10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K Annual report ("Report") pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1994 (FEE REQUIRED) Commission file number 1-10659 ROBERTSON-CECO CORPORATION ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 36-3479146 ------------------------------- ------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 222 Berkeley Street, Boston, Massachusetts 02116 ---------------------------------------------------- -------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 424-5500 -------------- Securities registered pursuant to Section 12(b) of the Act: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED -------------------- -------------------------------- Common Stock, par value, $0.01 per share New York Stock Exchange ---------------------------------------- -------------------------------- Securities registered pursuant to Section 12(g) of the Act: None ------------------------------------------------------------------------------ (Title of Class) The aggregate market value of the voting stock held by non-affiliates of the Registrant was $20,499,403 based upon the closing sales price of Registrant's common stock on the New York Stock Exchange on March 17, 1995. (The value of shares of common stock held by executive officers and directors of the Registrant and their affiliates has been excluded.) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [X] As of March 17, 1995, 16,096,562 shares of common stock of the Registrant were outstanding. Portions of the Registrant's definitive proxy statement for Registrant's 1994 annual meeting of stockholders to be filed with the Commission not later than 120 days after the end of Registrant's fiscal year covered by this report ("Report") are incorporated by reference into Part III. ROBERTSON-CECO CORPORATION Table of Contents PART I Page ----------------------------------------------------------- Item 1. Business . . . . . . . . . . . . . . . . . . . . . 3 Item 2. Properties . . . . . . . . . . . . . . . . . . . . 6 Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . 7 Item 4. Submission of Matters to a Vote of Security Holders . 8 Item 4.1 Executive Officers of the Registrant . . . . . . . 8 PART II ----------------------------------------------------------- Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. . . . . . . . . . . . . . . 10 Item 6. Selected Financial Data. . . . . . . . . . . . . . 11 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . 14 Item 8. Financial Statements and Supplementary Data. . . . 27 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . 60 PART III ----------------------------------------------------------- Item 10. Directors and Executive Officers of the Registrant. . 61 Item 11. Executive Compensation . . . . . . . . . . . . . . 61 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . 61 Item 13. Certain Relationships and Related Transactions . . 61 PART IV ----------------------------------------------------------- ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. . . . . . . . . . . . . . . 62 Signatures . . . . . . . . . . . . . . . . . . . . 63 ITEM 1. BUSINESS -------- THE COMPANY Robertson-Ceco Corporation (the "Company") was formed on November 8, 1990 by the merger (the "Combination") of H. H. Robertson ("Robertson") and Ceco Industries, Inc. ("Ceco Industries") with and into The Ceco Corporation ("Ceco"), a wholly-owned subsidiary of Ceco Industries, with Ceco continuing as the surviving corporation under the name Robertson-Ceco Corporation. The Combination was accounted for using the purchase method, with Robertson deemed the acquiror. Accordingly, the assets, liabilities and results of operations of Ceco Industries are included in the Company's consolidated financial statements only for periods subsequent to November 1, 1990. The Company and its subsidiaries operate in two segments: (1) the Metal Buildings Group, which is engaged in the manufacture, sale and installation of pre-engineered metal buildings for commercial and industrial users; and (2) the Building Products Group, which provides construction services and at certain locations is engaged in the manufacture, sale and installation of non-residential building components, including wall, roof and floor systems. Most of the products and services which the Company manufactures and sells are used in the construction of buildings, including commercial and industrial buildings, schools, offices, hospitals and multi-family dwellings. The Company considers all aspects of its business to be highly competitive. The Company's business is both seasonal and cyclical in nature and, as a consequence, has certain working capital needs which are characteristic of the industry in which the Company conducts its business. At a time of increased construction activity, the Company has a need for increased working capital which traditionally has been funded principally by short-term bank borrowings and letters of credit. As a result of the significant, negative impact on operations and liquidity caused by the severe recession in the worldwide non-residential construction markets, and the unlikelihood that a turnaround in the economy would occur in the near future, during the third quarter of 1991, the Company began to develop a restructuring plan designed to improve its operational and financial performance. In connection with this restructuring plan, during the first quarter of 1992, the Company sold (a) certain of its domestic building products and construction businesses, including the operations of the Ceco Door Products, the Ceco Entry Systems and the Ceco/Windsor Door operating units of the Company (collectively, the "Door Business"), acquired as part of the Combination, and the portion of the Company's H. H. Robertson Company (USA) operating unit engaged in the design, fabrication, marketing, sale and erection of industrial and architectural wall, roof and other building products systems (the "X-1 Business") for approximately $135 million, (b) its floor and deck business (the "Floor Business") for $2.4 million and (c) its subsidiary located in South Africa (the "South African Subsidiary" and, together with the X-1 Business and the Floor Business, the "Sold Businesses") for $5.3 million. The Company's 1990 results of operations were reclassified to reflect the Door Business as a discontinued operation. The Sold Businesses represented a portion of a segment and operated as part of the Company's Building Products Group. In November 1993, the Company sold for no cash consideration, its subsidiary located in the United Kingdom (the "U.K. Subsidiary") which also operated as part of the Company's Building Products Group. During the fourth quarter of 1994, the Company sold its remaining U.S. Building Products operation, the Cupples Products Division (the "Cupples Division") which manufactures curtainwall systems, to a newly formed Company owned by a member of the Company's Board of Directors, and commenced a plan to sell or dispose of its remaining European Building Products operations (the "European Operations"). The sale of the Cupples Division was completed December 27, 1994. The Company is currently in the process of implementing its plan to sell or dispose of its European Operations. The operating results of the Company's Cupples Division and the European Operations are included in the financial statements for periods prior to September 30, 1994. Also during the fourth quarter of 1994, the Company entered into a Letter of Intent for the sale of its Concrete Construction Group ("the Concrete Division"), to an entity owned by a company which is controlled by the Company's Chief Executive Officer. The sale of the Concrete Division was completed on March 3, 1995. The sale price was $11.5 million cash, adjusted to reflect an as of October 1, 1994 sale date, a $3 million interest bearing note which is payable over three years (the "Concrete Note") and the assumption of certain liabilities by the purchaser. Upon the closing of the sale, the Company received $8.0 million of cash, after adjustments. The Concrete Note was subsequently assigned to an unrelated third party pursuant to the settlement of certain litigation (see "Legal Proceedings") which is not related to the Concrete Division. The Concrete Division had previously operated as a separate business segment and, as a result of the sale, the Company's results of operations for the periods from 1990 to 1994 have been reclassified to reflect the Concrete Division as a discontinued operation. In addition to the sale of the businesses discussed above, a series of other operational restructuring actions were taken in 1992, 1993 and 1994. Operational restructuring actions included downsizing the corporate headquarters, exiting unprofitable businesses and product lines, closing excess plants and redistributing manufacturing operations and equipment from closed operations, consolidating and improving capacity and cost effectiveness at remaining plants, relocating certain product lines, reducing work force levels and consolidating certain financial and administrative functions. In addition, significant financial restructuring actions were completed during 1992, 1993 and 1994. (See "Managements Discussion and Analysis of Financial Condition and Results of Operations.") METAL BUILDINGS The Company owns and operates three pre-engineered metal building companies: Ceco Building Systems, Star Building Systems, and H. H. Robertson Building Systems (Canada). Pre-engineered metal buildings have traditionally accounted for a significant portion of the market for commercial and industrial buildings under 150,000 sq. ft. in size that are built in North America. Historically aimed at the one-story small to medium building market, the use of the product is expanding to large (up to 1 million sq. ft.), more complex, and multi-story (up to 4 floors) buildings. The product provides the customer with a custom designed building at generally a lower cost than conventional construction and is generally faster to job completion from concept. The Company's pre-engineered metal buildings are designed and manufactured at plants in California, Iowa, Mississippi and North Carolina, and in Ontario, Canada. The buildings are sold through builder/dealers located throughout the U.S. and Canada. In addition to sales in North America, in recent years the Company has been selling its buildings to a growing Asian market. Sales to these markets are made both through local unaffiliated dealers and by Company salespersons. The principal materials used in the manufactured buildings are hot and cold rolled steel products that are readily available from many sources. The buildings consist of four components: primary structural steel, secondary structural steel, cladding, and accessories (doors, windows, flashing, etc.). The buildings are erected by the dealer network supplemented by subcontractors and, in certain cases, by Company erection crews. The Company faces competition from many other manufacturers. Price and service are the primary competitive features in this market. The Metal Buildings Group accounted for 56%, 69% and 81% of the Company's revenue (before intersegment eliminations) in 1992, 1993 and 1994, respectively. BUILDING PRODUCTS The Building Products Group provides construction services with respect to: (a) insulated and non-insulated roofing, siding and exterior wall panels; (b) fluted steel roofs and decks and fluted and cellular steel floor and deck and related supplies and accessories; (c) louvers and ventilators; and (d) architectural wall systems. In connection with an agreement pursuant to which the Company sold the Door Business and the X-1 Business, the Company (a) sold its United States building products businesses, other than its Cupples Division and (b) agreed not to compete in the United States with respect to the building products businesses which were sold. During 1994, the Company sold its Cupples Division and commenced actions to sell or dispose of the remaining European Operations. The principal materials used by the Company in the manufacture of its building products are coiled steel (both galvanized and prepainted), coiled and sheet aluminum, glass synthetic resins and metal fastening devices. These materials are readily available from multiple sources. The principal geographic areas in which the Company's ongoing Building Products services and products are sold are Asia and the Pacific Rim, Australia and Canada. The Company's Building Products Group competes with a number of companies who provide such services and distribute competing product lines, including manufacturers of metal building products which are similar to those provided by the Company. Further competition comes from manufacturers using other materials such as concrete, brick, gypsum products, glass and reinforced plastics. Price, service, warranty, product and installation performance each affect competition for the Company's building products. The Building Products Group accounted for 44%, 31% and 19% of the Company's revenues (before intersegment eliminations) in 1992, 1993 and 1994, respectively. Refer to Note 17 to the Consolidated Financial Statements for information concerning the Company's business segments. SEASONALITY The Company operates in the construction and commercial building sectors with a significant portion of the Company's revenues concentrated in North America. As a result, the Company considers its business to be seasonal in nature and operating results are in part effected by the severity of weather conditions. CUSTOMERS The Company serves a wide variety of customers, virtually all of which are in the construction industry, and there is no dependence upon a single customer, group of related customers or a few large customers. INVENTORY AND BACKLOG Virtually all sales of pre-engineered metal buildings and building products are for specific projects, and the Company maintains a minimum inventory of finished products. Shipments of pre-engineered metal buildings and building products are generally made directly from the manufacturing plant to the building sites. Raw materials are largely comprised of steel-related materials which are susceptible to price increases, especially during periods of strong economic expansion. Historically, the Company and the related industries with which it competes have been successful in passing on such price increases to purchasers. Due to the wide availability of the necessary raw materials and the generally short delivery lead times, the Company generally has been able to minimize its risk with respect to price increases in the raw materials used to make its products. To the extent that the Company has quoted a fixed-price sales contract and has not locked in the related cost of the raw materials, the Company is at risk for price increases in such raw materials. For material, backlog is determined primarily based upon receipt of a letter of intent or purchase order from the customer; for erection work, backlog is determined based primarily on receipt of the customer contract or letter of intent. The Company reduces its backlog upon recognition of the related revenue. At December 31, 1994, the backlog of unfilled orders believed to be firm for the Company's ongoing businesses was approximately $100.8 million. On a comparable basis, adjusted for the sale of the Cupples Division, the European Operations and the Concrete Division, which together at December 31, 1993 had a combined backlog of approximately $67.3 million, the order backlog was approximately $84.1 million at December 31, 1993. Substantially all of the December 31, 1994 backlog is expected to be performed in 1995. PATENTS The Company owns a number of patents with varying expiration dates extending beyond the year 2000. None of these patents is believed to be a major factor in the competitive position of the Company. The Company has entered into various licensing arrangements relating to the Company's patents, trademarks and 'know-how,' but the revenues received from these arrangements, in the aggregate, are not significant. ENVIRONMENTAL CONTROLS The Company's manufacturing activities have generated and continue to generate materials classified as hazardous wastes. The Company devotes considerable resources to compliance with legal and regulatory requirements relating to (a) the use of these materials, (b) the proper disposal of such materials classified as hazardous wastes and (c) the protection of the environment. These requirements include clean-ups at various sites. The Company's policy is to accrue environmental and clean-up related costs of a non-capital nature when it is probable that a liability has been incurred and such liability can be reasonably estimated. Based upon currently available information, including the reports of third parties, management does not believe that the reasonably probable loss in excess of the amounts accrued in the Company's consolidated financial statements would be material. However, no assurance can be given that any future discovery of new facts and the application of the Company's legal and regulatory requirements to those facts would not be material and would not change the Company's estimate of costs it could be required to pay in any particular situation (See "ENVIRONMENTAL MATTERS"). EMPLOYEES At December 31, 1994, the Company employed at its ongoing businesses (excluding 1,183 employees at the Company's former Concrete Division which was sold March 3, 1995 and 94 employees of the European Operations which are held for sale or disposition at December 31, 1994) approximately 1,641 persons worldwide and was a party to collective bargaining agreements with various labor unions covering approximately 119 U.S. employees and 93 foreign employees. Work stoppages are generally a possibility in connection with the negotiation of collective bargaining agreements, although the Company believes that its employee relations are generally satisfactory. FOREIGN OPERATIONS The Company owns subsidiaries or directly conducts operations in several foreign countries. For the year ended December 31, 1994, foreign operations accounted for 21% of the Company's revenues before inter-area eliminations, and at December 31, 1994, foreign operations accounted for 20% of the Company's total assets (before adjustments and eliminations). The Company's foreign investments and businesses result in several risks to the Company's financial condition and results of operations, including potential losses through currency exchange rate fluctuations, expropriation of assets, restrictions upon the repatriation of capital and profits, and foreign governmental regulations discriminating against non-domestic companies (see Note 17 to the Consolidated Financial Statements). ITEM 2. PROPERTIES ---------- The Company maintains and operates manufacturing plants world-wide to produce the products and materials required by its business activities. The listing below identifies those manufacturing facilities of the Company's ongoing businesses which are currently used in the Company's business and identifies the business segments that use the properties. These facilities are owned by the Company. All of the Company's manufacturing facilities are pledged as collateral in connection with the Company's credit facilities. MANUFACTURING PLANT BUSINESS SEGMENT ------------------- ---------------- Monticello, Iowa Metal Buildings Lockeford, California Metal Buildings Mt. Pleasant, Iowa Metal Buildings Rocky Mount, North Carolina Metal Buildings Columbus, Mississippi Metal Buildings Hamilton, Ontario, Canada Metal Buildings Revesby, N.S.W., Australia Building Products Each of the Company's manufacturing plants is an operating facility, designed to produce particular items. The productive capacities of these plants are adequate to serve the Company's business needs at a volume at least equal to that achieved in 1994. ITEM 3. LEGAL PROCEEDINGS ----------------- LAWSUITS Three related lawsuits were filed by or against the Company in 1990 and 1991 and are pending in the Supreme Court of the State of New York [Cupples Product Division of H.H. Robertson Company v. Morgan Guaranty Trust Company of New York, et al (the "New York Litigation"); Ace Contracting Company, a Division of Cell-San Construction Company, Inc. v. Morgan Guaranty Trust Company of New York, et al; H. Sand & Co., Inc. v. Morgan Guaranty Trust Company of New York]. The lawsuits arise out of the construction of new headquarters for Morgan Guaranty Trust Company of New York ("Morgan") at 60 Wall Street, New York, New York. Cupples acted as a subcontractor for the provision and erection of custom curtainwall for the building. Morgan and Tishman Construction Company of New York ("Tishman"), the general contractors for the project, have claimed that the Company and Federal Insurance Company ("Federal"), as issuer of a performance bond in connection with the Company's work, are liable for $29.9 million in excess completion costs and delay damages due to the Company's alleged failure to perform its obligations under its subcontract. The Company has taken action to enforce a $5.0 million mechanic's lien against the building and seeks to recover more than $10.0 million in costs and damages caused by Tishman's breach of the subcontract with the Company. Ace Contracting Company and H. Sand & Co., Inc. each joined the Company as a necessary party, due to the existence of the Company's mechanic's lien, to mechanics liens actions brought by those parties, against other parties. In March 1995, the Company and Federal entered into an agreement under which Federal has agreed to hold the Company harmless from claims pending in the New York Litigation. Under the agreement, Federal will assume control of the New York Litigation (see Note 14 to the Consolidated Financial Statements). In February 1994, the Company filed suit in state court in Iowa against Alaska Industrial Development and Export Authority ("AIDEA"), Olympic Pacific Builders, Inc. ("OPB") and Strand Hunt Corp. ("Strand Hunt") and others alleging breach of contact, tortious interference with contractual relations, negligence and misrepresentation, and seeking payment of amounts owed to the Company and other damages in connection with a pre-engineered metal building in Anchorage, Alaska. The Company fabricated the building for OPB, which in turn supplied the building to Strand Hunt, as general contractor for AIDEA. In March 1994, Strand Hunt filed suit in the Superior Court for the State of Alaska against a number of parties, including the Company and its surety. Strand Hunt has alleged against the Company breach of contract, breach of implied warranties, misrepresentation and negligence in connection with the fabrication of the building and seeks damages in excess of $10 million. The Company answered the Alaska suit and asserted the claims made in the Iowa action as counterclaims against the other parties. In addition, cross-claims of a similar nature to those of Strand Hunt have been made against the Company by several of the other parties. The Company believes that it is entitled to payment and that it has meritorious defenses against the claims of Strand Hunt and the cross claims of the other parties. There are various other proceedings pending against or involving the Company which are ordinary or routine given the nature of the Company's business. While the outcome of the Company's legal proceedings cannot at this time be predicted with certainty, management does not expect that these matters will have a material adverse effect upon the consolidated financial condition or results of operations of the Company. ENVIRONMENTAL MATTERS The Company has completed its investigation of two owned disposal sites in Beaver County, Pennsylvania formerly used by Robertson to dispose of plant wastes from the Company's former Ambridge, Pennsylvania, manufacturing facility. The Company has submitted its reports of findings to the Pennsylvania Department of Environmental Resources ("PDER") and has submitted work plans for remedial activities for both sites to the PDER for its consideration and approval. The Company also is in the process of negotiating a Consent Order and Agreement to memorialize an agreed upon approach to remediate these sites. In another matter, the Company has submitted a proposal to the Illinois Environmental Protection Agency ("IEPA) regarding an appropriate work plan for the closure of an owned hazardous waste storage facility for electric arc furnace dust generated from Ceco's former Lemont, Illinois, steel mill facility. Environmental closure at this site is substantially complete. A closure unit has been constructed and a post- closure groundwater monitoring well system has been installed and is currently in operation. The Company has entered into discussions with the IEPA regarding what further conditions they will require to secure final closure at this site. The Company has recorded reserves in amounts which it considers to be adequate to cover the probable and reasonably estimable costs which may be incurred in relation to these matters. However, no guarantee can be made that the relevant governmental authorities will accept the remediation plans or actions proposed by the Company or the position taken by the Company as to its legal responsibilities and therefore that more costly remediation efforts will not be required. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- During the fourth quarter of the fiscal year covered by this report no matter was submitted to a vote of security holders. ITEM 4.1. EXECUTIVE OFFICERS OF THE REGISTRANT ------------------------------------ The following table sets forth certain information regarding the executive officers of the Company as of March 24, 1995. Name Age Position ---- --- -------- Andrew G. C. Sage, II 69 Chairman Michael E. Heisley 58 Chief Executive Officer and Vice Chairman E.A. Roskovensky 49 President and Chief Operating Officer John C. Sills 39 Executive Vice President and Chief Financial Officer George S. Pultz 43 Vice President, General Counsel and Secretary
Mr. Andrew G. C. Sage, II is Chairman (since July 1993) of the Company. Mr. Sage also served as President (from November 1992 until July 1993) and Chief Executive Officer (from November 1992 until December 1993) of the Company. Mr. Sage is also President of Sage Capital Corporation ("Sage Capital"), a general business and financial management corporation specializing in business restructuring and problem solving. Prior to the formation of Sage Capital in 1989, Mr. Sage was a consultant to and/or a director of Heico, Inc., Pettibone Corporation and USIF Real Estate. Mr. Sage is a director of Computervision Corporation, Fluid Condition Products, Tom's Foods, Inc. and Pettibone Corporation. Mr. Heisley is Chief Executive Officer and Vice Chairman (since December 1993) of the Company. Mr. Heisley is Chairman of the following companies: Davis Wire Corporation (since 1991), a manufacturer of steel wire; Tom's Foods, Inc. (since 1993), a manufacturer and distributor of snack foods; and Nutri/System, L.P. (since 1993), a national weight maintenance company. He is also a Chairman of the Executive Committee of Pettibone Corporation (since 1988), a diversified manufacturing company and director of Envirodyne, Inc. (since 1994). Mr. Roskovensky is President and Chief Operating Officer (since November 1994) of the Company. Prior to being elected President, Mr. Roskovensky served the Company as President of the Company's Metal Buildings Group (from February 1994). He is also the President and Chief Executive Officer of Davis Wire Corporation (from 1991), a manufacturer of steel wire. Prior to 1991, Mr. Roskovensky was the President of USS - POSCO Industries (from 1986 to 1990), a steel mill joint venture company between USX Corporation and Pohang Iron & Steel of the Republic of Korea. Mr. Sills is Executive Vice President and Chief Financial Officer (since November 1994) of the Company. Prior to being elected Chief Financial Officer, Mr. Sills was Vice President and Controller of the Company (from May 1992 to November 1994). Prior to joining the Company, Mr. Sills was employed at Price Waterhouse (from 1981 through 1992), a public accounting firm. Mr. Pultz is Vice President, General Counsel and Secretary (since January 1993) of the Company. Prior to joining the Company, Mr. Pultz was Assistant General Counsel and Assistant Secretary (from 1990 to 1993) and Assistant Corporate Counsel (from 1985 to 1990) of M/A-COM Inc., a manufacturer of microwave electronic components and subsystems. In addition, Mr. Pultz served as director (from 1988 to 1990) of Meteor Message Corporation, a start-up global positioning and messaging services provider. Mr. Pultz was also Clerk (from 1989 to 1993) of Filcom Microwave Inc., a microwave filter assembly maker. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS ------------------------------------------------------------ COMMON STOCK The Company's Common Stock is listed for trading on the New York Stock Exchange ("NYSE") under the symbol "RHH". The following table sets forth the high and low sale prices per share of the Common Stock as reported on the NYSE Composite Transaction Reporting System during the calendar periods indicated. Under the terms of the Company's current credit facility, the Company is restricted from paying cash dividends on its Common Stock. The Company did not pay cash dividends on the Common Stock during the periods set forth below.
High (1) Low (1) ----------- ------------ Calendar 1994 First Quarter. . . . . . . . . . . $ 4 - $ 2 7/8 Second Quarter . . . . . . . . . . 3 1/8 2 3/8 Third Quarter. . . . . . . . . . . 4 - 2 1/2 Fourth Quarter . . . . . . . . . . 4 - 3 - Calendar 1993 First Quarter. . . . . . . . . . . 11 11/32 6 3/16 Second Quarter . . . . . . . . . . 9 9/32 3 3/32 Third Quarter. . . . . . . . . . . 4 7/8 4 1/8 Fourth Quarter . . . . . . . . . . 3 5/8 2 1/2
(1) On July 23, 1993, a 1 for 16.5 reverse stock split of the Company's Common Stock became effective. This reverse stock split followed the issuance as of July 14, 1993 of 10,178,842 shares, after giving effect to the reverse stock split, in exchange for $63,733,867 principal amount of the Company's 15.5% Subordinated Debentures due 2000 and 500,000 shares of the Company's Preferred Stock pursuant to an exchange offer for such debentures and preferred stock consummated on that date (See Note 10 to the Consolidated Financial Statements). The high and low sales prices per share of Common Stock prior to July 23, 1993 are adjusted for the above reverse stock split. There were approximately 2,710 holders of record of the Company's Common Stock as of March 17, 1995. Included in the number of stockholders of record are stockholders who held shares in "nominee" or "street" name. The closing price per share of the Company's Common Stock on March 17, 1995, as reported under the NYSE Composite Transaction Reporting System was $2-7/8. ITEM 6. SELECTED FINANCIAL DATA ----------------------- Set forth below are historical financial data concerning the Company at December 31, 1990, 1991, 1992, 1993 and 1994 and for each of the five years in the period ended December 31, 1994. These data have been derived from the audited consolidated financial statements of the Company for such periods, some of which are presented elsewhere herein. The following information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Company's consolidated financial statements and the notes thereto appearing elsewhere in this Report. Statements of Operations Data (a)(b)(c)(h)(i): (In thousands, except share data)
Year Ended December 31 -------------------------------------------------- 1990 1991 1992 1993(e) 1994 -------- --------- --------- -------- -------- Net revenues . . . . . . $535,348 $ 566,510 $331,891 $315,657 $309,355 -------- --------- -------- -------- -------- Costs and expenses: Cost of Sales. . . . . 460,346 506,135 292,652 272,312 264,910 Selling, general and administrative . . . 76,174 89,247 68,238 50,766 44,516 Restructuring expense (income) . . . . . . (2,105) 33,170 9,208 - 3,420 -------- --------- -------- -------- -------- Total costs and expenses . . . . 534,415 628,552 370,098 323,078 312,846 -------- --------- -------- -------- -------- Operating income (loss). 933 (62,042) (38,207) (7,421) (3,491) Interest expense . . . . (11,861) (20,867) (15,267) (10,727) (4,634) Gain (loss) on businesses sold/held for sale . . - (25,371) (1,132) (9,700)(11,400) Other income (expense), net. . . . 2,893 2,081 (6,790) 622 832 -------- --------- -------- -------- -------- Income (loss) from continuing operations before income taxes. . . . . . . . . (8,035)(106,199) (61,396) (27,226)(18,693) Income taxes . . . . . . 2,552 2,030 1,205 9 256 -------- --------- -------- -------- -------- Income (loss) from continuing operations. (10,587)(108,229) (62,601) (27,235)(18,949) Income (loss) from discontinued operations. . . . . (2,095) (16,573) (8,544) 2,132 (2,811) Extraordinary gain on debt exchange. . . . . - - - 5,367 - Cumulative effect of accounting change (f). - - - (1,200) - -------- --------- -------- -------- -------- Net income (loss). . . . $(12,682) $(124,802)$(71,145) $(20,936) $(21,760) ======== ========= ======== ======== ======== Earnings (loss) per common share(d): Continuing operations. $ (23.65) $ (123.57)$ (71.30) $ (4.40) $ (1.20) Discontinued operations. . . . . (4.57) (18.87) (9.70) .35 (.18) Extraordinary item . . - - - .86 - Cumulative effect of accounting change (f). . . . . - - - (.20) - -------- --------- -------- -------- -------- Net income (loss) per common share . . . . $ (28.22) $ (142.44)$ (81.00) $ (3.39) $ (1.38) ======== ========= ======== ======== ======== Weighted average number of common shares outstanding (d) 458 878 880 6,217 15,808 ======== ======== ======== ======== ======== Cash dividends declared per common share . . . . . - - - - - ======== ======== ======== ======== ======== /TABLE Balance Sheet Data (a)(b)(c)(h)(i): (Thousands)
December 31 -------------------------------------------------- 1990 1991 1992 1993(e) 1994 -------- --------- -------- --------- -------- Working capital surplus (deficiency) . . . . . $ 63,602 $ 51,377 $(101,200) $ 4,708 $ 9,826 Total assets . . . . . . 539,340 422,937 232,370 181,823 137,400 Long-term debt (current portion) (g) . . . . . 3,476 65,964 67,420 390 134 Long-term debt (excluding current portion) . . . 108,056 69,897 1,426 45,084 43,421 Stockholders' equity (deficiency) . . . . . 155,545 39,874 (34,189) (16,663) (35,693)
(a) The consolidated financial data reflect the results of operations and assets and liabilities of Ceco Industries subsequent to November 1, 1990. See Note 2 of the Notes to Consolidated Financial Statements. (b) The consolidated statement of operations data exclude the results of operations of the Sold Businesses subsequent to December 31, 1991. For purposes of the consolidated balance sheet data, the Sold Businesses were recorded as net assets held for sale at December 31, 1991. (c) The consolidated statement of operations data exclude the results of operations of the Company's sold U.K. Subsidiary for periods subsequent to September 30, 1993. The consolidated balance sheet data exclude the assets and liabilities of the sold U.K. Subsidiary for all years subsequent to December 31, 1992. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 2 of the Notes to Consolidated Financial Statements. (d) On July 23, 1993, a 1 for 16.5 reverse split of the Company's common stock became effective. All common stock share amounts and per share data are restated to reflect the reverse split. (e) The consolidated financial information as of and for the year ended December 31, 1993 includes the effects of the Company's Exchange Offer which was consummated on July 14, 1993. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 10 of the Notes to Consolidated Financial Statements. (f) In the fourth quarter of 1993, the Company adopted Statement of Accounting Standards No. 112 "Employers' Accounting for Post Employment Benefits". See "Management's Discussion and Analysis of Financial Conditions and Results of Operations" and Note 19 of the Notes to Consolidated Financial Statements. (g) As a result of a default under the indenture, the amount of long-term debt (current portion) at December 31, 1992 includes $63,347,000 related to the Company's 15.5% Discount Subordinated Debentures due 2000. See Note 10 of the Notes to Consolidated Financial Statements. (h) The consolidated statement of operations data exclude the results of operations of the Company's Cupples Division and European Operations for periods subsequent to September 30, 1994. The consolidated balance sheet data exclude the assets and liabilities of the Cupples Division for 1994. At December 31, 1994, the assets and liabilities of the European Operations have been netted and are included in other liabilities. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 2 of the Notes to Consolidated Financial Statements. (i) The consolidated statement of operations data has been reclassified to reflect the Concrete Division as a discontinued operation. For purposes of the consolidated balance sheet data, the assets and liabilities of the Concrete Division have been netted and recorded as assets held for sale - current at December 31, 1994. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 2 of the Notes to Consolidated Financial Statements. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------------------------- RESULTS OF OPERATIONS OVERVIEW OF OPERATIONAL AND FINANCIAL RESTRUCTURING ACTIONS During the past several years, the Company has been adversely affected by the worldwide recession in most segments of the construction industry in which it operates and as a result has incurred significant operating losses and has experienced severe liquidity problems. To address these problems, the Company has developed and implemented, or is in the process of implementing a number of operational and financial restructuring plans. The significant operational and financial restructuring actions which have taken place or were in process during 1992, 1993, 1994 and the first quarter of 1995 are discussed below. On February 3, 1992, the Company sold its door business (the "Door Business") and certain of its U.S. domestic building products and construction businesses (the "X-1 Business") for $135.0 million (the "Disposition"). Additionally, during the first quarter of 1992, the Company sold its floor and deck business and its South African Subsidiary for $2.4 million and $5.3 million, respectively. The sale of the Door Business is reflected as a discontinued operation and the sale of the X-1 Business, the floor and deck business and the South African Subsidiary (collectively the "Sold Businesses"), which operated as part of the Company's Building Products Group, are reflected as disposals of portions of a segment of a business. On November 9, 1993, the Company sold, for no cash consideration, its subsidiary located in the United Kingdom (the "U.K. Subsidiary"). In connection with the sale, the Company recorded a charge of $9.7 million in the third quarter of 1993. The operating results and cash flows of the U.K. Subsidiary are included in the Company's financial statements through the year ended 1992 and for the period from January 1, 1993 through September 30, 1993, which was determined to be the measurement date. During 1992 and the nine month period ended September 30, 1993, the U.K. Subsidiary recorded revenues of $33.7 million and $23.1 million, respectively, and losses from continuing operations of $13.2 million and $4.4 million, respectively. On December 27, 1994, the Company sold the business and assets of its remaining U.S. Building Products operation, the Cupples Products Division (the "Cupples Division"), which manufactures curtainwall systems, to a newly formed company owned by a member of the Company's Board of Directors, for $.8 million cash and the assumption of certain liabilities by the purchaser. Pursuant to the terms of the sale agreement, the Company transferred certain contingent future rights to receive up to $.9 million of the proceeds, if any, relating to a curtainwall project which is in progress. In connection with the sale, the Company recorded a $4.8 million loss on sale of businesses in the third quarter of 1994. The operating results and cash flows of the Cupples Division are included in the Company's financial statements for the years ended December 31, 1992 and 1993, and the period from January 1, 1994 through September 30, 1994, the measurement date of the sale. During 1992, 1993 and the nine month period ended September 30, 1994, the Cupples Division recorded revenues of $12.3 million, $12.1 million and $8.3 million, respectively, and losses from continuing operations of $4.7 million, $4.6 million and $3.5 million, respectively. During the third quarter of 1994, the Company decided to sell or dispose of its remaining European Building Products operations (the "European Operations"). In connection with the planned sale or disposition of the European Operations, the Company recorded a $6.6 million loss on sale of businesses. For purposes of the December 31, 1994 Consolidated Balance Sheet, the assets and liabilities of the European Operations have been netted and are presented within other liabilities. The operating results and cash flows of the European Operations are included in the Company's financial statements for the years ended 1992 and 1993 and the period from January 1, 1994 through September 30, 1994 which was considered the measurement date. The European Operations recorded revenues of $53.2 million, $29.4 million and $16.1 million during the years ended December 31, 1992 and 1993 and the nine month period ended September 30, 1994, respectively. The European Operations recorded losses from continuing operations of $.7 million, $1.2 million and $1.3 million during the years ended December 31, 1992 and 1993 and the nine month period ended September 30, 1994, respectively. The U.K. Subsidiary, the Cupples Division and the European Operations operated as part of the Company's Building Products Group. On March 3, 1995, the Company sold the business and assets of its Concrete Construction business (the "Concrete Division") to Ceco Concrete Construction Corp., ("Ceco Concrete"), a newly formed company owned by an entity controlled by the Company's Chief Executive Officer. The consideration consisted of $11.5 million of cash, adjusted to reflect an as of sale date of October 1, 1994, a $3.0 million interest bearing promissory note payable in three equal annual installments, with interest at 7% (the "Concrete Note"), and the assumption of certain liabilities by the purchaser. Upon the close of the sale, the Company received $8.0 million of cash, after adjustments. The Concrete Note was subsequently transferred to an unrelated third party in connection with a settlement agreement (see "LITIGATION" below). The Concrete Division, which represented one of the Company's business segments, has been accounted for as a discontinued operation at December 31, 1994. Accordingly, the results of operations for all periods presented have been reclassified to reflect the Concrete Division as a discontinued operation. The Concrete Division recorded revenues of $69.1 million, $64.3 million and $69.7 million and income (losses) from continuing operations of $(4.7) million, $4.6 million and $5.2 million during the years ended December 31, 1992, 1993 and 1994, respectively. The Company expects that the sale of the Concrete Division will result in a gain for financial statement and tax reporting purposes, which will be recorded in the first quarter of 1995. For purposes of the December 31, 1994 Consolidated Balance Sheet, the assets and liabilities of the Concrete Division have been netted and classified as assets held for sale - current. In addition to the sale of the businesses discussed above, a series of other operational restructuring actions were taken in 1992, 1993 and 1994. Operational restructuring actions included downsizing the corporate headquarters, exiting unprofitable businesses and product lines, closing excess plants and redistributing manufacturing operations and equipment from closed operations, consolidating and improving capacity and cost effectiveness at remaining plants, relocating certain product lines, reducing work force levels and consolidating certain financial and administrative functions. The significant financial restructuring actions which were completed during 1992, 1993 and 1994 include: reductions in bank loans and certain other indebtedness from certain of the proceeds of the Disposition in February 1992; replacement of the Company's domestic credit facility in April 1993; the completion of an exchange offer for the Company's 15.5% Discount Subordinated Debentures due 2000 for new debt and common stock and the exchange of the Company's outstanding cumulative convertible preferred stock for common stock (the "Exchange Offer") in July 1993; retirement of a $4.0 million facility fee note through the issuance of 1,374,292 shares of common stock in November 1993; the sale of 3,333,333 newly issued shares of the Company's common stock and the transfer of all assets, claims and rights under a foreign project to an entity indirectly controlled by a director of the Company for $10.0 million in December 1993; and an amendment to the Company's domestic credit facility to include the assets of its Canadian operations and expand credit availability in May 1994. Additionally, throughout 1992, 1993 and 1994 the Company made significant reductions in collateral requirements under insurance programs, settled certain lawsuits pending against the Company, and renegotiated and settled certain operating leases and sold excess property and equipment in connection with the Company's downsizing activities. As a result of the sales and dispositions noted above, the Company's ongoing businesses currently include (excluding the European Operations) the Metal Buildings Group, which has sales and operations primarily throughout North America and, to a lesser extent, the Far East, and its Building Products Group, which has sales and operations primarily throughout the Asia/Pacific region and, to a lesser extent, Canada (the above hereinafter referred to as "Continuing Businesses"). The financial information presented in the tables below includes certain financial information concerning the Company's operations as it is presented in the Consolidated Financial Statements of the Company and provides certain pro forma information relating to the Company's Continuing Businesses. Adjustments for Businesses Sold/Held for Sale reflect the exclusion of the operating results for the periods indicated of the Company's businesses which have been sold or, in the case of the European Operations, are currently in the process of sale or disposal. Additionally, the pro forma Interest Expense amounts reflect the effect of the Company's Exchange Offer, assuming that the transaction was completed at the beginning of the period presented. Results of the Concrete Division are excluded, as this business is accounted for as a discontinued operation. The pro forma operating results are not necessarily indicative of what the Company's actual results would have been had such transaction occurred at the beginning of the periods presented and are not necessarily indicative of the financial condition or results of operations for any future period or date.
