the "Agreement") entered into between you
and Smith Corona Corporation, dated April 3, 1995. Capitalized
terms used herein and not defined shall have the meanings
assigned to such terms in the Agreement.
Involuntary Termination of Employment shall also
include your termination of your employment within the ninety
(90) day period following the first occurrence of an event of
Good Reason. "Good Reason" shall mean reduction in your base
compensation, substantial curtailment of your status or
responsibilities, or your forced relocation to an office located
more than 35 miles from New Canaan, Connecticut.
If the foregoing is acceptable to you, please sign and
date both copies of this Amendment to the Agreement in the space
indicated below and return one executed copy to the undersigned
at your earliest convenience.
Very truly yours,
SMITH CORONA CORPORATION
By:
AGREED AND ACCEPTED:
______________________________
John A. Piontkowski
______________________________
Date
June 1, 1990
Privileged and Confidential
Jerry L. Diener
4 Mallett Drive
Trumbull, CT 06611
Dear Mr. Diener:
In order to assure the continuity of your
contribution to Smith Corona Corporation (the "Company"), the
Company will provide you with the following severance
benefits in the event that your employment with the Company is
terminated as described herein:
1. Following your Involuntary Termination of
Employment (as hereinafter defined) with the Company, the
Company shall pay you an amount equal to your annual rate of
base pay in effect on the date of cessation of employment (the
"Termination Date") for a period of two (2) years following
such termination of employment with the Company ("Severance
Pay"). Such Severance Pay shall be paid to you in accordance
with the established pay periods for salaried employees of the
Company in effect from time to time. For purposes hereof, the
terms "Involuntary Termination of Employment" shall mean your
termination of employment with the Company for any reason
other than for "cause" or by reason of your death, permanent
disability or voluntary retirement or resignation, and "cause"
shall mean a material breach of, or willful misconduct in, the
performance of your duties as an employee of the Company;
employment by a firm not affiliated with the Company while you
are employed by the Company; theft, embezzlement, bribery or
other act of comparable dishonesty or disloyalty or breach of
trust against the Company; or the conviction of a felony.
"Voluntary Termination of Employment" shall mean voluntary
retirement or resignation.
- 2 -
2. Upon your Voluntary or Involuntary Termination
of Employment, the Company shall pay you for all accrued
vacation time in the current year calculated in accordance
with Company policy. Such vacation pay shall be paid to you
by the Company in one lump sum in the pay period immediately
following the Termination Date. Additional vacation time
shall not accrue for the period you are receiving Severance
Pay from the Company.
3. Your participation in the Company's Group Major
Medical Insurance Program and Group Life Insurance Program
shall continue following your Involuntary Termination of
Employment during the period that you are receiving Severance
Pay from the Company, until you are covered by another
employer's major medical program or group life program, if
sooner, subject to the provisions of such Company Programs,
including provisions relating to COBRA.
4. Upon your Voluntary or Involuntary Termination
of Employment, you will be entitled to receive pension
benefits under the Company's pension plan for salaried
employees in accordance with the provisions of that plan. For
the purpose of service and credited service under such plan,
service attributable to the severance period shall be counted
only for the period for which you would have received
severance in accordance with the terms of the Company's
Corporate Policy on Termination Allowance for Company salaried
employees generally. Your participation in all other benefits
plan and programs of the Company shall cease as of the
Termination Date, except as specifically provided in paragraph
3 above.
5. The Company will provide you, at its sole cost
and expense up to a maximum of $10,000, with outplacement
assistance at a firm selected by the Company following your
Involuntary Termination of Employment during the period that
you are receiving Severance Pay from the Company.
6. Notwithstanding anything in the foregoing to
the contrary, if any of the payments provided for in this
Agreement, together with any other payments which you have
the right to receive from the Company or any corporation
which is a member of an "affiliated group" (as defined in
Section 1504(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), without regard to Section 1504(b) of the
Code) of which the Company is a member, would constitute
a "parachute payment" (as defined in Section 280(G)(2) of the
Code), the Severance Pay to be made pursuant to this
Agreement shall be reduced to the largest amount as will
result in no portion of such payments being subject to the
- 3 -
excise tax imposed by Section 4999 of the Code; provided,
however, that the determination as to whether any reduction in
the payments under this Agreement pursuant to this provision
is necessary shall be made by the Company in good faith.
The terms of this letter will expire on June 30,
1993.
