<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended APRIL 2, 1995
-------------
Commission File Number 1-7484
------
EKCO GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-2167167
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
98 SPIT BROOK ROAD, NASHUA, NEW HAMPSHIRE 03062
--------------------------------------------------
(Address of principal executive offices) (Zip Code)
(603) 888-1212
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
As of May 11, 1995, there were issued and outstanding 18,332,104 shares of
common stock of the registrant.
1
<PAGE> 2
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
APRIL 2, JANUARY 1,
1995 1995
------- ---------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 185 $ 129
Accounts receivable, net 36,345 46,030
Inventories 54,291 48,242
Prepaid expenses and other current assets 6,146 6,296
Deferred income taxes 7,344 7,330
Investment pledged as collateral - 3,600
-------- --------
Total current assets 104,311 111,627
Property and equipment, net 53,398 52,361
Property held for sale or lease, net 7,222 7,373
Other assets 5,529 5,440
Excess of cost over fair value of net assets
acquired, net 139,873 140,982
-------- --------
Total assets $310,333 $317,783
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable $ - $ 3,643
Current portion of long-term obligations 95 36
Accounts payable 17,776 15,652
Accrued expenses 26,792 27,843
Income taxes 3,093 3,944
-------- --------
Total current liabilities 47,756 51,118
-------- --------
Long-term obligations, less current portion 98,181 102,580
-------- --------
Other long-term liabilities 9,523 9,375
-------- --------
7% Convertible Subordinated Note 22,000 22,000
-------- --------
Series B ESOP Convertible Preferred Stock, net;
outstanding 1,568 shares
redeemable at $3.61 per share 3,264 3,096
-------- --------
Commitments and contingencies - -
Minority interest 498 498
-------- --------
Stockholders' equity
Common stock, $.01 par value; outstanding
April 2, 1995, 18,317 shares; outstanding
January 1, 1995, 18,069 shares 183 181
Capital in excess of par value 106,903 105,448
Cumulative translation adjustment 766 771
Retained earnings 26,935 27,172
Unearned compensation (4,188) (2,968)
Pension liability adjustment (1,488) (1,488)
-------- --------
129,111 129,116
-------- --------
Total liabilities and stockholders' equity $310,333 $317,783
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 3
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 2, 1995 AND APRIL 3, 1994
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net revenues $58,732 $54,354
------- -------
Costs and expenses
Cost of sales 40,725 36,608
Selling, general and administrative 13,285 11,686
Amortization of excess of cost over fair value 1,109 1,110
------- -------
55,119 49,404
------- -------
Income before interest and income taxes 3,613 4,950
------- -------
Net interest expense
Interest expense 3,433 3,194
Investment income (75) (93)
------- -------
3,358 3,101
------- -------
Income before income taxes 255 1,849
Income taxes 121 870
------- -------
Net income $ 134 $ 979
======= =======
Net income per share $.01 $.05
==== ====
Weighted average number of shares used in
computation of per share data 20,224 20,068
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 2, 1995 AND APRIL 3, 1994
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $ 134 $ 979
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 2,466 2,390
Amortization of intangible assets 2,651 1,931
Other 151 45
Change in certain assets and liabilities, affecting
cash provided by (used in) operations:
Accounts receivable 9,826 4,629
Inventories (6,052) (345)
Other assets (1,454) (870)
Accounts payable and accrued expenses 808 (2,725)
Income taxes payable (851) 407
-------- --------
Net cash provided by operations 7,679 6,441
-------- --------
Cash flows from investing activities
Proceeds from sale of property, equipment and
product line - 4,353
Capital expenditures (3,009) (2,022)
-------- --------
Net cash provided by (used in) investing
activities (3,009) 2,331
-------- --------
Cash flows from financing activities
Proceeds from issuance of notes payable and
long-term obligations 5,820 16,048
Investment held as collateral 3,600 -
Dividends (371) -
Issuance of stock under stock option and purchase plans 145 142
Payment of notes and long-term obligations (13,792) (25,119)
Other (17) -
-------- --------
Net cash used in financing activities (4,615) (8,929)
Effect of exchange rate changes on cash 1 40
-------- --------
Net increase (decrease) in cash and cash equivalents 56 (117)
Cash and cash equivalents at beginning of year 129 327
-------- --------
Cash and cash equivalents at end of period $ 185 $ 210
======== =======
Cash paid during the period for
Interest $ 978 $ 717
Income taxes 726 435
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION AND OTHER MATTERS
The consolidated condensed financial statements included herein have
been prepared by Ekco Group, Inc. (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is believed,
however, that the disclosures are adequate to make the information presented
not misleading. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K. The consolidated
condensed financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. The condensed financial statements, in the opinion of management,
reflect all adjustments necessary to fairly state the Company's financial
position and the results of its operations. Such adjustments are of a normal
recurring nature.