Year Ended December 31 -------------------------------------- 1992 1993 1994 ---- ---- ---- (In Thousands) (Unaudited) Revenue: Metal Buildings. . . . $187,465 $218,338 $251,584 Building Products. . .144,426 97,319 60,186 Intersegment Eliminations . . . . - - (2,415) -------- -------- -------- As Reported. . . . . .331,891 315,657 309,355 Businesses Sold/Held for Sale . . . . . .(99,276) (64,554) (24,337) -------- -------- -------- Pro Forma Continuing Businesses . . . . . $232,615 $251,103 $285,018 ======== ======== ========
Year Ended December 31 -------------------------------------- 1992 1993 1994 ---- ---- ---- (In Thousands) (Unaudited) Cost of Goods Sold: Metal Buildings. . . . $162,918 $188,892 $213,948 Building Products. . .129,734 83,420 53,377 Intersegment Eliminations . . . . - - (2,415) -------- -------- -------- As Reported. . . . . .292,652 272,312 264,910 Businesses Sold/Held for Sale . . . . . .(87,623) (57,903) (22,555) -------- -------- -------- Pro Forma Continuing Businesses . . . . . $205,029 $214,409 $242,355 ======== ======== ========
Year Ended December 31 -------------------------------------- 1992 1993 1994 ---- ---- ---- (In Thousands) (Unaudited) Selling, General and Administrative Expense: Metal Buildings. . . . $ 20,368 $ 22,234 $ 22,222 Building Products. . . 26,428 20,584 12,606 Corporate. . . . . . . 21,442 7,948 9,688 -------- -------- -------- As Reported. . . . . . 68,238 50,766 44,516 Businesses Sold/Held for Sale . . . . . .(20,079) (15,587) (5,189) -------- -------- -------- Pro Forma Continuing Businesses . . . . . $ 48,159 $ 35,179 $ 39,327 ======== ======== ========
Year Ended December 31 -------------------------------------- 1992 1993 1994 ---- ---- ---- (In Thousands) (Unaudited) Restructuring Expense: Metal Buildings. . . . $ - $ - $ - Building Products. . . 6,410 - 1,345 Corporate. . . . . . . 2,798 - 2,075 -------- -------- -------- As Reported. . . . . . 9,208 - 3,420 Businesses Sold/Held for Sale . . . . . . (6,410) - (900) -------- -------- -------- Pro Forma Continuing Businesses . . . . . $ 2,798 $ - $ 2,520 ======== ======== ========
Year Ended December 31 -------------------------------------- 1992 1993 1994 ---- ---- ---- (In Thousands) (Unaudited) Operating Income: Metal Buildings. . . . $ 4,179 $ 7,212 $ 15,414 Building Products. . .(18,146) (6,685) (7,142) Corporate. . . . . . .(24,240) (7,948) (11,763) -------- -------- -------- As Reported. . . . . .(38,207) (7,421) (3,491) Businesses Sold/Held for Sale . . . . . . 14,836 8,936 4,307 -------- -------- -------- Pro Forma Continuing Businesses . . . . . $(23,371) $ 1,515 $ 816 ======== ======== ========
Year Ended December 31 -------------------------------------- 1992 1993 1994 ---- ---- ---- (In Thousands) (Unaudited) Interest Expense As Reported. . . . . . $ 15,267 $ 10,727 $ 4,634 Businesses Sold/Held for Sale . . . . . . (2,113) (1,009) (341) Exchange Offer . . . .(10,733) (6,491) - -------- -------- -------- Pro Forma Continuing Businesses . . . . . $ 2,421 $ 3,227 $ 4,293 ======== ======== ========
Year Ended December 31 -------------------------------------- 1992 1993 1994 ---- ---- ---- (In Thousands) (Unaudited) Income (Loss) from Continuing Operations: Metal Buildings. . . . $ 4,768 $ 7,332 $ 15,612 Building Products. . .(24,117) (17,443) (19,207) Corporate (including domestic interest expense) . . . . . .(43,252) (17,124) (15,354) -------- -------- -------- As Reported. . . . . .(62,601) (27,235) (18,949) Businesses Sold/Held for Sale . . . . . . 19,713 19,905 16,198 Exchange Offer . . . . 10,733 6,491 - -------- -------- -------- Pro Forma Continuing Businesses . . . . . $(32,155) $ (839) $ (2,751) ======== ======== ========
YEAR ENDED DECEMBER 31, 1994 COMPARED WITH YEAR ENDED DECEMBER 31, 1993 OVERVIEW OF RESULTS OF OPERATIONS. Revenue for the year ended December 31, 1994 was $309.4 million, a decrease of $6.3 million or 2% compared to 1993. The decrease in revenue is primarily a result of excluding the revenues of businesses which were sold, offset by an increase in revenues at the Metal Buildings Group. The revenue of the Continuing Businesses was $285.0 million in 1994 compared to $251.1 million in 1993. The Company's gross margin percentage was 14.4% in 1994 compared to 13.7% in 1993. The improvement in the gross margin percentage is largely due to improved margins at the Company's Metal Buildings Group, offset in part by lower margins reported by the Company's Asia/Pacific Building Products operations. Additionally, the gross margin percentage was improved as a result of excluding the U.K. Subsidiary from the 1994 operating results and excluding the Cupples Division operating results from the fourth quarter of 1994. Selling, general and administrative expenses decreased by $6.3 million in 1994 compared to 1993. The decrease in selling, general and administrative expenses is primarily a result of excluding the U.K. Subsidiary from the 1994 operating results and excluding the Cupples Division and the European Operations from the fourth quarter of 1994. Selling, general and administrative expenses associated with the Continuing Businesses increased $4.1 million in 1994 compared to 1993. The increase in selling, general and administrative expenses of the Continuing Businesses results from higher costs associated with higher volumes and a $1.2 million non-cash charge recorded in the fourth quarter of 1994 related to a change in the retirement plan at the Company's Asia/Pacific operations (see Note 18). Additionally, in 1993 the Company recorded a $2.8 million credit to selling, general and administrative expenses as a result of favorable settlements of certain litigation. For the year ended December 31, 1994, losses from continuing operations were $18.9 million compared with $27.2 million in 1993. The losses from continuing operations include the losses of the Cupples Division and the European Operations through September 30, 1994 which combined were $4.8 million in 1994, and the losses from continuing operations of the Cupples Division and European operations for 1993 and the U.K. Subsidiary through September 30, 1993, which when combined were $10.2 million in 1993. Additionally, losses from continuing operations include an $11.4 million and $9.7 million charge in 1994 and 1993, respectively, associated with the sale or disposition of businesses. Excluding the operating results of the Businesses Sold/Held for Sale and the related charges recorded for Businesses Sold/Held for Sale, the Company's loss from continuing operations for its Continuing Businesses was $2.8 million in 1994 compared to $.8 million in 1993. Such results for 1994 include restructuring charges of $2.5 million related to the Continuing Businesses. The following sections highlight the Company's operating results on a segment basis and provide information on non-operating income and expenses (see Note 17). METAL BUILDINGS GROUP. For the year ended December 31, 1994, Metal Buildings Group revenues increased by $33.2 million or 15.2% compared to 1993. The 1994 increase in revenues reflects primarily improved market conditions in the United States and Canada. Operating income for the year ended December 31, 1994 was $15.4 million in 1994 compared to $7.2 million in 1993, an increase of $8.2 million or 114%. The increase in operating income is primarily a result of realizing efficiencies associated with higher sales volumes. Additionally, the restructuring and other cost reduction initiatives implemented over the past several years enabled the Metal Buildings Group to increase revenues without increasing overall selling, general and administrative costs. BUILDING PRODUCTS GROUP. For the year ended December 31, 1994, Building Products Group revenues decreased by $37.1 million or 38.2% compared to 1993. The decrease in 1994 revenues is a result of excluding the revenues of the sold U.K. Subsidiary from the 1994 revenues, and excluding the revenues of the Cupples Division and the European Operations from the fourth quarter of 1994, offset in part by higher revenue levels at the Company's Asia/Pacific operations. Excluding the effects of the sold U.K. Subsidiary, the Cupples Division and the European Operations, which together recorded revenues of $24.3 million in 1994 and $64.6 million in 1993, Building Products Group revenues increased $3.1 million in 1994. The Building Products Group recorded an operating loss of $7.1 million in 1994 compared to an operating loss of $6.7 million in 1993. The 1994 operating loss includes restructuring charges of $1.3 million, a non-cash charge of $1.2 million recorded to selling, general and administrative expenses related to a change made in the retirement plan at the Asia/Pacific operations (see Note 18), and operating losses of the Cupples Division and the European Operations of $3.4 million through September 30, 1994, excluding a $.9 million restructuring charge. The 1993 operating loss includes losses of the U.K. Subsidiary, the Cupples Division and the European Operations of $8.9 million. Excluding the effects of restructuring charges, the charge related to the Asia/Pacific retirement plan, and the operating losses of the U.K. Subsidiary, the Cupples Division and the European Operations, the Building Products Group recorded an operating loss of $1.2 million in 1994 compared to operating income of $2.2 million in 1993. The decrease in profitability of the remaining Building Products operations is primarily a result of severe competition which adversely affected pricing, losses relating to certain projects and higher selling and administrative costs associated with expanding the Company's Asian markets. BACKLOG. At December 31, 1994, the backlog of unfilled orders believed to be firm for the Company's Continuing Businesses was approximately $100.8 million. On a comparable basis, adjusted for the sale of the Cupples Division, the European Operations and the Concrete Division, which at December 31, 1993 had a backlog of approximately $67.3 million, the order backlog was approximately $84.1 million at December 31, 1993. Substantially all of the December 31, 1994 backlog is expected to be completed in 1995. OTHER INCOME (EXPENSE). Interest expense for the year ended December 31, 1994 was $4.6 million compared to $10.7 million in 1993, a decrease of $6.1 million. The decrease in interest expense in 1994 is primarily due to the completion of the Exchange Offer which became effective July 14, 1993. On a pro forma basis, assuming the Exchange Offer had occurred on January 1, 1993, interest expense in 1993 would have been reduced by $6.5 million. Exclusive of the effects of the Exchange Offer and the interest expense related to the businesses sold or held for sale, the increase in interest expense in 1994 over 1993 is primarily the result of the higher costs associated with the Company's new credit facility which was entered into in April of 1993. During 1994, the Company sold its Cupples Division and decided to sell or dispose of its remaining European Operations. In connection with the decision to exit these businesses, the Company recorded charges of $11.4 million to operations in 1994. On November 9, 1993, the Company sold its U.K. Subsidiary and in connection with the sale recorded a charge of $9.7 million in the third quarter of 1993. The Company's decision to sell these businesses was based on the current negative economic outlook for these operations which was not expected to improve in the foreseeable future and the estimated cost and effect on liquidity to continue to support and to further restructure and downsize these businesses. Other income (expenses) - net for the year ended December 31, 1994 was $.8 million in 1994 compared to $.6 million in 1993. INCOME TAXES. At December 31, 1994, the Company had worldwide net operating loss carryforwards of $41.1 million, excluding the European Operations, for tax reporting purposes which are available to offset future income without limitation. Approximately $24.9 million of the tax net operating loss carryforwards relate to domestic operations and are available for use until expiration in the years 2008 and 2009. Foreign net operating loss carryforwards at December 31, 1994 were $16.2 million and expire at various dates in the years 1996 through 2005, exclusive of loss carryforwards associated with European Operations of $6.2 million. The 1993 Exchange Offer resulted in a "Change of Ownership," as defined by Section 382 of the Internal Revenue Code. The effect of that transaction was to limit the Company's ability to utilize its unused U.S. tax loss carryforwards which existed prior to the Change in Ownership. Should another "Change of Ownership" occur, the Company's current domestic loss carryforwards would be further limited (see Note 13). DISCONTINUED OPERATIONS. During 1994 and 1993, the Company recorded charges of $8.0 million and $2.5 million, respectively, reflecting primarily provisions for costs associated with the settlement of claims and disputes associated with the Company's discontinued custom curtainwall operations which were discontinued in 1988. Discontinued operations for the years 1994 and 1993 include income from the Concrete Division of $5.2 million and $4.6 million, respectively. LITIGATION. Several contracts related to the discontinued custom curtainwall operations continue to be the subject of litigation. In one of the actions, a lawsuit arising out of the construction of new headquarters for Morgan Guaranty Trust Company of New York ("Morgan") at 60 Wall Street, New York, New York is pending in the Supreme Court of the State of New York [Cupples Products Division of H.H. Robertson Company v. Morgan Guaranty Trust Company of New York, et al (the "New York Litigation")]. The Company's Cupples Division acted as a subcontractor for the provision and erection of the custom curtainwall for the building. Morgan and Tishman Construction Company of New York ("Tishman") the general contractor for the project, claimed that the Company and Federal Insurance Company ("Federal"), as issuer of a performance bond in connection with the Company's work, are liable for $29.9 million in excess completion costs and delay damages due to the Company's alleged failure to perform its obligations under its subcontract. The Company had taken action to enforce a $5.0 million mechanic's lien against the building and sought to recover more than $10.0 million in costs and damages caused by Tishman's breach of the subcontract with the Company. On March 3, 1995, the Company and Federal entered into an agreement (the "Federal Agreement") under which Federal agreed to hold the Company harmless from claims pending in the New York Litigation. Under the agreement, Federal will assume control of the New York Litigation and will also be the beneficiary of any affirmative claim which the Company may receive. As consideration for Federal's obligations, the Company assigned to Federal the $3.0 million interest bearing promissory note received from the Company's sale of its Concrete Division, and agreed to pay Federal $1.0 million per year, in equal quarterly installments, for seven years without interest commencing March 24, 1995. As security for the payment obligations to Federal, the Company granted to Federal a security interest in all of the Company's assets and the purchaser of the Concrete Division delivered a financial guarantee insurance policy securing payment of the Concrete Note. The Federal Agreement also provides that (i) at least 30% of the ownership of the common stock of the Company must be held by Andrew G.C. Sage, II, who is the current Chairman of the Company and at December 31, 1994 controlled approximately 34% of the outstanding common stock through his control of Sage RHH, and Michael E. Heisley, who is the current Chief Executive Officer of the Company and at December 31, 1994 controlled approximately 21% of the outstanding common stock through his ownership of RBC Holdings L.P., and (ii) that Mr. Sage, Mr. Heisley or both must continue as chief executive officer and/or chairman of the Company. The Federal Agreement provides that, in the event such common stock ownership and executive officers are not maintained, Federal will be entitled to immediate payment of all amounts remaining unpaid to them. In February 1994, the Company filed suit in state court in Iowa against Alaska Industrial Development and Export Authority ("AIDEA"), Olympic Pacific Builders, Inc. ("OPB") and Strand Hunt Corp. ("Strand Hunt") and others alleging breach of contact, tortious interference with contractual relations, negligence and misrepresentation, and seeking payment of amounts owed to the Company and other damages in connection with a pre-engineered metal building in Anchorage, Alaska. The Company fabricated the building for OPB, which in turn supplied the building to Strand Hunt, as general contractor for AIDEA. In March 1994, Strand Hunt filed suit in the Superior Court for the State of Alaska against a number of parties, including the Company and its surety. Strand Hunt has alleged against the Company breach of contract, breach of implied warranties, misrepresentation and negligence in connection with the fabrication of the building and seeks damages in excess of $10 million. The Company answered the Alaska suit and asserted the claims made in the Iowa action as counterclaims against the other parties. In addition, cross-claims of a similar nature to those of Strand Hunt have been made against the Company by several of the other parties. The Company believes that it is entitled to payment and that it has meritorious defenses against the claims of Strand Hunt and the cross claims of the other parties. In February of 1994, the Company's Concrete Division settled certain backcharge and other claims related to a project which was substantially complete in 1989. In connection with this settlement, during the first quarter of 1994 the Company received $1.7 million cash and recorded a $1.2 million gain, which is included in the accompanying Consolidated Statement of Operations as income from discontinued operations. During the second quarter of 1993, the Company recorded a credit to selling, general and administrative expenses of $2.8 million as a result of the settlement of certain lease obligations. In May 1994, the Company resolved and settled certain claims related to a custom curtainwall project located in Texas. The outcome of these settlements did not have a material effect on the Company's Consolidated Statement of Operations in the year ended December 31, 1994. There are various other proceedings pending against or involving the Company which are ordinary or routine given the nature of the Company's business. The Company has recorded a liability related to litigation where it is both probable that a loss has been incurred and the amount of the loss can be reasonably estimated. While the outcome of the Company's legal proceedings cannot at this time be predicted with certainty, management does not expect that these matters will have a material adverse effect on the Consolidated Balance Sheets or Statement of Operations of the Company. ENVIRONMENTAL MATTERS. The Company has been identified as a potentially responsible party by various federal and state authorities for clean-up at various waste disposal sites. While it is often extremely difficult to reasonably quantify future environmental related expenditures, the Company has engaged various third parties to perform feasibility studies and assist in estimating the cost of investigation and remediation. The Company's policy is to accrue environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and that the amount can be reasonably estimated. Based upon currently available information, including the reports of third parties, management does not believe that the reasonably possible loss in excess of the amounts accrued would be material to the consolidated financial statements. YEAR ENDED DECEMBER 31, 1993 COMPARED WITH YEAR ENDED DECEMBER 31, 1992 OVERVIEW OF RESULTS OF OPERATIONS. Revenue for the year ended December 31, 1993 of $315.7 million decreased $16.2 million or 4.9% compared to 1992. Excluding the effect of the sold U.K. Subsidiary, revenues declined $5.6 million or 1.9%. The remaining decrease reflects lower sales at the Company's Building Products Group offset in part by higher sales volumes at the Company's Metal Buildings Group. The Company's gross margin percentage was approximately 13.7% in 1993 compared with 11.8% in 1992 with each of the Company's business segments reporting improvements over 1992. The improvement reflects primarily benefits from restructuring activities at the Company's Building Products Group and higher sales levels at the Company's Metal Buildings Group. Selling, general and administrative expenses decreased by $17.5 million in 1993 compared with 1992. Excluding the effect of the sold U.K. Subsidiary, selling, general and administrative expenses decreased $15.0 million. The remaining decline represents primarily reductions in operating expenses in the Building Products Group resulting from restructuring actions, reductions in consulting, legal and other professional fees at Corporate, offset in part by higher selling and advertising costs at the Company's Metal Buildings Group. Additionally, amounts for 1993 include a credit to selling, general and administrative expense of $2.8 million as a result of favorable settlements of certain litigation, and results for 1992 include a charge of $3.5 million relating to environmental matters and a charge of $1.3 million relating to severances. For the year ended December 31, 1993 losses from continuing operations were $27.2 million compared with $62.6 million during the same period in 1992. Losses from continuing operations for 1993 include a $9.7 million loss from the sale of businesses and losses from continuing operations for 1992 include losses from the sale of businesses of $1.1 million and restructuring charges of $9.2 million. Exclusive of the 1993 and 1992 losses on sold businesses, the 1992 restructuring charges and the effect of the operating results of the sold U.K. Subsidiary which recorded a loss of $4.4 million in 1993 compared with a loss of $13.2 million in 1992, the Company's loss from continuing operations decreased by $28.4 million. As further discussed below, results for the year ended December 31, 1993 include a charge for discontinued operations of $2.5 million, income from discontinued operations relating to the Concrete Division of $4.6 million, an extraordinary gain of $5.4 million from the Company's Exchange Offer and a charge of $1.2 million for the cumulative effect of an accounting change. The following sections highlight the Company's operating income (loss) on a segment basis and provide information on non-operating income and expenses. METAL BUILDINGS GROUP. For the year end December 31, 1993, Metal Buildings Group revenues increased by $30.9 million or 16.5% compared to 1992. The increase in 1993 reflects primarily improved market conditions in the United States. For the year ended December 31, 1993 operating income was $7.2 million compared with $4.2 million in 1992. The improved operating results are primarily attributable to higher levels of sales offset, in part, by higher per unit material costs and higher selling and advertising expenditures associated with the development of international markets. BUILDING PRODUCTS GROUP. For the year ended December 31, 1993, Building Products Group revenues decreased by $47.1 million or 32.6%. Excluding the effect of the sold U.K. Subsidiary, Building Products Group revenues decreased $36.5 million or 33%. The decline reflects weak market conditions and pressures on selling prices at both the Company's U.S. and foreign operations. For the year ended December 31, 1993, the Building Products Group reported an operating loss of $6.7 million compared with $18.1 million in 1992. The 1993 and 1992 operating losses include operating losses before restructuring charges of $3.7 million and $8.8 million, respectively, from the sold U.K. Subsidiary. The 1992 operating losses also include restructuring charges of $6.4 million. Exclusive of these items, the operating results for the Building Products Group were losses of $2.9 million in 1993 compared with losses of $2.9 million in 1992. OTHER INCOME (EXPENSES). Interest expense for the year ended December 31, 1993 and 1992 totalled $10.7 million and $15.3 million, respectively. The decrease in interest expense of $4.5 million for 1993 compared with 1992 is primarily due to the completion of the Exchange Offer which became effective July 14, 1993. On a proforma basis, assuming that the Exchange Offer had occurred on January 1 of 1992 and 1993, reported interest expense for the years ended 1993 and 1992 would have been reduced by $6.5 million and $10.7 million, respectively. Other income (expense) - net for the year ended December 31, 1993, totalled $.6 million compared to $(6.8) million for 1992. The 1992 expense includes charges of approximately $6.2 million associated with operating losses and the writedown of an equity investment and foreign exchange losses of $1.1 million. INCOME TAXES. Income tax expense represents primarily taxes on foreign earnings which could not be offset by loss carryforwards. DISCONTINUED OPERATIONS. During the years ended December 31, 1993 and 1992, the Company recorded charges of $2.5 million and $3.9 million, respectively, reflecting primarily provisions for costs associated with the settlement of claims and disputes associated with the Company's discontinued custom curtainwall operations which were discontinued in 1988. The losses from discontinued operations for the years 1993 and 1992 include income (loss) from the Concrete Division of $4.6 million and $(4.7) million, respectively. ACCOUNTING CHANGES. Effective January 1, 1993, the Company adopted SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" for its U.S. plans and SFAS No. 109 "Accounting for Income Taxes". The adoption of these statements did not have a material impact on the Company's Consolidated Balance Sheets or Statements of Operations and the financial statements of prior periods have not been restated. Also, in the fourth quarter of 1993, the Company adopted the provisions of SFAS No. 112, "Employers' Accounting for Postemployment Benefits". The cumulative effect of the adoption of SFAS No. 112 was a charge of $1.2 million and has been recorded in the 1993 Consolidated Statement of Operations as a cumulative effect of an accounting change. LIQUIDITY AND CAPITAL RESOURCES During the year ended December 31, 1994, the Company used approximately $11.4 million of cash to fund its operating activities. Of this amount, approximately $5.3 million was used to fund restructuring activities, $.8 million was used to pay investment banking and other professional fees incurred in connection with the Company's Exchange Offer which was completed in July of 1993, $1.5 million was paid in connection with certain legal settlements, $5.1 million was used to fund the operating activities of the Cupples Division and European Operations, and $1.8 million was used to pay past due interest on the Company's 15.5% Subordinated Debentures, thereby curing the default which existed under such securities. The remaining uses of operating cash during 1994 reflect primarily the funding of trailing liabilities associated with sold and closed businesses and the funding of operating activities, including improvement in the aging of vendor payables at the Metal Buildings Group. Operating cash flow during the year ended December 31, 1994 included the receipt of a $1.7 million settlement payment in February of 1994 for a claim related to a job which was substantially complete in 1989. In addition, during the year ended December 31, 1994, the Company spent approximately $5.0 million on capital expenditures, most of which were directed toward upgrading and improving manufacturing equipment and data processing systems at the Company's Metal Buildings Group. Cash proceeds from sales of property, plant and equipment, and assets held for sale, and sales of businesses were $1.7 million, $3.8 million and $.8 million, respectively, for the year ended December 31, 1994. Cash provided by financing activities during the year consisted of short-term borrowings of $2.2 million which related primarily to the European Operations to assist in funding local working capital requirements and operating losses. As a result, primarily of the above, unrestricted cash and cash equivalents decreased by $7.8 million during 1994. At December 31, 1994, the Company had $7.9 million of cash (excluding the European Operations). On May 18, 1994, the Company entered into an amendment to its existing agreement with Foothill Capital Corporation (such amended agreement being hereinafter referred to as the "Credit Facility"), which, under its terms, amended the Company's existing credit facility by increasing the Company's maximum availability under the facility by $10.0 million to $45.0 million, incorporated certain receivables, inventory and property, plant and equipment of the Company's Canadian operations into the definition of the Borrowing Base, and extended the term of the Credit Facility to May 18, 1999. The Credit Facility requires that the Company borrow $5.0 million under a term loan and provides for issuances of commercial or standby letters of credit or guarantees of payment with respect to such letters of credit in an aggregate amount not to exceed $32.0 million and/or additional borrowings, based upon availability under the Borrowing Base. Availability under the Credit Facility is based on a percentage of eligible (as defined in the Credit Facility and subject to certain restrictions) accounts receivable and inventory, plus a base amount (which base amount is reduced by $166,667 per month and is subject to reduction in the case of sales of certain property, plant and equipment, including assets held for sale), plus the amount provided by the Company as cash collateral, if any, less the amount of $5.0 million required to be outstanding under a term loan note (each together the "Borrowing Base"). At December 31, 1994, the Borrowing Base was estimated to be $39.9 million and was used to support a $5.0 million term loan note and $29.2 million of outstanding letters of credit which are used primarily to support bonding programs, insurance programs and other financial guarantees. At December 31, 1994, the Company had unused availability under the Credit Facility of $5.7 million. In addition to the Credit Facility, borrowing arrangements are in place at the Company's Asia/Pacific operations to assist in supporting local working capital requirements and bonding programs. At December 31, 1994, the Company had in place at its Asia/Pacific operations available unused lines of credit of $.8 million and available letter of credit and performance guarantee facilities of $3.1 million of which $2.4 million of guarantees were outstanding. In February 1995, the Company was required to issue a $1.0 million letter of credit to support the Asia/Pacific operation's local banking facility. On a worldwide basis at December 31, 1994, excluding the European Operations, the Company had outstanding performance and financial bonds with related indemnification agreements from the Company of $34.3 million, which generally provide a guarantee as to the Company's performance under contracts and other commitments; certain of which are collateralized by letter of credit programs and certain of which are issued under foreign credit facilities. OUTLOOK. During the past several years, the Company has incurred significant losses from continuing operations. The combination of these operating losses, along with the funding required for restructuring activities, trailing liabilities associated with sold and discontinued businesses and substantial financing expenses have placed a significant strain on the Company's liquidity and credit resources. To respond to this situation, the Company has taken, and is in the process of taking, a number of operational and financial restructuring actions which are designed to improve the Company's profitability and liquidity. During 1994, the Company concluded that the appropriate near term strategy should be to: (i) focus the business around its Metal Buildings Group and Asia/Pacific Operations; (ii) exit those businesses which are considered non-strategic and consume significant liquidity; and (iii) preserve liquidity by aggressively managing trailing liabilities and, whenever possible, structure the payment of such obligations over a period of years. Actions which were taken during 1994 and the first quarter of 1995 to increase profitability, cash flow and liquidity include further reductions in headcount and costs associated with the corporate office; termination of the accrual of benefits under the Company's defined benefit pension plan for active salaried employees in the United States; sale of the Cupples Division, which incurred losses from continuing operations of $3.5 million for the nine months ended September 30, 1994; commencement of actions for the sale or disposition of the European Operations which incurred losses from continuing operations for the nine months ended September 30, 1994 of $1.3 million; filing on January 13, 1995 of an Application for Waiver of Minimum Funding Standard with the Internal Revenue Service to defer certain fiscal 1995 defined benefit pension plan contributions; entering into the Federal Agreement which provides a structured payout over time concerning certain litigation; development of a program to aggressively manage outstanding claims and to reduce collateral requirements in connection with insurance programs; and other actions to reduce the cost of active employee and retiree benefits. In view of the Company's liquidity situation, along with the projected working capital and capital expenditure needs for the Company's existing businesses, funding projections for trailing liabilities and the existing and anticipated bonding requirements required primarily by the Concrete Division, the Company decided during 1994 that it was necessary to sell its Concrete Division. In connection therewith, on March 3, 1995 the Company sold the business and assets of its Concrete Division. The sale price was $11.5 million cash, adjusted to reflect an as of October 1, 1994 sale date, a $3 million interest bearing promissory note (which was transferred to an unrelated third party in connection with the Federal Agreement) and the assumption of certain liabilities by the purchaser. Upon the closing of the sale, the Company received approximately $8.0 million of cash, after adjustments. In connection with the sale of the Company's Concrete Division at March 3, 1995, the Company's Borrowing Base under its Credit Facility was reduced by approximately $3.9 million. Additionally, in accordance with the sale agreement, the purchaser provided the Company's principal surety with a substitute indemnity agreement to satisfy the Company's bonding obligations with respect to those contracts transferred to the purchaser. The Company anticipates that demands on its liquidity and credit resources will continue to be significant during 1995 and the next several years as a result of funding requirements for restructuring programs, the Federal Agreement, nonrecurring cash obligations and trailing liabilities associated with sold and discontinued businesses. Additionally, beginning in November of 1995, the Company will be required to pay its interest obligation on its 10%-12% Senior Subordinated Notes in cash which will require a payment of $1.4 million semiannually. The Company expects to meet these requirements through a number of sources, including operating cash generated by the Company's Metal Buildings Group, proceeds from the sale of the Concrete Division, available cash which was $7.9 million at December 31, 1994, and availability under the Credit Facility and foreign credit facilities. The Company's liquidity projections are predicated on estimates as to the amount and timing of the payment of the Company's trailing liabilities and expectations regarding the operating performance of the Company's Continuing Businesses. In the event the Company experiences significant differences as to the amount and timing of the payment of the Company's trailing liabilities and/or the actual operating results of the Company's Continuing Businesses, the Company may be required to seek additional capital through the expansion of existing credit facilities or through new credit facilities, or through a possible debt or equity offering, or a combination of the above. There can be no assurance that such additional capital would be available to the Company. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ------------------------------------------- ROBERTSON-CECO CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share data)
For the Years Ended December 31 ------------------------------- 1992 1993 1994 ---- ---- ---- REVENUE Net product sales. . . . . . . . . . . . $287,592 $277,367 $276,987 Construction and other services. . . . . 44,299 38,290 32,368 -------- -------- -------- Total . . . . . . . . . . . . . . . 331,891 315,657 309,355 -------- -------- -------- COSTS AND EXPENSES Product costs. . . . . . . . . . . . . . 244,373 237,685 234,566 Construction and other services. . . . . 48,279 34,627 30,344 -------- -------- -------- Cost of sales . . . . . . . . . . . 292,652 272,312 264,910 Selling, general and administrative. . . 68,238 50,766 44,516 Restructuring expense. . . . . . . . . . 9,208 - 3,420 -------- -------- -------- Total . . . . . . . . . . . . . . . 370,098 323,078 312,846 -------- -------- -------- OPERATING INCOME (LOSS). . . . . . . . . (38,207) (7,421) (3,491) -------- -------- -------- OTHER INCOME (EXPENSE) Interest expense . . . . . . . . . . . . (15,267) (10,727) (4,634) Loss on businesses sold/held for sale. . (1,132) (9,700) (11,400) Other income (expense) - net . . . . . . (6,790) 622 832 -------- -------- -------- Total . . . . . . . . . . . . . . . (23,189) (19,805) (15,202) -------- -------- -------- Income(loss) from continuing operations before provision for taxes on income . . . . (61,396) (27,226) (18,693) Provision for taxes on income. . . . . . 1,205 9 256 -------- -------- -------- INCOME (LOSS) FROM CONTINUING OPERATIONS (62,601) (27,235) (18,949) -------- -------- -------- Income (loss) from discontinued operations . . . . (8,544) 2,132 (2,811) -------- -------- -------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE. . . . . (71,145) (25,103) (21,760) -------- -------- -------- Extraordinary gain on debt exchange. . . - 5,367 - -------- -------- -------- Cumulative effect of accounting change . - (1,200) - -------- -------- -------- NET INCOME (LOSS). . . . . . . . . . . . $(71,145)$(20,936)$(21,760) ======== ======== ======== EARNINGS (LOSS) PER COMMON SHARE Continuing operations. . . . . . . . . . $ (71.30)$ (4.40)$ (1.20) Discontinued operations. . . . . . . . . (9.70) .35 (.18) Extraordinary item . . . . . . . . . . . - .86 - Cumulative effect of accounting change . - (.20) - -------- -------- -------- NET INCOME (LOSS). . . . . . . . . . . . $ (81.00)$ (3.39)$ (1.38) ======== ======== ======== Weighted average number of common shares outstanding . . . . . . . . . . . . . 880 6,217 15,808 ======== ======== ========
See Notes to Consolidated Financial Statements. ROBERTSON-CECO CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands)
December 31 ------------------- 1993 1994 ---- ---- ASSETS CURRENT ASSETS Cash and cash equivalents. . . . . . . . . . . . $ 15,666 $ 7,890 Restricted cash. . . . . . . . . . . . . . . . . 3,138 2,478 Accounts and notes receivable, less allowance for doubtful accounts: 1993, $3,255; 1994, $1,143. . . 58,062 41,382 Inventories. . . . . . . . . . . . . . . . . . . 21,417 17,825 Net assets held for sale . . . . . . . . . . . . - 4,664 Other current assets . . . . . . . . . . . . . . 3,218 2,056 -------- -------- Total current assets. . . . . . . . . . . . 101,501 76,295 -------- -------- PROPERTY - AT COST Land and land improvements . . . . . . . . . . . 3,074 1,698 Buildings and building equipment . . . . . . . . 14,382 10,202 Machinery and equipment. . . . . . . . . . . . . 42,210 24,288 Construction in progress . . . . . . . . . . . . 3,065 3,739 -------- -------- Total . . . . . . . . . . . . . . . . . . . 62,731 39,927 Less accumulated depreciation. . . . . . . . . . 29,658 17,332 -------- -------- Property - net. . . . . . . . . . . . . . . 33,073 22,595 -------- -------- ASSETS HELD FOR SALE . . . . . . . . . . . . . . 4,289 992 -------- -------- EXCESS OF COST OVER NET ASSETS OF ACQUIRED BUSINESSES, LESS ACCUMULATED AMORTIZATION: 1993, $3,430; 1994, $4,257. . . . . . . . . . 29,094 28,267 -------- -------- OTHER NON-CURRENT ASSETS . . . . . . . . . . . . 13,866 9,251 -------- -------- Total assets. . . . . . . . . . . . . . . . $181,823 $137,400 ======== ========
See Notes to Consolidated Financial Statements. ROBERTSON-CECO CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
December 31 ----------------------- 1993 1994 ---- ---- LIABILITIES CURRENT LIABILITIES Loans payable. . . . . . . . . . . . . . . . . . $ 1,054 $ - Current portion of long-term debt. . . . . . . . 390 134 Accounts payable, principally trade. . . . . . . 36,480 25,168 Insurance liabilities. . . . . . . . . . . . . . 11,225 8,365 Other accrued liabilities. . . . . . . . . . . . 47,644 32,802 --------- --------- Total current liabilities . . . . . . . . . 96,793 66,469 --------- --------- LONG-TERM DEBT, LESS CURRENT PORTION . . . . . . 45,084 43,421 --------- --------- LONG-TERM INSURANCE LIABILITIES. . . . . . . . . 14,770 15,084 --------- --------- LONG-TERM PENSION LIABILITIES. . . . . . . . . . 16,881 16,265 --------- --------- RESERVES AND OTHER LONG-TERM LIABILITIES . . . . 24,958 31,854 --------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY (DEFICIENCY) COMMON STOCK Par value per share $.01 Authorized shares: 30,000,000 Issued shares: 1993 - 16,336,655; 1994 - 16,134,566 . . 163 161 CAPITAL SURPLUS. . . . . . . . . . . . . . . . .172,682 172,089 WARRANTS . . . . 6,042 6,042 RETAINED EARNINGS (DEFICIT). . . . . . . . . . . (177,519) (199,279) EXCESS OF ADDITIONAL PENSION LIABILITY OVER UNRECOGNIZED PRIOR SERVICE COST . . . . . . . (8,139) (7,991) DEFERRED COMPENSATION. . . . . . . . . . . . . . (1,551) (508) FOREIGN CURRENCY TRANSLATION ADJUSTMENTS . . . . (8,341) (6,207) --------- --------- Stockholders' equity (deficiency) . . . . . .(16,663) (35,693) --------- --------- Total liabilities and stockholders' equity (deficiency). . . . . . . . . . . $ 181,823 $ 137,400 ========= =========
See Notes to Consolidated Financial Statements. ROBERTSON-CECO CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
For the Years Ended December 31 ------------------------------- 1992 1993 1994 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss). . . . . . . . . . . . . . $(71,145)$(20,936)$(21,760) Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization . . . . . . 7,458 6,694 5,353 Amortization of discount on debentures and capitalized debt issuance costs . . . . 303 1,008 1,251 Loss on businesses sold/held for sale . . 1,132 9,700 11,400 Cumulative effect of accounting change. . - 1,200 - Extraordinary gain on debt exchange . . . - (5,367) - (Income) loss on sale of business segment (133) - - Provisions for: Bad debts and losses on erection contracts. . . . 3,526 2,658 3,539 Rectification and other costs . . . . . 3,719 4,203 4,035 Restructuring expense . . . . . . . . . 11,858 - 3,420 Loss from and writedown of equity investment. . . 6,161 - - Discontinued operations . . . . . . . . 3,930 2,500 8,000 Changes in assets and liabilities, net of divestitures: (Increase) decrease in accounts and notes receivable. . . . . . . . . . . . . . . 22,463 2,698 (8,930) Decrease in inventories . . . . . . . . 5,967 2,765 2,024 (Increase) decrease in restricted cash. (23,962) 20,824 660 Increase (decrease) in accounts payable, principally trade. . . . . . . . . . . (1,955) 2,672 (5,200) Net changes in other assets and liabilities . . . (43,762) (29,962) (15,229) -------- -------- -------- NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (74,440) 657 (11,437) -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures . . . . . . . . . . . . (3,221) (5,503) (4,991) Proceeds from sales of property, plant and equipment . 736 2,986 1,701 Proceeds from sales of businesses. . . . . . 142,707 - 807 Proceeds from sales of assets held for sale. 4,072 1,563 3,764 -------- -------- -------- NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 144,294 (954) 1,281 -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net (payments) proceeds on short-term borrowings . . . (3,885) (624) 2,242 Proceeds from long-term debt borrowings. . . - 5,000 - Payments on revolving credit arrangements. . (64,300) - - Proceeds from revolving credit arrangements. 5,200 - - Payments on long-term debt borrowings. . . . (7,680) (2,283) (80) Proceeds from common stock issued. . . . . . 10 7,000 - -------- -------- -------- NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (70,655) 9,093 2,162 -------- -------- -------- Effect of foreign exchange rate changes on cash. . . . (727) (350) 218 -------- -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . (1,528) 8,446 (7,776) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD . . 8,748 7,220 15,666 -------- -------- -------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 7,220 $ 15,666 $ 7,890 ======== ======== ======== SUPPLEMENTAL CASH FLOW DATA Cash payments made for: Interest. . . . . . . . . . . . . . . . . $ 3,387 $ 2,301 $ 5,789 ======== ======== ======== Income taxes. . . . . . . . . . . . . . . $ 572 $ 627 $ 191 ======== ======== ========
See Notes to Consolidated Financial Statements. ROBERTSON-CECO CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (In thousands except share data)
Cumulative Convertible Preferred Common Capital Stock Stock Surplus Warrants ---------- ------------------------- ----------- BALANCE DECEMBER 31, 1991 . $ 5 $ 145 $129,287 $ 6,042 Net loss for the year . . . Dividends payable on preferred stock, $.34 per share. . . (169) Stock issued to directors (410 shares) . . . . . . . 10 Change in excess of additional pension liability over unrecognized prior service cost . . . . . . . . . . . Foreign currency translation adjustments for the year . -------- ------- -------- -------- BALANCE DECEMBER 31, 1992 . 5 145 129,128 6,042 Net loss for the year . . . Dividends payable on preferred stock, $.23 per share. . . (112) Stock issued to directors (5,635 shares) . . . . . . 25 Exchange Offer. . . . . . . (5) (35) 31,022 Conversion of Facility Note (1,374,292 shares) . . . . 14 4,107 Stock issued (3,333,333 shares). . . . . . . . . . 33 6,967 Change in excess of additional pension liability over unrecognized prior service cost . . . . . . . . . . . Issuances under employee plans, net . . . . . . . . 6 1,545 Foreign currency translation adjustments for the year . Writedown from the sale of the U.K. Subsidiary. . . . . . -------- ------- -------- -------- BALANCE DECEMBER 31, 1993 . - 163 172,682 6,042 Net loss for the year . . . Change in excess of additional pension liability over unrecognized prior service cost . . . . . . . . . . . Forfeitures under employee plans, net . . . . . . . . (2) (593) Amortization of deferred compensation . . . . . . . Foreign currency translation adjustments for the year . Writedown from pending sale/ disposition of European Operations . . . . . . . . -------- ------- -------- -------- BALANCE DECEMBER 31, 1994 . $ - $ 161 $172,089 $ 6,042 ======== ======= ======== ========
See Notes to consolidated Financial Statements. ROBERTSON-CECO CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (In thousands except share data) (Continued)
Excess of Additional Pension Liability Foreign Retained Over Unrecog- Currency Earnings nized Prior Deferred Translation (Deficit) Service Cost CompensationAdjustment ---------- ------------- ----------------------- BALANCE DECEMBER 31, 1991 . $ (85,438) $(3,610) $ - $ (6,557) Net loss for the year . . .(71,145) Dividends payable on preferred stock, $.34 per share. . . Stock issued to directors (410 shares) . . . . . . . Change in excess of additional pension liability over unrecognized prior service cost . . . . . . . . . . . 1,899 Foreign currency translation adjustments for the year . (4,658) -------- ------- ------- -------- BALANCE DECEMBER 31, 1992 . (156,583) (1,711) - (11,215) Net loss for the year . . .(20,936) Dividends payable on preferred stock, $.23 per share. . . Stock issued to directors (5,635 shares) . . . . . . Exchange Offer. . . . . . . Conversion of Facility Note (1,374,292 shares) . . . . Stock issued (3,333,333 shares). . . . . . . . . . Change in excess of additional pension liability over unrecognized prior service cost . . . . . . . . . . . (6,428) Issuances under employee plans, net . . . . . . . . (1,551) Foreign currency translation adjustments for the year . (1,705) Writedown from the sale of the U.K. Subsidiary. . . . . . 4,579 -------- ------- ------- -------- BALANCE DECEMBER 31, 1993 . (177,519) (8,139) (1,551) (8,341) Net loss for the year . . .(21,760) Change in excess of additional pension liability over unrecognized prior service cost . . . . . . . . . . . 148 Forfeitures under employee plans, net . . . . . . . . 569 Amortization of deferred compensation . . . . . . . 474 Foreign currency translation adjustments for the year . 896 Writedown from pending sale/ disposition of European Operations . . . . . . . . 1,238 -------- ------- ------- -------- BALANCE DECEMBER 31, 1994 . $(199,279) $(7,991) $ (508) $ (6,207) ======== ======= ======= ========
See Notes to consolidated Financial Statements. ROBERTSON-CECO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1992, 1993 AND 1994 1. SUMMARY OF ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of Robertson- Ceco Corporation (the "Company") and all majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Certain previously reported amounts have been reclassified to conform to the 1994 presentation. Foreign Currency Translation Asset and liability accounts of foreign subsidiaries and affiliates are translated into U.S. dollars at current exchange rates. Income and expense accounts are translated at average rates. Any unrealized gains or losses arising from the translation are charged or credited to the foreign currency translation adjustments account included in stockholders' equity (deficiency). Foreign currency gains and losses resulting from transactions, except for intercompany debt of a long-term investment nature, are included in other income (expense)-net and amounted to $(1,088,000), $(382,000) and $(27,000),respectively, for the years ended December 31, 1992, 1993 and 1994. Financial Instruments The Company enters into foreign exchange contracts as hedges against exposure to fluctuations in exchange rates associated with certain transactions denominated in foreign currencies, principally receivables. Market value gains or losses on these contracts are included in the results of operations and generally offset gains or losses on the related transactions. The terms of the Company's forward contracts are generally less than one year. Gains and losses on these contracts are deferred and recognized as adjustments of carrying amounts when the hedged transaction occurs. Deferred gains or losses at December 31, 1994 are not significant. Inventories Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out ("LIFO") method for certain inventories and the first-in, first-out ("FIFO") method for other inventories. Property Property is stated at cost. Depreciation is computed for financial statement purposes by applying the straight-line method over the estimated lives of the property. For federal income tax purposes, assets are generally depreciated using accelerated methods. Amortization of assets under capital leases is included with depreciation expense. Estimated useful lives used in computing depreciation for financial statement purposes are as follows: Land improvements. . . . . . . . . . . 10-25 years Buildings and building equipment . . . 25-33 years Machinery and equipment. . . . . . . . 3-16 years
Income Taxes The provision for income taxes is based on earnings reported in the financial statements. Deferred tax assets, when considered realizable, and deferred tax liabilities are recorded to reflect temporary differences between the tax bases of assets and liabilities for financial reporting and tax purposes. Revenue Revenue from product sales is recognized generally upon passage of title, acceptance at a job site, or when affixed to a building. Revenue from construction services is recognized generally using the percentage-of- completion method which recognizes income ratably over the period during which contract costs are incurred. A provision for loss on construction services in progress is made at the time a loss is determinable. Insurance Liabilities The Company is self-insured in the U.S. for certain health insurance, worker's compensation, general liability and automotive liability, subject to specific retention levels. Insurance liabilities consist of liabilities incurred but not yet paid for such amounts. Deferred Revenues Billings in excess of revenues earned on construction contracts are reflected in other accrued liabilities as deferred revenues. Revenues earned in excess of billings are included in accounts receivable as unbilled receivables. Excess of Cost Over Net Assets of Acquired Businesses The excess of cost over the net assets of acquired businesses relates to the Company's acquisitions of its Ceco and Star metal buildings businesses. Such costs are being amortized on a straight-line basis over a period of 40 years. The Company periodically reviews the carrying value of its excess of cost over net assets of acquired businesses to determine whether facts and circumstances exist which would indicate that the asset has been impaired. No such determination has been made to date. Cash and Cash Equivalents As used in the consolidated statements of cash flows, cash equivalents represent those short-term investments that can be easily converted into cash and that have original maturities of three months or less. Earnings (Loss) per Common Share Earnings (loss) per common share is based on the weighted average number of common shares and common share equivalents outstanding during each period. Warrants to purchase common stock, outstanding stock options and restricted stock are included in the earnings (loss) weighted average share computations if the effect is not antidilutive. Earnings (loss) used in the computation, is earnings (loss), plus dividends paid or payable on preferred stock. On July 23, 1993, a 1 for 16.5 reverse split (the "Reverse Split") of the Company's common stock became effective. The Reverse Split followed the issuance as of July 14, 1993 of 10,178,842 shares, after giving effect to the Reverse Split, in exchange for $63,734,000 principal amount of the Company's 15.5% Subordinated Debentures due 2000 and 500,000 shares of the Company's Preferred Stock pursuant to an exchange offer (the "Exchange Offer") for such debentures and preferred stock consummated on that date (see Note 10). All common stock share amounts and per share data presented herein are restated to reflect the Reverse Split. 2. ACQUISITIONS AND DIVESTITURES On November 8, 1990, H.H. Robertson Company ("Robertson") and Ceco Industries, Inc. ("Ceco Industries") merged into The Ceco Corporation ("Ceco"), a wholly-owned subsidiary of Ceco Industries (the "Combination") with Ceco continuing as the surviving corporation under the name Robertson- Ceco Corporation (the "Company"). The Combination was accounted for using the purchase method of accounting, with Robertson deemed to be the acquiror. On February 3, 1992, the Company sold its door businesses (the "Door Business"), acquired as part of the Combination discussed above, and certain of its U.S. domestic building products and construction businesses (the "X-1 Business") for $135,000,000 (the "Disposition"). Additionally, during the first quarter of 1992, the Company sold its floor and deck business and its South African Subsidiary for $2,400,000 and $5,300,000, respectively. The sale of the Door Business is reflected as a discontinued operation and the sale of the X-1 Business, the floor and deck business and the South African Subsidiary (collectively the "Sold Businesses"), which operated as part of the Company's Building Products Group, are reflected as disposals of portions of a segment of a business. In the fourth quarter of 1993, the Company settled in a noncash transaction certain purchase price disputes arising out of the Disposition. In connection therewith, the Company transferred to the purchaser certain real estate previously recorded as assets held for sale which had an approximate fair value of $1,900,000. This transaction had no effect on the 1993 Consolidated Statement of Operations. On November 9, 1993, the Company sold, for no cash consideration, its subsidiary located in the United Kingdom (the "U.K. Subsidiary"). In connection with the sale, the Company recorded a charge of $9,700,000 in the third quarter of 1993. The operating results and cash flows of the U.K. Subsidiary are included in the accompanying financial statements for the year ended 1992 and for the period from January 1, 1993 through September 30, 1993, which was determined to be the effective date of the sale. After completion of the sale of the U.K. Subsidiary, the Company remains contingently liable under a Company letter of credit which had an outstanding value of $1,878,000 at December 31, 1994 and which secures the former subsidiary's banking line; under an equipment lease which had an outstanding balance of approximately $2,060,000 at December 31, 1994; and under certain performance guarantees which arose prior to the sale. During 1992 and the nine month period ended September 30, 1993, the U.K. Subsidiary recorded revenues of $33,700,000 and $23,100,000, respectively, and losses from continuing operations of $13,200,000 and $4,400,000, respectively. On December 27, 1994, the Company sold the business and assets of its remaining U.S. Building Products operation, the Cupples Products Division (the "Cupples Division"), which manufactures curtainwall systems, to a newly formed company owned by a member of the Company's Board of Directors, for $800,000 cash and the assumption of certain liabilities by the purchaser. Pursuant to the terms of the sale agreement, the Company transferred certain contingent future rights to receive up to $900,000 of the proceeds, if any, relating to a curtainwall project which is in progress (see Note 16). In connection with the sale, the Company recorded a $4,800,000 loss on sale of businesses in the third quarter of 1994. The operating results and cash flows of the Cupples Division are included in the accompanying financial statements for the years ended 1992 and 1993, and the period from January 1, 1994 through September 30, 1994, the measurement date of the sale. During 1992, 1993 and the nine month period ended September 30, 1994, the Cupples Division recorded revenues of $12,300,000, $12,100,000 and $8,300,000, respectively, and losses from continuing operations of $4,700,000, $4,600,000 and $3,500,000, respectively. During the third quarter of 1994, the Company decided to sell or dispose of its remaining European Building Products operations (the "European Operations"). In connection with the planned sale or disposition of the European Operations, the Company recorded a $6,600,000 loss on sale of businesses. For purposes of the December 31, 1994 Consolidated Balance Sheet, the assets and liabilities of the European Operations are netted and presented within other liabilities. The operating results and cash flows of the European Operations are included in the accompanying financial statements for the years ended 1992 and 1993 and the period from January 1, 1994 through September 30, 1994 which was considered the measurement date. The European Operations recorded revenues of $53,200,000, $29,400,000 and $16,100,000 during the years ended 1992 and 1993 and the nine month period ended September 30, 1994, respectively. The European Operations recorded losses from continuing operations of $700,000, $1,200,000 and $1,300,000 during the years ended 1992 and 1993 and the nine month period ended September 30, 1994, respectively. The U.K. Subsidiary, the Cupples Division and the European Operations operated as part of the Company's Building Products Group. On March 3, 1995, the Company sold the business and assets of its Concrete Construction business (the "Concrete Division") to Ceco Concrete Construction Corp., ("Ceco Concrete"), a newly formed company owned by an entity controlled by the Company's Chief Executive Officer. The consideration consisted of $11,500,000 of cash, adjusted to reflect an as of sale date of October 1, 1994, a $3,000,000 interest bearing promissory note payable in three equal annual installments, with interest at 7% (the "Concrete Note"), and the assumption of certain liabilities by the purchaser. Upon the closing of the sale, the Company received $8,000,000 of cash, after adjustments. The Concrete Division, which represented one of the Company's business segments, has been accounted for as a discontinued operation at December 31, 1994. Accordingly, the results of operations for all periods presented have been reclassified to reflect the Concrete Division as a discontinued operation. The Concrete Division recorded revenues of $69,062,000, $64,249,000 and $69,686,000 during each of the years ended December 31, 1992, 1993 and 1994, respectively. The Company expects that the sale of the Concrete Division will result in a gain for financial statement and tax reporting purposes, which will be recorded in the first quarter of 1995. For purposes of the December 31, 1994 Consolidated Balance Sheet, the assets and liabilities of the Concrete Division have been netted and classified as assets held for sale - current. The components of net assets held for sale - current related to the Concrete Division are as follows:
December 31 1994 ------------ (Thousands) Accounts and notes receivable, net . . . . . $14,349 Property, net. . . . . . . . . . . . . . . . 4,797 Other assets . . . . . . . . . . . . . . . . 1,603 Loans payable and debt . . . . . . . . . . . (593) Accounts payable . . . . . . . . . . . . . . (2,615) Deferred revenues. . . . . . . . . . . . . . (7,930) Other liabilities. . . . . . . . . . . . . . (5,024) ------- $ 4,587 =======
During 1988, the Company adopted a formal plan to discontinue its fixed- price custom curtainwall operations. During 1989, the existing contracts related to the discontinued operation were substantially physically completed; however, several of the contracts have been the subject of various disputes and litigation relating to performance, scope of work and other contract issues. The charges recorded in 1992, 1993 and 1994 relate to costs incurred to provide for the settlement of contract disputes, litigation and rectification costs and to write-off related accounts receivable determined to be uncollectible. Such provisions are made when it is probable that a loss has been incurred and the amount of the loss can be estimated. The Company continues to be involved in litigation related to its discontinued custom curtainwall operations, certain of which are discussed in Note 14. In connection with the sales and dispositions noted above, and other operational and financial restructuring actions which have taken place primarily since the Combination, the Company continues to be liable for significant trailing liabilities which were associated with such sold or discontinued businesses prior to the sale or disposition dates including, in certain instances, liabilities arising from Company self-insurance programs, unfunded pension liabilities, warranty and rectification claims, various severance obligations, environmental clean-up matters, various Company guarantees with respect to such businesses, and unresolved litigation arising in the normal course of the former business activities. The management of the Company has made estimates as to the amount and timing of the payment of such liabilities which are reflected in the accompanying consolidated financial statements. Given the subjective nature of many of these liabilities, their ultimate outcome cannot be predicted with certainty, based upon currently available information, management does not expect that the ultimate outcome of such matters will be materially different than what is currently recorded in the accompanying consolidated financial statements. The transactions described above are included in the Consolidated Statements of Operations as follows:
Years Ended December 31 ------------------------------- 1992 1993 1994 ---- ---- ---- (Thousands) Gain (loss) on businesses sold/held for sale X-1 Business . . . . . . . . . . .$(1,132) $ - $ - U.K. Subsidiary. . . . . . . . . . - (9,700) - Cupples Division . . . . . . . . . - - (4,800) European Operations. . . . . . . . - - (6,600) ------- ------- -------- Total. . . . . . . . . . . . .$(1,132) $(9,700)$(11,400) ======= ======= ======== Discontinued operations Income (loss) from discontinued operations Concrete Division. . . . . . .$(4,747) $ 4,632 $ 5,189 Fixed price custom curtainwall. . . . (3,930) (2,500) (8,000) Door Business. . . . . . . . . 133 - - ------- ------- -------- Total . . . . . . . . . .$(8,544) $ 2,132 $ (2,811) ======= ======= ========
The following unaudited pro forma financial information shows the results of operations of the Company assuming that the sale of the Sold Businesses, sale of the U.K. Subsidiary, sale of the Cupples Division, sale or disposal of the European Operations, sale of the Concrete Division and the Exchange Offer (see Notes 1, 2 and 10) had occurred at the beginning of the periods presented. These results are not necessarily indicative of what results would have been if such transactions had occurred at the beginning of the periods presented and are not necessarily indicative of the financial condition or results of operations for any future date or period.