As the terms described above exceed normal Company
policy regarding employee separation, it is understood that
this Agreement sets forth the entire agreement between the
Company and you and supersedes any and all prior agreements
and understandings, whether oral or written, relating to the
subject matter hereof; that your acceptance of these
arrangements is a compromise and settlement of any and all
claims which you may have against the Company; and that you
release the Company from any liability other than that which
the Company has agreed to above.
If the foregoing is acceptable to you, please sign
and date both copies of this Agreement in the space indicated
below and return one executed copy to the undersigned at your
earliest convenience.
Very truly yours,
SMITH CORONA CORPORATION
By: ____________________________
G. Lee Thompson
Chairman
Agreed and Accepted: ______________________________
Jerry L. Diener
June 1, 1995
PERSONAL AND CONFIDENTIAL
TO BE OPENED BY ADDRESSEE ONLY
Mr. Jerry L. Diener
Four Mallett Drive
Trumbull, CT 06611
Dear Jerry:
I am happy to inform you that the Board of Directors
has extended your Severance Agreement which was due to
expire on June 30, 1995 to December 31, 1995, at which
time the Agreement may be extended for an additional six
(6) months (to June 30, 1996) by mutual agreement between
the Board and yourself.
Conditions remain the same as outlined in your
original agreement.
Please sign the extra copy of this letter indicating
your understanding and acceptance and return it to my
attention by return mail.
Best regards,
Robert Van Buren
AGREED AND ACCEPTED:
_________________________
Jerry L. Diener
_________________________
Date
cc: D. P. Verostko
CONSULTING AGREEMENT
THIS AGREEMENT, effective June 9, 1995, by and between Smith
Corona Corporation incorporated in Delaware with offices at 65
Locust Avenue, New Canaan, Connecticut, U.S.A.
AND Manfred J. Eckhardt, residing at Scarborough Manor, P.O.
Box 271, Scarborough, New York 10510 (Consultant).
WHEREAS, Consultant has developed substantial knowledge and
experience in Treasury, Accounting, Risk Management and Cash
Management operations, and
WHEREAS, Smith Corona desires to receive the benefit of
Consultant's knowledge, experience and ability, and to retain
the services of Consultant, and
WHEREAS, Consultant desires to perform consulting services on
behalf of Smith Corona.
NOW, THEREFORE, IN CONSIDERATION of the mutual promises
hereinafter set forth, the parties agree as follows:
1) Consulting Services
Consultant agrees to make himself available for advising
and consulting with Smith Corona as mutually agreed.
2) Compensation
A) As full compensation for the services performed
under this agreement, Smith Corona shall pay Consultant a
retainer of $10,000. Consultant shall invoice Smith Corona at
the rate of $125.00 per hour for professional services
rendered to Smith Corona. At the termination of the
Agreement, Consultant shall remit to Smith Corona the unbilled
portion of the retainer.
Consultant shall receive a minimum of five hours
pay for each day his services are required. Consultant
acknowledges that Smith Corona will not provide or pay for any
fringe benefits, holidays or vacation. Consultant further
acknowledges that Smith Corona will not provide or pay for
expenses or travel time, time for travel between Consultant's
home or office and Smith Corona's New Canaan headquarters, but
will pay for travel time and expenses for all other required
travel.
B) Smith Corona will reimburse Consultant for all
reasonable and necessary expenses including travel expenses
incurred by Consultant in performance of the services rendered
under this agreement. No payment for expenses will be made
for expenses incurred without authorization in advance by
Robert Van Buren or his designate, on behalf of Smith Corona.
3) Place of Performance
Consultant shall perform services covered by this
agreement at such place or places as may be designed by Smith
Corona during the terms of this agreement.
4) Duration of Agreement
This agreement may be terminated by either party by
providing thirty (30) days written notice.
5) Confidential Information
All information compiled, including written reports made
by Consultant as a result of this agreement shall be
considered the confidential and proprietary information of
Smith Corona. Consultant agrees to take precautions to
safeguard and treat all information disclosed by Smith Corona
as confidential. Consultant further agrees that he will not
at any time during the term of this agreement or thereafter,
communicate, divulge or disclose, for his own use or for the
use of others, this information or any other information of a
secret, confidential or proprietary character which Consultant
has or may acquire from Smith Corona, its affiliates or its
employees until such time as such information becomes known to
others through no act of Consultant.