A large part of the Company's business is seasonal. Historically,
revenues in the last half of the calendar year have been greater than revenues
in the first half of the year. Accordingly, the results for the entire year
may not necessarily be the product of annualizing results for any interim
period.
<TABLE>
(2) ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:
<CAPTION>
APRIL 2, 1995 JANUARY 1, 1995
------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accounts receivable $37,925 $47,769
Allowance for doubtful accounts (1,580) (1,739)
------- -------
$36,345 $46,030
======= =======
</TABLE>
<TABLE>
(3) INVENTORIES
The components of inventory were as follows:
<CAPTION>
APRIL 2, 1995 JANUARY 1, 1995
------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Raw materials $15,204 $15,229
Work in process 4,671 4,047
Finished goods 34,416 28,966
------- -------
$54,291 $48,242
======= =======
</TABLE>
5
<PAGE> 6
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
<TABLE>
(4) PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
<CAPTION>
APRIL 2, 1995 JANUARY 1, 1995
------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Property and equipment at cost
Land, buildings and improvements $22,267 $22,261
Equipment, factory and other 63,100 59,839
------- -------
85,367 82,100
Less accumulated depreciation 31,969 29,739
------- -------
$53,398 $52,361
======= =======
</TABLE>
(5) EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET
<TABLE>
Excess of cost over fair value of net assets acquired consisted of the following:
<CAPTION>
APRIL 2, 1995 JANUARY 1, 1995
------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Excess of cost over fair value of
net assets acquired $164,272 $164,272
Accumulated amortization (24,399) (23,290)
-------- --------
$139,873 $140,982
======== ========
</TABLE>
(6) INCOME TAXES
The Company's effective tax rate as reported in its latest annual
report on Form 10-K was 46% for the year ended January 1, 1995 ("Fiscal 1994").
The difference between the Company's effective tax rate of 47% for the three
months ended April 2, 1995 and the Fiscal 1994 rate results primarily from
amortization of excess of cost over fair value of net assets acquired becoming
a higher percentage of earnings before income taxes.
(7) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES
<TABLE>
Long-term obligations consisted of the following:
<CAPTION>
APRIL 2, 1995 JANUARY 1, 1995
------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Group Credit Facility $38,131 (a) $ 42,424 (a)
12.70% Notes, due 1998 60,000 60,000
Other 145 192
------- --------
98,276 102,616
Less current portion 95 36
------- --------
$98,181 $102,580
======= ========
7% Convertible Subordinated Note,
due 2002 $22,000 $ 22,000
======= ========
</TABLE>
6
<PAGE> 7
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(7) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES (CONTINUED)
<TABLE>
Other long-term liabilities consisted of the following:
<CAPTION>
APRIL 2, 1995 JANUARY 1, 1995
------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accrued pension cost $1,450 $1,408
Deferred income taxes 1,027 948
Other long-term liabilities 7,046 7,019
------ ------
$9,523 $9,375
====== ======
</TABLE>
<TABLE>
(a) Borrowings which were refinanced under the Group Credit Facility:
<S> <C> <C>
Frem Credit Agreement $ - $ 5,896
Housewares Credit Agreement 10,064 14,305
Group Credit Line 28,067 22,223
------- -------
$38,131 $42,424
======= =======
</TABLE>
On April 11, 1995, the Company entered into a $75 million bank credit
agreement (the "Group Credit Facility") which provides lines of credit for each
of the Company ($30 million), Ekco Housewares, Inc. ("Housewares") ($35 million)
and Frem Corporation ("Frem") ($10 million). The proceeds from the Group Credit
Facility were used to retire loans under the Housewares Credit Agreement and the
Group Credit Line and, consequently, all amounts due under these agreements have
been classified as long-term. The remaining line ($36.9 million as of April 2,
1995) is available for general corporate purposes. The facility will mature on
December 1, 1998.
Loans under the Group Credit Facility bear interest ranging from the
bank's prime rate to the prime rate plus 0.25% or the LIBOR rate plus 1.25% to
1.75%, depending on the Company's borrowing strategy and the ratio of total debt
to cash flow (as defined). The Group Credit Facility provides for a commitment
fee of three-eighths of one percent on the unused portion of the commitment
amount and a $60,000 annual agency fee.