Years Ended December 31 -------------------------------- 1992 1993 1994 ---- ---- ---- (Unaudited) (Thousands, except per share data) Revenue. . . . . . . . . . . . . . $232,615 $251,103 $285,018 ======== ======== ======== Income (loss) from continuing operations. . . . . . . . . . . $(32,155)$ (839) $ (2,751) ======== ======== ======== Income (loss) from continuing operations per common share . . $ (2.91)$ (.07) $ (.17) ======== ======== ========
3. RESTRUCTURING ACTIONS In connection with its restructuring plans, the Company recorded restructuring charges of $9,208,000 and $3,420,000 in 1992 and 1994, respectively. The 1992 and 1994 restructuring charges relate primarily to the termination of employees and downsizing of operations within the Company's Building Products Group and the Corporate office. The 1994 restructuring charge included provisions for the termination of approximately thirty-six employees, substantially all of whom had been terminated as of December 31, 1994. The amounts accrued and charged against the restructuring liabilities during the year ended December 31, 1994 are as follows:
Reclassi- 1994 fication of Balance Provision Businesses Balance Dec. 31 and 1994 Sold/Held Dec. 31 1993 Adjustments Charges For Sale 1994 -------- ------------------ ----------- -------- (Thousands) Employee terminations . . $3,209 $3,498 $(3,811)$(634) $2,262 Provisions for leases . . 49 225 (210) - 64 Provision associated with closure of business. . . . . .1,090 (303) (678) (109) - Other. . . . . . . . 743 - (609) - 134 ------ ------ ------- ----- ------ $5,091 $3,420 $(5,308)$(743) $2,460 ====== ====== ======= ===== ======
4. EQUITY INVESTMENT The Company had a 40% equity interest in Spectrum Glass Products, Inc. ("Spectrum") which was accounted for under the equity method. On February 25, 1993, Spectrum filed a petition under Chapter 11 of the United States Bankruptcy Code and on March 19, 1993, the Bankruptcy Court approved the sale of substantially all of Spectrum's assets to an unrelated third party. At December 31, 1994, the Company is contingently liable for approximately $550,000 of future lease payments under a Parent Company guarantee relating to an equipment lease previously held by Spectrum which was assumed by the new owner. As security for the Company's guarantee, the Company has on deposit at a bank $658,000 of cash which is recorded in the Consolidated Balance Sheet at December 31, 1994 within Restricted Cash. Operating results and writedowns recognized by the Company related to its investment in Spectrum were $(6,161,000) in 1992 and are included in other income (expense)-net in the accompanying Consolidated Statement of Operations. There was no income or expenses recognized in 1993 or 1994 related to Spectrum. 5. CASH AND RELATED MATTERS Cash and cash equivalents consisted of the following:
December 31 ----------------- 1993 1994 ---- ---- (Thousands) Cash . . . . . . . . . . . . . . . . . . . $ 2,146 $ 4,984 Time deposits and certificates of deposit. 13,520 2,906 ------- ------- Total. . . . . . . . . . . . . . . . . $15,666 $ 7,890 ======= =======
At December 31, 1994, restricted cash of $810,000 was pledged primarily to support various borrowing agreements and guarantees including the Spectrum equipment lease guarantee (Note 4) and restricted cash of $1,668,000 was held in escrow related to the Disposition. On January 20, 1995, the Company entered into a settlement with respect to certain unresolved items pertaining to the Disposition. Under the terms of the settlement agreement, the Company received the $1,668,000 of previously restricted cash and paid $375,000 to settle certain legal claims and established a replacement letter of credit for the purchaser of $1,071,000 with respect to certain of the Company's outstanding insurance liabilities. 6. ACCOUNTS RECEIVABLE The Company grants credit to its customers, substantially all of which are involved in the construction industry. At December 31, 1993 and 1994 the Company's accounts receivable due from customers located outside of the United States totaled $20,599,000 and $16,019,000, respectively. Accounts receivable included unbilled retainages and unbilled accounts receivable relating to construction contracts of $3,624,000 and $1,463,000, respectively, at December 31, 1993 and $0 and $654,000, respectively, at December 31, 1994. There were no retainages due beyond one year at December 31, 1994. 7. INVENTORIES Inventories consisted of the following:
December 31 ----------------- 1993 1994 ---- ---- (Thousands) Finished goods . . . . . . . . . . . . . . $ 150 $ 57 Work in process. . . . . . . . . . . . . . 6,701 6,154 Materials and supplies . . . . . . . . . . 14,566 11,614 ------- ------- Total. . . . . . . . . . . . . . . . . $21,417 $17,825 ======= =======
At December 31, 1993 and 1994, approximately 75% and 85%, respectively, of inventories were valued on the LIFO method. The LIFO value for those inventories approximated their FIFO value at December 31, 1993 and 1994. 8. ASSETS HELD FOR SALE - NON-CURRENT PORTION Assets held for sale - noncurrent consists principally of land, buildings and equipment which are held for sale as a result of restructuring actions and other operating decisions. Such assets are recorded at their estimated net realizable value. 9. OTHER ACCRUED LIABILITIES Other accrued liabilities consisted of the following:
December 31 ----------------- 1993 1994 ---- ---- (Thousands) Payroll and related benefits . . . . . . . $11,515 $11,778 Warranty and backcharge reserves . . . . . 4,544 3,367 Deferred revenues. . . . . . . . . . . . . 9,292 1,778 Reserves for restructuring . . . . . . . . 5,091 2,460 Accrued interest . . . . . . . . . . . . . 2,043 1,804 Other. . . . . . . . . . . . . . . . . . . 15,159 11,615 ------- ------- Total. . . . . . . . . . . . . . . . . $47,644 $32,802 ======= =======
10. DEBT Long-term debt consisted of the following:
December 31 ----------------- 1993 1994 ---- ---- (Thousands) Foothill Term Loan Note. . . . . . . . . . $ 5,000 $ 5,000 10%-12% Senior Subordinated Notes due November 1999: Face amount . . . . . . . . . . . . 18,921 21,260 Capitalized future interest payments . . . . 15,783 13,444 15.5% Discount Subordinated Debentures due November 2000. . . . . . . . . . . . . . 4,812 4,845 Debt of foreign subsidiaries with interest from 6.4% to 20% due 1994 to 2007 . . . . . . 699 358 Other debt with interest of 10%. . . . . . 259 - ------- ------- Total. . . . . . . . . . . . . . . . . 45,474 44,907 Less current portion of principal. . . 390 134 Less current portion of capitalized interest payable. . . . . . . . . . . . . . . - 1,352 ------- ------- Long-term debt . . . . . . . . . . . . $45,084 $43,421 ======= =======
The aggregate maturities of long-term debt (including required future cash interest payments on capitalized interest) at December 31, 1994 were as follows: (Thousands) 1995 . . . . . . . . . . . . . . . . . $ 1,486 1996 . . . . . . . . . . . . . . . . . 2,810 1997 . . . . . . . . . . . . . . . . . 2,819 1998 . . . . . . . . . . . . . . . . . 2,707 1999 . . . . . . . . . . . . . . . . . 30,240 2000 and later . . . . . . . . . . . . 5,196 ------- Total maturities of long-term debt . 45,258 ------- Less unamortized discount on 15.5% Discount Subordinated Debentures . 351 ------- Total carrying value of long-term debt. . . . $44,907 =======
As described below, in connection with the Exchange Offer, all future interest payments on the Company's 10%-12% Senior Subordinated Notes are capitalized. For purposes of determining the debt maturities of the 10%-12% Senior Subordinated Notes, the table above assumes that interest will be paid in additional notes through May 31, 1995 and subsequent interest payments which are payable in cash are considered maturities of long-term debt when currently due. The related November 1995 cash interest payment of $1,352,000 is included in the accompanying Consolidated Balance Sheet within other accrued liabilities at December 31, 1994. On April 12, 1993, the Company entered into a credit agreement with Foothill Capital Corporation ("Foothill"). Under the terms of the credit agreement, Foothill agreed to provide the Company with a term loan and a revolving line of credit of up to a maximum amount of $35,000,000 (initially funded on May 3, 1993). On May 18, 1994, the Company entered into an amendment to its existing agreement with Foothill (such amended agreement being hereinafter referred to as the "Credit Facility"), which under its terms, amended the Company's existing credit facility by increasing the Company's maximum availability under the facility by $10,000,000 to $45,000,000, incorporated certain receivables, inventory and property, plant and equipment of the Company's Canadian operations into the definition of the Borrowing Base, and extended the term of the Credit Facility to May 18, 1999. The Credit Facility requires that the Company borrow $5,000,000 under a term loan and provides for issuances of commercial or standby letters of credit or guarantees of payment with respect to such letters of credit in an aggregate amount not to exceed $32,000,000 and/or additional borrowings, based upon availability under the Borrowing Base. The $5,000,000 term loan is evidenced by a term loan note (the "Term Loan Note") that bears interest which is payable monthly at a rate equal to twenty-four percentage points above the reference rate (the reference rate is equivalent to the prime rate at designated institutions) on 50% of the Term Loan Note and at a rate of 3% above the reference rate on the remaining 50% of the Term Loan Note. The Credit Facility requires that the Company pay a monthly fee equal to 2.5% per annum of the average letters of credit and letter of credit guarantees outstanding, and a fee equal to .5% per annum of 61.11% of the average unused line of credit. All other obligations under the Credit Facility bear interest at the higher of three percent above the reference rate or nine percent per annum. The Credit Facility also provides for the payment of penalties, depending on the year, in the event the Credit Facility is terminated by the Company. Availability under the Credit Facility is based on a percentage of eligible (as defined in the Credit Facility and subject to certain restrictions) accounts receivable and inventory, plus a base amount (which base amount is reduced by $166,667 per month and is subject to reduction in the case of sales of certain property, plant and equipment, including assets held for sale), plus the amount provided by the Company as cash collateral, if any, less the amount of $5,000,000 required to be outstanding under the Term Loan Note (each together the "Borrowing Base"). At December 31, 1994, the Borrowing Base was estimated to be $39,882,000 and was used to support the $5,000,000 Term Loan Note and $29,175,000 of outstanding letters of credit which are primarily used to support bonding programs, insurance programs and other financial guarantees. The Company had unused availability under the Credit Facility of $5,707,000 at December 31, 1994. As collateral for its obligations under the Credit Facility, the Company granted to Foothill a continuing security interest in and lien on substantially all of the Company's assets. The Credit Facility contains certain financial covenants with respect to the Company's tangible net worth and current ratio. In addition, there are covenants which prohibit the Company from paying dividends on or acquiring any of its capital stock and which either restrict or limit the Company's ability to take certain actions involving other indebtedness, liens, mergers, acquisitions, consolidations, dispositions, sales of assets, investments, capital expenditures, guarantees, prepayment of debt, transactions with affiliates and other matters. Upon entering into the original credit agreement with Foothill, the Company was required to pay a $350,000 commitment fee, and to deliver a facility note in an amount equal to $4,000,000 (the "Facility Note"). The Facility Note, plus accrued interest, which combined were $4,123,000, were paid in full on November 30, 1993 in a noncash transaction through the issuance of 1,374,292 shares of the Company's common stock to Foothill. At December 31, 1994, the Company had $4,288,000 of capitalized debt issuance costs related to the Credit Facility which is being amortized as interest expense over the term of the facility. In addition to the Credit Facility, borrowing and bank guarantee arrangements are in place at certain international locations to assist in supporting local working capital and bonding requirements. These arrangements are generally reviewed annually with the local banks and do not require significant commitment fees. The outstanding balance of such short-term loans payable and the weighted average interest rate at December 31, 1993 was $1,054,000 and 13.07%. Exclusive of the European Operations, for which the assets and liabilities are recorded in the balance sheet on a net basis, there were no outstanding loans payable at December 31, 1994. The Company's average short-term borrowings and weighted average interest rate on such short-term borrowings during 1994 were $2,613,000 and 13.18%, respectively. At December 31, 1994, the Company had in place at its Asia/Pacific operations unused lines of credit of $776,000 and guarantee facilities of $3,109,000 of which $2,427,000 of guarantees were outstanding. In February 1995, the Company was required to issue a $1,000,000 letter of credit guarantee to support the Asia/Pacific operation's banking facility. On a worldwide basis at December 31, 1994, excluding the European Operations, the Company had outstanding performance and financial bonds of $34,283,000, which generally provide a guarantee as to the Company's performance under contracts and other commitments; certain of which are collateralized by letter of credit programs and certain of which are issued under foreign credit facilities. In connection with the sale of the Company's Concrete Division at March 3, 1995, the Company's Borrowing Base under its Credit Facility was reduced by approximately $3,900,000. Additionally, in accordance with the sale agreement, the purchaser provided the Company's principal surety with a substitute indemnity agreement to satisfy the Company's bonding obligations with respect to those contracts transferred to Ceco Concrete. At December 31, 1994, the Company's European Operations had outstanding short-term bank borrowing of $3,145,000, which are generally supported by the local entities' assets. In addition, at December 31, 1994, the European Operations had outstanding performance bonds and other guarantees of $735,000. At certain of the European Operations, as well as other foreign locations, the Company has issued guarantees which support the local entities borrowings and performance guarantees. On July 14, 1993, the Company consummated its Exchange Offer. Under the terms of the Exchange Offer, the 15.5% Subordinated Debenture holders other than Sage RHH (see Note 16) who tendered their bonds each received $407.57 in principal amount of the Company's 10%-12% Senior Subordinated Notes due 1999, plus 111.4 shares of the Company's common stock for each $1,000 aggregate principal amount of 15.5% Subordinated Debentures. Sage RHH, an investor which controlled approximately 29% of the 15.5% Subordinated Debentures and 33.8% of the Company's common stock at the time of the Exchange Offer received approximately 260.4 shares of the Company's common stock for each $1,000 aggregate principal amount of 15.5% Subordinated Debentures tendered. The Company's Preferred Stock holder received 54.8 shares of common stock for each 200 shares of Preferred Stock plus accrued but unpaid dividends, which in the aggregate totaled $281,250 for all of the Preferred Stock. Pursuant to the Exchange Offer, $63,734,000 principal amount of 15.5% Subordinated Debentures plus accrued but unpaid interest of $17,128,000 were exchanged for an aggregate of $17,850,000 principal amount of the Company's 10%-12% Senior Subordinated Notes and 10,041,812 shares of the Company's common stock, and all 500,000 outstanding shares of the Preferred Stock were exchanged for an aggregate of 137,030 shares of the Company's common stock. Interest on the 10%-12% Senior Subordinated Notes is payable semi- annually on May 31 and November 30 of each year. Interest accruing on the 10%-12% Senior Subordinated Notes through and including May 31, 1995 may, at the Company's option, be paid in cash or additional 10%-12% Senior Subordinated Notes, and thereafter is payable in cash. Interest accrues on the 10%-12% Senior Subordinated Notes from May 31, 1993 through and including November 30, 1994 at the rate of 10% per annum if paid in cash and 12% per annum if paid in additional 10%-12% Senior Subordinated Notes, and thereafter accrues at 12% per annum. The November 30, 1993, May 31, 1994 and November 30, 1994 interest payments were paid by the Company in additional 10%-12% Senior Subordinated Notes and the Company currently anticipates that it will pay the May 31, 1995 interest payment in additional notes. The 10%-12% Senior Subordinated Notes will mature November 30, 1999, and are redeemable at the Company's option, at any time in whole or from time to time in part, at the principal amount thereof plus accrued interest to the redemption date. Indebtedness under the 10%-12% Senior Subordinated Notes is senior to the Company's 15.5% Subordinated Debentures, and subordinate to the extent provided in the indenture to all indebtedness under the Credit Facility and any other indebtedness which by its terms provides that it shall be senior to the 10%-12% Senior Subordinated Notes. During the third quarter of 1993, the Company recorded an extraordinary gain from the exchange of the 15.5% Subordinated Debentures of $5,367,000. In accordance with SFAS No. 15, all future interest payments which are due on the 10%-12% Senior Subordinated Notes are recorded as part of long-term debt, and, as a result, the Company has deferred the related economic gain and will not record any future interest expense related to the 10%-12% Senior Subordinated Notes. On a proforma basis, assuming that the Exchange Offer occurred at the beginning of the period, interest expense for the years ended December 31, 1992 and 1993 would have been reduced by $10,733,000 and $6,491,000, respectively. The effect of the Exchange Offer, which was a non-cash transaction, on the assets, liabilities and stockholders' equity of the Company, was recorded in the 1993 Consolidated Balance Sheet as of the date of the Exchange Offer, and is summarized as follows: (Thousands) Reduction in 15.5% Subordinated Debentures, net of discount. . . . . . . . . . . . . $ 58,743 Reduction in accrued interest. . . . . . . 17,128 Reduction in preferred stock dividends payable. . . 281 Charge-off of debt and equity issuance costs. . . . (4,960) Issuance of 10%-12% Senior Subordinated Notes, including future interest payments . . . (34,704) -------- Increase in stockholders' equity . . . $ 36,488 ========
At December 31, 1994, the 15.5% Subordinated Debentures consisted of principal of $5,196,000 and unamortized discount of $351,000. The 15.5% Subordinated Debentures, which accrete in value at the rate of 17.4% per annum, began to accrue cash interest December 9, 1991. The Company did not make the scheduled interest payments on its 15.5% Subordinated Debentures which were due on May 31, 1992, November 30, 1992, May 31, 1993 and November 30, 1993, and consequently was in default under the indenture. On February 15, 1994, the Company paid all past due interest, including interest on past due interest which in the aggregate approximated $1,829,000, thereby curing the event of default under the indenture. The Company made all scheduled interest payments on its 15.5% Subordinated Debentures during 1994. At December 31, 1992, the Company was in default under certain of its loan and capital lease agreements which, combined with its inability to generate adequate unrestricted cash to meet its then current and anticipated operating requirements, along with the Company's recurring losses from operations, negative working capital, and stockholders' deficiency raised substantial doubt at December 31, 1992 about the Company's ability to continue as a going concern. 11. RENTAL AND LEASE INFORMATION The Company leases certain facilities and equipment under operating leases. Total rental expense charged to the Consolidated Statements of Operations for continuing operations on operating leases was $5,614,000, $3,531,000 and $2,903,000 for 1992, 1993 and 1994, respectively. In addition, sublease rental income of $218,000, $140,000 and $0, respectively, was netted against rental expense in 1992, 1993, and 1994, respectively. Future minimum rental commitments under operating leases at December 31, 1994 are as follows: (Thousands) 1995 . . . . . . . . . . . . . . . . . . . $2,615 1996 . . . . . . . . . . . . . . . . . . . 1,983 1997 . . . . . . . . . . . . . . . . . . . 1,304 1998 . . . . . . . . . . . . . . . . . . . 790 1999 . . . . . . . . . . . . . . . . . . . 141 2000 and later . . . . . . . . . . . . . . - ------ Total . . . . . . . . . . . . . . . . $6,833 ======
The above amounts do not include rent payable under escalation clauses as the amounts are not determinable. 12. FINANCIAL INSTRUMENTS The Company enters into various types of financial instruments in the normal course of business. The estimated fair value of amounts are determined based on available market information and, in certain cases, on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of perceived risk. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of year end or that will be realized in the future. Fair values for cash and cash equivalents, restricted cash, and loans payable approximate their carrying value at December 31, 1994 due to the relatively short maturity of these financial instruments. The fair value of long-term debt, including the current portion of long-term debt at December 31, 1994, was estimated to be $26,348,000 compared to their carrying value of $44,907,000. 13. TAXES ON INCOME The Company adopted SFAS No. 109, "Accounting for Income Taxes," effective January 1, 1993. As permitted under the new standard, the Company did not restate the prior years' financial statements. The cumulative effective of adopting this Statement did not have a material impact on the Company's Consolidated Balance Sheets or Statements of Operations. Income (loss) from continuing operations before provision (credit) for taxes on income from continuing operations consisted of the following:
Year Ended December 31 ---------------------------------- 1992 1993 1994 ---- ---- ---- (Thousands) Income (loss) from continuing operations before provision for taxes on income: Domestic. . . . . . . . $(48,725) $(23,289) $(15,559) Foreign . . . . . . . . (12,671) (3,937) (3,134) -------- -------- -------- Total . . . . . . . . $(61,396) $(27,226) $(18,693) ======== ======== ======== Provision (credit) for taxes on income from continuing operations: Current: Foreign . . . . . . . . $ 1,205 $ 9 $ 256 -------- -------- -------- Total . . . . . . . . 1,205 9 256 -------- -------- -------- Deferred: Foreign . . . . . . . . - - - -------- -------- -------- Total . . . . . . . . - - - -------- -------- -------- Total . . . . . . . . $ 1,205 $ 9 $ 256 ======== ======== ========
A reconciliation between taxes computed at the U.S. statutory federal income tax rate and the provision for taxes on income from continuing operations reported in the Consolidated Statements of Operations follows:
Year Ended December 31 ---------------------------------- 1992 1993 1994 ---- ---- ---- (Thousands) Tax provision (credit) at U.S. statutory rate. . . . . . $(20,875) $(9,529) $(6,543) Operating losses that could not be offset against taxable income. . . . 22,298 9,276 6,484 Differences between foreign and domestic tax rates. . . . (257) 139 194 Other . . . . . . . . . . . 39 123 121 -------- ------- ------- Provision for taxes on income . . . . $ 1,205 $ 9 $ 256 ======== ======= =======
The following is a summary of the significant components of the Company's net deferred tax liability at December 31, 1993 and 1994:
1993 1994 ---- ---- (Thousands) Deferred tax assets: Insurance liabilities . . . . . . . . $ 9,098 $ 8,196 Interest on 10%-12% Senior Subordinated Notes. . . . . . . . . . . . . . . . 5,372 5,372 Pension liabilities . . . . . . . . . 3,563 1,221 Warranties, backcharges and job losses. . . . 3,362 3,489 Other expenses not currently deductible . . . 13,149 16,619 Unlimited operating loss carryforwards. . . . 9,754 16,494 Limited operating loss carryforwards. 1,181 1,225 Unrealized loss on sale/disposal of businesses . . . . . . . . . . . . . - 2,114 -------- -------- Total tax assets . . . . . . . . . 45,479 54,730 -------- -------- Deferred tax liabilities: Accelerated depreciation. . . . . . . (6,679) (6,457) Other items . . . . . . . . . . . . . (2,920) (3,128) -------- -------- Total tax liabilities. . . . . . . (9,599) (9,585) -------- -------- Deferred tax asset valuation allowance . . (36,780) (46,045) -------- -------- Net deferred tax liability . . . . $ (900) $ (900) ======== ========
During 1994, the valuation allowance increased by $9,265,000 and there were no changes regarding the need for a valuation allowance in any tax jurisdiction. At December 31, 1994, the Company had worldwide net operating loss carryforwards, excluding the European Operations, of $41,104,000 for tax reporting purposes which are available to offset future income without limitation. Approximately $24,888,000 of these net operating loss carryforwards relate to domestic operations and are available for use until expiration in the years 2008 and 2009. In addition, the Company has domestic tax net operating loss carryforwards of $140,249,000, as well as a general business credit carryforward of $1,000,000, that existed as of the date of the Exchange Offer, whose use has been limited due to a "Change in Ownership," as defined in Section 382 of the Internal Revenue Code. The Company's ability to utilize such carryforwards and credits is restricted to an aggregate potential availability of $3,500,000, with an annual limitation of approximately $250,000 through the year 2008. Additionally, these carryforwards can be used to offset income generated by the sale of certain assets to the extent that the gain existed at the time of the Exchange Offer. This amount and the Company's unlimited, domestic net operating loss carryforwards could be further limited should another "Change in Ownership" occur. In addition to the above, the Company has foreign net operating loss carryforwards at December 31, 1994 of $16,216,000, which expire at various dates in the years 1996 through 2005, excluding tax loss carryforwards associated with the European Operations (Note 2), of $6,196,000. Undistributed earnings of consolidated foreign subsidiaries at December 31, 1994, amounted to approximately $220,000, excluding $1,881,000 of undistributed earnings at the European Operation (Note 2). No provision for income taxes has been made because the Company intends to invest such earnings permanently, or in the case of the European Operations, intends to sell or dispose of such operations without prior repatriation of such earnings. If the Company were to repatriate all undistributed earnings, withholding taxes assessed in the local country would not be material to the Consolidated Financial Statements at December 31, 1994. On March 3, 1995, the Company sold its Concrete Division (Notes 2 and 16). The sale resulted in a pretax gain which the Company plans to offset by utilizing available domestic net operating loss carryforwards and other deductions. 14. CONTINGENT LIABILITIES Several contracts related to the discontinued custom curtainwall operations continue to be the subject of litigation. In one of the actions, a lawsuit arising out of the construction of new headquarters for Morgan Guaranty Trust Company of New York ("Morgan") at 60 Wall Street, New York, New York is pending in the Supreme Court of the State of New York [Cupples Products Division of H.H. Robertson Company v. Morgan Guaranty Trust Company of New York, et al (the "New York Litigation")]. The Company's Cupples Division acted as a subcontractor for the provision and erection of the custom curtainwall for the building. Morgan and Tishman Construction Company of New York ("Tishman") the general contractor for the project, claimed that the Company and Federal Insurance Company ("Federal"), as issuer of a performance bond in connection with the Company's work, are liable for $29,900,000 in excess completion costs and delay damages due to the Company's alleged failure to perform its obligations under its subcontract. The Company had taken action to enforce a $5,000,000 mechanic's lien against the building and sought to recover more than $10,000,000 in costs and damages caused by Tishman's breach of the subcontract with the Company. On March 3, 1995, the Company and Federal entered into an agreement (the "Federal Agreement") under which Federal agreed to hold the Company harmless from claims pending in the New York Litigation. Under the terms of the Federal Agreement, Federal will assume control of the New York Litigation and will also be the beneficiary of any affirmative claim which the Company may receive. As consideration for Federal's obligations, the Company assigned to Federal the $3,000,000 interest bearing promissory note received from the Company's sale of its Concrete Division, and agreed to pay Federal $1,000,000 per year, in equal quarterly installments, for seven years without interest commencing March 24, 1995. As security for the payment obligations to Federal, the Company granted to Federal a security interest in all of the Company's assets and the purchaser delivered a financial guarantee insurance policy securing payment of the Concrete Note. The Federal Agreement also provides that (i) at least 30% of the ownership of the common stock of the Company must be held by Andrew G.C. Sage, II, who is the current Chairman of the Company and at December 31, 1994 controlled approximately 34% of the outstanding common stock through his control of Sage RHH (Note 16), and Michael E. Heisley, who is the current Chief Executive Officer and Vice Chairman of the Company and at December 31, 1994 controlled approximately 21% of the outstanding common stock through his ownership of RBC Holdings L.P. and (ii) that Mr. Sage, Mr. Heisley or both must continue as chief executive officer and/or chairman of the Company. The Federal Agreement provides that, in the event such common stock ownership and executive officers are not maintained, Federal will be entitled to immediate payment of all amounts remaining unpaid to them. In February 1994, the Company filed suit in state court in Iowa against Alaska Industrial Development and Export Authority ("AIDEA"), Olympic Pacific Builders, Inc. ("OPB") and Strand Hunt Corp. ("Strand Hunt") and others alleging breach of contact, tortious interference with contractual relations, negligence and misrepresentation, and seeking payment of amounts owed to the Company and other damages in connection with a pre-engineered metal building project in Anchorage, Alaska. The Company fabricated the building for OPB, which in turn supplied the building to Strand Hunt, as general contractor for AIDEA. In March 1994, Strand Hunt filed suit in the Superior Court for the State of Alaska against a number of parties, including the Company and its surety. Strand Hunt has alleged against the Company breach of contract, breach of implied warranties, misrepresentation and negligence in connection with the fabrication of the building and seeks damages in excess of $10,000,000. The Company answered the Alaska suit and asserted the claims made in the Iowa action as counterclaims against the other parties. In addition, cross-claims of a similar nature to those of Strand Hunt have been made against the Company by several of the other parties. The Company believes that it is entitled to payment and that it has meritorious defenses against the claims of Strand Hunt and the cross claims of the other parties. In February of 1994, the Company's Concrete Division settled certain backcharge and other claims related to a project which was substantially complete in 1989. In connection with this settlement, during the first quarter of 1994 the Company received $1,700,000 of cash and recorded a $1,200,000 gain, which is included in the accompanying Consolidated Statement of Operations as income from discontinued operations. During the second quarter of 1993, the Company recorded a credit to selling, general and administrative expenses of $1,800,000 as a result of the settlement of certain lease obligations. In May 1994, the Company resolved and settled certain claims related to a custom curtainwall project located in Texas. The outcome of these settlements did not have a material effect on the Company's Consolidated Statement of Operations in the year ended December 31, 1994. There are various other proceedings pending against or involving the Company which are ordinary or routine given the nature of the Company's business. The Company has recorded a liability related to litigation where it is both probable that a loss will be incurred and the amount of the loss can be reasonably estimated. While the outcome of the Company's legal proceedings cannot at this time be predicted with certainty, management does not expect that these matters will have a material adverse effect on the consolidated financial condition or results of operations of the Company. The Company has been identified as a potentially responsible party by various federal and state authorities for clean-up at various waste disposal sites. While it is often extremely difficult to reasonably quantify future environmental related expenditures, the Company has engaged various third parties to perform feasibility studies and assist in estimating the cost of investigation and remediation. The Company's policy is to accrue environmental and clean-up related costs of a non-capital nature when it is both probable that a liability has been incurred and the amount can be reasonably estimated. Based upon currently available information, including the reports of third parties, management does not believe that the reasonably possible loss in excess of the amounts accrued would be material to the consolidated financial statements. 15. INCENTIVE PLANS, STOCK OPTIONS, WARRANTS 1986 Stock Option Plan and 1976 Stock Option Plan Options to purchase common stock of the Company were granted under the Company's 1986 Stock Option Plan (the "1986 Plan") and the 1976 Stock Option Plan (the "1976 Plan"). The 1986 Plan terminated by its terms effective May 6, 1991, and the 1976 Plan terminated by its terms effective December 31, 1986. No more options may be granted under the 1986 Plan or the 1976 Plan. Stock options, including stock options with stock appreciation rights granted in conjunction therewith, which were outstanding on the respective termination dates of the 1986 Plan and the 1976 Plan, continue in effect in accordance with their terms. There were no stock appreciation rights on stock options outstanding at December 31, 1994. A summary of stock option transactions under the Company's plans follows:
Year Ended December 31 -------------------------------- 1992 1993 1994 ---- ---- ---- Options outstanding, January 1. . . . 31,959 21,815 485 Granted . . . . . . . . . . . - - - Cancelled . . . . . . . . . . (10,144) (21,330) - -------- --------- --------- Options outstanding at end of period . . . . . . . . . . . 21,815 485 485 ======== ========= ========= Options price range at end of period . . . . . . . . . . . $33-$391 $184-$391 $184-$391 ======== ========= ========= Options exercisable at end of period . . . . . . . . . . . 8,997 485 485 ======== ========= =========
All options granted under the plans are at prices which were not less than 100% of the fair value of the Company's common stock on the date the options were granted. Stock options outstanding at December 31, 1994 expire March 31, 1995. Long-Term Incentive Plan The Company's 1991 Long-Term Incentive Plan, (the "Long Term Incentive Plan"), as amended and restated in 1993, provides for the grant of both cash- based and stock-based awards to eligible employees of, and persons or entities providing services to the Company and its subsidiaries and provides for one- time, automatic stock awards to non-employee members of the Board of Directors. Under the Long-Term Incentive Plan, the Company may provide awards in the form of stock options, stock appreciation rights, restricted shares, performance awards, and other stock based awards. Currently up to 1,400,000 shares of common stock are issuable under the Long-Term Incentive Plan, subject to appropriate adjustment in certain events. Shares issued pursuant to the Long-Term Incentive Plan may be authorized and unissued shares, or shares held in treasury. Awards may be granted under the Long-Term Incentive Plan through March 19, 2001, unless the plan is terminated earlier by action of the Board of Directors. At December 31, 1994, there were 1,032,000 shares under the Long-Term Incentive Plan which were available for grant. On December 22, 1993, the Company granted awards (the "1993 Awards") of 564,000 restricted shares of the Company's common stock to certain executive officers and key employees. The awards are designed to incentivize management in a manner which would enhance shareholder value by tying vesting provisions to achievement of performance targets representing increases in the average market value of the Company's common stock. The accelerated vesting provisions include comparison of future share prices to a pre-determined base price (each measured on a 60-day average basis), cumulative market value appreciation targets over a three year period, and a requirement of continued employment with the Company except in certain specific circumstances. The base price for the 1993 Awards is $3.41 per share. The 1993 Awards also provide that if performance targets are not achieved by August 10, 1996, all unvested shares not forfeited will vest automatically on August 10, 2003, provided the holder is still an employee of the Company as defined in the plan. The 1993 Awards also provide for immediate vesting if a change in the control of the Company occurs, as defined. During 1994, 203,000 restricted shares were forfeited as a result of employee terminations, and 140,000 restricted shares were vested pursuant to the provisions of an employment agreement between the Company and a former president. No other restricted shares vested or were awarded during 1994. At December 31, 1994, 221,000 unvested restricted shares were outstanding. The fair market value of the restricted shares, based on the market price at the date of the grant, is recorded as deferred compensation, as a component of stockholders' equity, and deferred compensation expense is amortized over the period benefited. Warrants In connection with the Combination, the Company assumed 1,470,000 of outstanding warrants of Ceco Industries. Each warrant, which is exercisable on or before December 9, 1996, provides for the right to purchase one stock unit at a price of $6.02 per unit, a unit being a fraction (as determined under the warrants) of a share. The warrants currently provide the holders with the right to acquire an aggregate of 90,249 shares of the Company's common stock at an exercise price of $98.11 per share. The Company has reserved 90,249 shares of its common stock for issuance upon exercise of the warrants. These warrants are reflected in the accompanying Consolidated Balance Sheets at their fair value at the date of acquisition. 16. RELATED PARTY TRANSACTIONS On September 15, 1992, Mulligan Partnership ("Mulligan") sold 297,655 shares of the Company's common stock, representing approximately 33.8% of the Company's then outstanding common stock, and $19,831,000 aggregate principal amount of the Company's 15.5% Subordinated Debentures, representing approximately 29% of the then outstanding principal amount of such 15.5% Subordinated Debentures, to Sage Capital Corporation ("Sage Capital"), a Wyoming corporation. The rights of Frontera S.A., ("Frontera") an affiliate of Mulligan, under a Stockholders Agreement dated as of June 8, 1990 among the Company, Frontera and certain other stockholders, including the right to nominate certain members of the Company's Board of Directors, terminated upon the sale by Mulligan to Sage Capital. Mulligan assigned to Sage Capital, Mulligan's rights under the terms of a registration rights agreement dated as of November 8, 1990 between the Company and Frontera. On November 18, 1992, the Company elected the President of Sage Capital as the Company's President and Chief Executive Officer and as a Director, and elected the Managing Director of Sage Capital as a Director of the Company. On December 30, 1992, Sage Capital transferred its shares of common stock and the 15.5% Subordinated Debentures to Sage RHH, a partnership, with Sage Capital retaining an 80% ownership in Sage RHH. As described in Note 10, Sage RHH tendered all of its 15.5% Subordinated Debentures in connection with the Exchange Offer. On December 2, 1993, the Company and its wholly owned subsidiary Robertson Espanola, S.A. ("Robertson Espanola") entered into an agreement (the "RC Agreement") with RC Holdings, Inc. ("RC Holdings") (formerly Heico Acquisitions, Inc.) which is indirectly controlled by the Company's Chief Executive Officer. Pursuant to the RC Agreement, RC Holdings, through an affiliate entity acquired 3,333,333 newly issued shares of the Company's common stock and certain inventory and interests related to a project in Madrid, Spain known as the Puerta de Europa project, for which the Company's Cupples Division had been providing the curtainwall system, Robertson Espanola had been providing certain project management and administrative services, and the owner of the project had been placed in insolvency proceedings. The shares issued represented approximately 21.4% of the then outstanding shares of the Company after issuance of such shares. The Company received an aggregate of $10,000,000 in cash for the shares and assets. The RC Agreement also provides that, if RC Holdings is able to realize any proceeds in connection with the Puerta de Europa project, all receipts in excess of $5,000,000 plus expenses incurred for completion and collection, will be split equally between RC Holdings and the Company (see Sale of Cupples Division below). The RC Agreement provides that, until the earlier of (i) December 2, 1998, (ii) the date on which RC Holdings and its affiliates no longer hold 10% of the Company's outstanding common stock or (iii) the date on which the current President of RC Holdings ceases to be a controlling person with respect to RC Holdings and its affiliates, the Board of Directors of the Company shall not elect a chief executive officer without the prior written consent of RC Holdings. On December 9, 1993, the Board of Directors appointed the President and sole stockholder of RC Holdings as its chief executive officer and vice chairman of the Board of Directors. On August 1, 1994, the Company and Robertson Espanola entered into a subcontract agreement with RC Holdings (the "RC Subcontract"). Pursuant to the RC Subcontract, the Company and Robertson Espanola have undertaken to acquire and supply certain materials for, and to coordinate the installation of, the curtainwall system related to the above-mentioned Puerto de Europa project. The Company and Robertson Espanola will be paid for certain costs and expenses associated with the performance of the RC Subcontract. During 1994, the Company, including Robertson Espanola, charged RC Holdings for costs and services performed pursuant to the RC Subcontract. Such amounts were not significant. On December 27, 1994, the Company sold the business and assets (including up to $900,000 of the Company's share of the excess proceeds from the above-mentioned Puerto de Europa project, if any, received by the Company pursuant to the RC Agreement) of its remaining U.S. Building Products operation, the Cupples Division, to Cupples Products, Inc. ("CPI"), a newly- formed entity owned by a member of the Company's Board of Directors, for $800,000 and the assumption of certain liabilities by the purchaser. The transaction and the consideration therefor were negotiated with the purchaser under the direction of a special committee of disinterested directors appointed by the Board of Directors. The sale agreement provides that CPI will provide certain services to the Company for certain fees, on an as-needed basis, to assist in the resolution of certain legal proceedings and warranty and rectification claims which arose prior to the sale date. Accordingly, the Company anticipates that certain business relationships between the Company and CPI will continue in the future. On March 3, 1995, the Company sold the business and assets of its Concrete Construction Division to Ceco Concrete Construction Corp. ("Ceco Concrete"), a newly-formed entity controlled by the Company's Chief Executive Officer. The consideration consisted of $11,500,000 of cash, adjusted to reflect an as of sale date of October 1, 1994, a $3,000,000 interest bearing promissory note payable in three equal annual installments, with interest at 7%, and the assumption of certain liabilities by the purchaser. Upon the closing of the sale, the Company received $8,000,000 of cash, after adjustments. Additionally, the purchaser agreed to provide a substitute indemnity, bonds or collateral to satisfy the Company's bonding obligations with respect to those contracts transferred to Ceco Concrete. The transaction and the consideration therefor were negotiated under the direction of a special committee of disinterested directors appointed by the Board of Directors of the Company, who engaged the services of an independent investment banker and were represented by an independent law firm. During 1994, the Company agreed to pay $222,000 to a company affiliated with the Company's Chief Executive Officer for the services of an individual who served as President of the Company's Metal Buildings Group during the period from February 1994 through November 3, 1994 and as President and Chief Operating Officer of the Company from November 3, 1994. The Company also agreed to pay to another affiliated company of the Company's Chief Executive Officer $260,000 for manufacturing and certain other consulting services. Pursuant to a consulting agreement with Sage Capital, the Company paid $175,000, $517,000 and $200,000, respectively, in 1992, 1993 and 1994, for financial and operational restructuring services. In connection with the sale of the Cupples Division, the consulting agreement with Sage Capital was terminated. The Company has employment agreements and severance payment plans with respect to certain of its executive officers and certain other management personnel. These agreements generally provide for salary continuation for a specified number of months under certain circumstances. Certain of the agreements provide the employees with certain additional rights after a change of control of the Company, as defined, occurs. 17. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION The Company's operations are classified into two business segments: the Metal Buildings Group and the Building Products Group. The Metal Buildings Group designs and manufactures pre-engineered metal buildings for commercial and industrial users. The Building Products Group provides construction services and at certain locations fabricates, sells and erects the components for roof, walls and floors of non-residential buildings. The Concrete Construction Group, which provided certain concrete forming services and was previously reported as a segment, has been reflected as a discontinued operation (Note 2). Summarized financial information for each of the Company's business segments and geographic areas of operations for 1992, 1993, and 1994 is presented below. Information on Segments
1992 1993 1994 ---- ---- ---- (Thousands) Revenue: Metal Buildings Group. . . $187,465 $218,338 $251,584 Building Products Group .144,426 97,319 60,186 Intersegment eliminations. - - (2,415) -------- -------- -------- Total. . . . . . . . . $331,891 $315,657 $309,355 ======== ======== ======== Operating income (loss): Metal Buildings Group. . . $ 4,179 $ 7,212 $ 15,414 Building Products Group .(18,146) (6,685) (7,142) Corporate. . . . . . . . .(24,240) (7,948) (11,763) -------- -------- -------- Total. . . . . . . . . $(38,207)$ (7,421) $ (3,491) ======== ======== ======== Identifiable assets: Metal Buildings Group. . . $ 84,448 $ 96,665 $ 97,140 Building Products Group . 90,705 42,839 23,229 Businesses held for sale . 22,055 22,736 4,587 Corporate. . . . . . . . . 38,462 25,934 15,830 Adjustments and eliminations . . . (3,300) (6,351) (3,386) -------- -------- -------- Total. . . . . . . . . $232,370 $181,823 $137,400 ======== ======== ======== Capital expenditures: Metal Buildings Group. . . $ 948 $ 2,955 $ 3,355 Building Products Group . 1,371 1,614 442 Corporate. . . . . . . . . 253 35 10 -------- -------- -------- Total. . . . . . . . . $ 2,572 $ 4,604 $ 3,807 ======== ======== ======== Depreciation: Metal Buildings Group. . . $ 2,510 $ 2,419 $ 2,348 Building Products Group . 3,106 2,348 1,037 Corporate. . . . . . . . . 63 94 94 -------- -------- -------- Total. . . . . . . . . $ 5,679 $ 4,861 $ 3,479 ======== ======== ========
Information on Geographic Areas
1992 1993 1994 ---- ---- ---- (Thousands) Revenue: United States. . . . . . . $204,965 $223,553 $250,259 Canada . . . . . . . . . . 29,099 22,063 22,941 Europe . . . . . . . . . . 86,939 52,498 16,084 Asia/Pacific . . . . . . . 24,843 21,681 27,749 Inter-area eliminations. .(13,955) (4,138) (7,678) -------- -------- -------- Total. . . . . . . $331,891 $315,657 $309,355 ======== ======== ======== Operating income (loss): United States. . . . . . . $ 1,101 $ 2,829 $ 11,058 Canada . . . . . . . . . . (2,829) 1,099 646 Europe . . . . . . . . . .(11,131) (5,054) (896) Asia/Pacific . . . . . . . (1,108) 1,653 (2,536) Corporate. . . . . . . . .(24,240) (7,948) (11,763) -------- -------- -------- Total. . . . . . . $(38,207)$ (7,421) $ (3,491) ======== ======== ======== Identifiable assets: United States. . . . . . . $105,731 $102,953 $ 93,325 Canada . . . . . . . . . . 16,716 15,013 13,728 Europe . . . . . . . . . . 52,896 13,088 - Asia/Pacific . . . . . . . 12,104 13,431 13,976 Businesses held for sale . 22,055 22,736 4,587 Corporate. . . . . . . . . 38,462 25,934 15,830 Adjustments and eliminations . . . (15,594) (11,332) (4,046) -------- -------- -------- Total. . . . . . . $232,370 $181,823 $137,400 ======== ======== ========