6) Right to Perform
Consultant represents that he is free, as a self-employed
independent contractor, to perform the services called for
hereby in the area defined and limited in accordance with the
terms of this agreement. Consultant agrees to pay all income,
social security and other taxes which may become due as a
result of being compensated pursuant to this agreement.
7) Construction of Agreement
This agreement encompasses the full understanding of the
parties and this agreement shall not be modified except by
written agreement signed by the parties. This agreement shall
be governed and interpreted under the laws of the State of
Connecticut, U.S.A.
8) Non-Competing Consulting
Consultant acknowledges that Smith Corona will disclose
highly sensitive and confidential information to him during
the term of the agreement. Consultant hereby agrees that he
will not at any time during the term of the agreement or for
a period of one year after termination of the agreement
howsoever effective, consult with, advise, counsel or accept
a position as an employee with any competitor of Smith Corona.
IN WITNESS WHEREOF, the parties have set their hand to
duplicates of this agreement.
Smith Corona Corporation
By
April 13, 1995
Mr. Robert Van Buren
1096 Oakland Avenue
Plainfield, NJ 07060
Re: Smith Corona Corporation 1990 Stock Option Plan
Dear Bob:
Pursuant to the terms of the Smith Corona Corporation
1990 Stock Option Plan, as amended (the "Plan"), a copy of which
is attached hereto as Exhibit A, the Stock Option Committee (the
"Committee") of the Board of Directors of Smith Corona
Corporation (the "Company") hereby grants you an option (the
"Option") to purchase shares of the Company's Common Stock, par
value $.01 per share (the "Shares"), in accordance with the
following terms and conditions:
1. Grant of Option. Subject to the terms and
conditions set forth herein and in the Plan, the Company hereby
grants you, effective as of March 24, 1995 (the "Date of Grant"),
an Option to purchase 100,000 Shares at a price per share equal
to $2.750 (the "Option Price").
2. Time of Exercise. The Option may be exercised
three months from the Date of Grant, provided, however, that this
vesting period, which differs from the terms of the Plan as of
the date hereof, is subject to stockholders' approval, and shall
remain exercisable until the Expiration Date, when the right to
exercise shall terminate absolutely. The Expiration Date shall
be the earliest to occur of the following:
(i) if you shall cease to be employed by the
Company for any reason other than Death, Disability, Special
Employment Termination, Retirement or Termination for Cause (each
as defined in the Plan), thirty (30) days after the date of
termination of employment; or
(ii) if you shall cease to be employed by the
Company because of Disability or Death, twelve (12) months after
the date you terminate employment because of Disability or Death;
or
(iii) if you shall cease to be employed by the
Company because of Retirement, the later of twelve (12) months
from the date of Retirement or three (3) years and six (6) months
from the Date of Grant; or
(iv) if you are Terminated for Cause, the date
of termination of employment; or
(v) if you shall cease to be employed by the
Company as a result of Special Employment Termination, the day
twelve (12) months after you cease to be employed or the date
before the tenth anniversary of the Date of Grant.
For purposes hereof, the terms "Disability,"
"Retirement," "Termination for Cause," and "Special Employment
Termination" shall have the meanings ascribed to them in the
Plan.
3. Payment for Shares. Full payment for Shares
purchased upon the exercise of the Option shall be made in cash
or in Shares already owned by you having a total fair market
value (as determined pursuant to Section 8.2 of the Plan) upon
such exercise, as determined by the Committee, equal to the
Option Price or a combination of cash and Shares having a total
fair market value, as so determined, equal to the Option Price.
4. Manner of Exercise. The Option shall be exercised
by giving written notice of exercise to the Committee, in care of
the Company's Secretary at the Company's headquarters in New
Canaan, Connecticut. Such notice shall be deemed to have been
given when hand delivered, telecopied or mailed, first class,
postage prepaid and shall be irrevocable once given.
5. Nontransferability of Option. The Option may not
be transferred or assigned by you otherwise than by will or the
laws of descent and distribution or be exercised other than by
you or, in the case of your death, by your personal
representative, heir or legatee.
6. Securities Laws. The Committee may from time to
time impose any conditions on the exercise of the Option as it
deems necessary or advisable to ensure that all rights granted
under the Plan satisfy the requirements of Rule 16b-3, or any
successor rule, promulgated by the Securities and Exchange
Commission. Such conditions may include, without limitation, the
partial or complete suspension of the right to exercise the
Option.