Borrowings under the Group Credit Facility are collateralized by
substantially all of the tangible assets of the Company. The Group Credit
Facility contains certain financial and operating covenants. The most
restrictive covenant requires the Company to maintain a minimum level of cash
flow.
(8) SERIES B ESOP CONVERTIBLE PREFERRED STOCK
<TABLE>
Series B ESOP Convertible Preferred Stock, net, consisted of the following:
<CAPTION>
APRIL 2, 1995 JANUARY 1, 1995
------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Series B ESOP Convertible Preferred
Stock, par value $.01, redeemable at
$3.61 per share $ 5,662 $ 5,662
Unearned compensation (2,398) (2,566)
------- -------
$ 3,264 $ 3,096
======= =======
</TABLE>
7
<PAGE> 8
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(9) COMMON STOCK, $.01 PAR VALUE
<TABLE>
Share information regarding common stock consisted of the following:
<CAPTION>
APRIL 2, 1995 JANUARY 1, 1995
------------- ---------------
<S> <C> <C>
Authorized shares 60,000,000 60,000,000
========== ==========
Shares issued 27,555,126 27,292,641
Shares held in treasury 9,238,600 9,223,600
---------- ----------
18,316,526 18,069,041
========== ==========
</TABLE>
(10) NET INCOME PER COMMON SHARE
<TABLE>
Primary earnings per common share are based upon the weighted average of common stock and dilutive common stock equivalent
shares outstanding during each period. Fully diluted earnings per share have been omitted since they are either the same as primary
earnings per share or anti-dilutive. The weighted average number of shares used in computation of earnings per share consisted of
the following for the periods presented:
<CAPTION>
THREE MONTHS ENDED
------------------
APRIL 2, 1995 APRIL 3, 1994
------------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Weighted average shares of common
stock outstanding during the period 18,204 17,848
Series B ESOP Convertible Preferred
Stock 1,568 1,640
Weighted average common equivalent
shares due to stock options 452 580
------ ------
20,224 20,068
====== ======
</TABLE>
(11) CONTINGENCIES
LEGAL PROCEEDINGS
The Company is a party to several pending legal proceedings and
claims. Although the outcome of such proceedings and claims cannot be
determined with certainty, the Company's management is of the opinion that the
expected final outcome should not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
ENVIRONMENTAL MATTERS
From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters relating to
the generation or handling of hazardous substances by the Company or its
predecessors and has incurred obligations for investigations or remedial
actions with respect to certain of such matters. While the Company does not
believe that any such claims asserted or obligations incurred to date will
result in a material adverse effect upon the Company's financial position,
results of operations or liquidity, the Company is aware that at its facilities
in Massillon and Hamilton, Ohio, Easthampton, Massachusetts, Hudson,
8
<PAGE> 9
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
ENVIRONMENTAL MATTERS (CONTINUED)
New Hampshire, and Lititz, Pennsylvania, hazardous substances and oil have been
detected and that additional investigation will be, and remedial action will or
may be, required. Operations at these and other facilities currently or
previously owned or leased by the Company utilize, or in the past have
utilized, hazardous substances. There can be no assurance that activities at
these or any other facilities owned or operated by the Company or future
facilities may not result in additional environmental claims being asserted
against the Company or additional investigations or remedial actions being
required.
In connection with the acquisition of Kellogg Brush Manufacturing Co.
and subsidiaries ("Kellogg") by the Company in 1993, the Company engaged
environmental engineering consultants ("Consultants") to review potential
environmental liabilities at all of Kellogg's properties. Such additional
investigation and testing resulted in the identification of likely
environmental remedial actions, operation, maintenance and ground water
monitoring and the estimated costs thereof. Based upon the cost estimates
provided by the Consultants, the Company believes remediation costs will be
approximately $1.6 million and the expense for the ongoing operation,
maintenance and ground water monitoring will be $181,000 for the first ten
years and $116,000 for 20 years thereafter. Management believes that the total
amount of these liabilities is approximately $6 million, including the effects
of inflation. Accordingly, the Company has recorded a liability of
approximately $3.6 million. This amount represents the undiscounted costs of
remediation and the net present value of future operation, maintenance and
ground water monitoring costs discounted at 6%. The Company expects to pay
approximately $1.3 million of the remediation costs in the current year
("Fiscal 1995") with the balance being paid out in fiscal years 1996 and 1997.