Identifiable assets in each segment or geographic area include the assets used in the Company's operations and the excess of the purchase price over the fair value of assets acquired with respect to the Metal Buildings Group. Corporate assets consist primarily of cash and cash equivalents, restricted cash, assets held for sale and capitalized debt issuance costs related to the Credit Facility. Businesses held for sale at December 31, 1994 reflects primarily the net assets of the Concrete Division. Inter-area sales are generally recorded at prices which are intended to approximate prices charged to unaffiliated customers. 18. RETIREMENT BENEFITS Historically, the Company has provided retiree benefits to substantially all of its U.S. and certain of its foreign employees under various defined benefit pension plans. In connection with the Company's restructuring initiatives, the Company amended its U.S. defined benefit pension plan, effective January 1, 1995, so that active salary employees will cease to accrue future benefits after that date. Benefits which are provided under the Company's defined benefit pension plans are primarily based on years of service and the employee's compensation. During fiscal 1992 and 1993, the Company's funding policy with respect to its U.S. defined benefit plans was to contribute quarterly installments as required by minimum funding standards determined in accordance with the Internal Revenue Code. During fiscal 1994, the Company changed its funding policy with respect to its U.S. defined benefit plans whereby it ceased contributing in quarterly installments. During 1994, Company contributions were generally paid to its U.S. defined benefit plans such that, subject to applicable rules and regulations, the unpaid outstanding required contribution for each plan, including interest penalties, did not exceed $1,000,000 per plan. At December 31, 1994, the aggregate amount of such unpaid outstanding contributions for all plans was approximately $1,860,000. On January 13, 1995, the Company filed an Application for Waiver of Minimum Funding Standard with the Internal Revenue Service for certain of its U.S. defined benefit pension plans for the plan years 1994 and 1995. If the request to waive these contributions is accepted, the Company's pension funding requirements for the calendar year ended December 31, 1995 of approximately $6,400,000 will be deferred and such contributions may be made ratably over a future period, depending on the instructions of the Internal Revenue Service. In the event that the request to waive these contributions is denied, the Company will be required to immediately fund its past due contributions. Plan assets relative to defined benefit plans are invested in broadly diversified portfolios of government obligations, mutual funds, stocks, bonds and fixed income and equity securities. U.S. and Canadian Defined Benefit Plans Net pension cost (income) consisted of the following:
Year Ended December 31 ------------------------------- 1992 1993 1994 ---- ---- ---- (Thousands) Service cost-benefits earned during the year . . . . $ 1,293 $ 926 $ 699 Curtailment loss and special termination benefits from sale of the Cupples Division and termination of future benefit accruals for salaried employees. . . . . . . . . . . . . - - 738 Interest cost on projected benefit obligation . . . . . . . . . . . . 5,744 5,222 4,305 Actual return on assets. . . . . . . (6,928) (5,536) 463 Net amortization and deferral. . . . 543 1,355 (3,642) ------- ------ ------- Net pension cost . . . . . . . . . .$ 652 $1,967 $ 2,563 ======= ====== =======
The above net pension cost includes the pension expense related to certain of the Company's former employees of the Concrete Division, which has been recorded as a discontinued operation. The amount of net pension expense which was allocated to the Concrete Division for the years ended 1992, 1993 and 1994 was $278,000, $329,000, and $310,000, respectively. The following table sets forth the aggregate funded status of the U.S. and Canadian defined benefit pension plans:
December 31, 1993 December 31, 1994 Plans With Plans With ----------------------- ------------------------ Assets Accumulated Assets Accumulated Exceeding Benefits Exceeding Benefits Accumulated Exceeding AccumulatedExceeding Benefits Assets Benefits Assets Canadian U.S. Canadian U.S. Plan Plans Plan Plans ----------- ----------- ---------------------- (Thousands) Actuarial present value of benefit obligation: Vested benefit obligation . . . .$ 8,619 $ 58,222 $ 7,398 $ 52,440 Non-vested benefit obligation . . . . 35 787 30 3,027 ------- -------- ------- -------- Accumulated benefit obligation . . . . 8,654 59,009 7,428 55,467 Excess of projected benefit obligation over accumulated benefit obligation. . . . 442 595 380 - ------- -------- ------- -------- Projected benefit obligation . . . . . 9,096 59,604 7,808 55,467 Plan assets at fair value. . . 15,182 40,296 12,130 35,630 ------- -------- ------- -------- Projected benefit obligation (in excess of) or less than plan assets. . . 6,086 (19,308) 4,322 (19,837) Unrecognized net (gain) loss . . . . . . . 225 9,380 1,170 8,296 Remaining unrecognized net transition (asset) obligation. . . . . . (614) 531 (115) 253 Adjustment required to recognize minimum liability . . . . - (9,315) - (8,549) ------- -------- ------- -------- Prepaid (accrued) pension cost recognized in the Consolidated Balance Sheets . . . . . . .$ 5,697 $(18,712) $ 5,377 $(19,837) ======= ======== ======= ========
Actuarial assumptions used for the U.S. and Canadian plans were as follows:
Years Ended December 31 ------------------------------- 1992 1993 1994 ---- ---- ---- Assumed discount rate U.S. plans 8.5% 7.25% 8.25% Assumed discount rate Canadian plan . . 9.5 8.0 9.0 Assumed rate of compensation increase . 4-5.5 4.5-5.5 5.0-5.5 Expected rate of return on plan assets. 9-10 9.0 9.0
Other Foreign Defined Benefit Plans The amounts reported below relating to other foreign defined benefit pension plans exclude in 1994 the plan of the sold U.K. Subsidiary. Net pension cost (income) consisted of the following:
Years Ended December 31 ------------------------------- 1992 1993 1994 ---- ---- ---- (Thousands) Service cost-benefits earned during the year . . . . . . . . . . . $ 1,049 $ 690 $ 263 Interest cost on projected benefit obligation . . . . . . . . . . 3,385 2,249 151 Actual return on assets. . . . . (5,342) (2,394) 102 Net amortization and deferral. . 2,143 196 (270) Curtailment loss . . . . . . . . - - 1,241 ------- ------- ------ Net pension cost (income). . . . $ 1,235 $ 741 $1,487 ======= ======= ======
The following table sets forth the aggregate funded status of other foreign defined benefit pension plans:
December 31 Plans with Assets Exceeding Accumulated Benefits --------------------- 1993 1994 ---- ---- (Thousands) Actuarial present value of benefit obligation Vested benefit obligation. . . . . . . . . $1,949 $2,283 Non-vested benefit obligation. . . . . . . 14 14 ------ ------ Accumulated benefit obligation . . . . . . 1,963 2,297 Excess of projected benefit obligation over accumulated benefit obligation. . . . . 74 85 ------ ------ Projected benefit obligation. . . . . . . . . 2,037 2,382 Plan assets at fair value . . . . . . . . . . 2,150 2,346 ------ ------ Projected benefit obligation less than (greater than) plan assets . . . . . . . . 113 (36) Unrecognized net gain . . . . . . . . . . . . 1,489 - Remaining unrecognized net transition asset . (515) - ------ ------ Prepaid (accrued) pension cost recognized in the Consolidated Balance Sheets. . . . . . . . $1,087 $ (36) ====== ======
Actuarial assumptions used for the other foreign defined benefit plans were as follows:
Years Ended December 31 ------------------------------- 1992 1993 1994 ---- ---- ---- Assumed discount rate. . . . . . 9.5-10.5% 7.0%8.0% Assumed rate of compensation increase . . 7-7.5 4.5 5.5 Expected rate of return on plan assets. . . . . . . . . . . . . 11-13 7.5 8.5
Additionally, certain U.S. employees are covered by a defined contribution plan which provides for contributions based primarily on compensation levels. The Company funds its contributions to the defined contribution plan as accrued. Plan assets of defined contribution plans are invested in bank funds. Pension expense related to the Company's defined contribution plans included the following amounts:
Years Ended December 31 ------------------------------- 1992 1993 1994 ---- ---- ---- (Thousands) U.S. defined contribution plan . $1,029 $ 665 $ 679 ====== ====== ======
The amounts noted above exclude the Concrete Division for which the U.S. defined contribution plan pension expense was $212,000, $165,000, and $180,000, respectively, in 1992, 1993 and 1994, and the pension expense under multi-employer pension plans was $1,444,000, $1,455,000, and $1,616,000 in 1992, 1993 and 1994, respectively. As a result of the Disposition discussed in Note 2, during 1992 the Company recorded settlement gains of $1,733,000, which are reflected in the Consolidated Statement of Operations as a component of the loss from discontinued operations. As a result of the amendment to the salary defined benefit plan which is discussed above, the Company recorded a curtailment loss of $465,000 in the fourth quarter of 1994. Additionally, as a result of the sale of the Cupples Division (Note 2), the Company recognized a curtailment and special termination benefit loss of $268,000 during 1994, which was recorded as a component of loss on businesses sold/held for sale in the Consolidated Statement of Operations. During the fourth quarter of 1994, the Company's Asia/Pacific subsidiary implemented a plan whereby it would terminate its Staff Superannuation Fund (the "Superannuation Fund"), a defined benefit plan which provides retirement benefits for substantially all the salaried employees of H.H. Robertson (Australia) Pty. Limited, and contribute all assets of the Superannuation Fund to a new, defined contribution plan. The termination of the Superannuation Fund resulted in the Company recognizing a charge to selling, general and administrative expense of $1,241,000 in the fourth quarter of 1994. 19. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Effective January 1, 1993, the Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" for its U.S. plans. SFAS No. 106 requires measurement of the obligations of an employer to provide future postretirement benefits and the accrual of costs during the years that the employee provides services. The Company provides postretirement health and life insurance benefits under unfunded plans to a select group of retired former U.S. employees. In 1993, the Company fixed its per retiree cost of providing these benefits to a majority of these participants. The accumulated postretirement benefit obligation at adoption was approximately $21,501,000 and is being recognized over the expected payment period of 14 years. The adoption of SFAS No. 106 did not have a material impact on the Company's Consolidated Statements of Operations or Cash Flows. Prior to the adoption of SFAS No. 106, the Company expensed the net cost of providing such benefits to retired employees on a pay-as-you-go basis. During fiscal 1994, the Company adopted the provisions of SFAS No. 106 with respect to its foreign postretirement benefit obligations which cover a limited group of former employees and the effect was not material. The Company terminated its postretirement benefit plan for its U.S. active employees at the beginning of 1993. The following table sets forth the U.S. plans' funded status reconciled with the amount recognized in the Company's Consolidated Balance Sheets.
December 31, ---------------------- 1993 1994 ------- -------- (Thousands) Accumulated Postretirement Benefit Obligation: Retired employees. . . . . . . . . . . . $(21,068) $(18,891) ======== ======== Unfunded accumulated benefit obligation in excess of plan assets. . . . . . . . . $(21,068) $(18,891) Unrecognized net (gain)/loss . . . . . . 1,004 (117) Unrecognized transition obligation . . . 19,934 18,465 -------- -------- Accrued postretirement benefit cost recognized in the Consolidated Balance Sheets . . $ (130) $ (543) ======== ========
For the purposes of measuring the December 31, 1994 accumulated postretirement benefit obligation, the per capita cost of covered health care benefits was assumed to increase at 11.75% from 1994 to 1995 for retirees not in the Company's fixed cost plan. The rate was assumed to decrease gradually down to 5.25% by 2002 and remain at that level thereafter. Because the health care cost trend rate assumption affects relatively few participants, there is no significant effect on the amounts reported. Increasing assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1994 by $489,000, or 2.6%. The weighted average discount rate used in determining the accumulated postretirement benefit obligation at December 31, 1993 and 1994 was 7.25% and 8.25%, respectively. Net periodic postretirement benefit cost for 1993 and 1994 included the following components:
Year Ended December 31, ----------------------- 1993 1994 ------ ------ (Thousands) Interest cost. . . . . . . . . . . . . . $1,716 $1,413 Net amortization and deferral. . . . . . 1,567 1,542 ------ ------ Net periodic postretirement benefit cost. . . . . $3,283 $2,955 ====== ======
For purposes of measuring the 1994 net periodic postretirement benefit cost, the per capita cost of covered health care benefits was assumed to increase at 11.25% from 1994 to 1995 for retirees not in the fixed cost plans. The rate was assumed to decrease gradually down to 4.75% by 2000 and remain level thereafter. Because the health care cost trend rate assumption affects relatively few participants, increasing assumed health care cost trend rates by one percentage point each year would increase the aggregate of the service and interest cost components of the net periodic postretirement benefit cost for fiscal 1994 by $35,000, or 2.5%. The weighted average discount rate used in determining the expense in 1993 and 1994 was 8.5% and 7.25%, respectively. The net cost for providing postretirement benefits to retired employees on a pay-as-you-go basis was approximately $2,436,000 in 1992. For purposes of segment reporting, the net periodic postretirement benefit cost is included as a corporate expense (Note 17). The Company is currently evaluating various options and, in certain cases, is taking actions to reduce the cost of its post-retirement benefits. In the event that the Company changes such benefits, the projection of future obligations and costs may differ significantly from the above. In the fourth quarter of 1993, the Company adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits". This statement requires an accrual method of recognizing postemployment benefits. The cumulative effect of adopting SFAS No. 112 was $1,200,000, which principally reflects long-term disability benefits which arose when the Company's policy was to self-insure such benefits. Prior to the adoption of SFAS No. 112, the Company expensed the net cost of providing these benefits on a pay-as-you-go basis. Amounts recognized in the prior and current years Consolidated Statements of Operations, exclusive of the effect of adopting SFAS No. 112, were not material. 20. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarterly financial data is summarized as follows:
First Second Third Fourth ----- ------ ----- ------ 1994 (a)(b) Revenue . . . . . . . . . .$62,490 $84,421 $ 83,848 $ 78,596 Cost of sales . . . . . . . 56,663 71,851 69,898 66,498 Income (loss) from continuing operations. . . . . . . . (6,562) (308) (10,493) (1,586) Net income (loss) . . . . . (5,511) 918 (15,373) (1,794) Income (loss) per share from continuing operations . .$ (.42)$ (.02)$ (.67) $ (.10) Net income (loss) per common share . . . . . . . . . .$ (.35)$ .06 $ (.97) $ (.11) 1993 (a)(c) Revenue . . . . . . . . . .$65,999 $79,628 $ 89,371 $ 80,659 Cost of sales . . . . . . . 58,724 67,315 76,279 69,994 Income (loss) from continuing operations. . . . . . . . (8,336) (4,910) (12,365) (1,624) Net income (loss) . . . . . (8,615) (3,772) (5,511) (3,038) Income (loss) per share from continuing operations . .$ (9.53)$ (5.64)$ (1.32) $ (.12) Net income (loss) per common share . . . . . . . . . .$ (9.85)$ (4.35)$ (.59) $ (.22)
(a) The quarterly financial data presented has been reclassified to reflect the Concrete Division as a discontinued operation. (b) During the third and fourth quarters of 1994, the Company recorded charges of $9,800,000 and $1,600,000, respectively, to write-down the carrying values of the Cupples Division and the European Operations to their estimated net realizable values. The fourth quarter of 1994 excludes the results of the Cupples Division and the European Operations. Additionally, in the third and fourth quarters of 1994, the Company recorded losses from discontinued operations of $6 million and $2 million, respectively for the settlement of certain litigation related to the discontinued custom curtainwall operations (Note 14). The Company recorded restructuring charges of $900,000, $147,000, $2,078,000 and $295,000, respectively, in the first, second, third and fourth quarters of 1994. Also during the fourth quarter of 1994, the Company recorded curtailment losses from its pension plans of $1,706,000 (Note 18). (c) In the third quarter of 1993, the Company recorded a charge of $9,700,000 for the sale of the Company's U.K. Subsidiary (Note 2) and an extraordinary gain of $5,367,000 resulting from the completion of the Company's Exchange Offer (Note 10). In the fourth quarter of 1993, the Company recorded a charge for discontinued operations of $2,500,000 (Note 2) and a charge of $1,200,000 for the cumulative effect of an accounting change (Note 19). As discussed in Note 2, the results of operations of the sold U.K. Subsidiary are excluded for all periods after September 30, 1993. Independent Auditors' Report To the Board of Directors and Stockholders of Robertson-Ceco Corporation In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholders' equity (deficiency) and of cash flows present fairly, in all material respects, the financial position of Robertson-Ceco Corporation and its subsidiaries (the "Company") at December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. The financial statements of Robertson-Ceco Corporation for the year ended December 31, 1992 were audited by other independent accountants whose report dated February 25, 1993 (May 3, 1993 as to Note 10) expressed an unqualified opinion on those statements and included an explanatory paragraph that described the substantial doubt about the Company's ability to continue as a going concern. As discussed in Note 19 to the financial statements, the Company changed its method of accounting for postemployment benefits in 1993 by adopting Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" and Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits." In addition, as discussed in Note 13 to the financial statements, the Company changed its method of accounting for income taxes in 1993 by adopting Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." /s/ Price Waterhouse LLP PRICE WATERHOUSE LLP Boston, Massachusetts March 15, 1995 Independent Auditors' Report To the Board of Directors and Stockholders of Robertson-Ceco Corporation: We have audited the accompanying consolidated statements of operations, stockholders' equity (deficiency), and cash flows for the year ended December 31, 1992 of Robertson-Ceco Corporation and its subsidiaries. Our audit also included the financial statement schedule for the year ended December 31, 1992 listed in Item 14. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of Robertson-Ceco Corporation and its subsidiaries for the year ended December 31, 1992 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. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 10 to the consolidated financial statements, the Company's defaults under its loan and capital lease agreements and its inability to generate adequate unrestricted cash to meet its current and anticipated operating requirements, along with the Company's recurring losses from operations, negative working capital, and stockholders' deficiency raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP Boston, Massachusetts February 25, 1993 (May 3, 1993 as to Note 10) ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND --------------------------------------------------------------- FINANCIAL DISCLOSURE -------------------- On September 14, 1993, the Board of Directors of Robertson Ceco Corporation, acting upon the recommendation of its Audit Committee, authorized the engagement of the firm of Price Waterhouse as its independent accountants to audit the financial statements of the Company for the fiscal year ending December 31, 1993. Price Waterhouse was also engaged to perform the audit of the financial statements of the Company for the year ended December 31, 1994. Price Waterhouse replaced the firm of Deloitte & Touche, whose engagement as independent accountants of the Company terminated September 14, 1993. The reports of Deloitte & Touche on the Company's financial statements for the year ended December 31, 1992, except as noted below, did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The report of Deloitte & Touche on the Company's financial statements for the year ended December 31, 1992 contained an explanatory paragraph with respect to a substantial doubt about the ability of the Company to continue as a going concern. During the year ended December 31, 1992 and in the period from January 1, 1993 through September 14, 1993, there were no disagreements with Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Deloitte & Touche, would have caused Deloitte & Touche to make reference to the matter in connection with its reports on the Company's financial statements with respect to such periods. Also, during the year ended December 31, 1992 and in the period from January 1, 1993 through September 14, 1993, there were no "reportable events" as defined in subparagraph (a)(1)(v) of Item 304 of Regulation S-K. During the year ended December 31, 1992 and in the period from January 1, 1993 through September 14, 1993, which was prior to the engagement of Price Waterhouse, neither the Company nor anyone else on its behalf consulted Price Waterhouse regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or (ii) the type of audit opinion that might be rendered on the Company's financial statements. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -------------------------------------------------- (a) Information concerning the Registrant's directors is incorporated by reference to the section entitled "Election of Directors" in the registrant's definitive proxy statement for the Annual Meeting of Stockholders to be held on May 2, 1995, to be filed pursuant to Regulation 14A. (b) Information concerning executive officers of the Registrant is set forth in Item 4.1 of Part I page 8 of this Report under the heading "EXECUTIVE OFFICERS OF THE REGISTRANT". ITEM 11. EXECUTIVE COMPENSATION ---------------------- Information concerning executive compensation is incorporated by reference to the section entitled "Executive Compensation" in the registrant's definitive proxy statement for the Annual Meeting of Stockholders to be held on May 2, 1995, to be filed pursuant to Regulation 14A. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -------------------------------------------------------------- Information concerning security ownership of certain beneficial owners and management is incorporated by reference to the section entitled "Security Ownership" in the registrant's definitive proxy statement for the Annual Meeting of Stockholders to be held on May 2, 1995, to be filed pursuant to Regulation 14A. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ---------------------------------------------- Information concerning certain relationships and related transactions is incorporated by reference to the section entitled "Certain Relationships and Related Transactions" in the registrant's definitive proxy statement for the Annual Meeting of Stockholders to be held on May 2, 1995, to be filed pursuant to Regulation 14A. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K ---------------------------------------------------------------- The following documents are filed as part of this Report Report: (a)1. Consolidated Financial Statements of Robertson-Ceco Corporation. Consolidated Statements of Operations for the three years ended December 31, 1994. Consolidated Balance Sheets at December 31, 1993 and 1994. Consolidated Statements of Cash Flows for the three years ended December 31, 1994. Consolidated Statements of Stockholders' Equity (Defic- iency) for the three years ended December 31, 1994. Notes to Consolidated Financial Statements, including Selected Quarterly Financial Data as required by Item 302 of Regulation S-K. Independent Auditors' Reports. Price Waterhouse LLP Deloitte & Touche LLP (a)2. Financial Statement Schedules for the Three Years Ended December 31, 1994. SCHEDULE II - Valuation and Qualifying Accounts All other schedules are omitted because they are not applicable or not required. Report of Independent Accountants on Financial Schedules Price Waterhouse LLP - as of and for the years ended December 31, 1993 and 1994. (a)3. List of Exhibits. Exhibits filed or incorporated by reference in connection with this Report are listed in the Exhibit Index starting on page 67. (b) Reports on Form 8-K On January 9, 1995 the Company filed a Form 8-K reporting on the sale of the assets and business of its Cupples Division on December 27, 1994. The Cupples Division operated as part of the Company's Building Products Group. On March 20, 1995 the Company filed a Form 8-K reporting the sale of the assets and business of its Concrete Division and the entering into a settlement agreement with respect to certain litigation. The Concrete Division operated as a separate business segment and is accounted for as a discontinued operation. 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, in the city of Boston, The Commonwealth of Massachusetts, on this 29 day of March 1995. ROBERTSON-CECO CORPORATION By /s/ John C. Sills ------------------------------- Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons in the capacities and as of the 29 day of March, 1995. Each person whose signature appears below hereby authorizes each of Andrew G. C. Sage, II, Elmer A. Roskovensky and George S. Pultz and appoints each of them singly his or her attorney-in-fact, each with full power of substitution, to execute in his name, place and stead, in any and all capacities, any or all further amendments to this Report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, making such further changes in this Report as the Company deems appropriate. SIGNATURE /s/ Michael E. Heisley /s/ Andrew G. C. Sage, II ---------------------------------- ------------------------------- Michael E. Heisley Andrew G. C. Sage, II Chief Executive Officer and Director Chairman and Director (Principal Executive Officer) /s/ Elmer A. Roskovensky /s/ John C. Sills ---------------------------------- ------------------------------- Elmer A. Roskovensky John C. Sills President and Chief Operating Officer Executive Vice President and and Director Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) /s/ Frank A. Benevento /s/ Stanley G. Berman ---------------------------------- ------------------------------- Frank A. Benevento Stanley G. Berman Director Director /s/ Mary Heidi Hall Jones /s/ Kevin E. Lewis ---------------------------------- ------------------------------- Mary Heidi Hall Jones Kevin E. Lewis Director Director /s/ Leonids Rudins /s/ Gregg C. Sage ---------------------------------- ------------------------------- Leonids Rudins Gregg C. Sage Director Director
ROBERTSON-CECO CORPORATION SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Thousands) ======================================================================================= COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E --------------------------------------------------------------------------------------- ADDITIONS BALANCE ----------------------- BALANCE AT CHARGED TO CHARGED TO AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD --------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1994: Deducted from Asset Accounts: Allowance for Doubtful Accounts. $ 3,255 $ 692 $ 13 (a) $ 729 (b) 2,088 (g) $ 1,143 ======= ======= ======= ======= ======= Reserves for Discon- tinued Operations (1) . . . . . . . $ 5,246 $ 8,000 $ 166 $ 1,103 (e) $12,309 ======= ======= ======= ======= ======= Not Deducted from Asset Accounts: Insurance liabilities - current . . . . . $11,225 $14,908 $ 331 $18,099 (e) $ 8,365 ======= ======= ======= ======= ======= Insurance liabilities - long-term . . . . $14,770 $ $ 332 $ 18 (e) $15,084 ======= ======= ======= ======= ======= Other-current (k). $12,568 $ 8,397 $ 1,311 (f) $10,692 (e) 3,834 (g) 797 (f) $ 6,827 (m) ======= ======= ======= ======= ======= Other-noncurrent (1). $13,616 $ $ 36 (f) $ 2,624 (f) $11,028 ======= ======= ======= ======= ======= YEAR ENDED DECEMBER 31, 1993: Deducted from Asset Accounts: Allowance for Doubtful Accounts. $ 4,653 $ 1,707 $ 57 (a) $ 2,887 (b) 76 (f) 351 (g) $ 3,255 ======= ======= ======= ======= ======= Reserves for Discon- tinued Operations (1) . . . . . . . $ 4,938 $ 2,500 $ $ 2,192 (e) $ 5,246 ======= ======= ======= ======= ======= Not Deducted from Asset Accounts: Insurance liabilities - current . . . . . $16,434 $11,884 $ 680 (f) $17,773 (e) $11,225 ======= ======= ======= ======= ======= Insurance liabilities - long-term . . . . $11,990 $ 3,100 $ $ 320 (e) $14,770 ======= ======= ======= ======= ======= Other-current (k). $30,967 $ 6,164 $ 83 (f) $23,635 (e) 221 (g) 790 (f) $12,568 (m) ======= ======= ======= ======= ======= Other-noncurrent (1). $22,652 $ 110 $ $ 9,064 (e) 82 (f) $13,616 ======= ======= ======= ======= =======
ROBERTSON-CECO CORPORATION SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Continued) (Thousands) ========================================================================================== COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E --------------------------------------------------------------------------------------- ADDITIONS BALANCE ----------------------- BALANCE AT CHARGED TO CHARGED TO AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD --------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1992: Deducted from Asset Accounts: Allowance for Doubtful Accounts . . . . . $ 3,582 $ 2,671 $ 203 (a) $ 1,617 (b) 855 (n) 678 (f) 363 (d) $ 4,653 ======= ======= ======= ======= ======= Reserves for Discon- tinued Operations (1) . . . . . . $ 3,326 $ 3,968 $ $ 2,356 (e) $ 4,938 ======= ======= ======= ======= ======= Not Deducted from Asset Accounts: Insurance liabilities - current . . . . $16,986 $10,950 $ $11,502 (e) $16,434 ======= ======= ======= ======= ======= Insurance liabilities - long-term . . . $19,743 $ 4,781 $ $12,534 (e) $11,990 ======= ======= ======= ======= ======= Other-current (k) $44,932 $16,932 $ 806 (f) $29,537 (e) 1,848 (f) 318 (d) $30,967 (m) ======= ======= ======= ======= ======= Other-noncurrent (1) . . . . . $15,055 $ 5,500 $ 5,422 $ 3,325 (e) $22,652 ======= ======= ======= ======= =======
NOTES: (a) Represents recovery of accounts receivable previously written off as uncollectible. (b) Accounts receivable written off as uncollectible. (c) Transfer to net assets held for sale. (d) Other adjustments. (e) Represents charges to the accounts for their intended purposes. (f) Represents transfer of reserves. (g) Represents reserves of sold/held for sale businesses. (j) The reserves are included in the captions "Other Current Assets and Other Non-Current Assets" in the Consolidated Balance Sheets. (k) The reserves are included in the caption "Other Accrued Liabilities" in the Consolidated Balance Sheets. (l) The reserves are included in the caption "Reserves and Other Long-Term Liabilities" in the Consolidated Balance Sheets. (m) The reserves include warranty and backcharge reserves, reserves for restructuring, environmental and job loss reserves included in the caption "Other Accrued Liabilities" in the Consolidated Balance Sheets. See Notes to Consolidated Financial Statements. (n) Included in the income statement in the caption "Restructuring expense (income)-net." Report of Independent Accountants on Financial Statement Schedules To the Board of Directors of Robertson-Ceco Corporation Our audits of the consolidated financial statements referred to in our report dated March 15, 1995 appearing on page 58 of the 1994 Annual Report on Form 10-K of Robertson-Ceco Corporation also included an audit of the Financial Statement Schedule which is as of and for the years ended December 31, 1993 and 1994 listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/ Price Waterhouse LLP Price Waterhouse LLP Boston, Massachusetts March 15, 1995 Exhibit Index Exhibit No. Description 3.1 Registrant's Second Restated Certificate of Incorporation, effective July 23, 1993, filed as Exhibit 3 to Registrant's report on Form 8-K dated July 14, 1993 (File No. 1-10659), and incorporated herein by reference thereto. . . . . . 3.2 Bylaws of Registrant, effective November 8, 1990, and as Amended on November 12, 1991, August 27, 1992 and December 16, 1993, filed as Exhibit 3.2 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 1-10659), and incorporated herein by reference thereto . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Registrant's Second Restated Certificate of Incorporation, effective July 23, 1993 referred to in Exhibit 3.1 above . 4.2 Bylaws of Registrant, effective November 8, 1990, and as Amended on November 12, 1991, August 27, 1992 and December 16, 1993 referred to in Exhibit 3.2 above . . . . . . . 4.3 Indenture, dated December 9, 1986, by and between M C Co. (a predecessor of Registrant) and Mellon Bank, N.A. relating to Ceco Industries, Inc. 15.5% Discount Subordinated Debentures Due 2000 filed as Exhibit 4(b) to Ceco Industries, Inc.'s report on Form 10-K for the year ended December 31, 1986 (File No. 33-10181), and incorporated herein by reference thereto . . . . . . . . . . . . . . . . . . . 4.4 First Supplemental Indenture, dated as of December 9, 1986 between M C Co. (a predecessor of Registrant) and Mellon Bank, N.A. filed as Exhibit 4.5 to Registration Statement of The Ceco Corporation on Form S-4, Registration No. 33- 37020, and incorporated herein by reference thereto . . 4.5 Second Supplemental Indenture, dated November 8, 1990, between Registrant and Bank One, Columbus, N.A. (as successor Trustee to Mellon Bank, N.A.) filed as Exhibit 4.6 to Registrant's report on Form 8-K dated as of November 8, 1990 (File No. 1-10659), and incorporated herein by reference thereto 4.6 Third Supplemental Indenture, dated July 14, 1993, between Registrant and Bank One, Columbus, N.A. (as successor Trustee to Mellon Bank, N.A.) filed as Exhibit 2 to registrant's report on Form 8-K (File No. 1-10659) dated July 14, 1993, and incorporated herein by reference thereto. . . . . . 4.7 Amended and Restated Stockholders Agreement dated as of July 12, 1990 by and among the principal stockholders of Ceco Industries, Inc., H.H. Robertson Company and Registrant (formerly known as The Ceco Corporation) filed as Exhibit 4.2 to Registration Statement of The Ceco Corporation on Form S-4, Registration Statement No. 33-37020, and incorporated herein by reference thereto . . . . . . . . . . . . . . 4.8 Stock Purchase Agreement and related Registration Rights Agreement dated as of June 8, 1990 by and among H.H. Robertson Company, Ceco Industries, Inc. and Frontera S.A. filed as Exhibit 10(a) to Ceco Industries, Inc.'s report on Form 8-K (File No. 33-10181), dated as of June 5, 1990, and incorporated herein by reference thereto. . . . . . . . 4.9 Agreement, dated as of June 8, 1990, by and among Frontera S.A., First City Financial Corporation Ltd., Hornby Trading, Inc., Frill Trading Inc., the principal stockholders of Ceco Industries, Inc. and H.H. Robertson Company and related letter agreement dated as of June 8, 1990, among the principal stockholders of Ceco Industries, Inc., and Frontera S.A. filed as Exhibit 28(b) to Ceco Industries, Inc.'s report on Form 8-K (File No. 33-10181), dated as of June 5, 1990, and incorporated herein by reference thereto. . . . . . 4.10 Warrant Agreement, dated December 9, 1986, by and among Registrant (formerly known as The Ceco Corporation), Ceco Industries, Inc. (a predecessor of Registrant) and Continental Illinois National Bank and Trust Company of Chicago (now known as Continental Bank N.A.), filed as Exhibit 4(c) to Ceco Industries, Inc.'s Form 10-K (File No. 33-10181), for the year ended December 31, 1986, and incorporated herein by reference thereto together with Supplement to Warrant Agreement dated as of November 8, 1990 between Registrant and Continental Bank, N.A. filed as Exhibit 4.6 to Registrant's report on Form SE (File No. 1-10659), dated November 16, 1990, and incorporated herein by reference thereto . . . . . . . . . . . . . . . . . . . . . . . . 4.11 Registration Rights Agreement, dated December 9, 1986, by and among Registrant (formerly known as The Ceco Corporation), Ceco Industries, Inc., and the Purchasers listed on the Signature Pages of the Purchase Agreement dated December 9, 1986, between the Ceco Corporation, Ceco Industries, Inc., and the Purchasers of the Subordinated Notes of The Ceco Corporation and the Warrants of Ceco Industries, Inc. filed as Exhibit 4(d) to Ceco Industries, Inc.'s Form 10-K (File No. 33-10181), for the year ended December 31, 1986, and incorporated herein by reference thereto . . . . . . . . . . . . . . . . . . . . . . . . 4.12 Registration Rights Agreement dated May 17, 1993 by and among the Registrant and Sage RHH filed as Exhibit 10.27 to the Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto . . . . . . . . . . . . . . 4.13 Registration Rights Agreement dated November 23, 1993 by and among the Registrant and Foothill Capital Corporation filed as Exhibit 4.13 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 1-10659), and incorporated herein by reference thereto. . . . . . 4.14 Registration Rights Agreement dated December 14, 1993 by and among the Registrant and Heico Acquisitions, Inc. filed as Exhibit 4.14 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (File No. 1-10659), and incorporated herein by reference thereto. . . . . . 4.15 Indenture dated as of July 14, 1993 among the Registrant and IBJ Schroder Bank and Trust Company, Trustee, relating to the Registrant's 10-12% Senior Subordinated Notes due 1999 together with specimen certificate therefor filed as Exhibit 1 to the Registrant's report on Form 8-K dated July 14, 1993 (File No. 10659), and incorporated herein by reference thereto. . . . . . . . . . . . . . . . . . 4.16 Specimen certificate for Common Stock, par value $.01 per share, of Registrant filed as Exhibit 4.9 to the Registration Statement of The Ceco Corporation on Form S-4, Registration No. 33-37020, and incorporated herein by reference thereto . . . . . . . . . . . . . . . . . . . 10.1 Borrower Security Agreement dated as of November 8, 1990 by Registrant in favor of Wells Fargo Bank, N.A., as Agent, filed as Exhibit 10.6 to Registrant's report on Form 10-K for the year ended December 31, 1990 (File No. 1-10659), and incorporated herein by reference thereto. . . . . . 10.2 Subsidiary Security Agreement dated as of November 8, 1990 among Ceco Dallas Co., Ceco Houston Co., Ceco San Antonio Co., M C Durham Co., M C Wathena Co., M C Windsor Co., Meyerland Co., R.P.M. Erectors, Inc. and Quantum Constructors, Inc. in favor of Wells Fargo Bank, N.A., as Agent, filed as Exhibit 10.7 to Registrant's report on Form 10-K for the year ended December 31, 1990 (File No. 1- 10659), and incorporated herein by reference thereto. . 10.3 Subsidiary Guarantee dated as of November 8, 1990 among Ceco Dallas Co., Ceco Houston Co., Ceco San Antonio Co., M C Durham Co., M C Wathena Co., M C Windsor Co., Meyerland Co., R.P.M. Erectors and Quantum Constructors, Inc. in favor of Wells Fargo Bank, N.A. as Agent, filed as Exhibit 10.8 to Registrant's report on Form 10-K for the year ended December 31, 1990 (File No. 1-10659), and incorporated herein by reference thereto . . . . . . . . . . . . . . 10.4 1976 Option Plan of H.H. Robertson Company (a predecessor of Registrant), as adopted and approved by H.H. Robertson Company's shareholders on May 2, 1978 and on May 6, 1980 and as further amended by H.H. Robertson Company's Board of Directors on August 11, 1981, February 9, 1982 and September 14, 1982, filed as Exhibit 10.5 to the report of H.H. Robertson Company on Form 10-K for the fiscal year ended December 31, 1987 (File No. 1-5697), and incorporated herein by reference thereto. . . . . . . . . . . . . . . . . . 10.5 1986 Stock Option Plan of H.H. Robertson Company (a predecessor of Registrant), as adopted and approved by H.H. Robertson Company's shareholders on May 6, 1986, as amended by H.H. Robertson Company's Board of Directors on March 24, 1987 and as further amended by H.H. Robertson Company's Board of Directors on February 22, 1989, filed as Exhibit 19 to the report of H.H. Robertson Company on Form 10-Q of H.H. Robertson Company for the quarter ended September 30, 1989, (File No. 1-5697), and incorporated herein by reference thereto . . . . . . . . . . . . . . . . . . . 10.6 Text of Executive Separation Plan of H.H. Robertson Company (a predecessor of Registrant) effective May 1, 1989, filed as Exhibit 19 to H.H. Robertson Company's report on Form 10-Q for the quarter ended June 30, 1989 (File No. 1-5697), and incorporated herein by reference thereto. . . . . . 10.7 Agreement and Purchase of Sale of Assets by and between United Dominion Industries, Inc., and Robertson-Ceco Corporation dated December 20, 1991, with letter amendment dated January 24, 1992, filed as Exhibit 2.1 to Registrant's report on Form 8-K dated as of February 3, 1992 (File No. 1-10659), and incorporated herein by reference thereto. 10.8 Loan and Security Agreement dated as of April 12, 1993 between the Registrant and Foothill Capital Corporation, filed as Exhibit 10.15 to the Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto, together with Amendment No. 1 to Loan and Security Agreement dated April 30, 1993 between the Registrant and Foothill Capital Corporation, filed as Exhibit 10.16 to Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto. . . . . . . . . . . . . . . . . . 10.9 Amendment No. 2 to Loan and Security Agreement dated April 20, 1994, between Registrant and Foothill Capital Corporation. 10.10 Amendment No. 3 to Loan and Security Agreement dated May 1994 between Registrant and Foothill Capital Corporation . . 10.11 Amendment No. 4 to Loan and Security Agreement dated December 15, 1994 between Registrant and Foothill Capital Corporation. . 10.12 Amendment No. 5 to Loan and Security Agreement dated as of January 31, 1995 between Registrant and Foothill Capital Corporation . . . . . . . . . . . . . . . . . . . . . . 10.13 Consulting and Services Agreement dated as of September 15, 1992 between Registrant and Sage Capital Corporation, filed as Exhibit 10.17 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992 (File No. 1-10659), and incorporated herein by reference thereto, together with Amended and Restated Consulting and Services Agreement dated as of July 15, 1993 between Registrant and Sage Capital Corporation, filed as Exhibit 10.13 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 1-10659) and incorporated herein by reference thereto. . . . . . 10.14 Continuing Guaranty dated as of April 30, 1993 between M C Durham Co. & Foothill Capital Corporation, filed as Exhibit 10.19 to the Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto. . . . . . . . . . . . . . . . . . 10.15 Continuing Guaranty dated as of April 30, 1993 between Ceco-San Antonio Co. and Foothill Capital Corporation, filed as Exhibit 10.20 to the Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto. . . . . . . . 10.16 Continuing Guaranty dated as of April 30, 1993 between Meyerland Co. and Foothill Capital Corporation, filed as Exhibit 10.21 to the Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto. . . . . . . . 10.17 Security Agreement - Stock Pledge (Domestic Subsidiaries) dated as of April 30, 1993 between the Registrant and Foothill Capital Corporation, filed as Exhibit 10.22 to the Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto 10.18 Security Agreement - Stock Pledge (Foreign Subsidiaries) dated as of April 30, 1993 between the Registrant and Foothill Capital Corporation, filed as Exhibit 10.23 to the Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto 10.19 Intercreditor Agreement dated as of April 30, 1993 among the Registrant, Foothill Capital Corporation and Wells Fargo Bank, N.A., filed as Exhibit 10.24 to the Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto 10.20 Intercreditor Agreement dated as of March 3, 1995 among Foothill Capital Corporation, Wells Fargo Bank, N.A., Federal Insurance Company and the Registrant. . . . . . . . . . 10.21 Intercreditor Agreement dated as of November 18, 1993 among Foothill Capital Corporation, Acstar Insurance Company and the Registrant, together with Amendment to Intercreditor Agree- ment dated as of April 17, 1994 . . . . . . . . . . . . 10.22 Intercreditor Agreement dated as of April 30, 1993 among Foothill Capital Corporation, Reliance Insurance Co., United Pacific Insurance Company, Planet Insurance Company and the Registrant, filed as Exhibit 10.25 to the Registrant's Registration Statement on Form S-4, Registration Statement No. 33-58818, and incorporated herein by reference thereto 10.23 Asset Purchase and Stock Subscription Agreement among Heico Acquisitions, Inc., Registrant and Robertson Espanola, S.A. dated December 2, 1993, filed as Exhibit 28 to Registrant's report on Form 8-K dated December 14, 1993 (File No. 1-10659), and incorporated herein by reference thereto. 10.24 Employment Agreement between Registrant and Denis N. Maiorani dated July 15, 1993 filed as Exhibit 10.22 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 1-10659), and incorporated herein by reference thereto . . . . . . . . . . . . . . . . . . . . . . . . 10.25 Employment Agreement between Registrant and Andrew G. C. Sage, II dated July 15, 1993 filed as Exhibit 10.23 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 1-10659), and incorporated herein by reference thereto. . . . . . . . . . . . . . . . . . 10.26 Agreement Regarding Debtor in Possession Financing and Use of Cash Collateral dated as of April 30, 1993 among the Registrant, Foothill Capital Corporation and Wells Fargo Bank, N.A., filed as Exhibit 10.28 to Registrant's report on Form 8-K dated December 14, 1993 (File No. 1-10659), and incorporated herein by reference thereto. . . . . . . . 10.27 Letter of Credit Agreement by and among Registrant, Wells Fargo Bank, N.A. and Foothill Capital Corporation dated as of April 30, 1993, filed as Exhibit 10.29 to Registrant's report on Form 8-K dated December 14, 1993 (File No. 1-10659), and incorporated herein by reference thereto. . . . . . . . 10.28 Amended and Restated 1991 Long Term Incentive Plan, filed as Exhibit 4.1 to Registrant's Form S-8 Registration Statement No. 33-51665 dated December 22, 1993, and incorporated herein by reference thereto . . . . . . . . . . . . . . 10.29 Agreement by and among Registrant, Capella Investments Limited and H. H. Robertson (U.K.) Limited dated November 9, 1993, filed as Exhibit 2.1 to the Registrant's report on Form 8-K dated November 22, 1993, and incorporated herein by reference thereto. . . . . . . . . . . . . . . . . . 10.30 Indenture, dated December 9, 1986, by and between M C Co. (a predecessor of Registrant) and Mellon Bank, N.A. relating to Ceco Industries, Inc. 15.5% Discount Subordinated Debentures Due 2000 referred to in Exhibit 4.3 above, together First Supplemental Indenture, dated as of December 9, 1986 referred to in Exhibit 4.4 above, Second Supplement Indenture, dated November 8, 1990, referred to in Exhibit 4.5 above, and Third Supplemental Indenture, dated July 14, 1993, referred to in Exhibit 4.6 above. . . . . . . . . . . . . . . . . . 10.31 Amended and Restated Stockholders Agreement dated as of July 12, 1990 by and among the principal stockholders of Ceco Industries, Inc., H.H. Robertson Company and Registrant (formerly known as The Ceco Corporation) referred to in Exhibit 4.7 above . . . . . . . . . . . . . . . . . . . 10.32 Stock Purchase Agreement and related Registration Rights Agreement dated as of June 8, 1990 by and among H.H. Robertson Company, Ceco Industries, Inc. and Frontera S.A. referred to in Exhibit 4.8 above. . . . . . . . . . . . 10.33 Agreement, dated as of June 8, 1990, by and among Frontera S.A., First City Financial Corporation Ltd., Hornby Trading Inc., Frill Trading Inc., the principal stockholders of Ceco Industries, Inc. and H.H. Robertson Company and related letter agreement dated as of June 8, 1990, among the principal stockholders of Ceco Industries, Inc., and Frontera S.A. referred to in Exhibit 4.9 above . . . . . . . . . 10.34 Warrant Agreement, dated December 9, 1986, by and among Registrant (formerly known as The Ceco Corporation), Ceco Industries, Inc. (a predecessor of Registrant) and Continental Illinois National Bank and Trust Company of Chicago (now known as Continental Bank N.A.) , together with Supplement to Warrant Agreement dated as of November 8, 1990 referred to in Exhibit 4.10 above . . . . . . . . . . . 10.35 Registration Rights Agreement, dated December 9, 1986, by and among Registrant (formerly known as The Ceco Corporation), Ceco Industries, Inc., and the Purchasers listed on the Signature Pages of the Purchase Agreement dated December 9, 1986, between the Ceco Corporation, Ceco Industries, Inc., and the Purchasers of the Subordinated Notes of The Ceco Corporation and the Warrants of Ceco Industries, Inc. referred to in Exhibit 4.11 above. . . 10.36 Registration Rights Agreement dated May 17, 1993 by and among the Registrant and Sage RHH referred to in Exhibit 4.12 above . 10.37 Registration Rights Agreement dated November 23, 1993 by and among the Registrant and Foothill Capital Corporation referred to in Exhibit 4.13 above . . . . . . . . . . . 10.38 Registration Rights Agreement dated December 14, 1993 by and among the Registrant and Heico Acquisitions, Inc. referred to in Exhibit 4.14 above. . . . . . . . . . . . . . . . 10.39 Indenture dated as of July 14, 1993 among the Registrant and IBJ Schroder Bank and Trust Company, Trustee, relating to the Registrant's 10-12% Senior Subordinated Notes due 1999 together with specimen certificate therefor referred to in Exhibit 4.15 above. . . . . . . . . . . . . . . . . . . 10.40 Specimen certificate for Common Stock, par value $.01 per share, of Registrant referred to in Exhibit 4.16 above. 10.41 Asset Purchase Agreement, dated December 27, 1994 by and between Cupples Products, Inc. and the Registrant filed as Exhibit 2.1 to Registrant's Report on Form 8-K dated December 27, 1994 (File No. 1-10659), and incorporated herein by reference thereto . . . . . . . . . . . . . . . . . . . 10.42 Agreement for Purchase and Sale of Assets dated March 3, 1995 by and between the Registrant and Ceco Concrete Construction Corp. filed as Exhibit 2.1 to Registrant's Report on Form 8-K dated March 3, 1995 (File No. 1-10659), and incorporated herein by reference thereto . . . . . . . . . . . . . . 10.43 Settlement Agreement dated March 3, 1995 by and between the Registrant and Federal Insurance Company. . . . . . . . 11 Statement re Computation of Earnings (Loss) Per Common Share. . 16 Letter dated September 20, 1993 from Deloitte & Touche to the Securities and Exchange Commission filed as Exhibit 16 to Registrant's report on Form 8-K dated September 14, 1993 (File No. 1-10659), and incorporated herein by reference thereto . . . . . . . . . . . . . . . . . . . . . . . . 21 List of subsidiaries of Registrant. . . . . . . . . . . 23.1 Consent of Deloitte & Touche LLP. . . . . . . . . . . . 