7. Issuance of Certificate. Subject to the provisions
of paragraph 6 hereof, a certificate for the Shares issuable on
the exercise of an Option shall be delivered to you or to your
personal representative, heir or legatee upon the satisfactory
exercise of an Option, provided that no certificates for Shares
will be delivered to you or to your personal representative, heir
or legatee until (a) appropriate arrangements have been made with
the Company for the withholding of any taxes that may be due with
respect to such Shares and (b) the Option Price has been paid in
full. The Company may condition delivery of certificates for
Shares upon the prior receipt from you of any undertakings that
it may determine are required to assure that the certificates are
being issued in compliance with federal and state securities
laws.
8. Right Prior to Exercise. Neither you nor your
personal representative, heir or legatee shall have any of the
rights of a shareholder with respect to any Shares until the date
of the issuance by the Company of a certificate for such Shares
as provided in paragraph 7 hereof.
9. Status of Option; Interpretation. The Option is
intended to be a non-qualified stock option, and it is further
intended that the Shares transferred pursuant to the exercise of
the Option shall constitute property subject to federal income
tax pursuant to the provisions of Section 83 of the Internal
Revenue Code of 1986, as amended. The Committee shall have sole
power to resolve any dispute or disagreement arising out of this
Agreement. The interpretation and construction of any provision
of this Option or the Plan made by the Committee shall be final
and conclusive and, insofar as possible, shall be consistent with
the requirements of a non-qualified stock option.
10. Option Not to Affect Employment. The Option
granted hereunder shall not confer upon you any rights to
continue in the employment of the Company.
11. Miscellaneous. (a) The address to which notices,
demands and other communications to be given or delivered to you
under or by reason of the provisions hereof shall be the address
set forth below under your signature unless you advise the
Committee otherwise in writing.
(b) This letter agreement may be exercised in one
or more counterparts, all of which taken together will constitute
one and the same instrument.
(c) The validity, performance, construction and
effect of this letter agreement shall be governed by the laws of
the State of New York, without giving effect to principles of
conflicts of law.
(d) You hereby acknowledge receipt of a copy of
the Plan attached hereto and agree to be bound by all the terms
and provisions thereof as the same may be amended from time to
time.
12. Entire Agreement. This letter agreement is
intended by the parties as a final expression of their agreement
and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This letter agreement
supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
If you are in agreement with the foregoing, please
indicate your acceptance of the terms and conditions of this
Option by signing a counterpart of this letter agreement in the
space provided (together with a witness to your signature),
completing the information for your address and returning it to
the undersigned in the envelope enclosed for that purpose.
SMITH CORONA CORPORATION
By:___________________________
Name:
Title:
Accepted and Agreed:
______________________________
Robert Van Buren
Exhibit A - 1990 Stock Option Plan
SMITH CORONA CORPORATION
65 LOCUST AVENUE
NEW CANAAN, CONNECTICUT 06840
March 28, 1995
PERSONAL AND CONFIDENTIAL
Mr. Robert Van Buren
369 South Lake Drive
Palm Beach, Florida 33480
Dear Bob:
This letter will confirm the terms and conditions of
your Employment Agreement (the "Agreement") with Smith
Corona Corporation ("SCO").
1. You will be employed as the Chairman and Chief
Executive Officer of SCO, reporting to the Board of
Directors, effective March 24, 1995.
2. Your compensation in such capacity will be
salary at the rate of $30,000 per month.
3. You will be eligible for consideration of
grants of SCO share options when other officers are
considered, usually annually; on March 8, 1995, you received
100,000 share options based on the average share price on
the date of the grant. All options will be exercisable in
accordance with the SCO 1990 Stock Option Plan, as amended
from time to time, except that it is the intention of the
Board of Directors to take steps within its authority to
vest you in this grant as soon thereafter as is lawful,
subject to stockholder approval which is necessary to
implement a change in the vesting provisions of the Stock
Option Plan.
4. You will be entitled to receive the following
fringe benefits:
(a) Term life insurance coverage equal to
two times your annual base salary pursuant to the terms of
the current SCO coverage;
(b) Executive Medical Program;
(c) Reasonable out-of-pocket expenses
related to your temporary relocation to New Canaan;
(d) Reimbursement for expenses incurred in
the discharge of your duties as Chairman and Chief Executive
Officer in accordance with established SCO policies and
procedures including a rental vehicle or mileage charges for
the use of your automobile.
5. This Agreement may be terminated at any time
at the discretion of the Board of Directors. In the event
that the Board of Directors of SCO terminates your
employment for reasons other than Cause, you will be paid
your base salary, plus benefits as set forth in Paragraph 4
above until the last day of the month during which you are
given oral or written notice of your termination. "Cause"
shall mean a material breach of, or willful misconduct in,
the performance of your duties as an employee of SCO;
employment by a firm not affiliated with SCO while you are
employed by SCO; theft, embezzlement, bribery or other act
of comparable dishonesty or disloyalty or breach of trust
against SCO; or the conviction of a felony.
6. This Agreement, upon your acceptance in the space
provided below, shall be a binding contract to be governed and
construed in accordance with the laws of the state of Connecticut
and it shall supersede and replace all prior agreements and
understandings between the parties.
As the terms described in this letter differ from
normal SCO policy regarding employee benefits and separation, it
is understood that this Agreement sets forth the entire agreement
between SCO and you relating to your employment; that you waive
any and all benefits from any SCO employee benefit program not
specifically referred to herein, that you understand that
employees who serve as director receive no additional compensation
therefor and that you release SCO from any liability other than
that to which SCO has agreed above.
Very truly yours,
SMITH CORONA CORPORATION
By:
Richard R. West
Chairman, Special Committee
of the Board of Directors
I accept and agree to the
foregoing terms and conditions.
Robert Van Buren
Date
Exhibit 21
SUBSIDIARIES OF
SMITH CORONA CORPORATION
<TABLE>
<CAPTION>
Jurisdiction Name Doing
Name of Incorporation Business Under
<S> <C> <C>
SCC LI Corporation New York Histacount Corporation
Smith Corona Overseas Delaware Smith Corona Overseas
Holdings, Inc. Holdings, Inc.
Smith Corona Private Republic of Smith Corona Private Ltd.
Ltd. Singapore
SCM Office Supplies, Delaware SCM Office Supplies,
Inc. Inc.
SCM (United Delaware SCM (United Kingdom) Limited
Kingdom) Limited
Smith Corona Ontario, Canada Smith Corona
(Canada) Limited (Canada) Limited
Smith Corona (France) Paris, France Smith Corona (France)
S.A.R.L. S.A.R.L.
Smith Corona GmbH Dusseldorf, Germany Smith Corona GmbH
Smith Corona Australia New South Wales, Smith Corona Australia
PTY Limited Australia PTY Limited
Smith Corona (UK) United Kingdom Smith Corona (UK)
Limited Limited
Smith Corona S.A. Waterloo, Belgium Smith Corona S.A.
Smith Corona de Mexico Tijuana, B.C., Mexico Smith Corona de Mexico
S.A. de C.V. S.A. de C.V.
</TABLE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT TO INCORPORATION BY REFERENCE IN
REGISTRATION STATEMENTS ON FORM S-8
SMITH CORONA CORPORATION:
We consent to the incorporation by reference in Smith Corona
Corporation's Registration Statement Nos. 33-34796, 1-10281 and
33-56421 on Form S-8 of our reports dated August 22, 1995
appearing and incorporated by reference in the Annual Report on
Form 10-K for the year ended June 30, 1995.
/s/ Deloitte & Touche
- ---------------------
DELOITTE & TOUCHE LLP
Stamford, Connecticut
August 22, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SMITH
CORONA CORPORATION CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO OF
THIS FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 7003
<SECURITIES> 0
<RECEIVABLES> 39138
<ALLOWANCES> 1484
<INVENTORY> 54335
<CURRENT-ASSETS> 108463
<PP&E> 57462
<DEPRECIATION> 34574
<TOTAL-ASSETS> 136066
<CURRENT-LIABILITIES> 78447
<BONDS> 0
<COMMON> 303
0
0
<OTHER-SE> 19947
<TOTAL-LIABILITY-AND-EQUITY> 136066
<SALES> 196309
<TOTAL-REVENUES> 196309
<CGS> 180959
<TOTAL-COSTS> 180959
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 965
<INCOME-PRETAX> (47731)
<INCOME-TAX> 14514
<INCOME-CONTINUING> (62245)
<DISCONTINUED> 9798
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52447)
<EPS-PRIMARY> (1.73)
<EPS-DILUTED> 0
</TABLE>