23.2 Consent of Price Waterhouse LLP . . . . . . . . . . . . EX-10 2 EXHIBIT 10.9 AMENDMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT This AMENDMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT (this "Amendment") is entered into as of April 20, 1994, by and between Foothill Capital Corporation, a California corporation ("Foothill"), on the one hand, and Robertson-Ceco Corporation, a Delaware corporation ("Borrower"), with reference to the following facts: A. Foothill and Borrower heretofore have entered into that certain Loan and Security Agreement, dated as of April 12, 1993 (the "Original Agreement"), as amended by that certain Amendment Number One To Loan And Security Agreement, dated as of April 30, 1993 (the Original Agreement, as so amended and as heretofore modified or supplemented from time to time, hereinafter is referred to as the "Agreement"); B. Borrower has requested Foothill to amend further the Agreement to, among other things, increase the Maximum Amount and adjust the Borrowing Base, as set forth in this Amendment; C. Foothill is willing to so amend the Agreement in accordance with the terms and conditions hereof; and D. All capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Agreement, as amended hereby. NOW, THEREFORE, in consideration of the above recitals and the mutual premises contained herein, Foothill and Borrower hereby agree as follows: 1. Amendments to the Agreement. a. The definition of "Accounts" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Accounts" means all currently existing and hereafter arising accounts, contract rights, and all other forms of obligations owing to Borrower or Canada Sub arising out of the sale or lease of goods or the rendition of services by Borrower or Canada Sub, irrespective of whether earned by performance, and any and all credit insurance, guaranties, or security therefor. b. The definition of "Base Amount" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Base Amount" means an amount equal, as of the Second Amendment Closing Date, to Eight Million Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Eight Dollars ($8,999,998), such amount to be reduced on the first day of each calendar month, commencing on the first day of the sixth (6th) calendar month commencing after the Second Amendment Closing Date, by One Hundred Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($166,667) per month, until such amount equals zero; provided, however, that all net proceeds from the sale of Real Property permitted to be sold under Section 7.4 shall be used to reduce permanently the Base Amount. c. The definition of "Borrowing Base" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Borrowing Base" means, as of the date any determination thereof is to be made: (i) the sum of (a) the amount of the Eligible Accounts Availability Component, plus (b) the amount of the Eligible Inventory Availability Component, plus (c) the Base Amount, plus (d) the amount of the Cash Collateral Amount; minus (ii) the Term Loan Amount. For purposes of this definition, any amount that is denominated in a currency other than Dollars (including Canadian dollars) shall be valued in Dollars based on the applicable Exchange Rate for such currency as of the date of determination. d. The definition of "Collateral" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Collateral" means each of the following: the Accounts of Borrower; Borrower's Books; the Equipment; the General Intangibles (including the Deposit Account); the Inventory of Borrower; the Negotiable Collateral; any money, or other assets of Borrower which hereafter come into the possession, custody, or control of Foothill (including the Cash Collateral Amount); and the proceeds and products, whether tangible or intangible, of any of the foregoing including proceeds of insurance covering any or all of the Collateral, and any and all Accounts of Borrower, Equipment, General Intangibles, Inventory of Borrower, Negotiable Collateral, money, deposit accounts, or other tangible or intangible, real or personal, property resulting from the sale, exchange, collection, or other disposition of the Collateral, or any portion thereof or interest therein, and the proceeds thereof. e. The definition of "Eligible Accounts" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Eligible Accounts" means Eligible Domestic Accounts and Eligible Canadian Accounts. f. The definition of "Eligible Accounts Availability Component" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Eligible Accounts Availability Component" means, as of the date any determination thereof is made, an amount equal to the lesser of: (i) the sum of (A) eighty percent (80%) of the amount of Eligible Accounts of Borrower, and (B) the lesser of (1) eighty percent (80%) of the Eligible Accounts of Canada Sub, and (2) $5,000,000; and (ii) an amount equal to Borrower's and Canada Sub's cash collections for the immediately preceding forty-five (45) calendar day period. g. The definition of "Eligible Inventory" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Eligible Inventory" means Inventory consisting of first quality finished goods held for sale in the ordinary course of Borrower's and Canada Sub's respective businesses and raw materials for such finished goods (and, in Foothill's reasonable discretion, certain work-in-process), that are located at Borrower's and Canada Sub's premises identified on Schedule E-1, are acceptable to Foothill in all respects, and strictly comply with all of Borrower's representations and warranties to Foothill. Eligible Inventory shall not include such Inventory of Canada Sub in excess of $3,000,000, slow moving or obsolete items, restrictive or custom items, work-in-process (other than work-in- process approved by Foothill), components which are not part of finished goods, spare parts, packaging and shipping materials, supplies used or consumed in Borrower's and Canada Sub's respective businesses, Inventory at the premises of third parties or subject to a security interest or lien in favor of any third Person (other than Wells Fargo), bill and hold goods, Inventory that is not subject to Foothill's first priority perfected security interest, returned or defective goods, "seconds," and Inventory acquired on consignment. Without limiting the generality of the foregoing sentence, Eligible Inventory shall not include Inventory of the Cupples Division or the Concrete Division, except such Inventory as may be acceptable to Foothill in its exclusive judgment. Eligible Inventory shall be valued at the lower of Borrower's or Canada Sub's, as the case may be, cost or market value. h. The definition of "Eligible Inventory Availability Component" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Eligible Inventory Availability Component" means, as of the date any determination thereof is made, an amount equal to the lesser of: (i) 50% of the amount of credit availability created by the Eligible Accounts Availability Component (it being understood that in calculating this clause, all Obligations shall be deemed to have been advanced or issued against Eligible Accounts to the maximum extent of availability against such Collateral or Canada Collateral), and (ii) the lesser of (A) 50% of the Eligible Inventory, and (B) $15,000,000. i. The definition of "Inventory" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Inventory" means all present and future inventory in which Borrower or Canada Sub has any interest, including goods held for sale or lease or to be furnished under a contract of service and all of Borrower's and Canada Sub's present and future raw materials, work in process, finished goods, and packing and shipping materials, wherever located, and any documents of title representing any of the above. j. The definition of "Lock Box Agreements" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Lock Box Agreements" means, collectively, those certain Tri-Party Agreements, in form and substance satisfactory to Foothill, dated as of the Closing Date, each of which is among Borrower, Foothill, and one of the Collection Agents, and those certain other Tri-Party Agreements, in form and substance satisfactory to Foothill, dated as of the Second Amendment Closing Date, each of which is among Canada Sub, Foothill, and one of the Collection Agents. k. The definition of "Permitted Protest" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Permitted Protest" means the right of Borrower or Canada Sub to protest any tax or other charge, other than any such charge which constitutes a portion of the Obligations, provided (i) at the option of Foothill, either (a) the repayment of the obligation that gave rise to such tax or other charge is secured in a manner reasonably satisfactory to Foothill within 30 days after such obligations become due and owing, or (b) a reserve with respect to such obligation is established on the books of Borrower or Canada Sub, as the case may be, in an amount which is satisfactory to Foothill, (ii) any such protest is instituted and diligently prosecuted by Borrower or Canada Sub, as the case may be, in good faith, and (iii) Foothill is reasonably satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the liens or security interests of Foothill in and to the property or assets of Borrower or Canada Sub, as the case may be. l. The definition of "Subsidiary Guarantees" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Subsidiary Guarantees" means one or more Guarantees, in form and substance satisfactory to Foothill, dated as of the Closing Date (or, with respect to Canada Sub, dated as of the Second Amendment Closing Date), between Foothill and each of the following subsidiaries of Borrower: Meyerland Co., Ceco San Antonio Co., M C Durham Co., and Canada Sub, pursuant to which such subsidiaries guaranty the Obligations of Borrower. m. Section 1.1 of the Agreement hereby is amended by adding the following new defined terms in alphabetical order: "ACSTAR Intercreditor Agreement" means that certain Intercreditor Agreement, dated as of November 18, 1993, between Foothill and ACSTAR Insurance Company. "Canada Collateral" means, collectively, the "Collateral" as defined in each of the Canada Sub Security Agreements. "Canada Sub" means H.H. Robertson, Inc., an Ontario corporation and wholly owned subsidiary of Borrower. "Canada Sub Guarantee" means the Subsidiary Guarantee executed by Canada Sub concurrently herewith and in the form of Exhibit C-1. "Canada Sub Security Agreements" means, collectively, those certain Security Agreements and those certain Assignments of Book Debts, each dated as of the date hereof, between Canada Sub and Foothill, in the respective forms of Exhibit C-2. "Dollars" or "$" means and refers to United States of America dollars or such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts in the United States of America. "Eligible Canadian Accounts" means those Accounts that do not qualify as Eligible Domestic Accounts solely because (a) they are created by Canada Sub instead of by Borrower, and (b) (i) the Account Debtor is a resident of Canada instead of the United States of America, or (ii) the payments thereunder are payable in Canadian dollars instead of Dollars. "Eligible Domestic Accounts" means those Accounts created by Borrower in the ordinary course of business that arise out of Borrower's sale of goods or rendition of services, that strictly comply with all of Borrower's representations and warranties to Foothill, and that are and at all times shall continue to be acceptable to Foothill in all respects; provided, however, that standards of eligibility may be fixed and revised from time to time by Foothill in Foothill's reasonable credit judgment. Eligible Domestic Accounts shall not include the following: (a) Accounts which the Account Debtor has failed to pay within ninety (90) days, or more, of invoice date; (b) Accounts with selling terms of more than thirty (30) days; (c) Accounts with respect to which the Account Debtor is an officer, employee, agent, or a subsidiary of, related to, or an Affiliate of Borrower; (d) Accounts with respect to which goods are placed on consignment, guaranteed sale, sale or return, sale on approval, bill and hold, or other terms by reason of which the payment by the Account Debtor may be conditional; (e) Accounts with respect to which the Account Debtor is not a resident of the United States, and that are not supported by one or more letters of credit that are assignable by their terms and have been delivered to Foothill in an amount and of a tenor, and issued by a financial institution, acceptable to Foothill; (f) Accounts with respect to which the Account Debtor is the United States or any department, agency, or instrumentality of the United States, any state of the United States, or any city, town, municipality, or division thereof (other than Accounts with respect to which Borrower shall have complied, to the satisfaction of Foothill, with the Assignment of Claims Act, 31 U.S.C. Section 3727); (g) Accounts with respect to which Borrower is or may become liable to the Account Debtor for goods sold or services rendered by the Account Debtor to Borrower; (h) Accounts with respect to an Account Debtor whose total obligations owing to Borrower exceed ten percent (10%) of all Eligible Accounts owing to Borrower, to the extent of the obligations of such Account Debtor in excess of such percentage that are not fully supported by one or more letters of credit that are assignable by their terms and have been delivered to Foothill in an amount and of a tenor, and issued by a financial institution, acceptable to Foothill; (i) Accounts with respect to which the Account Debtor disputes liability or makes any claim with respect thereto, or is subject to any Insolvency Proceeding, or become insolvent, or goes out of business; (j) Accounts the collection of which Foothill, in its reasonable credit judgment, believes to be doubtful by reason of the Account Debtor's financial condition; (k) Accounts owed by an Account Debtor that has failed to pay fifty percent (50%) or more of its Accounts then owed to Borrower within ninety (90) days of the date of the applicable invoices; (l) Accounts that are payable in other than United States Dollars except to the extent that (i) the obligations of such Account Debtor are fully supported by one or more letters of credit that are assignable by their terms and have been delivered to Foothill in an amount and of a tenor, and issued by a financial institution acceptable to Foothill, and (ii) to the extent any such letter of credit is denominated in other than United States Dollars, Borrower has entered into a foreign currency swap or similar instrument acceptable to Foothill with respect to the amount of such letter of credit, which instrument shall have been assigned (in form and substance satisfactory to Foothill) to Foothill; (m) Except as may be acceptable to Foothill in its exclusive judgment, Accounts which represent progress payments or other advance billings that are due prior to the completion of performance by Borrower of the subject contract for goods or services; (n) Accounts with respect to which a surety or other bond has been issued, including bonded contracts to which the Reliance Intercreditor Agreement or the ACSTAR Intercreditor Agreement is applicable; and (o) Except as may be acceptable to Foothill in its exclusive judgment, Accounts that arise out of the sale of goods or the rendition of services by the Cupples Division. "Exchange Rate" means and refers to the nominal rate of exchange available to Foothill in a chosen foreign exchange market for the purchase by Foothill at 12:00 noon, local time, one Business Day prior to any date of determination, expressed as the number of units of such currency per one (1) Dollar. With respect to Canadian dollars, the Exchange Rate therefor as of any date of determination shall be the "Late NY" rate for Canadian dollars per Dollar that is published in the Wall Street Journal on the Monday immediately prior to such date of determination (or, if the date of determination is on Monday, that Monday). "Overline" means an amount equal to Ten Million Dollars ($10,000,000), such amount to be reduced, in the event the Overline Extension is exercised, to Five Million Dollars ($5,000,000) from and after November 30, 1994, and to equal zero from and after the end of the Overline Period. "Overline Extension" means the option of the Borrower to extend the Overline Period, one time only, to end on December 31, 1994 upon Foothill's receipt of written notice of Borrower's exercise of such option, together with payment of the Overline Extension Fee, no later than five (5) days prior to the date of expiration of the Overline Period. The Overline Extension Fee shall be fully-earned and non- refundable on the date of such exercise. "Overline Extension Fee" means a fee in an amount equal to Three Hundred Seventy Five Thousand Dollars ($375,000) to be paid to Foothill in connection and concurrently with Borrower's exercise of the Overline Extension. "Overline Period" means the period commencing on April 1, 1994 and ending on June 30, 1994. The Overline Period may be extended pursuant to Borrower's exercise of the Overline Extension. "Second Amendment" means that certain Amendment Number Two to Loan and Security Agreement, dated as of April ___, 1994, between Foothill and Borrower, whereby Foothill and Borrower further amend the Agreement to provide for, among other things, an increase in the Maximum Amount by the Overline. "Second Amendment Closing Date" means April ___, 1994. n. Section 2.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 2.1 Revolving Advances. Subject to the terms and conditions of this Agreement, and so long as no Event of Default has occurred and is continuing, Foothill agrees to make revolving advances to Borrower in an amount not to exceed the Borrowing Base less the undrawn or unreimbursed amount of L/Cs and L/C Guarantees outstanding hereunder. Anything to the contrary in the definition of Borrowing Base, the definition of Eligible Accounts Availability Component or the definition of Eligible Inventory Availability Component notwithstanding, Foothill may reduce its advance rates based upon Eligible Accounts and Eligible Inventory without declaring an Event of Default if it determines, in its reasonable discretion, that there is a material impairment of the prospect of repayment of all or any portion of the Obligations or a material impairment of the value or priority of Foothill's security interests in the Collateral or the Canada Collateral. Foothill shall have no obligation to make advances hereunder to the extent they would cause the outstanding Obligations to exceed the lesser of: (i) the Maximum Amount (as defined below), or (ii) the Maximum Foothill Amount plus the Syndicated Amount. As used herein, "Maximum Amount" means an amount equal to Thirty Five Million Dollars ($35,000,000); provided, however, that the Maximum Amount shall be increased by an amount equal to the Overline during the Overline Period. Foothill is authorized to make advances under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Officer of Borrower or, without instructions, if in Foothill's discretion such advances are necessary to meet Obligations. Borrower agrees to establish and maintain a single designated deposit account for the purpose of receiving the proceeds of the advances requested by Borrower and made by Foothill hereunder. Unless otherwise agreed by Foothill and Borrower, any advance requested by Borrower and made by Foothill hereunder shall be made to such designated deposit account. Amounts borrowed pursuant to this Section 2.1 may be repaid and, so long as no Event of Default has occurred and is continuing, reborrowed at any time during the term of this Agreement. o. Section 4.3 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 4.3 Collection of Accounts, General Intangibles, Negotiable Collateral. On or before the Closing Date, Foothill, Borrower, and the Collection Agents shall enter, and on or before the Second Amendment Closing Date, Foothill, Canada Sub, and the Collection Agents shall enter, into the Lock Box Agreements, in form and substance satisfactory to Foothill in its sole discretion, pursuant to which all of Borrower's and Canada Sub's cash receipts, checks, and other items of payment will be forwarded to Foothill on a daily basis. At any time that an Event of Default has occurred and is continuing or Foothill has a good faith belief that an Event of Default has occurred and is continuing, Foothill or Foothill's designee may: (a) notify customers or Account Debtors of Borrower and Canada Sub that the Accounts, General Intangibles, or Negotiable Collateral have been assigned to Foothill or that Foothill is the beneficiary of a security interest therein; and (b) collect the Accounts, General Intangibles, and Negotiable Collateral directly and charge the collection costs and expenses to Borrower's loan account. Borrower agrees that it will hold in trust for Foothill, as Foothill's trustee, any cash receipts, checks, and other items of payment that it receives on account of the Accounts, General Intangibles, or Negotiable Collateral and immediately will deliver said cash receipts, checks, and other items of payment to Foothill in their original form as received by Borrower. p. Section 4.4 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 4.4 Delivery of Additional Documentation Required. Borrower shall execute and deliver, and shall cause Canada Sub to execute and deliver, to Foothill, at any time and from time to time at the request of Foothill, all financing statements, continuation financing statements, fixture filings, security agreements, deeds of trust, mortgages, chattel mortgages, pledges, assignments, endorsements of certificates of title, applications for title, affidavits, reports, notices, schedules of accounts, letters of authority, and all other documents that Foothill may reasonably request, in form satisfactory to Foothill, to perfect and continue perfected Foothill's security interests in the Collateral and the Canada Collateral and in order to fully consummate all of the transactions contemplated under the Loan Documents. q. The lead-in sentence of Section 6 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: Borrower covenants and agrees that, so long as any credit hereunder shall be available and until payment in full of the Obligations, and unless Foothill shall otherwise consent in writing, Borrower shall do, and shall cause Canada Sub to do, all of the following: r. The lead-in sentence of Section 7 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: Borrower covenants and agrees that, so long as any credit hereunder shall be available and until payment in full of the Obligations, Borrower will not do, and will not cause, suffer, or permit Canada Sub to do, any of the following without Foothill's prior written consent: s. All references in Sections 4.5, 4.6, 5.1, 5.2, 5.3, 5.4, 5.5, 5.8, 5.9, 5.11 (other than in the first sentence thereof), 6.1, 6.2, 6.3, 6.6, 6.7, 6.15, 6.11, 7.4 (other than in the provisos therein), 7.5, 7.6, 7.7 (other than in the proviso therein), 7.13, 7.15, 8.2, 8.3, 8.4, 8.5, 8.9, 8.10, 8.11, 8.12, 9.1(c), (d), (e), (f), (i), (j), (k), and (m), and 11.2 of the Agreement to (i) Borrower, or (ii) the Collateral, shall be deemed references, respectively, to (i) Borrower or Canada Sub, as the case may be, or (ii) the Collateral or the Canada Collateral, as the case may be. t. Section 5.6 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 5.6 Location of Chief Executive Office. The chief executive office of Borrower is located at the address indicated in the first paragraph of this Agreement. The chief executive office of Canada Sub is located at 411 Parkdale Avenue North, Hamilton, Ontario, Canada L8H 5Y4. Borrower covenants and agrees that, without thirty (30) days prior written notification to Foothill, Borrower shall not relocate, nor cause, suffer, or permit Canada Sub to relocate, their respective chief executive offices. u. Section 6.16 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 6.16 Deposit Account. On or before the Closing Date, Borrower shall open and thereafter maintain a deposit account with a bank headquartered and located in the State of California that is reasonably satisfactory to Foothill, and on or before the Second Amendment Closing Date, Canada Sub shall open and thereafter maintain two deposit accounts with banks that are reasonably satisfactory to Foothill (such deposit accounts of Borrower and Canada Sub are referred to herein, individually and collectively, as the "Deposit Account"). Borrower and Canada Sub shall adopt and maintain a cash concentration system pursuant to which all of Borrower's and Canada Sub's respective cash and other items of payment (other than as received in the Lock Boxes) shall be transferred to, and maintained in, the Deposit Account. Borrower and Canada Sub shall use the amounts in their respective Deposit Accounts solely: (a) to reduce the amount of the Obligations; (b) to pay obligations owed to third Persons; or (c) for Permitted Investments; or (d) with respect to Canada Sub and Canada Sub's Deposit Accounts only, for its other lawful and permitted corporate purposes. So long as no Event of Default shall have occurred and be continuing and no Obligations (other than those evidenced by the Term Loan Note, so long as they are not then due) are then due and payable, all amounts received in the Lock Boxes (and transferred to a concentration account of Foothill) from time to time shall automatically be transferred to the Deposit Account; provided, however, that if the outstanding amount of advances under Section 2.1 and the L/C Amount exceed the amount of the Borrowing Base, Foothill shall be authorized to transfer any and all amounts received in the Lock Boxes to the Cash Collateral Account until the amount of such advances and the L/C Amount are equal to or less than the amount of the Borrowing Base. Upon the occurrence and during the continuance of an Event of Default, the amounts in the Deposit Account (or Foothill's concentration account) shall be held by Foothill as cash collateral in accordance with Section 9.1. v. Section 5.7 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 5.7 Due Organization and Qualification. Each of Borrower and Canada Sub is and shall at all times hereafter be duly organized and existing and in good standing under the laws of the state or jurisdiction of its incorporation and qualified and licensed to do business in, and in good standing in, any state or jurisdiction in which the conduct of its business or its ownership of property requires that it be so qualified. w. Section 5.13 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 5.13 Environmental Condition. Except as set forth on Schedule 5.13, none of Borrower's or Canada Sub's properties or assets has ever been used by Borrower or Canada Sub, as the case may be, or, to the best of Borrower's knowledge, by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any hazardous waste or hazardous substance. Except as set forth on Schedule 5.13, none of Borrower's or Canada Sub's properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a hazardous waste or hazardous substance disposal site, or a candidate for closure pursuant to any environmental protection statute. No lien arising under any environmental protection statute has attached to any revenues or to any real or personal property owned or operated by Borrower or Canada Sub. Neither Borrower nor Canada Sub has received a summons, citation, notice, or directive from the Environmental Protection Agency (or Canadian equivalent thereof) or any other federal, state, or provincial governmental agency concerning any action or omission by Borrower or Canada Sub, as the case may be, resulting in the releasing or disposing of hazardous waste or hazardous substances into the environment. x. Section 6.5 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 6.5 Tax Returns. Borrower agrees to deliver, and cause Canada Sub to deliver, to Foothill copies of each of Borrower's and Canada Sub's future federal income tax returns, and any amendments thereto, within thirty (30) days of the filing thereof with the Internal Revenue Service (or the Canadian equivalent thereof). y. Section 6.10 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 6.10 Taxes. All assessments and taxes, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against Borrower, Canada Sub, or any of their respective properties have been paid, and shall hereafter be paid in full, before delinquency or before the expiration of any extension period. Borrower and Canada Sub shall make due and timely payment or deposit of all federal, state or provincial (as the case may be), and local taxes, assessments, or contributions required of Borrower and Canada Sub by law, and will execute and deliver to Foothill, on demand, appropriate certificates attesting to the payment or deposit thereof. Borrower and Canada Sub will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A. (or the Canadian equivalent thereof), F.U.T.A. (or the Canadian equivalent thereof), state disability (or the Canadian equivalent thereof), and local, state or provincial (as the case may be), and federal income taxes, and will, upon request, furnish Foothill with proof satisfactory to Foothill indicating that Borrower and Canada Sub have made such payments or deposits. The foregoing to the contrary notwithstanding, Borrower and Canada Sub shall not be required to pay or discharge any such assessment or tax so long as the validity thereof shall be the subject of a Permitted Protest. z. Section 7.14 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 7.14 Investments. Directly or indirectly make or acquire any beneficial interest in (including stock, partnership interest, or other securities of), or make any loan, advance, or capital contribution to, any Person (other than Canada Sub); provided, however, that Borrower may make or acquire additional beneficial interests in, or capital contributions to, or make loans to, any of its foreign subsidiaries so long as the aggregate amount expended on such beneficial interests and capital contributions and outstanding on such loans after the date hereof shall not exceed Two Million Dollars ($2,000,000), plus the amount received by Borrower in payment of the intercompany account payable with respect to the project known as Puerto de Europa owing from its Spanish subsidiary (net of all United States taxes payable in connection with the receipt by Borrower of such payment and net of any past due intercompany account payable owing to Borrower from such subsidiary and net of any intercompany account payable owing from Borrower to such subsidiary), plus the aggregate amount of cash dividends and repayments of intercompany accounts payable (net of all United States taxes payable in connection with the receipt by Borrower of any such payments and net of any past due intercompany account payable owing to Borrower from such subsidiary and net of any intercompany account payable owing from Borrower to such subsidiary) received by Borrower after the date hereof from its foreign subsidiaries. Borrower shall not release, forgive, or write-off (i) any Account owing from any of its foreign subsidiaries (other than Canada Sub) arising from the sale of goods or the rendition of services or (ii) any Account whatsoever owing from any of its foreign subsidiaries (other than Canada Sub) arising after the Closing Date. If there exists a past due Account owing from a subsidiary to Borrower, Borrower agrees that it will require such subsidiary to pay the amount of such past due Account prior to the declaration and payment by such subsidiary of a dividend to Borrower. aa. A new Section 8.14 is hereby added to the Agreement as follows: 8.14 If Canada Sub fails or neglects to perform, keep, or observe any term, provision, condition, covenant, or agreement contained in the Canada Sub Guarantee or the Canada Sub Security Agreements; or bb. A new Section 8.15 is hereby added to the Agreement as follows: 8.15 If the obligation of Canada Sub under any Loan Document is limited or terminated by operation of law or by Canada Sub, or Canada Sub becomes the subject of an Insolvency Proceeding (or the Canadian equivalent thereof). 2. Representations and Warranties. Borrower hereby represents and warrants to Foothill that (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected, and (b) this Amendment and the Agreement, as amended by this Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in accordance with its terms. 3. Conditions Precedent to Amendment. The satisfaction of each of the following on or before, unless otherwise specified below, the Second Amendment Closing Date shall constitute conditions precedent to the effectiveness of this Amendment: a. Foothill shall have received the following, each duly executed and delivered by an authorized official of each party (other than Foothill) thereto: (1) the reaffirmation and consent of each of Meyerland Co., Ceco-San Antonio Co., and M C Durham Co. attached hereto as Exhibit A; (2) the Canada Sub Guaranty; (3) the Canada Sub Security Agreements; and (4) amendments to such Loan Documents as Foothill may require, in each case, in form and substance satisfactory to Foothill; b. Foothill shall have received all consents of creditors, if any, required under its intercreditor agreements in respect of Borrower, in each case, in form and substance satisfactory to Foothill; c. Foothill shall have conducted appraisals or field surveys of the Canada Collateral and the locations where the Canada Collateral is located, and the results thereof shall be satisfactory to Foothill in its sole discretion; d. Foothill shall have received opinions of Borrower's and Canada Sub's counsel, each in form and substance satisfactory to Foothill in its sole discretion; e. The representations and warranties in this Amendment, the Agreement as amended by this Amendment, and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date); f. No Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date hereof, nor shall result from the consummation of the transactions contemplated herein; g. No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental authority against Borrower, Foothill, or any of their Affiliates; h. The Collateral shall not have declined materially in value from the values set forth in the most recent appraisals or field examinations previously done by Foothill; and i. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Foothill and its counsel. 4. Conditions Subsequent to Amendment. The following shall be conditions subsequent to the Amendment and the failure to satisfy each of the following shall constitute an Event of Default: a. Foothill shall receive, within sixty (60) days after the Second Amendment Closing Date, (i) from a title company reasonably satisfactory to Foothill, such endorsements to title policies as Foothill may require, including endorsements to afford Foothill protection for any loss of priority of its liens on the Real Property resulting from any increase in the Maximum Amount; and (ii) from Borrower or the other mortgagors of the Mortgages, such amendments to the Mortgages as Foothill may require, each duly executed and delivered and in form and substance satisfactory to Foothill; b. Borrower shall pay to Foothill, on demand, and Borrower hereby agrees that Foothill may charge Borrower's loan account for payment of, a one-time fee in respect of the Overline in the amount of $250,000 (the "Overline Fee"), which shall be fully-earned as of April 1, 1994 and non-refundable when paid; provided, however, that Foothill agrees not to demand or charge to Borrower's loan account the Overline Fee so long as, in Foothill's sole discretion, LaSalle National Bank is proceeding satisfactorily and in good faith toward agreeing to participate, in an amount not less than Ten Million Dollars ($10,000,000), in the credit facility provided under the Agreement; provided, further, that in the event LaSalle National Bank and Foothill reach agreement on such participation and the Agreement is further amended by an Amendment Number Three to Loan and Security Agreement, pursuant to which Borrower shall pay a "Third Amendment Closing Fee" of not less than Two Hundred Seventy-Five Thousand Dollars ($275,000), Foothill may then charge the Overline Fee to Borrower's loan account as a credit against such Third Amendment Closing Fee. Such Third Amendment Closing Fee shall be comprised of a $100,000 component representing the initial participation fee that would become owing to LaSalle National Bank and a $175,000 component consisting of Foothill's pro-rata portion (with respect to Foothill's Participants) of the annual fee of the facility, as the same will be restructured pursuant to such Amendment Number Three, that would become owing to Foothill on the closing of such Amendment Number Three; and c. Borrower shall cause Canada Sub to use best efforts to deliver to Foothill, within sixty (60) days after the Second Amendment Closing Date, duly executed landlord and mortgagee waivers from the lessors and mortgagees of the locations where the Canada Collateral is located, in each case, in form and substance satisfactory to Foothill. 5. Effect on Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment shall not operate as a waiver of or, except as expressly set forth herein, as an amendment, of any right, power, or remedy of Foothill under the Agreement, as in effect prior to the date hereof. 6. Further Assurances. Borrower shall, and shall cause Canada Sub to, execute and deliver all agreements, documents, and instruments, in form and substance satisfactory to Foothill, and take all actions as Foothill may reasonably request from time to time, to perfect and maintain the perfection and priority of Foothill's security interests in the Collateral and the Canada Collateral and to fully consummate the transactions contemplated under this Amendment and the Agreement, as amended by this Amendment. 7. Miscellaneous. a. Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. b. Upon the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. c. Upon the effectiveness of this Amendment, each reference in the Agreement and the other Loan Documents to Schedule C-1, Schedule E-1, Schedule R-1, Schedule 5.13, Schedule 6.15, and Schedule 7.6 of, and Exhibit C-1 and Exhibit C-2 to, the Agreement shall mean and refer to Schedule C-1, Schedule E-1, Schedule R-1, Schedule 5.13, Schedule 6.15, and Schedule 7.6 hereof, and Exhibit C-1 and Exhibit C-2 hereto, respectively, and each reference in the Agreement and the other Loan Documents to Schedule 5.9 and Schedule P-1 of the Agreement shall mean and refer to such schedules as supplemented by the "Schedule 5.9 Addendum" and the "Schedule P-1 Addendum", respectively, attached hereto. d. This Amendment shall be governed by and construed in accordance with the laws of the State of California. e. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above. FOOTHILL CAPITAL CORPORATION, a California corporation By____________________________ Title:________________________ ROBERTSON-CECO CORPORATION, a Delaware corporation By____________________________ Title:________________________ EX-10 3 EXHIBIT 10.10 AMENDMENT NUMBER THREE TO LOAN AND SECURITY AGREEMENT This AMENDMENT NUMBER THREE TO LOAN AND SECURITY AGREEMENT (this "Amendment") is entered into as of May 18, 1994, by and between Foothill Capital Corporation, a California corporation ("Foothill") and Robertson-Ceco Corporation, a Delaware corporation ("Borrower"), with reference to the following facts: A. Foothill and Borrower heretofore have entered into that certain Loan and Security Agreement, dated as of April 12, 1993 (the "Original Agreement"), as amended by that certain Amendment Number One To Loan And Security Agreement, dated as of April 30, 1993 and that certain Amendment Number Two To Loan And Security Agreement, dated as of April 20, 1994 (the Original Agreement, as so amended and as heretofore modified or supplemented from time to time, hereinafter is referred to as the "Agreement"); B. Borrower has requested Foothill to amend further the Agreement to, among other things, modify the interest and fees payable by Borrower in respect of the Loan Agreement, fix the Maximum Amount at $45,000,000 for the term of the Loan Agreement, and extend the Maturity Date, as set forth in this Amendment; C. Foothill is willing to so amend the Agreement in accordance with the terms and conditions hereof; and D. All capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Agreement, as amended hereby. NOW, THEREFORE, in consideration of the above recitals and the mutual premises contained herein, Foothill and Borrower hereby agree as follows: 1. Amendments to the Agreement. a. The definition of "ACSTAR Intercreditor Agreement" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "ACSTAR Intercreditor Agreement" means that certain Intercreditor Agreement, dated as of November 18, 1993, as amended by that certain Amendment to Intercreditor Agreement, dated as of April 17, 1994, and as may be amended, restated, modified, or supplemented from time to time, between Foothill and ACSTAR Insurance Company. b. The definition of "Base Amount" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Base Amount" means an amount equal to, as of the Third Amendment Closing Date, Ten Million Dollars ($10,000,000), such amount to be reduced on the first day of each calendar month, commencing on the first day of the first calendar month commencing after the Third Amendment Closing Date, by One Hundred Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($166,667) per month, until such amount equals zero. c. The definition of "Maturity Date" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Maturity Date" means the date that is the day immediately before the fifth (5th) anniversary of the Third Amendment Closing Date. d. The definition of "Term Loan Note" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Term Loan Note" means that certain Amended and Restated Term Loan Note, substantially in the form of Exhibit T-1, in the original principal amount of Five Million Dollars ($5,000,000), issued by Borrower to the order of Foothill, evidencing the obligation of Borrower to repay the Term Loan. e. The following definitions in Section 1.1 of the Agreement hereby are deleted in their entirety: "Overline"; "Overline Extension"; "Overline Extension Fee"; and "Overline Period". f. Section 1.1 of the Agreement hereby is amended by adding the following new defined terms in alphabetical order: "Third Amendment" means that certain Amendment Number Three to Loan and Security Agreement, dated as of May 18, 1994, between Foothill and Borrower, whereby Foothill and Borrower further amend the Agreement to, among other things, modify the interest and fees payable by Borrower in respect of the Loan Agreement, fix the Maximum Amount at $45,000,000 for the term of the Loan Agreement, and extend the Maturity Date. "Third Amendment Closing Date" means May 18, 1994. "Third Amendment Closing Fee" has the meaning set forth in Section 2.8(a). g. Section 2.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 2.1 Revolving Advances. Subject to the terms and conditions of this Agreement, and so long as no Event of Default has occurred and is continuing, Foothill agrees to make revolving advances to Borrower in an amount not to exceed the Borrowing Base less the undrawn or unreimbursed amount of L/Cs and L/C Guarantees outstanding hereunder. Anything to the contrary in the definition of Borrowing Base, the definition of Eligible Accounts Availability Component or the definition of Eligible Inventory Availability Component notwithstanding, Foothill may reduce its advance rates based upon Eligible Accounts and Eligible Inventory without declaring an Event of Default if it determines, in its reasonable discretion, that there is a material impairment of the prospect of repayment of all or any portion of the Obligations or a material impairment of the value or priority of (x) Foothill's security interests in the Collateral or the Canada Collateral or (y) Foothill's liens on the Real Property. Foothill shall have no obligation to make advances hereunder to the extent they would cause the outstanding Obligations to exceed the lesser of: (i) the Maximum Amount (as defined below), or (ii) the Maximum Foothill Amount plus the Syndicated Amount. As used herein, "Maximum Amount" means an amount equal to Forty Five Million Dollars ($45,000,000). Foothill is authorized to make advances under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Officer of Borrower or, without instructions, if in Foothill's discretion such advances are necessary to meet Obligations. Borrower agrees to establish and maintain a single designated deposit account for the purpose of receiving the proceeds of the advances requested by Borrower and made by Foothill hereunder. Unless otherwise agreed by Foothill and Borrower, any advance requested by Borrower and made by Foothill hereunder shall be made to such designated deposit account. Amounts borrowed pursuant to this Section 2.1 may be repaid and, so long as no Event of Default has occurred and is continuing, reborrowed at any time during the term of this Agreement. h. Subsection (a) of Section 2.2 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: (a) Subject to the terms and conditions of this Agreement, Foothill agrees to issue standby letters of credit for the account of Borrower (each an "L/C") or to issue standby letters of credit or guarantees of payment (each such letter of credit or guaranty, an "L/C Guaranty") with respect to commercial or standby letters of credit issued by another Person for the account of Borrower in an aggregate face amount not to exceed the lesser of: (i) the Borrowing Base less the amount of outstanding revolving advances pursuant to Section 2.1, and (ii) Thirty-Two Million Dollars ($32,000,000). Borrower expressly understands and agrees that Foothill shall have no obligation to arrange for the issuance by other financial institutions of L/Cs that are to be the subject of L/C Guarantees and that certain of such L/Cs may be outstanding on the Closing Date. Each such L/C (including those that are the subject of L/C Guarantees) shall have an expiry date no later than thirty (30) days prior to the date on which this Agreement is scheduled to terminate under Section 3.5 and all such L/Cs and L/C Guarantees shall be in form and substance acceptable to Foothill in its sole discretion. Foothill shall not have any obligation to issue L/Cs or L/C Guarantees to the extent that the face amount of all outstanding L/Cs and L/C Guarantees, plus the amount of revolving advances outstanding pursuant to Section 2.1, would exceed the lesser of: (i) the Maximum Amount, or (ii) the Maximum Foothill Amount plus the Syndicated Amount. The L/Cs and the L/C Guarantees issued under this Section 2.2 shall be used by Borrower, consistent with this Agreement, for its general working capital purposes or other business obligations. If Foothill is obligated to advance funds under an L/C or L/C Guaranty, the amount so advanced immediately shall be deemed to be an advance made by Foothill to Borrower pursuant to Section 2.1 and, thereafter, shall bear interest on the terms and conditions provided in Section 2.5. i. Subsection (d) of Section 2.2 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: (d) Any and all service charges, commissions, fees and costs incurred by Foothill relating to the letters of credit guaranteed by Foothill shall be considered Foothill Expenses for purposes of this Agreement and shall be immediately reimbursable by Borrower to Foothill. On the first day of each month, Borrower will pay Foothill a fee equal to two and one-half percent (2.5%) per annum times the average Daily Balance of the L/Cs and L/C Guarantees that were outstanding during the immediately preceding month, such fee to be computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed. Service charges, commissions, fees and costs may be charged to Borrower's loan account at the time the service is rendered or the cost is incurred. j. Subsections (a) and (b) of Section 2.5 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: (a) Interest Rate. All Obligations, except for undrawn L/Cs and L/C Guarantees and those evidenced by the Term Loan Note, shall bear interest, on the average Daily Balance, at a rate equal to the higher of: (i) three (3.0) percentage points above the Reference Rate, or (ii) nine percent (9%) per annum. The Term Loan Amount, together with accrued and unpaid interest thereon, shall bear interest as follows: (i) fifty percent (50%) of the Term Loan Amount, together with accrued and unpaid interest thereto, shall bear interest at a rate equal to twenty four (24.0) percentage points in excess of the Reference Rate; and (ii) fifty percent (50%) of the Term Loan Amount, together with accrued and unpaid interest thereto, shall bear interest at a rate equal to three (3.0) percentage points in excess of the Reference Rate. (b) Default Rate. All Obligations, except for undrawn L/Cs and L/C Guarantees and those evidenced by the Term Loan Note, shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to the higher of: (i) seven (7.0) percentage points above the Reference Rate, or (ii) thirteen percent (13%) per annum. The Term Loan Amount, together with accrued and unpaid interest thereon, shall bear interest, from and after the occurrence and during the continuance of an Event of Default, as follows: (i) fifty percent (50%) of the Term Loan Amount, together with accrued and unpaid interest thereto, shall bear interest at a rate equal to twenty eight (28.0) percentage points in excess of the Reference Rate; and (ii) fifty percent (50%) of the Term Loan Amount, together with accrued and unpaid interest thereto, shall bear interest at a rate equal to seven (7.0) percentage points in excess of the Reference Rate. From and after the occurrence and during the continuance of an Event of Default, Foothill shall be entitled to charge Borrower a fee on the L/C Amount equal to six and one-half percent (6.5%) per annum times the average Daily Balance of the L/C Amount during the immediately preceding calendar month, such fee to be computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed. k. Section 2.8 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 2.8 Additional Compensation. Borrower shall pay to Foothill the following: (a) Third Amendment Closing Fee. A one time closing fee (the "Third Amendment Closing Fee") of Two Hundred Seventy-Five Thousand Dollars ($275,000) which is due and payable by Borrower to Foothill on the Third Amendment Closing Date and non-refundable when paid. Two Hundred Fifty Thousand Dollars of the Third Amendment Closing Fee was fully-earned as of April 1, 1994 and the balance thereof shall be fully earned on the Third Amendment Closing Date. (b) Unused Line Fee. On the first day of each month during the term of this Agreement, commencing with the first day of the first month after the Third Amendment Closing Date, a fee in an amount equal to one-half percent (0.5%) per annum times sixty-one and eleven/hundredths percent (61.11%) of the Average Unused Portion of the Maximum Amount. (c) Annual Facility Fee. On each anniversary of the Third Amendment Closing Date, a fee in an amount equal to Two Hundred Seventy-Five Thousand Dollars ($275,000), such fee to be fully earned on each such anniversary. (d) Financial Examination, Documentation, and Appraisal Fees. Foothill's customary fee of Five Hundred Dollars ($500) per day per examiner, plus out-of-pocket expenses for each financial analysis and examination of Borrower performed by Foothill or its agents; Foothill's customary appraisal fee of Seven Hundred Fifty Dollars ($750) per day per appraiser, plus out-of-pocket expenses for each appraisal of the Collateral performed by Foothill or its agents; and Foothill's customary fee of One Thousand Dollars ($1,000) per year for its loan documentation review; and (e) Servicing Fee. On the first day of each calendar month after the Closing Date for so long as any Obligations are outstanding, a servicing fee in an amount equal to Four Thousand Dollars ($4,000) per month. l. Section 3.5 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: 3.5 Term. This Agreement shall become effective upon the execution and delivery hereof by Borrower and Foothill and shall continue in full force and effect for a term ending on the Maturity Date. The foregoing notwithstanding, Foothill shall have the right to terminate its obligations under this Agreement immediately and without notice upon the occurrence of an Event of Default. m. Subsection (c) of Section 3.7 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: (c) The provisions of Section 3.5 that provide for the termination of this Agreement on the Maturity Date notwithstanding, Borrower has the option, upon ninety (90) days prior written notice to Foothill, but not prior to the date of the satisfaction of the condition subsequent in Section 3.4(a) hereof, to terminate this Agreement by paying to Foothill, in cash, the Obligations (including any contingent reimbursement obligations of Foothill under L/Cs or L/C Guarantees), together with a premium (the "Early Termination Premium") equal to: if such prepayment is made prior to the first anniversary of the Third Amendment Closing Date, Five Hundred Thousand Dollars ($500,000); if such prepayment is made on or after such first anniversary and prior to the third anniversary of the Third Amendment Closing Date, Three Hundred Thousand Dollars ($300,000); and if such prepayment is made on or after such third anniversary, Two Hundred Thousand Dollars ($200,000); provided, however, that no Early Termination Premium shall be required to be paid in connection with a termination that occurs within the sixty (60) day period immediately preceding the Maturity Date. 2. Representations and Warranties. Borrower hereby represents and warrants to Foothill that (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected, and (b) this Amendment and the Agreement, as amended by this Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in accordance with its terms. 3. Conditions Precedent to Amendment. The satisfaction of each of the following on or before, unless otherwise specified below, the Third Amendment Closing Date shall constitute conditions precedent to the effectiveness of this Amendment: a. Foothill shall have received the Third Amendment Closing Fee; b. Foothill shall have received an opinion of Canada Sub's counsel in connection with the Second Amendment in form and substance satisfactory to Foothill in its sole discretion; c. Foothill shall have received the following, each duly executed and delivered by an authorized official of each party (other than Foothill) thereto: (1) the reaffirmation and consent of each of Meyerland Co., Ceco-San Antonio Co., M C Durham Co., and Canada Sub attached hereto as Exhibit A; (2) the new Term Loan Note, in the form of that attached hereto as Exhibit T-1; (3) amendments to such Loan Documents as Foothill may require, in each case, in form and substance satisfactory to Foothill; d. Foothill shall have received an opinion of Borrower's counsel in form and substance satisfactory to Foothill in its sole discretion; e. The representations and warranties in this Amendment, the Agreement as amended by this Amendment, and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date); f. No Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date hereof, nor shall result from the consummation of the transactions contemplated herein; g. No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental authority against Borrower, Foothill, or any of their Affiliates; h. Neither the Collateral nor the Canada Collateral shall have declined materially in value from the values set forth in the most recent appraisals or field examinations previously done by Foothill; and i. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Foothill and its counsel. 4. Condition Concurrent to Amendment. The execution and delivery of a Participation Agreement between Foothill and LaSalle National Bank, in form and substance satisfactory to Foothill, whereby LaSalle agrees to become a Participant in an amount not less than Ten Million Dollars ($10,000,000), shall be a condition concurrent to the Amendment. 5. Condition Subsequent to Amendment. The following shall be a condition subsequent to the Amendment and the failure to satisfy the same shall constitute an Event of Default: Foothill shall receive, within sixty (60) days after the Second Amendment Closing Date, (i) from a title company reasonably satisfactory to Foothill, such endorsements to title policies as Foothill may require, including endorsements to afford Foothill protection for any loss of priority of its liens on the Real Property resulting from the increase in the "Maximum Amount" from Thirty-Five Million Dollars ($35,000,000) to Forty-Five Million Dollars ($45,000,000); and (ii) from Borrower or the other mortgagors of the Mortgages, such amendments to the Mortgages as Foothill may require, each duly executed and delivered and in form and substance satisfactory to Foothill. 6. Effect on Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment shall not operate as a waiver of or, except as expressly set forth herein, as an amendment, of any right, power, or remedy of Foothill under the Agreement, as in effect prior to the date hereof. 7. Further Assurances. Borrower shall, and shall cause each of Canada Sub, Meyerland Co., Ceco-San Antonio Co., and M C Durham Co. to, execute and deliver promptly all agreements, documents, and instruments, in form and substance satisfactory to Foothill, and promptly take all actions as Foothill may reasonably request from time to time, to perfect and maintain the perfection and priority of Foothill's security interests in the Collateral, the Canada Collateral, and the Real Property and to fully consummate the transactions contemplated under this Amendment and the Agreement, as amended by this Amendment. 8. Miscellaneous. a. Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. b. Upon the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. c. Upon the effectiveness of this Amendment, each reference in the Agreement or the Loan Documents to Exhibit T-1 to the Agreement shall mean and refer to Exhibit T-1 attached hereto. d. This Amendment shall be governed by and construed in accordance with the laws of the State of California. e. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above. FOOTHILL CAPITAL CORPORATION, a California corporation By____________________________ Title:________________________ ROBERTSON-CECO CORPORATION, a Delaware corporation By____________________________ Title:________________________ EX-10 4 EXHIBIT 10.11 AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT This AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT (this "Amendment") is entered into as of December 15, 1994, by and between Foothill Capital Corporation, a California corporation ("Foothill") and Robertson-Ceco Corporation, a Delaware corporation ("Borrower"), with reference to the following facts: A. Foothill and Borrower heretofore have entered into that certain Loan and Security Agreement, dated as of April 12, 1993 (the "Original Agreement"), as amended by that certain Amendment Number One To Loan And Security Agreement, dated as of April 30, 1993, that certain Amendment Number Two To Loan And Security Agreement, dated as of April 20, 1994, and that certain Amendment Number Three To Loan And Security Agreement, dated as of May 18, 1994 (the Original Agreement, as so amended and as heretofore modified or supplemented from time to time, hereinafter is referred to as the "Agreement"); B. Borrower has requested Foothill to consent to Borrower's proposed sales of Borrower's Cupples Division and to amend further the Agreement to, among other things, reflect such proposed sale in the Base Amount, as set forth in this Amendment; C. Foothill is willing to give such consent and to so amend the Agreement in accordance with the terms and conditions hereof; and D. All capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Agreement, as amended hereby. NOW, THEREFORE, in consideration of the above recitals and the mutual premises contained herein, Foothill and Borrower hereby agree as follows: 1. Amendments to the Agreement. a. The definition of "Eligible Inventory" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Eligible Inventory" means Inventory consisting of first quality finished goods held for sale in the ordinary course of Borrower's and Canada Sub's respective businesses and raw materials for such finished goods (and, in Foothill's reasonable discretion, certain work-in-process), that are located at Borrower's and Canada Sub's premises identified on Schedule E-1, are acceptable to Foothill in all respects, and strictly comply with all of Borrower's representations and warranties to Foothill. Eligible Inventory shall not include such Inventory of Canada Sub in excess of $3,000,000, slow moving or obsolete items, restrictive or custom items, work-in-process (other than work-in- process approved by Foothill), components which are not part of finished goods, spare parts, packaging and shipping materials, supplies used or consumed in Borrower's and Canada Sub's respective businesses, Inventory at the premises of third parties or subject to a security interest or lien in favor of any third Person (other than Wells Fargo), bill and hold goods, Inventory that is not subject to Foothill's first priority perfected security interest, returned or defective goods, "seconds," and Inventory acquired on consignment. Without limiting the generality of the foregoing sentence, Eligible Inventory shall not include Inventory of the Concrete Construction Division (except such Inventory as may be included by Foothill in its sole and absolute discretion). Eligible Inventory shall be valued at the lower of Borrower's or Canada Sub's, as the case may be, cost or market value. b Section 1.1 of the Agreement hereby is amended by adding the following new defined terms in alphabetical order: "Fourth Amendment" means that certain Amendment Number Four to Loan and Security Agreement, dated as of December 15, 1994, between Foothill and Borrower. "Fourth Amendment Closing Date" means December 15, 1994. 2. Consent to Sale of Cupples Division. a. Anything in the Loan Agreement to the contrary notwithstanding, Foothill hereby consents to the sale by Borrower of the business of and assets relating primarily to its Cupples Division to an entity controlled by Gregg C. Sage, for consideration consisting of the assumption thereby of certain liabilities of Borrower, substantially in accordance with the terms and conditions set forth in the letter agreement, dated October 17, 1994, between Borrower and Gregg C. Sage (the "Cupples Letter of Intent"), a true and correct copy of which Borrower hereby represents and warrants is attached hereto as Exhibit C-1; provided, however, that the provisions of the definitive agreement referenced in the Cupples Letter of Intent and the documents related thereto shall be in form and substance not materially less favorable to Borrower than as set forth in the December 12, 1994 draft of such agreement (a copy of which has been provided to Foothill) and shall otherwise be reasonably satisfactory to Foothill; provided further, that as a condition concurrent to the effectiveness of the foregoing consent, Borrower shall deliver to Foothill a copy of the written consent of Wells Fargo to such sale; provided, further, that any consideration in the form of a promissory note payable to Borrower promptly (and in any event within three (3) Business Days after Borrower's receipt thereof) shall be delivered in pledge as Negotiable Collateral to Foothill (together with all necessary endorsements). Borrower and Foothill hereby acknowledge that a "consent fee" equal to Twenty-Five Thousand Dollars ($25,000) has been paid by Borrower concurrently herewith. Such fee is in consideration of Foothill's consent to Borrower's proposed sale of its Cupples Division and of Foothill's agreement to consent (subject to the terms and conditions to be set forth in an Amendment Number Five to Loan and Security Agreement) to Borrower's proposed sale of its Concrete Construction Division, and is fully earned and non-refundable when paid, regardless of whether any such proposed sale is consummated. 3. Representations and Warranties. Borrower hereby represents and warrants to Foothill that (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected, and (b) this Amendment and the Agreement, as amended by this Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in accordance with its terms. 4. Conditions Precedent to Amendment. The satisfaction of each of the following on or before, unless otherwise specified below, the Fourth Amendment Closing Date shall constitute conditions precedent to the effectiveness of this Amendment: a. Foothill shall have received the reaffirmation and consent of each of Meyerland Co., Ceco-San Antonio Co., M C Durham Co., and Canada Sub attached hereto as Exhibit A, each duly executed and delivered by an authorized official thereof; b. The definitive agreement referenced in the Cupples Letter of Intent and the documents related thereto shall be in form and substance reasonably satisfactory to Foothill; c. The representations and warranties in this Amendment, the Agreement as amended by this Amendment, and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date); d. No Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date hereof, nor shall result from the consummation of the transactions contemplated herein; e. No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental authority against Borrower, Foothill, or any of their Affiliates; f. Neither the Collateral nor the Canada Collateral shall have declined materially in value from the values set forth in the most recent appraisals or field examinations previously done by Foothill; and g. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Foothill and its counsel. 5. Effect on Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment shall not operate as a waiver of or, except as expressly set forth herein, as an amendment, of any right, power, or remedy of Foothill under the Agreement, as in effect prior to the date hereof. 6. Further Assurances. Borrower shall, and shall cause each of Canada Sub, Meyerland Co., Ceco-San Antonio Co., and M C Durham Co. to, execute and deliver promptly all agreements, documents, and instruments, in form and substance satisfactory to Foothill, and promptly take all actions as Foothill may reasonably request from time to time, to perfect and maintain the perfection and priority of Foothill's security interests in the Collateral, the Canada Collateral, and the Real Property and to fully consummate the transactions contemplated under this Amendment and the Agreement, as amended by this Amendment. Upon the sale of the Cupples Division of Borrower, Foothill agrees to execute and deliver to Borrower, at Borrower's expense, UCC Partial Releases (in form and substance satisfactory to Foothill in its absolute discretion) in respect of the Collateral of the Cupples Division of Borrower. 7. Miscellaneous. a. Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. b. Upon the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. c. This Amendment shall be governed by and construed in accordance with the laws of the State of California. d. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above. FOOTHILL CAPITAL CORPORATION, a California corporation By____________________________ Title:________________________ ROBERTSON-CECO CORPORATION, a Delaware corporation By____________________________ Title:________________________ EX-10 5 EXHIBIT 10.12 AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT This AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT (this "Amendment") is entered into as of January 31, 1995, by and between Foothill Capital Corporation, a California corporation ("Foothill") and Robertson-Ceco Corporation, a Delaware corporation ("Borrower"), with reference to the following facts: A. Foothill and Borrower heretofore have entered into that certain Loan and Security Agreement, dated as of April 12, 1993 (the "Original Agreement"), as amended by that certain Amendment Number One To Loan And Security Agreement, dated as of April 30, 1993, that certain Amendment Number Two To Loan And Security Agreement, dated as of April 20, 1994, that certain Amendment Number Three To Loan And Security Agreement, dated as of May 18, 1994, and that certain Amendment Number Four To Loan And Security Agreement, dated as of December 15, 1994 (the Original Agreement, as so amended and as heretofore modified or supplemented from time to time, hereinafter is referred to as the "Agreement"); B. Borrower has entered into a settlement with respect to certain litigation matters, which settlement requires that Borrower's obligations in respect of such settlement be secured by a junior and subordinate security interest in the Collateral. Borrower has requested Foothill to consent to (1) Borrower's grant of such junior and subordinate security interest in the Collateral to secure Borrower's obligations in respect of such settlement, and (2) Borrower's proposed sale of Borrower's Concrete Construction Division and to amend further the Agreement to, among other things, reflect such proposed sale in the Base Amount, as set forth in this Amendment; C. Foothill is willing to give such consent and to so amend the Agreement in accordance with the terms and conditions hereof; and D. All capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Agreement, as amended hereby. NOW, THEREFORE, in consideration of the above recitals and the mutual premises contained herein, Foothill and Borrower hereby agree as follows: 1. Amendments to the Agreement. a. The definition of "Base Amount" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Base Amount" means an amount equal to, as of February 1, 1995, and after giving effect to the disposition of the remaining fixed assets of the Concrete Division, Five Million Nine Hundred Thirty Six Thousand Seven Hundred Twenty Two Dollars ($5,936,722), such amount to be reduced on the first day of each calendar month, commencing on March 1, 1995, by One Hundred Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($166,667) per month, until such amount equals zero. b. The definition of "Eligible Inventory" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Eligible Inventory" means Inventory consisting of first quality finished goods held for sale in the ordinary course of Borrower's and Canada Sub's respective businesses and raw materials for such finished goods (and, in Foothill's reasonable discretion, certain work-in-process), that are located at Borrower's and Canada Sub's premises identified on Schedule E-1, are acceptable to Foothill in all respects, and strictly comply with all of Borrower's representations and warranties to Foothill. Eligible Inventory shall not include such Inventory of Canada Sub in excess of $3,000,000, slow moving or obsolete items, restrictive or custom items, work-in-process (other than work-in- process approved by Foothill), components which are not part of finished goods, spare parts, packaging and shipping materials, supplies used or consumed in Borrower's and Canada Sub's respective businesses, Inventory at the premises of third parties or subject to a security interest or lien in favor of any third Person (other than Wells Fargo), bill and hold goods, Inventory that is not subject to Foothill's first priority perfected security interest, returned or defective goods, "seconds," and Inventory acquired on consignment. Eligible Inventory shall be valued at the lower of Borrower's or Canada Sub's, as the case may be, cost or market value. c. The definition of "Permitted Liens" in Section 1.1 of the Agreement hereby is deleted in its entirety and the following hereby is substituted in lieu thereof: "Permitted Liens" means: (a) liens and security interests held by Foothill; (b) subject to the terms and conditions of the WFB Intercreditor Agreement, liens and security interests held by Wells Fargo; (c) subject to the terms and conditions of the Reliance Intercreditor Agreement, liens and security interests held by Reliance Insurance Company, United Pacific Insurance Company, or Planet Insurance Company on the Accounts of Borrower; (d) liens for unpaid taxes that are not yet due and payable; (e) liens and security interests set forth on Schedule P-1; (f) purchase money security interests and liens of lessors under capitalized leases to the extent that the acquisition or lease of the underlying asset was permitted under Section 7.10, and so long as the security interest or lien only secures the purchase price of the asset; (g) liens or rights of issuers of letters of credit for the account of Borrower in connection with cash collateral deposited with such issuers to secure, in whole or in part, Borrower's reimbursement obligations with respect to drawings on such letters of credit; (h) subject to the terms and conditions of the ACSTAR Intercreditor Agreement, liens and security interests held by ACSTAR Insurance Company on the Accounts, Equipment, and General Intangibles of Borrower; and (i) subject to the terms and conditions of the Federal Intercreditor Agreement, liens and security interests held by Federal Insurance Company on the Collateral securing obligations of Borrower owed to Federal Insurance Company in the maximum principal amount of $7,000,000. d. Section 1.1 of the Agreement hereby is amended by adding the following new defined terms in alphabetical order: "Federal Intercreditor Agreement" means that certain Intercreditor Agreement, dated as of March 2, 1995, among Foothill, Wells Fargo, and Federal Insurance Company, and acknowledged by Borrower. "Fifth Amendment" means that certain Amendment Number Five to Loan and Security Agreement, dated as of January 31, 1995, between Foothill and Borrower. 2. Consent to Sale of Concrete Construction Division. Anything in the Loan Agreement to the contrary notwithstanding, Foothill hereby consents to the sale by Borrower of the business of and assets relating primarily to its Concrete Construction Division, as more particularly described in Schedule C-1 attached hereto (the "Purchased Concrete Assets"), to an entity controlled by Michael E. Heisley, for consideration in the approximate amount of $14,500,000, comprised of approximately $11,500,000 in cash and a promissory note payable to the order of Borrower in the principal amount of $3,000,000 (the "Concrete Sale Note"), and otherwise substantially in accordance with the terms and conditions set forth in the letter agreement, dated November 3, 1994, between Borrower and Michael E. Heisley (the "Concrete Letter of Intent"), a true and correct copy of which Borrower hereby represents and warrants is attached hereto as Exhibit C-1; provided, however, that as conditions concurrent to the effectiveness of the foregoing consent, Borrower shall (a) provide additional cash collateral to Foothill in an amount equal to the maximum amount of Foothill's obligations under L/Cs plus the maximum amount of Foothill's obligations to any issuing bank under outstanding L/C Guarantees, in each case in respect of the business or operations of Borrower's Concrete Construction Division, and (b) provide Foothill with satisfactory evidence of Wells Fargo's consent to such sale and release of Wells Fargo's security interests in the Purchased Concrete Assets. Upon the effectiveness of Foothill's consent under this Section 2, Foothill's security interests in the Purchased Concrete Assets automatically shall be released without the necessity of having any further action taken by Foothill or Borrower to effect such release. 3. Consent to Incurrence of Secured Indebtedness to Federal. Anything in the Loan Agreement to the contrary notwithstanding, Foothill hereby consents to (a) the assignment by Borrower to Federal Insurance Company of the Concrete Sale Note in connection with the Federal Settlement Agreement, and (b) the granting by Borrower to Federal Insurance Corporation of junior and subordinate liens on and security interests in the Collateral, subject to the terms and conditions of the Federal Intercreditor Agreement, in order to secure the obligations of Borrower owed to Federal Insurance Company in the maximum principal amount of $7,000,0000 under that certain Settlement Agreement and Release, dated as of March 3, 1995, between Federal Insurance Company and Borrower (the "Federal Settlement Agreement") in respect of the settlement of certain litigation matters more particularly described therein and in accordance with the terms and conditions thereof; provided, however, that as conditions concurrent to the effectiveness of the foregoing consent, (x) Borrower shall provide Foothill with satisfactory evidence of Wells Fargo's release of Wells Fargo's security interest in the Concrete Sale Note, (y) Foothill shall have received the Federal Intercreditor Agreement, duly executed by Federal Insurance Company and Wells Fargo and acknowledged by Borrower, and in form and substance satisfactory to Foothill, and (z) Foothill shall have received satisfactory evidence of the execution and delivery of the Federal Settlement Agreement and the dismissal with prejudice of the "Massachusetts Litigation" (as defined in the Federal Settlement Agreement). Upon the effectiveness of Foothill's consent under this Section 3, Foothill's security interests in the Concrete Sale Note automatically shall be released without the necessity of having any further action taken by Foothill or Borrower to effect such release. Borrower hereby represents and warrants that true and correct copies of the Federal Settlement Agreement and other documents related thereto are attached hereto as Exhibit F and that the same are in full force and effect. 3A. Additional Provisions Regarding Federal Settlement Agreement. a. Borrower hereby agrees that Borrower will not: (1) Agree to any amendment to, or waive any of, the terms and provisions regarding principal payment amounts, no interest being due or payable, total principal amounts, or similar material terms and provisions of the Federal Settlement Agreement, including the definitions applicable thereto, without in each case obtaining the prior written consent of Foothill to such amendment or waiver; and (2) Agree to any amendment to the events of default, prepayment provisions, or affirmative and negative covenants relative to or contained in the Federal Settlement Agreement (including the defined terms related to any of the foregoing), which would make such terms or conditions materially more onerous or restrictive to Borrower, without obtaining the prior written consent of Foothill to such amendment or waiver. b. Borrower and Foothill hereby agree that any one or more of the following shall constitute an Event of Default: (1) If there is a payment default or any other default under the Federal Settlement Agreement (after giving effect to any grace period set forth therein) that results in a right by Federal Insurance Company, irrespective of whether exercised, to accelerate the maturity of Borrower's obligations thereunder; or (2) If a judgment in favor of Federal Insurance Company is entered, filed, or recorded against Borrower in respect of Borrower's obligations under the Federal Settlement Agreement or the "Massachusetts Litigation" (as defined in the Federal Settlement Agreement). 4. Representations and Warranties. Borrower hereby represents and warrants to Foothill that (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected, and (b) this Amendment and the Agreement, as amended by this Amendment, constitute Borrower's legal, valid, and binding obligation, enforceable against Borrower in accordance with its terms. 5. Conditions Precedent to Amendment. The satisfaction of each of the following on or before, unless otherwise specified below, March 3, 1995 shall constitute conditions precedent to the effectiveness of this Amendment: a. Foothill shall have received the following, each duly executed and delivered by an authorized official of each party (other than Foothill) thereto: (1) the reaffirmation and consent of each of Meyerland Co., Ceco-San Antonio Co., M C Durham Co., and Canada Sub attached hereto as Exhibit A; (2) the Federal Intercreditor Agreement, in form and substance satisfactory to Foothill; and (3) all required consents of Foothill's Participants in respect of Foothill's execution and delivery of this Amendment; b. The definitive agreement referenced in the Concrete Letter of Intent and documents related thereto shall be in form and substance reasonably satisfactory to Foothill; c. The Federal Settlement Agreement and documents related thereto shall be in form and substance reasonably satisfactory to Foothill; d. The representations and warranties in this Amendment, the Agreement as amended by this Amendment, and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date); e. No Event of Default or event which with the giving of notice or passage of time would constitute an Event of Default shall have occurred and be continuing on the date hereof, nor shall result from the consummation of the transactions contemplated herein; f. No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental authority against Borrower, Foothill, or any of their Affiliates; g. Neither the Collateral nor the Canada Collateral shall have declined materially in value from the values set forth in the most recent appraisals or field examinations previously done by Foothill; and h. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Foothill and its counsel. 6. Effect on Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment shall not operate as a waiver of or, except as expressly set forth herein, as an amendment, of any right, power, or remedy of Foothill under the Agreement, as in effect prior to the date hereof. 7. Further Assurances. Borrower shall, and shall cause each of Canada Sub, Meyerland Co., Ceco-San Antonio Co., and M C Durham Co. to, execute and deliver promptly all agreements, documents, and instruments, in form and substance satisfactory to Foothill, and promptly take all actions as Foothill may reasonably request from time to time, to perfect and maintain the perfection and priority of Foothill's security interests in the Collateral, the Canada Collateral, and the Real Property and to fully consummate the transactions contemplated under this Amendment and the Agreement, as amended by this Amendment. Upon the sale of the Concrete Construction Division of Borrower, Foothill agrees to execute and deliver to Borrower, at Borrower's expense, UCC Partial Releases and releases or reconveyances of Mortgages in respect of the Collateral and the Real Property of the Concrete Construction Division of Borrower. 8. Miscellaneous. a. Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. b. Upon the effectiveness of this Amendment, each reference in the Loan Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. c. Upon the effectiveness of this Amendment, in order to reflect the sales by Borrower of its Concrete Construction Division and Cupples Division, each reference in the Agreement or the Loan Documents to Schedule E-1, Schedule R-1, or Schedule 6.15, as the case may be, of the Agreement shall mean and refer to Schedule E-1, Schedule R-1, or Schedule 6.15, respectively, attached hereto. d. This Amendment shall be governed by and construed in accordance with the laws of the State of California. e. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above. FOOTHILL CAPITAL CORPORATION, a California corporation By____________________________ Title:________________________ ROBERTSON-CECO CORPORATION, a Delaware corporation By____________________________ Title:________________________ EX-10 6 EXHIBIT 10.20 INTERCREDITOR AGREEMENT THIS INTERCREDITOR AGREEMENT (this "Agreement"), dated as of March 3, 1995, is entered into between FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), WELLS FARGO BANK, N.A., a national banking association ("Wells Fargo"), and FEDERAL INSURANCE COMPANY, a Indiana corporation ("Federal"), and is acknowledged and consented to by ROBERTSON- CECO CORPORATION, a Delaware corporation ("Robertson-Ceco"). W I T N E S S E T H : WHEREAS, Robertson-Ceco, certain of Robertson-Ceco's subsidiaries and Wells Fargo are parties to certain letter of credit agreements, loan agreements, promissory notes, security agreements, pledge agreements, mortgages, deeds of trust, or other related documents (collectively, the "Wells Fargo Agreements"); WHEREAS, to secure the obligations owed to Wells Fargo under the Wells Fargo Agreements, the Obligors have granted Wells Fargo security interests in and liens on some or all of the Collateral; WHEREAS, Robertson-Ceco and Foothill have entered into the Loan Agreement and the Obligors have entered into various other documents with Foothill related thereto including promissory notes, security agreements, pledge agreements, mortgages, deeds of trust, or other related agreements (collectively, the "Foothill Agreements"); WHEREAS, to secure the obligations owed to Foothill under the Foothill Agreements, the Obligors have granted or will grant to Foothill security interests in and liens on all of the Collateral; WHEREAS, Robertson-Ceco and Federal have entered into the Settlement Agreement and Robertson-Ceco has entered into various other documents with Federal related thereto including security agreements, pledge agreements, mortgages, deeds of trust, or other related agreements (collectively, the "Federal Agreements"); WHEREAS, to secure the obligations owed to Federal under the Federal Agreements, the Obligors have granted or will grant to Federal security interests in and liens on all of the Collateral; WHEREAS, Foothill has requested that Wells Fargo expressly subordinate its liens and security interests in the Collateral to those securing the Foothill Claim; WHEREAS, Foothill and Wells Fargo have required, as a condition to their consent to the grant by the Obligors of liens and security interests in the Collateral, that Federal expressly subordinate its liens and security interests in the Collateral to those securing the Foothill Claim and the Wells Fargo Claim; WHEREAS, Wells Fargo, Foothill, and Federal each have filed, or hereafter may file, financing statements, fixture filings, mortgages, deeds of trust, or other filings or notices; and WHEREAS, Wells Fargo, Foothill, and Federal each desire to agree to the relative priority of their respective security interests in and liens on the Collateral and to agree to certain other rights, priorities, and interests. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, Wells Fargo, Foothill, and Federal hereby agree as follows, and Robertson-Ceco hereby acknowledges and consents to the following: 1. Definitions. As used herein the following initially capitalized terms shall have the indicated definitions: "Accounts" means all presently existing and hereafter arising accounts, contract rights for the payment of money, and all other forms of obligations owing to an Obligor arising out of the sale or lease of goods or the rendition of services by such Obligor, irrespective of whether earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by such Obligor relating to any of the foregoing. "Acstar" means ACSTAR Insurance Company. "Acstar Collateral" means that portion of the Collateral that is subject to a prior security interest in favor of Acstar under and pursuant to the terms of the Acstar Intercreditor Agreements. "Acstar Intercreditor Agreements" means (a) that certain Intercreditor Agreement between Wells Fargo and Acstar, and (b) that certain Intercreditor Agreement, dated as of November 18, 1993, between Foothill and Acstar, each of which is substantially identical to the other. "Agreement" means this Intercreditor Agreement, as it may be amended, supplemented, or modified from time to time in accordance with the provisions hereof. "Asset" means any interest of an Obligor in any kind of property or asset, whether real, personal, or mixed real and personal, or whether tangible or intangible. "Bankruptcy Code" means the federal bankruptcy law of the United States as from time to time in effect, currently as Title 11 of the United States Code. Section references to current sections of the Bankruptcy Code shall refer to comparable sections of any revised version thereof if section numbering is changed. "Books and Records" means all of the Obligors' books and records including: ledgers; records indicating, summarizing, or evidencing the Obligors' assets or liabilities, or the Collateral; all information relating to the Obligors' business operations or financial condition; and all computer programs, disc or tape files, printouts, runs, or other computer prepared information, and the Equipment containing such information. "Business Day" means any day, other than a Saturday or Sunday, that commercial banks in general are open for the transaction of commercial banking business in Los Angeles, California. "Claims" means the Federal Claim, the Foothill Claim, or the Wells Fargo Claim. "Collateral" means any and all Assets, whether tangible or intangible, in which any Obligor now or hereafter has any right, title, or interest, and in which either Federal, Foothill, or Wells Fargo from time to time has or may have any lien or security interest, including each of the following: the Accounts; the Books and Records; the Collateral Custody Account; the Domestic Subsidiary Stock; the Equipment; the Foreign Subsidiary Stock; the General Intangibles; the Inventory; any Money; the Negotiable Collateral; the Real Property Collateral; any other Assets of the Obligors that hereafter come into the possession, custody, or control of Federal, Foothill, or Wells Fargo; and the Proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the Collateral, and including any and all Proceeds of the Accounts, the Books and Records, the Collateral Custody Account, the Domestic Subsidiary Stock, the Equipment, the Foreign Subsidiary Stock, the General Intangibles, the Inventory, any Money, the Negotiable Collateral, any Real Property Collateral, and any other tangible or intangible Assets resulting from the sale, exchange, collection, or other disposition of the Collateral, or any portion thereof or interest therein. "Collateral Custody Account" shall have the meaning ascribed thereto in the Wells Fargo Agreements. "Commitment" means (i) $30,000,000 for the first eighteen months of the term of the Letter of Credit Agreement, (ii) $25,000,000 for the nineteenth through the twenty-fourth month of the term thereof, (iii) $20,000,000 for the twenty-fifth through the thirtieth month of the term thereof, and (iv) $15,000,000 for the thirty-first through the thirty-sixth month of the term thereof. "Credit Documents" means the Federal Agreements, the Foothill Agreements, and the Wells Fargo Agreements. "Creditor" means Federal, Foothill, or Wells Fargo. "Default Notice" shall mean a written notice from or on behalf of Federal to Foothill notifying Foothill of the existence of a payment default under the Federal Agreements and specifically designating such notice as a "Default Notice." "Domestic Subsidiary Stock" means all shares of capital stock, rights to acquire same, or certificates evidencing same, of any one or more of Robertson-Ceco's domestic subsidiaries, now or hereafter beneficially owned by any Obligor. "Enforcement Action" means, with respect to any Creditor and with respect to any item of Collateral in which such Creditor has or claims a security interest, lien, or Right of Offset, any action, whether judicial or nonjudicial, to repossess, collect, offset, recoup, give notification to third parties with respect to, sell, dispose of, foreclose upon, give notice of sale, disposition, or foreclosure with respect to, or obtain equitable or injunctive relief with respect to, such Collateral. In addition, with respect to Wells Fargo, "Enforcement Action" includes any acceleration of the maturity of the Wells Fargo Claim, the termination of the Commitment or of the Letter of Credit Agreement, or the commencement of any lawsuit or proceeding against any Obligor to collect or enforce the Wells Fargo Claim. In addition, with respect to Federal, "Enforcement Action" includes any acceleration of the maturity of the Federal Claim or the commencement of any lawsuit or other proceeding against any Obligor to collect or enforce the Federal Claim or the enforcement of any judgment against any Obligor with respect to the Federal Claim. The filing by any Creditor of, or the joining in the filing by any Creditor of, an involuntary bankruptcy or insolvency proceeding against any Obligor also is an Enforcement Action. "Equipment" means all of the Obligors' present and hereafter acquired machinery, machine tools, motors, equipment, furniture, furnishings, fixtures, vehicles, tools, parts, dies, jigs, goods (other than consumer goods, farm products, or Inventory), and any interest in any of the foregoing, wherever located, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located. "Existing Letters of Credit" means those certain letters of credit that are outstanding as of the date hereof, are described in Schedule E-1 attached hereto, and were issued by Wells Fargo pursuant to the Wells Fargo Agreements. "Federal" has the meaning ascribed to such term in the preamble to this Agreement. "Federal Agreements" has the meaning ascribed to such term in the recitals to this Agreement, and shall include any future amendments, modifications, extensions, supplements, restatements, or replacements of any of the Federal Agreements. "Federal Claim" means any and all present and future "claims" (used in its broadest sense, as contemplated by and defined in Section 101(5) of the Bankruptcy Code, but without regard to whether such claim would be disallowed under the Bankruptcy Code) of Federal now or hereafter arising or existing under or relating to the Federal Agreements, whether joint, several, or joint and several, whether fixed or indeterminate, due or not yet due, contingent or non-contingent, matured or unmatured, liquidated or unliquidated, or disputed or undisputed, whether under a guaranty, and whether arising under contract, in tort, by law, or otherwise, and including all credit advanced or extended to or for the benefit of any Obligor at any time (including any indebtedness arising pursuant to debtor-in-possession financing arrangements or pursuant to financing arrangements entered into in connection with the confirmation of a plan of reorganization under chapter 11 of the Bankruptcy Code), any interest or fees thereon (including interest or fees that accrue after the filing of a petition by or against any Obligor under the Bankruptcy Code, irrespective of whether allowable under the Bankruptcy Code), any costs of Enforcement Actions, including reasonable attorneys fees and costs, and any prepayment or termination premiums. "Foothill" has the meaning ascribed to such term in the preamble to this Agreement. "Foothill Agreements" has the meaning ascribed to such term in the recitals to this Agreement, and shall include any future amendments, modifications, extensions, supplements, restatements, or replacements of any of the Foothill Agreements. "Foothill Claim" means any and all present and future "claims" (used in its broadest sense, as contemplated by and defined in Section 101(5) of the Bankruptcy Code, but without regard to whether such claim would be disallowed under the Bankruptcy Code) of Foothill now or hereafter arising or existing under or relating to the Foothill Agreements, whether joint, several, or joint and several, whether fixed or indeterminate, due or not yet due, contingent or non-contingent, matured or unmatured, liquidated or unliquidated, or disputed or undisputed, whether under a guaranty, a Foothill Letter of Credit, or any other letter of credit, and whether arising under contract, in tort, by law, or otherwise, and including all credit advanced or extended to or for the benefit of any Obligor at any time (including any indebtedness arising pursuant to debtor-in-possession financing arrangements or pursuant to financing arrangements entered into in connection with the confirmation of a plan of reorganization under chapter 11 of the Bankruptcy Code), any interest or fees thereon (including interest or fees that accrue after the filing of a petition by or against any Obligor under the Bankruptcy Code, irrespective of whether allowable under the Bankruptcy Code), any costs of Enforcement Actions, including reasonable attorneys fees and costs, and any prepayment or termination premiums. "Foothill Collateral" means all of the Collateral other than the Acstar Collateral, the Reliance Collateral, and the Wells Fargo Cash Collateral. "Foothill Letters of Credit" means those certain standby letters of credit issued from time to time by Foothill, for the account of Robertson- Ceco, for the benefit of Wells Fargo, in order to support Robertson-Ceco's obligations with respect to a Wells Fargo Letter of Credit. "Foreign Subsidiary Stock" means all shares of capital stock, rights to acquire same, or certificates evidencing same, of any one or more of Robertson-Ceco's foreign subsidiaries, now or hereafter beneficially owned by any Obligor. "Future Letters of Credit" means any letter of credit, other than an Existing Letter of Credit, issued, extended, renewed, or amended by Wells Fargo for the account of Robertson-Ceco. "General Intangibles" means all of the Obligors' present and future general intangibles and other personal property (including choses or things in action, liens or other rights arising by operation of law, whether by virtue of common law, statutory law, or regulatory law, deposit accounts, goodwill, patents, logos, trade names, trademarks, service marks, copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, contract rights, deposit accounts, route lists, monies due under any royalty or licensing agreements, infringements, claims, computer programs, computer discs, computer tapes, literature, reports, catalogs, insurance premium refunds, tax refunds, and tax refund claims), exclusive of goods, Accounts, and, the Wells Fargo Cash Collateral up to, but not in excess of, the Required Cash Collateral Amount. "Inventory" means all present and future inventory in which any Obligor has any interest, including goods held for sale or lease or to be furnished under a contract of service and all of any Obligor's present and future raw materials, work in process, finished goods, and packing and shipping materials, wherever located, and any documents of title representing any of the above. "Letter of Credit Agreement" means that certain Letter of Credit Agreement, dated as of even date herewith, among Foothill, Robertson-Ceco, and Wells Fargo, pursuant to which, among other things, Wells Fargo agrees to issue, amend, renew, or extend Letters of Credit for the account of Robertson- Ceco in an amount up to the amount of the Commitment extant from time to time. "Loan Agreement" means that certain Loan and Security Agreement, dated as of April 12, 1993, between Foothill and Robertson-Ceco, as amended from time to time. "Money" means cash, coins, currency, or any other medium of exchange that is treated as the equivalent of cash (but not including Negotiable Collateral or deposit accounts), including foreign currency. "Negotiable Collateral" means all of the Obligors' present and future letters of credit, notes, drafts, instruments, documents, personal property leases, and chattel paper. "Obligors" means Robertson-Ceco and each of its subsidiaries that is a party to a Wells Fargo Agreement, a Federal Agreement, or a Foothill Agreement, individually and collectively. "Personal Property Collateral" means and includes all of the Collateral except for the Real Property Collateral. "Proceeds" has the meaning given such term by Division 9 of the UCC and case law interpreting and defining such term, irrespective of whether received by any Obligor, and shall include insurance proceeds, rents received or receivable from the lease of goods, and dividends or other distributions paid or payable with respect to shares of capital stock. "Robertson-Ceco" has the meaning ascribed to such term in the preamble to this Agreement and shall, if applicable, include Robertson-Ceco Corporation in its capacity as a debtor-in-possession. "Real Property Collateral" means any of the Collateral that constitutes real property, and the identifiable and traceable rents, issues, and profits of such real property, except that "Real Property Collateral" shall not include any Equipment. "Reliance" means Reliance Insurance Company, United Pacific Insurance Company, and Planet Insurance Company. "Reliance Collateral" means that portion of the Collateral that is subject to a prior security interest in favor of Reliance under and pursuant to the terms of the Reliance Intercreditor Agreements. "Reliance Intercreditor Agreements" means (a) that certain Intercreditor Agreement, dated as of November 8, 1990, between Wells Fargo and Reliance, and (b) that certain Intercreditor Agreement, dated as of April 30, 1993, between Foothill and Reliance, each of which is substantially identical to the other. "Required Cash Collateral Amount" means the amount of Money or cash equivalents maintained by the Obligors in the Collateral Custody Account equal to (a) (i) the outstanding undrawn amount of the Wells Fargo Letters of Credit plus (ii) the amount of unpaid drawings under Wells Fargo Letters of Credit, minus (b) (i) the undrawn and unpaid amount of Foothill Letters of Credit plus (ii) the Third Party Letter of Credit Amount. "Right of Offset" means any right of offset, recoupment, setoff, banker's lien, or other similar right or remedy, whether at law or in equity. "Settlement Agreement" means that certain Settlement Agreement, dated as of March 2, 1995, between Federal and Robertson-Ceco. "Standstill Period" means the period commencing on the date of receipt by Foothill of a Default Notice from Federal until the first to occur of: (a) the 180th day after receipt of such Notice; provided, however, that if, on or before such date or during such period, Foothill has (y) accelerated its Claim, and (z) has commenced and diligently is pursuing a judicial proceeding to collect its Claim or has commenced and diligently is pursuing the collection of the Accounts or has given notice of a sale of a substantial part of the Collateral securing its Claim and diligently is pursuing the collection or foreclosure and sale of such Collateral, then such period shall continue unless and until Foothill either rescinds such acceleration, abandons, terminates, or diligently fails to pursue such judicial proceeding, or abandons, terminates, or diligently fails to pursue such collection or foreclosure proceedings to realize upon a substantial part of its Collateral; and (b) the date on which Federal shall have waived or acknowledged, in writing, the cure of the default that was the subject of the Default Notice. "Third Party Letter of Credit Amount" means the amount equal to the undrawn and unpaid amount under one or more letters of credit issued in favor of Wells Fargo, in form and by a third party issuer acceptable to Wells Fargo, in the exercise of its sole discretion, to support the obligation of Robertson-Ceco with respect to the Wells Fargo Letters of Credit. "UCC" means the Uniform Commercial Code in effect in the State of California, except with respect to the perfection of any security interest, in which case the term "UCC" shall refer to the Uniform Commercial Code of the jurisdiction that, under Section 9103 of the California Uniform Commercial Code, governs the perfection of the security interest. "Wells Fargo" has the meaning ascribed to such term in the preamble to this Agreement. "Wells Fargo Agreements" has the meaning ascribed to such term in the recitals to this Agreement together with the Letter of Credit Agreement, and shall include any future amendments, modifications, extensions, supplements, restatements, or replacements of any of the Wells Fargo Agreements. "Wells Fargo Cash Collateral" means that portion of the Collateral that is composed of the Required Cash Collateral Amount and that has been deposited in and is evidenced by the Collateral Custody Account. To the extent that the Collateral Custody Account contains more than the Required Cash Collateral Amount, the excess is not Wells Fargo Cash Collateral. "Wells Fargo Claim" means any and all present and future "claims" (used in its broadest sense, as contemplated by and defined in Section 101(5) of the Bankruptcy Code, but without regard to whether such claim would be disallowed under the Bankruptcy Code) of Wells Fargo now or hereafter arising or existing under or relating to the Foothill Agreements, whether joint, several, or joint and several, whether fixed or indeterminate, due or not yet due, contingent or non-contingent, matured or unmatured, liquidated or unliquidated, or disputed or undisputed, whether under a Wells Fargo Letter of Credit, and whether arising under contract, in tort, by law, or otherwise, and including all credit advanced or extended to or for the benefit of the Obligors at any time (including any indebtedness arising pursuant to debtor-in-possession financing arrangements or pursuant to financing arrangements entered into in connection with the confirmation of a plan of reorganization under chapter 11 of the Bankruptcy Code), any interest or fees thereon (including interest or fees that accrue after the filing of a petition by or against any Obligor under the Bankruptcy Code, irrespective of whether allowable under the Bankruptcy Code), any costs of Enforcement Actions, including reasonable attorneys fees and costs, and any prepayment or termination premiums. "Wells Fargo Letters of Credit" means the Existing Letters of Credit and the Future Letters of Credit. 2. Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and to the singular include the plural, the part includes the whole, the terms "include," "includes," and "including" are not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or". The words "hereof," "herein," "hereby," "hereunder" and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Section references are to this Agreement unless otherwise specified. Any terms used in this Agreement which are defined in the UCC shall be construed and defined as set forth in the UCC unless otherwise defined herein. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference. 3. Lien Priorities. Notwithstanding the date, manner, or order of perfection of the security interests, liens, or Rights of Offset granted to or otherwise existing in favor of Wells Fargo, Federal, or Foothill, and notwithstanding any contrary provisions of the UCC, or any applicable law or decision, or the provisions of the Wells Fargo Agreements, the Federal Agreements, or the Foothill Agreements, and irrespective of whether Wells Fargo, Federal, or Foothill holds possession of all or any part of the Collateral, the following, as between and among Wells Fargo, Federal, and Foothill, shall be the relative priority of the security interests, liens, and Rights of Offset of Wells Fargo, Federal, and Foothill in and to the Collateral: a. As to the Reliance Collateral: i) Foothill shall have a second and subordinate security interest in or lien on such Reliance Collateral, subordinate only to the first and prior perfected security interest therein or lien thereon of Reliance, if any; ii) Wells Fargo shall have a third and subordinate security interest in or lien on such Reliance Collateral, subordinate only to the first and prior perfected security interest therein or lien thereon of Reliance, if any, and the second and prior security interest therein or lien thereon of Foothill; and iii) Federal shall have a fourth and subordinate security interest in or lien on such Reliance Collateral, subordinate only to the first and prior perfected security interest therein or lien thereon of Reliance, if any, the second and prior security interest therein or lien thereon of Foothill, and the third and prior security interest therein or lien thereon of Wells Fargo; b. As to the Acstar Collateral: i) Foothill shall have a second and subordinate security interest in or lien on such Acstar Collateral, subordinate only to the first and prior perfected security interest therein or lien thereon of Acstar, if any; ii) Wells Fargo shall have a third and subordinate security interest in or lien on such Acstar Collateral, subordinate only to the first and prior perfected security interest therein or lien thereon of Acstar, if any, and the second and prior security interest therein or lien thereon of Foothill; and iii) Federal shall have a fourth and subordinate security interest in or lien on such Acstar Collateral, subordinate only to the first and prior perfected security interest therein or lien thereon of Acstar, if any, the second and prior security interest therein or lien thereon of Foothill, and the third and prior security interest therein or lien thereon of Wells Fargo; c. As to the Wells Fargo Cash Collateral: i) Wells Fargo shall have a first and prior security interest in, lien on, and Right of Offset with respect to such Wells Fargo Cash Collateral; ii) Foothill shall have a second and subordinate security interest in, lien on, and Right of Offset with respect to such Wells Fargo Cash Collateral, subordinate only to the first and prior security interest therein, lien thereon, or Right of Offset with respect thereto of Wells Fargo; and iii) Federal shall have a third and subordinate security interest in, lien on, and Right of Offset with respect to such Wells Fargo Cash Collateral, subordinate only to the first and prior security interest therein, lien thereon, or Right of Offset with respect thereto of Wells Fargo and the second and prior security interest therein, lien thereon, or Right of Offset with respect thereto of Foothill; d. As to the Foothill Collateral: i) Foothill shall have a first and prior security interest in, lien on, and Right of Offset with respect to such Foothill Collateral; ii) Wells Fargo shall have a second and subordinate security interest in, lien on, and Right of Offset with respect to such Foothill Collateral, subordinate only to the first and prior security interest therein, lien thereon, or Right of Offset with respect thereto of Foothill; and iii) Federal shall have a third and subordinate security interest in, lien on, and Right of Offset with respect to such Foothill Collateral, subordinate only to the first and prior security interest therein, lien thereon, or Right of Offset with respect thereto of Foothill and the second and prior security interest therein, lien thereon, or Right of Offset with respect thereto of Wells Fargo. If the Claims of any Creditor holding a level of priority with respect to a category of Collateral are fully and finally paid and satisfied and such Creditor has no further commitment to extend credit facilities to Robertson- Ceco and has released or terminated its security interests and liens in the Collateral, then each Creditor with a junior level of priority thereupon shall be elevated one level of priority with respect to such category of Collateral for all purposes hereof. In the event that Federal or Wells Fargo obtains the rights of a holder in due course of a negotiable instrument with respect to any portion of the Collateral, then Section 9309 of the UCC shall not provide Federal or Wells Fargo, as applicable, with priority in such Collateral. The provisions of Section 9309 of the UCC notwithstanding, the relative priority of the security interests, liens, and Rights of Offset of Wells Fargo and Foothill in and to any portion of the Collateral in which another party obtains the rights of a holder in due course shall be determined by the priorities set forth in this section. 4. Distribution of Proceeds of Collateral. Upon the occurrence and during the continuance of any event of default under any of the Credit Documents, as among the Creditors, all Proceeds of any sale, exchange, collection, or other disposition of the Collateral shall be distributed as follows: a. As to the Reliance Collateral: i) First, to Reliance, to the extent required by the express terms and conditions of the Reliance Intercreditor Agreements; ii) Second, the balance, if any, to Foothill, in an amount up to the amount of the Foothill Claim; iii) Third, the balance, if any, to Wells Fargo up to the amount of the Wells Fargo Claim; and iv) Fourth, the balance, if any, to Federal up to the amount of the Federal Claim; and b. As to the Acstar Collateral: i) First, to Acstar, to the extent required by the express terms and conditions of the Acstar Intercreditor Agreements; ii) Second, the balance, if any, to Foothill, in an amount up to the amount of the Foothill Claim; iii) Third, the balance, if any, to Wells Fargo up to the amount of the Wells Fargo Claim; and iv) Fourth, the balance, if any, to Federal up to the amount of the Federal Claim; and c. As to the Collateral Custody Account: i) First, to Wells Fargo, in an amount up to the amount of the Required Cash Collateral Amount extant from time to time; ii) Second, the balance, if any, to Foothill, up to the amount of the Foothill Claim; iii) Third, the balance, if any, to Federal, up to the amount of the Federal Claim; and d. As to the Foothill Collateral (other than the Collateral Custody Account): i) First, to Foothill, in an amount up to the amount of the Foothill Claim; ii) Second, the balance, if any, to Wells Fargo up to the amount of the Wells Fargo Claim; and iii) Third, the balance, if any, to Federal up to the amount of the Federal Claim. This section is applicable with respect to any item of Collateral only to the extent that each of the Creditors concurrently has a security interest in or lien on or Right of Offset with respect to such Collateral. Nothing herein shall require any Creditor to have or hold a security interest in or lien on or Right of Offset with respect to Collateral that it does not wish to have or hold, and the priorities in Section 3 shall not be relevant to any Collateral in which only one of the Creditors has a security interest or lien or Right of Offset. Any Proceeds of Collateral that are received by Foothill pursuant to and in accordance with the provisions of this section at a time when one or more Foothill Letters of Credit are outstanding and undrawn shall be held by Foothill as cash collateral until the contingent obligation represented by such Foothill Letter of Credit either matures and is paid or is retired without the contingency occurring. To the extent that the contingent obligation matures and is paid, Foothill shall have the right to apply such cash collateral to the repayment of the extant non-contingent obligation. To the extent that the contingent obligation is retired without the contingency occurring, the cash collateral shall be reapplied in the sequence described above as if such cash collateral had, at the time of the retirement of such contingent obligation, been received as Proceeds of Collateral. Any Proceeds of Collateral that are received by Wells Fargo pursuant to and in accordance with the provisions of this section at a time when one or more Wells Fargo Letters of Credit are outstanding and undrawn shall be held by Wells Fargo as cash collateral until the contingent obligation represented by such Wells Fargo Letter of Credit either matures and is paid or is retired without the contingency occurring. To the extent that the contingent obligation matures and is paid, Wells Fargo shall have the right to apply such cash collateral to the repayment of then extant non-contingent obligation. To the extent that the contingent obligation is retired without the contingency occurring, the cash collateral shall be reapplied in the sequence described above as if such cash collateral had, at the time of the retirement of such contingent obligation, been received as Proceeds of Collateral. 5. Limitation on Exercise of Remedies by Wells Fargo. Any provision in the Wells Fargo Agreements to the contrary notwithstanding, without the prior written consent of Foothill, Wells Fargo shall not take any Enforcement Action unless a drawing that is made by Wells Fargo under a Foothill Letter of Credit (in accordance with the terms of such Foothill Letter of Credit) is not paid by Foothill within thirty (30) days (sixty (60) days in the event that Foothill disputes, in good faith, its obligation to make payment under the Foothill Letter of Credit) after the date on which, by the terms of such Foothill Letter of Credit, Foothill is obligated to make such payment. Wells Fargo further agrees that the Obligors will be free to use their Money and cash equivalents (other than the Required Cash Collateral Amount in the Collateral Custody Account) for their general corporate purposes, notwithstanding the security interests, liens, or Rights of Offset of Wells Fargo, so long as Wells Fargo is not enforcing, in accordance with the terms and conditions hereof, its security interests, liens, or Rights of Offset in respect of such Money or cash equivalents. Foothill and Federal each agrees that Wells Fargo shall not incur any liability to Foothill or Federal for taking or refraining from taking any action with respect to the Collateral so long as Wells Fargo complies with the express provisions of this Agreement. 6. Limitation on Exercise of Remedies by Federal. Any provision in the Federal Agreements to the contrary notwithstanding, without the prior written consent of both Foothill and Wells Fargo, Federal shall not take any Enforcement Action unless and until the Foothill Claim and the Wells Fargo Claim have been fully and finally paid and such Creditors have no further commitments to extend credit facilities to Robertson-Ceco and have released or terminated their security interests and liens in the Collateral; provided, however, that the foregoing shall not prohibit Federal (a) from filing, at the times and in accordance with the terms and conditions of the Federal Agreements, an agreement for judgment in Civil Action No. 94-12316-PBS currently pending in U.S. District Court for the District of Massachusetts (the "Massachusetts Action"), and (b) after the Standstill Period shall cease to be in effect, from taking any and all actions to enforce such judgment that may be available at law or in equity, exclusive, however, of any right to foreclose or otherwise enforce its security interest in the Collateral by any available judicial procedure. The lien of any levy that may be made upon the Collateral by virtue of any execution based upon the judgment entered in the Massachusetts Action shall not relate back to the date of the perfection of Federal's security interest in such Collateral. A judicial sale after the end of the Standstill Period, pursuant to any such execution, shall not constitute a foreclosure or other enforcement of Federal's security interest in the Collateral. Federal acknowledges that the foregoing covenant was an essential and unconditional requirement of Foothill and Wells Fargo in agreeing to permit Federal to obtain a junior lien and security interest in and to the Collateral and Federal agrees that any breach of the foregoing will cause Foothill and Wells Fargo irreparable harm and that either Foothill or Wells Fargo may obtain an injunction to prevent Federal from violating or continuing to violate the foregoing covenant. Federal further agrees that the Obligors will be free to use their Money and cash equivalents for their general corporate purposes, notwithstanding the security interests, liens, or Rights of Offset of Federal, so long as Federal is not enforcing, in accordance with the terms and conditions hereof, its security interests, liens, or Rights of Offset in respect of such Money or cash equivalents. Foothill and Wells Fargo each agrees that Federal shall not incur any liability to Foothill or Wells Fargo for taking or refraining from taking any action with respect to the Collateral so long as Federal complies with the express provisions of this Agreement. 7. Exercise of Remedies in the Absence of a Limitation. Subject only to any express provision of this Agreement that requires a Creditor to take or refrain from taking an action, each Creditor may exercise its discretion with respect to exercising or refraining from exercising any of its rights and remedies under its respective agreements with the Obligors or from taking or refraining from taking any Enforcement Action. Wells Fargo and Federal each agrees that Foothill shall not incur any liability to Wells Fargo or Federal for taking or refraining from taking any action with respect to the Collateral so long as Foothill complies with the express provisions of this Agreement. Wells Fargo further agrees that, Section 952 of the California Financial Code to the contrary notwithstanding, if Foothill notifies Wells Fargo, pursuant to Section 9502 of the UCC, to make payment to Foothill of any Account or General Intangible (other than the Wells Fargo Cash Collateral up to the then Required Cash Collateral Amount) owed by Wells Fargo to one or more of the Obligors, then Wells Fargo promptly will comply with such request and will remit such amount or amounts directly to Foothill. 8. Waiver of Right of Offset by Wells Fargo. Wells Fargo hereby waives in favor of Foothill any Right of Offset that Wells Fargo may have with respect to any amounts maintained on deposit by Foothill with Wells Fargo (including amounts that are Proceeds of Collateral including collections of Accounts or General Intangibles that have been remitted by Robertson-Ceco (or any other Obligor) to such account of Foothill) and agrees with Foothill that it will not exercise any such Right of Offset with respect to any deposit account of Foothill maintained with Wells Fargo on account of any amount drawn under a Foothill Letter of Credit. The foregoing to the contrary notwithstanding, Wells Fargo shall be entitled to recoup against any deposit account of Foothill the fees, expenses, and charges of Wells Fargo that are chargeable to Foothill for the maintenance and administration of such deposit account. 9. Limitation on Amendments to the Wells Fargo Agreements. From and after the date hereof, Wells Fargo agrees that it will not alter, amend, modify, add, supplement, or otherwise change (other than by extending the dates on which the Commitment is to be reduced) any term or condition contained in the Wells Fargo Agreements, without obtaining the express prior written consent of Foothill to such alteration, amendment, modification, addition, supplement, or other change. Should Wells Fargo cease extending further credit to the Obligors, this Agreement nevertheless shall continue in effect as to the outstanding Claims of each Creditor until this Agreement is terminated in accordance with the provisions hereof. 10. Limitation on Amendments to the Federal Agreements. From and after the date hereof, Federal agrees that it will not alter, amend, modify, add, supplement, or otherwise change (other than by extending the dates on which payments of principal are due and payable under the terms of the Federal Agreements) any term or condition contained in the Federal Agreements, without obtaining the express prior written consent of Foothill and Wells Fargo to such alteration, amendment, modification, addition, supplement, or other change. 11. Amendments to the Foothill Agreements. Foothill may alter, amend, modify, add, supplement, or otherwise change any term or condition contained in the Foothill Agreements, including the increasing or decreasing of the amount of the credit facilities made available by it to the Obligors, without the need to obtain any consent of Wells Fargo or Federal to such alteration, amendment, modification, addition, supplement, or other change and without in any way affecting the rights and obligations of the Creditors under this Agreement. Foothill does agree to give Wells Fargo (but not Federal) written notice of any increase in the Maximum Amount (as that term is defined in the Loan Agreement), such notice to be provided concurrent with or prior to any such increase. Should Foothill cease extending further credit to the Obligors, this Agreement nevertheless shall continue in effect as to the outstanding Claims of each Creditor until this Agreement is terminated in accordance with the provisions hereof. 12. Notice of Acceleration. Foothill, Federal, and Wells Fargo each shall endeavor, in good faith, to provide each other with notice (in accordance with the notice provisions hereof) of their acceleration of the Foothill Claim, the Federal Claim, or the Wells Fargo Claim, as applicable; provided, however, that neither Foothill, nor Federal, nor Wells Fargo shall suffer any liability whatsoever for any failure (other than a wilful failure) to send such notification. 13. UCC Notices. In the event that any Creditor shall be required by the UCC or any other applicable law to give any notice to the other Creditor, such notice shall be given in accordance with the notice provisions hereof, and five (5) Business Days notice shall be conclusively deemed to be commercially reasonable. 14. Independent Credit Investigations. No Creditor, nor any of their respective directors, officers, agents, or employees, shall be responsible to any other Creditor or to any other person or entity for any Obligor's solvency, creditworthiness, financial condition, or ability to repay any of the Claims or for the accuracy of any recitals, statements, representations, or warranties of any such Obligors, oral or written, or for the validity, sufficiency, enforceability, or perfection of the Claims or the Credit Documents, or any security interests or liens or Rights of Offset granted by any such Obligors to any Creditor in connection therewith. Each Creditor has entered into its respective financing agreements with the Obligors based upon its own independent investigation, and makes no warranty or representation to the other Creditor, nor does it rely upon any representation of the other Creditor with respect to matters identified or referred to in this paragraph. 15. Perfection of Possessory Security Interests. For the limited purpose of perfecting the security interests or liens or Rights of Offset of the Creditors in those types or items of Collateral in which a security interest or lien or Right of Offset may be perfected by possession, each Creditor hereby appoints the other Creditors as its bailee for the limited purpose of possessing on its behalf any such Collateral that may come into the possession of such other Creditors from time to time, and each Creditor agrees to act as the others' bailee for such limited purpose of perfecting the others' security interest or lien or Right of Offset by possession through a bailee, provided that no Creditor shall incur any liability to the other Creditors by virtue of acting as the others' bailee hereunder, and any Creditor may relinquish possession of Collateral in its possession to another Creditor without the consent of any other Creditor, and without incurring liability to any other Creditor. In this regard, Wells Fargo agrees to use its reasonable best efforts to perfect and assist Foothill in the perfection of its security interests and liens with respect to the Obligors' rights in and to any and all deposit accounts, investment accounts, or other similar financial products provided by Wells Fargo to the Obligors. 16. Waiver of Right to Require Marshaling. Each Creditor hereby expressly waives any right that it otherwise might have to require any other Creditor to marshal Assets or to resort to Collateral in any particular order or manner, whether provided for by common law or statute. No Creditor shall be required to enforce any guaranty or any security interest or lien or Right of Offset given by any Obligor as a condition precedent or concurrent to the taking of any enforcement action with respect to the Collateral. 17. Termination. This Agreement is a continuing agreement, and, unless each of the Creditors has specifically consented in writing to its earlier termination, this Agreement shall remain in full force and effect in all respects until the later of (a) such time as the Foothill Claims are paid or otherwise satisfied in full, Foothill has no further commitment to extend credit facilities to Robertson-Ceco, and Foothill has released or terminated its security interests and liens in the Collateral, and (b) such time as the Wells Fargo Claims are paid or otherwise satisfied in full, Wells Fargo has no further commitment to extend credit facilities to Robertson-Ceco (or any commitment to Foothill to extend such credit facilities to Robertson-Ceco), and Wells Fargo has released or terminated its security interests and liens in the Collateral. 18. Accountings. Each Creditor agrees, upon the occurrence of any Enforcement Action, to provide the other Creditors upon reasonable request periodic accountings of the amount of such Creditor's Claims, giving effect to any applications of realizations upon Collateral. 19. Effect of Bankruptcy. This Agreement shall be and remain enforceable notwithstanding any bankruptcy or other insolvency proceeding by or against Robertson-Ceco or any other Obligor and shall apply with full force and effect to any indebtedness arising pursuant to debtor-in-possession financing arrangements or pursuant to financing arrangements entered into in connection with the confirmation of a plan of reorganization under chapter 11 of the Bankruptcy Code. 20. Effect of Dispositions of Collateral on Junior Security Interests. Creditors agree that (a) any UCC collection, exchange, sale, or other disposition of Personal Property Collateral constituting Foothill Collateral by Foothill shall be free and clear of the junior security interests, liens, or Rights of Offset of Wells Fargo and Federal in such Personal Property Collateral (provided that such security interests, liens, or Rights of Offset of Wells Fargo and Federal shall attach, subject to the senior security interest, lien, or Right of Offset of Foothill, to the proceeds of any such collection, exchange, sale, or other disposition and any surplus, after the application of the proceeds in accordance with Section 4 hereof, shall be remitted to Wells Fargo or Federal, as applicable, in accordance with the provisions hereof), (b) any UCC collection, exchange, sale, or other disposition of Personal Property Collateral constituting Wells Fargo Cash Collateral by Wells Fargo shall be free and clear of the junior security interests, liens, or Rights of Offset of Foothill and Federal in such Personal Property Collateral (provided that such security interests, liens, or Rights of Offset of Foothill and Federal shall attach, subject to the senior security interest, lien, or Right of Offset of Wells Fargo, to the proceeds of any such collection, exchange, sale, or other disposition and any surplus, after the application of the proceeds in accordance with Section 4 hereof, shall be remitted to Foothill or Federal, as applicable, in accordance with the provisions hereof), (c) any UCC collection, exchange, sale, or other disposition of Personal Property Collateral constituting Foothill Collateral by Wells Fargo shall be (i) free and clear of the junior security interest, lien, or Right of Offset of Federal in such Personal Property Collateral (provided that such security interest, lien, or Right of Offset of Federal shall attach, subject to the senior security interests, liens, or Rights of Offset of Foothill and Wells Fargo, to the proceeds of any such collection, exchange, sale, or other disposition and any surplus, after the application of the proceeds in accordance with Section 4 hereof, shall be remitted to Federal in accordance with the provisions hereof), and (ii) subject to the senior security interest, lien, or Right of Offset of Foothill in such Personal Property Collateral; provided, however, that any amounts realized by Wells Fargo with respect to the collection, exchange, sale, or other disposition of its junior priority security interest, lien, or Right of Offset in Money, Accounts, General Intangibles constituting a right to payment of Money (other than the Wells Fargo Cash Collateral), and Negotiable Collateral shall be turned over to Foothill to be applied in reduction of the Foothill Claim or held by Foothill as cash collateral in accordance with the provisions of Section 4 hereof; (d) any UCC collection, exchange, sale, or other disposition of Personal Property Collateral constituting Foothill Collateral or Wells Fargo Cash Collateral by Federal shall be subject to the senior security interests, liens, or Rights of Offset of Foothill or Wells Fargo in such Personal Property Collateral; provided, however, that any amounts realized by Federal with respect to the collection, exchange, sale, or other disposition of its junior priority security interest, lien, or Right of Offset in Money, Accounts, General Intangibles constituting a right to payment of Money (other than the Wells Fargo Cash Collateral), and Negotiable Collateral shall be turned over to Foothill to be applied in reduction of the Foothill Claim or held by Foothill as cash collateral in accordance with the provisions of Section 4 hereof and, thereafter, to Wells Fargo to be applied in reduction of the Wells Fargo Claim or held by Wells Fargo as cash collateral in accordance with the provisions of Section 4 hereof; provided further, however, that any amounts realized by Federal with respect to the collection, exchange, sale, or other disposition of its junior priority security interest, lien, or Right of Offset in the Wells Fargo Cash Collateral shall be turned over to Wells Fargo to be applied in reduction of the Wells Fargo Claim or held by Wells Fargo as cash collateral in accordance with the provisions of Section 4 hereof and, thereafter, to Foothill to be applied in reduction of the Foothill Claim or held by Foothill as cash collateral in accordance with the provisions of Section 4 hereof; (e) any foreclosure sale of Real Property Collateral by Foothill, or any collection by Foothill of rents, issues, or profits that are part of the Real Property Collateral, shall be free and clear of the junior security interests or liens of Wells Fargo and Federal in such Real Property Collateral (provided that such security interests or liens of Wells Fargo and Federal shall attach, subject to the senior security interest or lien of Foothill, to the proceeds of any such collection or other disposition and any surplus, after the application of the proceeds in accordance with Section 4 hereof, shall be remitted to Wells Fargo and Federal, as applicable, in accordance with the provisions hereof); (f) any foreclosure sale of Real Property Collateral by Wells Fargo, or any collection by Wells Fargo of rents, issues, or profits that are part of the Real Property Collateral, shall be (i) free and clear of the junior security interests or liens of Federal in such Real Property Collateral (provided that such security interest or lien of Federal shall attach, subject to the senior security interests or liens of Foothill and Wells Fargo, to the proceeds of any such collection or other disposition and any surplus, after the application of the proceeds in accordance with Section 4 hereof, shall be remitted to Federal in accordance with the provisions hereof), and (ii) subject to the senior security interest or lien of Foothill in such Real Property Collateral; provided, however, that any amounts realized by Wells Fargo with respect to the collection of rents, issues, or profits that are part of the Real Property Collateral by Wells Fargo shall be turned over to Foothill to be applied in reduction of the Foothill Claim or held by Foothill as cash collateral in accordance with the provisions of Section 4 hereof; and (g) any foreclosure sale of Real Property Collateral by Federal, or any collection by Federal of rents, issues, or profits that are part of the Real Property Collateral, shall be subject to the senior security interests or liens of Foothill and Wells Fargo in such Real Property Collateral; provided, however, that any amounts realized by Federal with respect to the collection of rents, issues, or profits that are part of the Real Property Collateral by Federal shall be turned over to Foothill to be applied in reduction of the Foothill Claim or held by Foothill as cash collateral in accordance with the provisions of Section 4 hereof and, thereafter, to Wells Fargo to be applied in reduction of the Wells Fargo Claim or held by Wells Fargo as cash collateral in accordance with the provisions of Section 4 hereof. 21. Notices. All notices hereunder shall be effective upon receipt, shall be in writing, and shall be sent by U.S. mail, Federal Express overnight courier (or the equivalent), hand delivery by a reputable and reliable professional courier service, mailgram, telefacsimile, telegram, or telex as follows: If to Wells Fargo: WELLS FARGO BANK, N.A. 420 Montgomery Street San Francisco, CA 94163 Attn: Mr. Lenny Mason With a copy to: GIBSON, DUNN & CRUTCHER One Montgomery Street, 31st Floor San Francisco, CA 94104 Attn: Kathryn Coleman, Esq. If to Foothill: FOOTHILL CAPITAL CORPORATION 11111 Santa Monica Boulevard, Suite 1500 Los Angeles, CA 90025 Attn: Business Finance Division Manager With a copy to: BROBECK, PHLEGER & HARRISON 550 S. Hope Street, Suite 2100 Los Angeles, CA 90071 Attn: John Francis Hilson, Esq. If to Federal: FEDERAL INSURANCE COMPANY Surety Claims Department 15 Mountain View Road Warren, New Jersey 07061-1615 Attn: Walter J. Maxwell, Esq. With a copy to: SACKS MONTGOMERY, P.C. 800 Third Avenue New York, NY 10022 Attn: David E. Montgomery, Esq. The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other. The failure to send a copy of notice to the individuals who are shown above as being required to receive copies shall not invalidate or otherwise affect the validity of a notice that is otherwise effectively given. All notices or demands sent in accordance with this section shall be deemed received on the earlier of the date of actual receipt or five (5) Business Days after the deposit thereof in the mail. 22. No Benefit to Third Parties. The terms and provisions of this Agreement shall be for the sole benefit of Foothill, Federal, and Wells Fargo and their respective successors and assigns, and no other person (including Robertson-Ceco, any other Obligor, Acstar, or Reliance), firm, entity, or corporation shall have any right, benefit, priority, or interest under, or because of this Agreement. 23. Governing Law. This Agreement and all matters related hereto shall be governed as to validity, interpretation, enforcement, and effect by the laws of the State of California. 24. Further Assurances. The parties hereto agree to execute and deliver such other documents and to take such action as reasonably may be required to carry out the purposes and intent of this Agreement, including the execution of releases and termination statements. In this regard, Federal agrees, upon request from either Foothill or Wells Fargo, to execute and deliver intercreditor agreements with Acstar and Reliance to reflect the priorities in the Acstar Collateral and the Reliance Collateral as set forth in Section 4 hereof, such intercreditor agreements to be substantially identical to the Acstar Intercreditor Agreements and the Reliance Intercreditor Agreements, respectively. 25. Attorneys Fees. If any legal action or proceeding is brought by any party hereto to enforce or construe a provision of this Agreement, the unsuccessful party in such action or proceeding, irrespective of whether such action or proceeding is settled or prosecuted to final judgment, shall pay all of the reasonable attorneys fees and costs incurred by the prevailing party. 26. Modifications in Writing. No amendment, modification, supplement, termination, consent, or waiver of or to any provision of this Agreement nor any consent to any departure therefrom shall in any event be effective unless the same shall be in writing and signed by or on behalf of each of the Creditors. Any waiver of any provision of this Agreement, or any consent to any departure from the terms of any provisions of this Agreement, shall be effective only in the specific instance and for the specific purpose for which given. 27. Waivers; Failure or Delay. No failure or delay on the part of any Creditor in the exercise of any power, right, remedy, or privilege under this Agreement shall impair such power, right, remedy, or privilege or shall operate as a waiver thereof; nor shall any single or partial exercise of any such power, right, or privilege preclude any other or further exercise of any other power, right, or privilege. The waiver of any such right, power, remedy, or privilege with respect to particular facts and circumstances shall not be deemed to be a waiver with respect to other facts and circumstances. 28. Headings. Section headings used in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any purpose or affect the construction of this Agreement. 29. Severability of Provisions. Any provision of this Agreement which is illegal, invalid, prohibited, or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity, prohibition, or unenforceability without invalidating or impairing the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 30. Complete and Integrated Agreement. This Agreement is intended by the parties as a final expression of their agreement and is intended as a complete and integrated statement of the terms and conditions of their agreement. In this regard, upon the effectiveness of this Agreement, this Agreement shall supercede the terms and conditions of that certain Intercreditor Agreement, dated as of April 30, 1993, between Foothill and Wells Fargo. This Agreement shall not be modified except in a writing signed by the party to be charged, and may not be modified by conduct or oral agreements. 31. Successors and Assigns. This Agreement is binding upon and inures to the benefit of the successors and assigns of each Creditor. Each Creditor agrees to maintain a copy of this Agreement together with its copies of the Credit Documents relating to its Claims. Each Creditor expressly reserves its right to transfer or assign its Claims, in whole or in part, together with its rights hereunder, provided that, prior to transferring or assigning any interest in its Claims to any person or entity, each Creditor shall disclose to such person or entity the existence and contents of this Agreement, shall provide to such person or entity a complete and legible copy hereof, and shall advise such person or entity that such Creditor's interests in the Collateral is subject to the terms hereof. Each Creditor agrees that at the request of another Creditor, it shall enter into an agreement containing the same or substantially similar terms as are provided under this Agreement, with any person or entity that refinances or proposes to refinance the requesting Creditor's Claim. 32. Release of Collateral. Creditors agree that any Creditor may release or refrain from enforcing its security interest in any Collateral, or permit the use or consumption of such Collateral by Robertson-Ceco or any other Obligor, free of such Creditor's security interest, without incurring any liability to the other Creditors. The foregoing shall not, however, be deemed to affect the other Creditors' rights hereunder or to override or conflict with any covenant binding upon Robertson-Ceco, or the other Obligors, in the Foothill Agreements, the Federal Agreements, or the Wells Fargo Agreements. In the event of any sale or disposition by any Obligor of Collateral, Wells Fargo, Federal, and Foothill agree that the Creditor that holds the first lien on, the security interest in, or Right of Offset with respect to such Collateral shall be entitled to make the determination as to whether to release such Collateral in order to facilitate such sale or disposition. To the extent that Wells Fargo or Foothill, as applicable, determine to release its senior lien, security interest, or Right of Offset with respect to such item or items of Collateral, it shall provide written notice of such determination to the other Creditors whereupon such other Creditors shall be obligated to execute any and all documents reasonably required in order to release their junior liens, security interests, or Rights of Offset with respect to the subject item of Collateral (but not the proceeds of such sale or disposition). 33. Counterparts; Telecopy Execution. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, admissible into evidence, and all of which together shall be deemed to be a single instrument. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile shall also deliver a manually executed counterpart of this Agreement but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. 34. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO, AND EACH OF THEM, TO THE FULLEST EXTENT THEY MAY LEGALLY DO SO, HEREBY KNOWINGLY, EXPRESSLY, AND VOLUNTARILY WAIVE AND RELINQUISH ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE FULLEST EXTENT THEY MAY LEGALLY DO SO, SUCH PARTIES HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY. IN WITNESS WHEREOF, Wells Fargo, Federal, and Foothill have executed this Agreement as of the day and year first above written. FOOTHILL CAPITAL CORPORATION, a California corporation By_________________________________ Title:_______________________________ WELLS FARGO BANK, N.A., a national banking association By_________________________________ Title:_______________________________ FEDERAL INSURANCE COMPANY, a Indiana corporation By_________________________________ Title:_______________________________ ACKNOWLEDGEMENT, CONSENT AND AGREEMENT TO BE BOUND By executing this Agreement, Robertson-Ceco acknowledges and consents to this Agreement and agrees to be bound by the provisions hereof, as of the day and year first above written. Robertson-Ceco further agrees that the terms of this Agreement shall not give it any substantive rights vis-a-vis Wells Fargo, Federal, or Foothill. If Wells Fargo, Foothill, or Federal shall enforce their rights or remedies in violation of the terms of this Agreement, Robertson-Ceco agrees that it shall not have the right to assert such violation as a defense against Wells Fargo, Federal, or Foothill, as applicable, or assert such violation as a counterclaim or basis for set-off or recoupment. By its execution of this Agreement, to the maximum extent permitted by law, Robertson-Ceco expressly waives any right that it has under Section 952 of the California Financial Code. ROBERTSON-CECO CORPORATION, a Delaware corporation By_________________________________ Title:_______________________________ EX-10 7 EXHIBIT 10.21 INTERCREDITOR AGREEMENT This Intercreditor Agreement, dated as of November 18, 1993, is made between Foothill Capital Corporation ("Foothill") and ACSTAR Insurance Company ("Surety"), as surety under the Surety Agreement (as defined in Recital B below). RECITALS A. Robertson-CECO Corporation, a Delaware corporation ("Robertson"), and Foothill have entered into that certain Loan and Security Agreement dated as of April 12, 1993 (as the same may be amended, restated, modified or supplemented from time to time, the "Loan Agreement"), pursuant to which Foothill has agreed to make certain credit facilities available to Robertson, on the terms and conditions set forth therein. A copy of the Loan Agreement has been delivered to Surety. B. Surety has entered into that certain Indemnity Agreement, executed on October 26, 1993 (as the same may be amended, restated, modified or supplemented from time to time, the "Surety Agreement"), in favor of Surety, a copy of which is attached as Exhibit A hereto, pursuant to which Surety has agreed to entertain performance and surety bond ("Bonds") requests for the benefit of Robertson and its subsidiaries (collectively, "Company") in the ordinary course of its business to assure the performance by Company of its obligations to third parties under manufacturing, construction and related contracts (the "Bonded Contracts"). C. As security for the obligations of Robertson to Foothill under the Loan Agreement (the "Foothill Obligations"), Robertson has granted to Foothill a security interest in all accounts receivable, inventory, equipment, general intangibles, deposit accounts, cash, investments and other assets, and proceeds of the foregoing (the "Foothill Collateral"), as described in the Loan Agreement. The security interest in the Foothill Collateral is intended to be of first priority, except that the security interest in the portion of the Foothill Collateral that also constitutes Surety First Priority Collateral (as defined below) is intended to be of second priority. The Foothill Collateral other than the Surety First Priority Collateral is herein referred to as the "Foothill First Priority Collateral." D. As security for the obligations of Company to Surety under the Surety Agreement (the "Surety Obligations"), Company has granted to Surety a security interest in certain assets of Company particularly described in Paragraph 6 of the Surety Agreement (the "Surety Collateral"). The Surety Collateral includes all accounts receivable related to Bonded Contracts (the "Bonded Receivables") and contract rights related to the Bonded Receivables (collectively, with the Bonded Receivables, the "Surety First Priority Collateral"). The security interest in the Surety First Priority Collateral is intended to be of first priority, and the security interest in the remaining Surety Collateral is intended to be of second priority. The Loan Agreement and the Surety Agreement are collectively referred to herein as the "Security Documents." The Foothill Collateral and the Surety Collateral are collectively referred to herein as the "Collateral." E. Foothill and Surety desire to set forth their respective rights as regards the Collateral. Now, therefore, the parties hereto agree as follows: AGREEMENT 1. Definitions. As used herein, the term "Loss" shall mean all indemnifiable or reimbursable costs, expenses, liabilities and losses of Surety, pursuant to the Surety Agreement, and the terms "Business Day" and "Insolvency Proceeding" shall have the meanings set forth for such terms in the Loan Agreement. 2. Exercise of Rights under Security Documents. (a) Foothill shall be permitted and is hereby authorized to take any and all actions and to exercise any and all rights, remedies and options which it may have under the Loan Agreement with respect to the Foothill First Priority Collateral, or any part thereof, without objection or interference by Surety. (b) Surety shall be permitted and is hereby authorized to take any and all actions and to exercise any and all rights, remedies and options which Surety may have under the Surety Agreement with respect to the Surety First Priority Collateral, or any part thereof, without objection or interference by Foothill. (c) Notwithstanding the foregoing, Surety agrees that it shall not take any action or exercise any rights or enforce any remedies provided for in the Surety Agreement or available under applicable law to foreclose its security interest in the Surety First Priority Collateral, without having given at least 10 Business Days prior written notice to Foothill by certified mail, return receipt requested. (d) Foothill shall not take any action, exercise any rights, receive any payments, or avail itself of any remedies or options under the Loan Agreement or available under applicable law with respect to the Foothill Collateral which also constitutes Surety First Priority Collateral, or any part thereof, without the prior written consent of the Surety; provided that if Foothill shall have requested such consent from Surety by certified mail, return receipt requested, and Surety (i) has not responded to such request within 15 Business Days or (ii) has notified Foothill that it has refused to give such consent, but has not commenced proceedings to foreclose or otherwise exercise its rights, remedies or options with respect to the Surety Collateral within 30 Business Days following the initial request from Foothill, then Foothill shall be permitted and is hereby authorized to take any action or exercise any rights, remedies or options under the Loan Agreement with respect to the Surety First Priority Collateral, or any part thereof, without objection or interference by Surety. Any amounts received by Foothill in respect of Surety First Priority Collateral shall be segregated and held in trust for, and promptly paid over to, Surety. (e) Surety shall not take any action, exercise any rights, receive any payments, or avail itself of any remedies or options under the Security Agreement or available under applicable law with respect to Foothill First Priority Collateral prior to the termination of this Agreement in accordance with Section 9(c) hereof. Any amounts received by Surety in respect of Foothill First Priority Collateral shall be segregated and held in trust for, and promptly paid over to, Foothill. 3. Priority and Subordination. Each of Foothill and Surety agrees to take or cause to be taken such actions, including the filing of financing statements in the appropriate jurisdictions, to perfect their respective security interests in the Collateral. Foothill and Surety agree that, notwithstanding the order or time of perfection by Foothill and Surety of their respective security interests in the Collateral, the order of priority with respect to the Collateral as between them shall be as follows: (a) The lien and security interest of Foothill in the Surety First Priority Collateral under the Loan Agreement are and shall continue to be subject, subordinate and junior in all respects to the lien and security interest of Surety in the Surety First Priority Collateral under the Surety Agreement and any and all advances and future advances under the Surety Agreement, whether or not such advances or future advances are obligatory, and to all terms, covenants and conditions contained in the Surety Agreement applicable to the Surety First Priority Collateral. (b) The lien and security interest of Surety in the Foothill First Priority Collateral under the Surety Agreement are and shall continue to be subject, subordinate and junior in all respects to the lien and security interest of Foothill in the Foothill First Priority Collateral. (c) Surety has no interest, nor shall Surety request or obtain any interest, in any Collateral other than the Surety Collateral and letters of credit for account of the Company issued to Surety as beneficiary, as to which Foothill releases any interest therein. 4. Application of Proceeds of Collateral. (a) Any and all cash and other amounts received by Company in connection with a disposition of Collateral prior to any enforcement of the Security Documents by Surety or Foothill may, subject to the provisions of the Loan Agreement, be used by Company for general working capital purposes. (b) Any and all cash and other amounts actually received by Surety or Foothill in connection with the enforcement of the Security Documents after the occurrence and during the continuance of an Event of Default under the Loan Agreement or a default under the Surety Agreement, including the proceeds of any collection, foreclosure, sale or other disposition of the Collateral or any portion thereof (collectively, the "Proceeds") shall be promptly applied as follows: If the Proceeds relate to Collateral that is Foothill First Priority Collateral: first, to the reasonable costs and expenses (including reasonable attorneys' fees and disbursements) incurred by Foothill in connection with such collection, foreclosure, sale or other disposition; second, toward payment of the Foothill Obligations, in accordance with the Loan Agreement, until the Foothill Obligations shall have been paid in full; third, toward payment of any Loss; and fourth, to Company or whomsoever may be lawfully entitled thereto. If the Proceeds relate to Collateral that is Surety First Priority Collateral: first, to the reasonable costs and expenses (including reasonable attorneys' fees and disbursements) incurred by Surety in connection with such collection, foreclosure, sale or other disposition; second, toward payment of any Loss; third, toward payment of the Foothill Obligations, until the Foothill Obligations shall have been paid in full; and fourth, to Company or whomsoever may be lawfully entitled thereto. 5. Information. (a) Foothill agrees that it will notify Surety immediately (i) in the event it elects to terminate its commitments under the Loan Agreement, (ii) upon the occurrence of an Event of Default under, and as defined in, the Loan Agreement, and (iii) upon the exercise of any of its remedies after the occurrence of such Event of Default. (b) Surety agrees that it will notify Foothill immediately upon (i) its decision to cease to consider requests by Company for the issuance of any Bonds, (ii) the occurrence of any default under the Surety Agreement, and (iii) its decision to take possession or control of the work under any Bonded Contract in order to complete such Bonded Contract. (c) Each of Surety and Foothill agrees to cooperate fully with the other and to provide such information as the other may reasonably request in connection with any action taken to foreclose, collect, sell, dispose or otherwise take any other action with respect to the Collateral or any portion thereof or to enforce any provisions of the Security Documents or this Agreement. (d) Each of Surety and Foothill agrees promptly upon request to certify to the other from time to time the amount of Obligations outstanding under the Surety Agreement or the Loan Agreement, as the case may be, in connection with distribution of proceeds set forth in this Agreement. Any funds held by Surety which are to be distributed to Foothill in accordance with this Agreement shall be segregated and held in trust for, and promptly paid over to, Foothill. Any funds held by Foothill which are to be distributed to Surety in accordance with this Agreement shall be segregated and held in trust for, and promptly paid over to, Surety. The basis set forth in this Agreement for allocation and distribution of any such funds shall apply in the context of an Insolvency Proceeding filed by or against Company. (e) Neither Surety nor Foothill shall have any responsibility to provide the other with any credit, financial or other information concerning the business, financial condition or operations of Company or any of its affiliates which may come into its possession. (f) Neither Surety nor Foothill shall have any duty to keep itself informed as to the performance or observance of any of the Foothill Obligations or the Surety Obligations, as the case may be. 6. Use and Control of Bonded Contract Equipment. Foothill agrees that it shall not interfere with any right of Surety to: (a) use all of the tools and equipment belonging to Company employed in the performance of Bonded Contracts for duration of the performance of such Bonded Contract; provided that Surety shall maintain and preserve or cause to be maintained and preserved, in good order and repair, all such tools and equipment; and provided, further, that upon foreclosure by Foothill against the Foothill Collateral, any right of Surety to use such tools and equipment shall be subject to the payment by Surety to Foothill of a reasonable, fair market daily rent therefor; and (b) visit and inspect any of the properties of Company, including its and their books, records, drawings, blue prints, job logs, payment requests, sworn statements, checks and all other documents, computer tapes, discs or other electronically recorded data and all other tangible records pertaining to Bonded Contracts. 7. Purchase of Materials. Foothill agrees that if Foothill has then foreclosed against the Foothill Collateral, upon the occurrence of a default under the Surety Agreement, Surety may, upon 10 Business Days notice to Foothill, purchase from Foothill, and Foothill agrees to sell to Surety, such of the Collateral comprised of materials which are work-in-process or finished goods and which are necessary to enable Surety to complete work on a Bonded Contract; provided that Surety shall not be required to purchase from Foothill any materials which were previously sold by Company and for which payment was received by Company. Such materials shall be purchased for a price equal to the book value of such materials on the books and records of Company immediately prior to foreclosure by Foothill, which price shall be paid by Surety to Foothill, in immediately available funds, on the earlier of 90 days after Surety obtains possession of the materials or 15 days after the completion of the related Bonded Contract by the Surety or otherwise. 8. Amendment of Surety Agreement or Loan Agreement. No amendment to the Surety Agreement or the Loan Agreement, as the case may be, shall be effective without the written concurrence of Foothill or Surety, as the case may be, if the effect of such amendment is to materially adversely affect the interests of Foothill under the Loan Agreement or Surety under the Surety Agreement, as the case may be. 9. No Inconsistencies. Foothill, Surety and, by its acknowledgment below, Robertson (for itself and on behalf of its subsidiaries), agree that in the event of any inconsistency between any term or provision of this Agreement and any term or provision of the Surety Agreement or the Loan Agreement, this Agreement shall control. Without limiting the generality of the foregoing, Foothill, Surety and Robertson agree that the use of all tools and equipment shall be governed by Section 6 hereof. 10. Miscellaneous. (a) All notices, requests, demands, directions, and other communications provided for hereunder must be in writing and must be mailed, telegraphed, telecopied, delivered, or sent by telex, or cable to the appropriate party at the address set forth on the signature pages of this Agreement at any other address as may be designated by it in a written notice sent to all other parties hereto in accordance with this Section 10(a). Any notice, request, demand, direction, or other communication given by telegram, telecopier, telex, or cable must be confirmed within 48 hours by letter mailed or delivered to the appropriate party at its respective address. Except as otherwise expressly provided herein, if any notice, request, demand, direction, or other communication required or permitted by this Agreement is given by mail it will be effective on the earlier of receipt or the third calendar day after deposit in the United States mail with first class or airmail postage prepaid; if given by telegraph or cable, when delivered to the telegraph company with charges prepaid; if given by telex or telecopier, when received; or if given by personal delivery, when delivered. (b) This Agreement may be modified or waived only by an instrument or instruments in writing signed by each party including, with respect to Section 9 hereof only, Robertson. This Agreement shall be binding upon and inure to the benefit of Foothill, Surety and their respective successors and assigns. This Agreement may be executed in any number of counterparts and any party hereto may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which counterparts of this Agreement, taken together, will be deemed to be but one and the same instrument. The execution of this Agreement by any party hereto will not become effective until counterparts hereof have been executed by all such parties. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California. (c) This Agreement shall terminated upon the earlier to occur of the payment in full of the Foothill Obligations or Surety Obligations. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written. FOOTHILL CAPITAL CORPORATION By:________________________________ Its: ______________________________ Address: 11111 Santa Monica Boulevard Suite 1500 Los Angeles, CA 90025 Attn: Business Finance Division Manager ACSTAR INSURANCE COMPANY By:________________________________ Its:_______________________________ Address: 233 Main Street New Britain, CT 06050-2350 Attn: President Acknowledged and Agreed: ROBERTSON-CECO CORPORATION By:________________________________ Its:_______________________________ Address: 222 Berkeley Street Boston, MA 02116 Attn: Treasurer AMENDMENT TO INTERCREDITOR AGREEMENT This AMENDMENT TO INTERCREDITOR AGREEMENT (this "Amendment") is entered into as of April 17, 1994, by and between Foothill Capital Corporation ("Foothill") and ACSTAR Insurance Company ("Surety"), with reference to the following facts: A. Pursuant to that certain Intercreditor Agreement, dated as of November 18, 1993 (the "Agreement"), between Foothill and Surety, Foothill and Surety agreed to the relative priorities of their respective liens and security interests in the Collateral of Robertson-Ceco Corporation; and B. All capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Agreement. NOW, THEREFORE, in consideration of the mutual premises contained herein, Foothill and Surety hereby agree as follows: 1. Amendment to Agreement. Section 8 of the Agreement is hereby deleted in its entirety and the following is hereby substituted in lieu thereof: "8. Amendments to Surety Agreement or Loan Agreement. No Amendment to the Surety Agreement or the Loan Agreement, as the case may be, shall be effective without the written concurrence of Foothill or Surety, as the case may be, if the effect of such amendment is to materially adversely affect the interests of Foothill under the Loan Agreement or Surety under the Surety Agreement, as the case may be; provided, however, that any increase in the amount of the Surety Obligations or the Foothill Obligations (including, without limitation, any increase in the "Maximum Amount" (as defined in the Loan Agreement)), as the case may be, shall not be deemed to have a material adverse effect on the interests of Foothill under the Loan Agreement or Surety under the Surety Agreement, as the case may be." 2. Representations and Warranties. Each party hereto represents and warrants to the other party that (a) the execution, delivery, and performance of this Amendment and of the Agreement, as amended by this Amendment, are within its corporate powers, have been duly authorized by all necessary corporate action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental authority, or of the terms of its charter or bylaws, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected, and (b) this Amendment and the Agreement, as amended by this Amendment, constitute such party's legal, valid, and binding obligation, enforceable against such party in accordance with its terms. 3. Effect on Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its terms and is hereby ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment shall not operate as a waiver of or, except as expressly set forth herein, as an amendment, of any right, power, or remedy of the parties under the Agreement, as in effect prior to the date hereof. 4. Miscellaneous. a. Upon the effectiveness of this Amendment, each reference in the Agreement to "this Agreement", "this Intercreditor Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and refer to the Agreement as amended by this Amendment. b. This Amendment shall be governed by and construed in accordance with the laws of the State of California. c. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above. FOOTHILL CAPITAL CORPORATION By: _________________________________ Its: ___________________________ ACSTAR INSURANCE COMPANY By: _________________________________ Its: ___________________________ Acknowledged and Agreed: ROBERTSON-CECO CORPORATION By: _________________________________ Its: ___________________________ EX-10 8 EXHIBIT 10.43 Settlement Agreement This Settlement Agreement ("Agreement") is made this 3rd day of March, 1995, by and between Robertson-Ceco Corporation ("Robertson-Ceco") and Federal Insurance Company ("Federal"). WHEREAS, Robertson-Ceco is the successor entity resulting from a merger between H. H. Robertson Company and Ceco Industries, Inc. which occurred on or about November 8, 1990; and WHEREAS, Federal and H. H. Robertson Company had previously entered into a General Agreement of Indemnity on May 9, 1977, a copy of which is attached hereto as Exhibit A, which provided that bonds and other undertakings by Federal on behalf of H. H. Robertson Company would be subject to the terms and conditions contained therein; and WHEREAS, in August, 1986, pursuant to the General Agreement of Indemnity, Federal issued a Performance Bond ("the Performance Bond"), a copy of which is attached hereto as Exhibit B in the amount of $26,692,000 in favor of Tishman Construction Corporation ("Tishman") and Morgan Guaranty Trust Company ("Morgan") relating to a subcontract entered into between Tishman (as general contractor) and the Cupples Products Division of H. H. Robertson Company (as subcontractor) by which the Cupples Products Division of H.H. Robertson Company agreed to construct a curtain wall for the building which Tishman agreed to construct for Morgan at 60 Wall Street, New York, New York (the "Project"); and WHEREAS, litigation entitled Cupples Products Division of H.H. Robertson Company, Plaintiff -against- Morgan Guaranty Trust Company of New York, et al., Defendants has been filed in the New York State Supreme Court (New York County Clerk's Index Number 19448/90) by and between Robertson-Ceco (as the successor to H. H. Robertson Company), Tishman, Morgan, Federal and others concerning the performance of Robertson-Ceco's subcontract and the amounts allegedly due to or from Robertson-Ceco as the result of its performance pursuant to its subcontract, in which Robertson-Ceco has claimed damages from Tishman and Morgan in an amount in excess of $14 million, and concerning Federal's obligations with respect to amounts allegedly owed by Robertson-Ceco to Tishman and/or Morgan (the "New York Litigation"); and WHEREAS, the parties believe that Robertson-Ceco's losses of over $14 million were caused by the breaches of contract by Morgan and Tishman, and that Robertson-Ceco and Federal have meritorious defenses to Morgan's and Tishman's claims; and WHEREAS, on or about November 21, 1994, Federal filed a lawsuit in the United States District Court for the District of Massachusetts entitled Federal Insurance Company, Plaintiff -against- Robertson-Ceco Corporation, Defendant (Civil Action No. 94-12316-PBS), (the "Massachusetts Litigation"), alleging various claims relating to the obligations of Robertson-Ceco under or relating to, the General Agreement of Indemnity arising by virtue of Federal's execution of the Performance Bond; and WHEREAS, Federal has incurred extraordinary expenses in the form of attorney's fees, expert fees and fees expended to enforce the obligations of Robertson-Ceco under the General Agreement of Indemnity, and WHEREAS, Federal will continue to incur extraordinary expenses in the form of attorney's fees and expert fees necessary to prepare for and conduct the trial of the New York Litigation. WHEREAS, Robertson-Ceco for its own business reasons unrelated to the merit or lack thereof of Morgan's and Tishman's claims, wants to fix and limit its potential liability to Federal arising out of the New York Litigation. WHEREAS, the parties hereto desire to settle the Massachusetts Litigation and settle and compromise the respective rights, duties and obligations between Robertson-Ceco and Federal pursuant to the New York Litigation so as to relieve Robertson-Ceco of any further involvement, expense or potential liability with respect to the New York Litigation except as the consideration stated in the Agreement; NOW, THEREFORE, in consideration of the mutual promises set forth below, the sufficiency of which is mutually acknowledged by the parties hereto, the parties agree as follows: The Pettibone Note 1. Robertson-Ceco hereby represents that it has entered into an agreement with Pettibone Corporation ("Pettibone") for the sale of the Ceco Concrete Division of Robertson-Ceco and that as part of the consideration of that transaction, Pettibone will deliver to Robertson-Ceco a note made by Ceco Concrete Construction Corp., payment of which is guaranteed by Pettibone, in the amount of three million dollars ($3,000,000) (the "Pettibone Note") to be paid over three years bearing an interest rate of seven percent (7%) per annum. A copy of the form of the Pettibone Note is attached hereto as Exhibit C. Robertson-Ceco's Obligation 2. In addition to its other obligations, Robertson-Ceco, in consideration of the agreements of Federal contained herein, shall pay to Federal the sum of seven million ($7,000,000) dollars without interest, in twenty-eight consecutive quarterly installments of two hundred fifty thousand ($250,000) dollars. The first such payment shall be made three weeks after the Closing Date (as defined in Section 6 hereof) with subsequent payments every three months thereafter. Robertson-Ceco's Obligations at Closing 3. Subject to the terms and conditions of this Agreement and on the basis of the representations, warranties, covenants and agreements herein contained, on the Closing Date (as defined in Section 6) Robertson-Ceco shall: a. Assign and deliver to Federal the Pettibone Note together with the written consent, in form acceptable to counsel for Federal, by Ceco Concrete Construction Corp. and Pettibone to such assignment which further confirms that Pettibone's guarantee runs directly to Federal upon such assignment and delivery; b. Deliver to Federal a guarantee of the Pettibone Note in the form of a financial guarantee Insurance Policy issued by Asset Guaranty Insurance Company, securing the payment of all principal and interest of the Pettibone Note in accordance with the terms of the Pettibone Note, the premium for said policy having been fully paid for the full term of the Pettibone Note, said policy to be delivered in the form attached as Exhibit D; c. Deliver to Federal a Security Agreement in the form annexed as Exhibit E which grants to Federal a security interest in all of the assets of Robertson-Ceco subject only to the prior interest of Foothill Capital Corporation ("Foothill"), Wells Fargo Bank, ACSTAR Insurance Company, Reliance Insurance Company, United Pacific Insurance Company and Planet Insurance Company (the "R-C Secured Parties") in order to secure payment by Robertson-Ceco of the seven million dollars ($7,000,000) as set forth in Section 2 above; d. Deliver to Federal all financing statements and/or other documents required by Federal's counsel to perfect Federal's Security interest in Robertson-Ceco's assets pursuant to the Security Agreement; and e. Deliver to Federal a release in the form annexed as Exhibit F. f. Deliver to Federal documents signed by each of the R-C Secured Parties who have a security interest in the Pettibone Note releasing such security interest or other right which any of them may hold in the Pettibone Note. Federal's Obligations at Closing 4. Subject to the terms and conditions of this Agreement and on the basis of the representations, warranties, covenants and agreements herein contained, on the Closing Date (as defined in Section 6) Federal shall: a. Deliver to Robertson-Ceco a Limited Release in the form annexed as Exhibit G. Joint Obligations of Robertson-Ceco and Federal at Closing 5. At the Closing each of the parties by its attorneys will execute an Agreement for Judgment in the form annexed as Exhibit H allowing for the entry of judgment in the amount of $7,000,000 in the Massachusetts Litigation which shall then be given to Federal. Federal agrees (1) that it will file such Agreement for Judgment and obtain a judgment based upon such Agreement only in the event of a default by Robertson-Ceco of the sort described in Sections 12 and/or 24 hereof. Federal shall also concurrently furnish Robertson-Ceco with a satisfaction of judgment for the amount that Robertson-Ceco has paid of the $7,000,000 prior to the time that Federal files such Agreement for Judgment. Within ten (10) days after the Closing, Federal and Robertson-Ceco shall seek dismissal of the Massachusetts Litigation subject to the Court's retaining continuing jurisdiction to enter judgment for Federal pursuant to such Agreement for Judgment until such time that there has been receipt by Federal of full payment on the Pettibone Note and the $7,000,000 to be paid by Robertson-Ceco. Such dismissal shall further provide that each party is to bear its own fees and expenses with respect to the Massachusetts Litigation. The Closing 6. The closing (the "Closing") of the transaction contemplated by this Agreement will be held simultaneously with the closing of the transaction between Pettibone and Robertson-Ceco or at such other time or on such other date as shall be mutually agreed in writing by Federal and Robertson-Ceco (the "Closing Date"). The Closing shall take place at the offices of Sacks Montgomery, counsel for Federal, 800 Third Avenue, New York, New York 10022 or such other location as the parties may mutually agree upon. Representations and Warranties of Robertson-Ceco 7. Robertson-Ceco hereby represents and warrants to Federal as follows: a. Corporate Existence. Robertson-Ceco is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to conduct its business as it is now being conducted. b. Corporate Power and Authority. Robertson-Ceco has full corporate power and authority to enter into this Agreement, perform its obligations hereunder, and carry out the transactions contemplated hereby. The execution and delivery of this Agreement, the performance by Robertson-Ceco of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all corporate, shareholder and other actions on the part of Robertson-Ceco required by applicable law, its certificate of incorporation or by-laws, or otherwise. This Agreement constitutes the legal, valid and binding obligation of Robertson-Ceco, enforceable against it in accordance with its terms, except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. c. No Violation. Neither the execution and delivery of this Agreement nor the performance by Robertson-Ceco of its obligations hereunder nor the consummation of the transactions contemplated hereby will (i) contravene any provision of the certificate of incorporation or by-laws of Robertson-Ceco; (ii) violate, be in conflict with, constitute a default under, permit the termination of, cause the acceleration of the maturity of any debt or obligation of Robertson-Ceco under, constitute a breach of, create a loss of a material benefit under, or result in the creation or imposition of any Lien (as defined in Section 6(e)), upon any property or assets of Robertson-Ceco under any mortgage, indenture, lease, contract, agreement, instrument or commitment to which Robertson-Ceco is a party or by which it or any of its assets or properties, may be bound; or (iii) violate any statute or law or any judgment, decree, order, regulation or rule of any court or governmental authority to which Robertson-Ceco is subject or by which Robertson-Ceco or any of its assets or properties, are bound. d. Consents and Approvals of Governmental Authorities. Except as set forth in Schedule 1, no consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority is required to be made or obtained by or on behalf of Robertson-Ceco in connection with the execution, delivery or performance of this Agreement by Robertson-Ceco. e. Title to Properties; Encumbrances. Robertson-Ceco, as of the Closing, will have good and marketable title to the Pettibone Note which shall not be subject to any Lien. As of the Closing, Robertson-Ceco will have good and marketable title to its assets, other than the Pettibone Note, which shall not be subject to any Liens other than the security interest of the R-C Secured Parties. When used in this Agreement, "Lien" or "Liens" shall mean any mortgage, pledge, security interest, conditional sale or other title retention agreement, encumbrance, lien, easement, claim, right, covenant, restriction, right of way, warrant, option or charge of any kind, but excluding any of the foregoing on real property that does not materially adversely affect the business of Robertson-Ceco. f. Litigation. There are no actions or proceedings pending, or, to the best of Robertson-Ceco's knowledge, threatened, against Robertson-Ceco or Pettibone before any court, arbitrator or administrative governmental body which questions or challenges the validity of this Agreement or any action taken or proposed to be taken by Robertson-Ceco pursuant to this Agreement or in connection with the transactions contemplated hereby or the validity of the transaction with Pettibone whereby Robertson-Ceco is to acquire the Pettibone Note except as set forth on Schedule 2. g. Laws. By executing this Agreement and completing the transactions contemplated hereby Robertson-Ceco will not violate any State, Federal or Local statute, ordinance or regulation. h. Consideration. Robertson-Ceco confirms that Federal is defending, indemnifying and releasing Robertson-Ceco as specified in this Agreement in consideration for Robertson-Ceco's furnishing the Pettibone Note, making payment of $7,000,000 and carrying out its other obligations under this Agreement. Representations and Warranties of Federal 8. Federal hereby represents and warrants to Roberts-Ceco as follows: a. Corporate Existence. Federal is a corporation duly organized, validly existing and in good standing under the laws of the State of Indiana and has full corporate power and authority to conduct its business as it is now being conducted. b. Corporate Power and Authority. Federal has full corporate power and authority to enter into this Agreement, perform its obligations hereunder, and carry out the transactions contemplated hereby. The execution and delivery of this Agreement, the performance by Federal of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all corporate, shareholder and other actions on the part of Federal required by applicable law, its certificate of incorporation or by-laws, or otherwise. This Agreement constitutes the legal, valid and binding obligation of Federal, enforceable against it in accordance with its terms, except (i) as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. c. No Violation. Neither the execution and delivery of this Agreement nor the performance by Federal of its obligations hereunder nor the consummation of the transactions contemplated hereby will (i) contravene any provision of the certificate of incorporation or by-laws of Federal; (ii) violate any statute or law or any judgment, decree, order regulation or rule of any court or governmental authority to which Federal is subject or by which Federal or any of its assets or properties, are bound. d. Consents and Approvals of Governmental Authorities. Except as set forth in Schedule 1, no consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority is required to be made or obtained by or on behalf of Federal in connection with the execution, delivery or performance of this Agreement by Federal. e. Litigation. There are no actions or proceedings pending, or, to the best of Federal's knowledge, threatened, against Federal before any court, arbitrator or administrative governmental body which questions or challenges the validity of this Agreement or any action taken or proposed to be taken by Federal pursuant to this Agreement or in connection with the transactions contemplated hereby except as set forth on Schedule 2. f. Laws. By executing this Agreement and completing the transactions contemplated hereby Federal will not violate any State, Federal or Local statute, ordinance or regulation. g. Consideration. Federal confirms that Robertson-Ceco is making payment of $7,000,000 plus undertaking its other obligations hereunder in consideration for Federal's accepting the defenses of and liability for the New York Litigation and for carrying out its other obligations under this Agreement. Conditions to Federal's Obligations 9. Each and every obligation of Federal under this Agreement to be performed on or before the Closing Date shall be subject to the satisfaction,on or before the Closing Date, of each of the following conditions: a. Representations and Warranties True. The representations and warranties of Robertson-Ceco contained herein, in any Schedules and Exhibits hereto and in all certificates and other documents delivered by Robertson-Ceco to Federal pursuant hereto or in connection with the transactions contemplated hereby shall be in all material respects true and accurate as of the date of this Agreement and as of the Closing Date with the same effect as if made on and as of the Closing Date. b. Performance. Robertson-Ceco shall have performed and complied in all material respects with all agreements, obligations and conditions required by this Agreement to be performed or complied with by it on or prior to the Closing Date, including, without limitation, any referred to in this Section 9. c. Consents. All filings with and consents from government agencies and third parties required to consummate the transactions contemplated hereby shall have been obtained, except to the extent that Federal has waived the obtaining of any such consent by notifying Robertson-Ceco in writing at or prior to the Closing of such waiver. d. Transfer Instruments. Robertson-Ceco shall have delivered to Federal an assignment transferring to Federal the ownership of the Pettibone Note, its proceeds and the guarantee bond (referenced in section 3b. above) together with all other documents referred to in section 3 above. e. Certificates. Robertson-Ceco shall have furnished such certificates of its President or Vice President to evidence compliance with the conditions set forth in this Section 9 and any other certificates to evidence compliance with the conditions set forth in this Section as may be reasonably requested by Federal. f. Resolutions. Robertson-Ceco shall have furnished a copy of the resolutions adopted by the Board of Directors of Robertson-Ceco authorizing this Agreement and the transactions contemplated hereby, certified by a Secretary or Assistant Secretary. g. Absence of Litigation. There shall be no action or proceeding pending or threatened before any Federal, state or local court, governmental agency or regulatory body which seeks to invalidate or set aside, in whole or in part, this Agreement, to restrain, prohibit, invalidate or set aside, in whole or in part, the consummation of the transactions contemplated hereby or to obtain substantial damages in connection therewith. Conditions to Robertson-Ceco's obligations 10. Each and every obligation of Robertson-Ceco under this Agreement to be performed on or before the Closing Date shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions: a. Representations and Warranties True. The representations and warranties of Federal contained herein and in all certificates and other documents delivered by Federal to Robertson-Ceco pursuant hereto or in connection with the transactions contemplated hereby shall be in all material respects true and accurate as of the date of this Agreement and as of the Closing Date with the same effect as if made on and as of the Closing Date. b. Performance. Federal shall have performed and complied in all material respects with all agreements, obligations and conditions required by this Agreement to be performed or complied with by it on or prior to the Closing Date, including without limitation, any referred to in this Section 10. c. Consents. All filings with and consents from government agencies and third parties required to consummate the transactions contemplated hereby shall have been obtained, except to the extent that making any such filing or obtaining any such consent has been waived in writing by Robertson-Ceco. d. Certificates. Federal shall have furnished a certificate of its President or Vice President certifying compliance with the conditions set forth in this Section 10 and any other certificates to evidence compliance with the conditions set forth in this Section 10 as may be reasonably requested by Robertson-Ceco. e. Absence of Litigation. There shall be no action or proceeding pending or threatened before any Federal, state or local court, governmental agency or regulatory body which seeks to invalidate or set aside, in whole or in part, this Agreement, to restrain, prohibit, invalidate or set aside, in whole or in part, the consummation of the transactions contemplated hereby or to obtain substantial damages in connection therewith. Certain Post-Closing Covenants 11. Indemnity of Robertson-Ceco. Federal shall defend, indemnify, and hold harmless Robertson-Ceco, its officers, directors, employees, agents, predecessors, parent and/or subsidiaries from and against any and all claims pending in the New York Litigation as of the date of execution of this Agreement. Should any such claims give rise to a judgment against Robertson-Ceco or settlement requiring payment of money, Federal shall make such payment directly and shall not limit itself to reimbursing Robertson-Ceco. Nothing herein shall be construed as an obligation of Federal to defend, indemnify, hold harmless or reimburse Robertson-Ceco with respect to any other litigation other than the lawsuit defined as the New York Litigation on page 2 of this Agreement. Default by Robertson-Ceco, Acceleration of Payment 12. In the event that Robertson-Ceco (a) fails to make any payment as required by this Agreement and does not cure such failure to pay within ten (10) days after Federal gives Notice of such failure; (b) breaches the terms of this Agreement and fails to cure such breach within thirty (30) days after Federal gives Notice of such breach; or (c) is declared a bankrupt, makes an assignment for the benefit of creditors and/or seeks the protection of the bankruptcy laws; then, without limiting Federal's other rights or remedies, all payments remaining under the Robertson-Ceco Note shall become immediately due and payable. The Continuing New York Litigation 13. Upon the Closing, the parties shall do the following with regard to the New York Litigation: a. Robertson-Ceco will cause legal counsel currently representing it in the New York Litigation (Ross & Cohen) to cease all further work on behalf of Robertson-Ceco and to withdraw from the case unless Federal decides to retain such counsel. Federal may, but is not obligated to, retain counsel of its choice (including Ross & Cohen if it so desires) to appear on behalf of Robertson-Ceco in the New York Litigation. Subsequent to the Closing, Federal shall be responsible for the defense of Robertson-Ceco as to all of the claims asserted against Robertson-Ceco as of the Closing in the New York Litigation. Subsequent to the Closing, Federal shall also control the prosecution of Robertson-Ceco's affirmative claims in the New York Litigation which Federal may pursue or not as it desires. Robertson-Ceco agrees that the manner of prosecution of Robertson-Ceco's affirmative claims or the lack of such prosecution and the settlement of such claims by Federal is at Federal's sole discretion and Robertson-Ceco shall make no claim against Federal of any sort due to any such action or omission to act by Federal. b. Robertson-Ceco shall cooperate fully with Federal with respect to the defense, prosecution, trial and/or settlement of the New York Litigation. Robertson-Ceco shall promptly make available to Federal, upon request, all documents and/or personnel which Federal believes are necessary for its defense and/or prosecution of the New York Litigation. Robertson-Ceco shall promptly sign all documents presented to it by Federal necessary in connection with the settlement, defense, prosecution and/or trial of the New York Litigation. c. Robertson-Ceco shall cooperate with Federal to assist Federal in obtaining the services of Michael Stoecker to assist Federal in the preparation for trial of the New York Litigation. Federal shall be responsible for any compensation to Mr. Stoecker. d. Federal shall have the sole discretion as to any settlement to be made on behalf of Robertson-Ceco, it being expressly agreed that Federal shall be solely responsible for paying any settlement, judgment and/or lien which may be made, executed or entered on or against Robertson-Ceco resulting from the claims pending in the New York Litigation as of the Closing to the extent that it exceeds any affirmative recovery by Robertson-Ceco in the New York Litigation. e. Federal shall pay all attorneys fees, costs and expenses incurred by Sacks Montgomery relating to the New York Litigation, regardless of whether such fees, costs or expenses were incurred prior to or subsequent to the execution of this Agreement. Robertson-Ceco shall have no liability for any fees or expenses of Sacks Montgomery and Federal shall not seek reimbursement or indemnification therefor from Robertson-Ceco. f. Federal shall have no liability for the attorneys fees, costs and expenses incurred by Ross & Cohen relating to the New York Litigation except in the event that Federal chooses to retain Ross & Cohen, in which case Federal shall be liable for Ross & Cohen's fees and expenses incurred thereafter. Survival of Representations and Warranties 14. Notwithstanding (a) the making of this Agreement, (b) any examination made by or on behalf of the parties hereto and (c) the Closing hereunder, the representations and warranties of Robertson-Ceco and Federal contained in this Agreement, or in any document delivered pursuant to the provisions of this Agreement, as well as the Closing, the covenants and agreements required to be performed after the Closing or as conditions to the Closing (unless noncompliance with those covenants was waived in writing at the Closing) are neither waived by nor merged into the Closing. Amendment; Waiver 15. Neither this Agreement, nor any of the terms or provisions hereof, may be amended, modified, supplemented or waived, except by a written instrument signed by the parties hereto (or, in the case of a waiver, by the party granting such waiver). No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. No failure of either party hereto to insist upon strict compliance by the other party with any obligation, covenant, agreement or condition contained in this Agreement shall operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 15. Notices 16. (a) All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing (including telefax, telegraphic, telex or cable communication) and mailed, telefaxed, telegraphed, telexed, cabled or delivered: (i) If to Federal, to: Federal Insurance Company Surety Claims Department 15 Mountain View Road P.O. Box 1615 Warren, New Jersey 07061-1615 Attn.: Walter J. Maxwell, Esq. with a copy to: Sacks Montgomery, P.C. 800 Third Avenue New York, NY 10022 Attn.: David E. Montgomery, Esq. (ii) If to Robertson-Ceco to: Robertson-Ceco 222 Berkeley Street Boston, Massachusetts 02116 Attn.: George Pultz, General Counsel with a copy to: McDermott, Will & Emery 75 State Street Boston, Massachusetts 02109 Attn.: Cornelius Chapman, Jr., Esq. (b) All notices and other communications required or permitted under this Agreement which are addressed as provided in this Section (i) if delivered personally against proper receipt or by confirmed telefax or telex, shall be effective upon delivery and (ii) if delivered (A) by certified or registered mail with postage prepaid, (B) by Federal Express or similar courier service with courier fees paid by the sender or (C) by telegraph or cable, shall be effective two business days following the date when mailed, couriered, telegraphed or cabled, as the case may be. Either party may from time to time change its address for the purpose of notices to that party by a similar notice specifying a new address, but no such change shall be deemed to have been given until it is actually received by the party sought to be charged with its contents. Assignment; Assumption 17. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by the parties hereto without the prior written consent of the other party. Any assignment which contravenes this Section 17 shall be void ab initio. Absent the prior written consent of Federal, Robertson-Ceco may not transfer its obligation to make payments of the amounts due under this Agreement to anyone. Should Robertson-Ceco attempt to have another entity assume the obligation for payment under this Agreement, such assumption will obligate the entity attempting to assume such obligation, but it will not release Robertson-Ceco from its said obligation; Robertson-Ceco and the said entity shall thereafter be jointly and severally liable to Federal for the payments due under the terms of this Agreement. Governing Law 18. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the conflicts of laws principles thereof. Counterparts 19. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Headings 20. The headings contained in this Agreement are for convenience of reference only and shall not constitute a part hereof or define, limit or otherwise affect the meaning of any of the terms or provisions hereof. Entire Agreement 21. This Agreement (which defined term includes the Schedules and Exhibits to this Agreement) embodies the entire agreement and understanding among the parties hereto with respect to the subject matter of this Agreement and supersedes all prior agreements, commitments, arrangements, negotiations or understandings, whether oral or written, between the parties with respect thereto. There are no agreements, covenants, undertakings, representations or warranties with respect to the subject matters of this Agreement other than those expressly set forth or referred to herein. Nevertheless, except as the rights of Federal have been expressly limited with regard to the claims asserted in the New York Litigation as of the Closing Date, the General Agreement of Indemnity remains in full force and effect. Severability 22. Each term and provision of this Agreement constitutes a separate and distinct undertaking, covenant, term and/or provision hereof. In the event that any term or provision of this Agreement shall be determined to be unenforceable, invalid or illegal in any respect, such unenforceability, invalidity or illegality shall not affect any other term or provision of this Agreement, but this Agreement shall be construed as if such unenforceable, invalid or illegal term or provision had never been contained herein. Moreover, if any term or provision of this Agreement shall for any reason be held to be excessively broad as to time, duration, activity or subject, it shall be construed, by limiting and reducing it, so as to be enforceable to the extent permitted under applicable law as it shall then exist. No Third Party Beneficiaries 23. Except as expressly stated, nothing in this Agreement is intended, nor shall anything in this Agreement be construed, to confer any rights, legal or equitable, in any Person other than the parties hereto and their respective successors and assigns. Change of Control 24. Federal is entering into this Agreement in reliance, inter alia, upon the good faith intentions of the shareholders of Robertson-Ceco to pay the amounts due under this Agreement. Thus, Robertson-Ceco (a) shall have at least 30% of the ownership of the stock of Robertson-Ceco being held by Andrew Sage and Michael Heisley and (b) shall have as its chief executive officer and/or chairman of the board either Andrew Sage, Michael Heisley or both. Failure by Robertson-Ceco to maintain such stock ownership and executive officers shall constitute a material default by Robertson-Ceco under this Agreement which shall entitle Federal to immediate payment by Robertson-Ceco of all amounts remaining unpaid under this Agreement. No Admission 25. This agreement reflects a settlement and compromise of the rights and obligations between Robertson-Ceco and Federal, undertaken for their own business reasons. Nothing contained herein is intended to be nor shall it be construed to constitute an admission by the parties hereto as to the validity of any claims advanced by Morgan and Tishman in the New York Litigation. Confidentiality 26. This Agreement is intended to settle fully the Massachusetts Litigation. The terms of this Agreement are intended to be confidential, however. As a result, the parties each agree not to disclose the terms of this Agreement or even its existence except as is required by law. Further, should it be required that this Agreement be filed with the Court, then the parties shall jointly apply to the Court in the Massachusetts Litigation for an order that this Agreement be filed with such Court under seal and that the parties keep its terms confidential except to the extent that the law requires disclosure. The parties shall jointly apply to the Court in the Massachusetts Ligitation for an order that the papers heretofore filed therein be placed under seal. Miscellaneous 27. The persons executing this Agreement in behalf of the parties hereto are duly authorized to execute, acknowledge and deliver this Agreement. Time is of the essence of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. Robertson-Ceco Corporation By:_______________________________ Name: Title: Federal Insurance Company By:_______________________________ Name: Title: EX-11 9 EXHIBIT 11 ROBERTSON-CECO CORPORATION COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE ----------------------------------------------- (Thousands, except per share amounts) (Unaudited)
YEAR ENDED DECEMBER 31 ---------------------------------- 1992 1993 1994 ---- ---- ---- PRIMARY: Income (loss) from continuing operations . . . . . . . . . $(62,601) $(27,235) $(18,949) Less dividends on preferred stock . . . . 169 112 - -------- -------- -------- Primary income (loss) from continuing operations. . . . . . . . . . (62,770) (27,347) (18,949) (Loss) from discontinued operations . . . (8,544) 2,132 (2,811) Income (loss) from extraordinary items. . - 5,367 - Income (loss) from Cumulative effect of accounting change. . . . . - (1,200) - -------- -------- -------- Total primary earnings (loss) . $(71,314) $(21,048) $(21,760) ======== ======== ======== Average number common shares outstanding . . . . 880 6,217 15,808 -------- -------- -------- Total Shares. . . . 880 6,217 15,808 ======== ======== ======== Primary earnings (loss) per common share from continuing operations. . . . $ (71.30)$ (4.40) $ (1.20) Primary earnings (loss) per common share from discontinued operations. . . (9.70) .35 (.18) Primary earnings (loss) per common share from extraordinary item . . . . . - .86 - Primary earnings (loss) from cumulative effect of accounting change. . - (.20) - -------- -------- -------- Primary earnings (loss) per common share. . . . $ (81.00)$ (3.39) $ (1.38) ======== ======== ========
EX-11 10 EXHIBIT 11 (Continued) ROBERTSON-CECO CORPORATION COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE ----------------------------------------------- (Thousands, except per share amounts) (Unaudited)
YEAR ENDED DECEMBER 31 ---------------------------------- 1992 1993 1994 ---- ---- ---- FULLY DILUTED: Income (loss) from continuing operations. . . . . $(62,601) $(27,235) $(18,949) Less dividends on preferred stock . . . . 169 112 - -------- -------- -------- Fully diluted income (loss) from continuing operations . . . . (62,770) (27,347) (18,949) (Loss) from discontinued operations . . . (8,544) 2,132 (2,811) Income (loss) from extraordinary items. . - 5,367 - Income (loss) from cumulative effect of accounting change. . . . . - (1,200) - -------- -------- -------- Total fully diluted earnings (loss). . . . . . . . $(71,314) $(21,048) $(21,760) ======== ======== ======== Average number common shares outstanding . . . . 880 6,217 15,808 -------- -------- -------- Total number common shares, assuming full dilution . . 880 6,217 15,808 ======== ======== ======== Fully diluted earnings (loss) per common share from continuing operations. . . . . $ (71.30) $ (4.40) $ (1.20) Fully diluted earnings (loss) per common share from discontinued operations. . . . . (9.70) .35 (.18) Fully diluted earnings (loss) per common share from extraordinary item. . . - .86 - Fully diluted earnings (loss) from cumulative effect of accounting change. . . . . . . - (.20) - -------- -------- -------- Fully diluted earnings (loss) per common share. . . . $ (81.00)$ (3.39) $ (1.38) ======== ======== ========
EX-21 11 EXHIBIT 21 ROBERTSON-CECO CORPORATION SUBSIDIARIES OF THE REGISTRANT DECEMBER 31, 1993 ------------------------------------------------------------------------------ JURISDICTION COMPANY OF INCORPORATION ------------------------------------------------------------------------------ Subsidiaries of the registrant included in the respective consolidated financial statements: DOMESTIC Ceco Dallas Co. Texas Ceco Houston Co. Texas Ceco San Antonio Co. Texas Kroy Manufacturing Co. Delaware RHH Industries, Inc. Delaware Quantum Constructors, Inc. Delaware M C Durham Co. North Carolina M C Windsor Co. Arkansas Meyerland Co. Colorado Robertson-Ceco Industries, Inc. Delaware Robertson-Ceco Enterprises, Inc. Delaware RPM Erectors, Inc. California FOREIGN H. H. Robertson, Inc. Ontario H. H. Robertson Asia/Pacific Pte. Ltd. Singapore H. H. Robertson (Australia) Pty Ltd Australia H. H. Robertson Hong Kong Ltd. Hong Kong H. H. Robertson Singapore Pte Ltd Singapore Robertson Nederland B.V. (a) Holland Robertson Espanola S.A. (a) Spain Robertson Nordisk A/S (a) Norway Unlisted subsidiaries, considered in the aggregate, do not constitute a significant subsidiary. (a) During the third quarter of 1994, the Registrant decided to exit its European Operations (see Note 2 to the Consolidated Financial Statements). EX-23 12 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33-41371 and 33-51665 of Robertson-Ceco Corporation on Form S-8 of our report dated February 25, 1993 (May 3, 1993 as to Note 10) (which includes an explanatory paragraph with respect to a substantial doubt about the ability of the Company to continue as a going concern), appearing in this Annual Report on Form 10-K of Robertson-Ceco Corporation for the year ended December 31, 1994. /s/ Deloitte & Touche Deloitte & Touche LLP Boston, Massachusetts March 27, 1995 EX-23 13 EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-41371 and 33-51665) of Robertson-Ceco Corporation of our report dated March 15, 1995 appearing on page 58 of the Annual Report on Form 10-K for the year ended December 31, 1994. We also consent to the incorporation by reference of our report on the Financial Statement Schedules, which appears on page 66 of this Form 10-K. /s/ Price Waterhouse LLP Price Waterhouse LLP Boston, Massachusetts March 28, 1995 EX-27 14
5 1,000 YEAR DEC-31-1994 DEC-31-1994 7890 0 18968 (1143) 4664 76295 39927 (17332) 137400 66469 43421 161 0 0 (35854) 137400 276987 309355 234566 312846 10568 0 4634 (18693) 256 (18949) (2811) 0 0 (21760) (1.38) (1.38)