During the first quarter of Fiscal 1995, the Company paid approximately $62,000
of such costs. These estimates may subsequently change if additional sites are
identified or further remediation measures are required or undertaken or the
interpretation of current laws or regulations are modified. The Company has
not anticipated any insurance proceeds or third-party payments in arriving at
the above estimates.
9
<PAGE> 10
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated results of
operations for the thirteen week periods ended April 2, 1995 (the First Quarter
of Fiscal 1995) and April 3, 1994 (the First Quarter of Fiscal 1994) and the
financial condition at April 2, 1995 should be read in conjunction with the
Company's Consolidated Condensed Financial Statements and Notes thereto.
Because of the seasonality of the Company's revenues, which have historically
been concentrated in the second half of its fiscal year, the results of
operations and the balance sheet for, or as of, the end of any interim period
may not be indicative of either a full year's operations or the financial
condition of the Company at the end of any fiscal year.
NET REVENUES
Net revenues for the First Quarter of Fiscal 1995 increased
approximately $4.4 million (8%) from the comparable prior year period. The
increase was primarily due to the introduction of new products ($1.5 million)
(primarily from the Company's plastic products), price increases ($1.0 million)
initiated in Fiscal 1995, increased sales from the Company's J-Hook program
($.6 million) and increased sales of the Company's bakeware and kitchenware
products. These increases were partially offset by a decline in the sales of
the Company's cleaning products ($1.3 million), principally due to a general
softening at retail.
Toward the end of the First Quarter of Fiscal 1995, the Company began to
experience a softening in demand which is the result of industry-wide weakness
in retail sales. The Company's two largest customers have announced inventory
reduction plans and have cancelled or delayed promotions originally scheduled
for the second quarter of Fiscal 1995.
GROSS PROFIT
The Company's gross profit margin declined from 33% in the First Quarter
of Fiscal 1994 to 31% for the First Quarter of Fiscal 1995. The decline in
gross profit margin was primarily due to increased raw material costs,
particularly plastic resin and corrugated paper and increases in warehousing
and distribution costs. The decline was partially offset by the price
increases mentioned above and improved facilities utilization.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased to $13.3 million
(23% of net revenues) for the First Quarter of Fiscal 1995 from $11.7 million
(21% of net revenues) for the First Quarter of Fiscal 1994. The increase was
primarily due to increased display and sales promotion costs for the Company's
kitchen tool and gadget products, costs associated with the Company's bakeware
media campaign and costs associated with B. Via International Housewares, Inc.,
a start-up venture, that is developing products for the upscale and specialty
market place.
NET INTEREST EXPENSE
Net interest expense increased $257,000 from the First Quarter of Fiscal
1994 level of $3.1 million. The increase was primarily due to an increase in
interest rates.
10
<PAGE> 11
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
During the fourth quarter of Fiscal 1993, the Company recorded an $11
million restructuring/reorganization and excess facilities charge ($6.6 million
after income taxes) resulting from management's analysis of the Company's
operations and future strategy. Of this charge, approximately $2.7 million was
non-cash. At January 1, 1995, the accrual relating to restructuring/
reorganization and excess facilities costs was $3.3 million.
In February 1995, the Company announced the second phase of its
restructuring which is expected to utilize the balance of the accrual. As part
of the second phase, the Company is combining its principal housewares
business units into a single operating division. The new division will
consolidate the management and operations of Housewares, Frem and Kellogg and
will provide certain administrative and distribution services to the Company's
other business units.
During the First Quarter of Fiscal 1995, the Company charged
approximately $900,000 against the accrual for costs incurred in the
implementation of the second phase of the restructuring plan. At April 2, 1995
the accrual was $2.4 million.
LIQUIDITY AND CAPITAL RESOURCES
During the First Quarter of Fiscal 1995, the Company generated
approximately $8 million of cash from operations. Such cash along with
proceeds from the liquidation of investments previously pledged as collateral
were used for capital expenditures (approximately $3 million) and an $8 million
net reduction in borrowings.
The decline in the Company's accounts receivable balance results from
the collection of receivables from the seasonally high revenues in the fourth
quarter, which have historically been concentrated in the second half of its
fiscal year. The increase in inventory reflects a planned increase in plastic
products to better balance manufacturing in anticipation of the "back-to-
school" season and a softening of demand experienced towards the end of the
first quarter.
On April 11, 1995, the Company entered into a $75 million bank credit
agreement (the "Group Credit Facility") which provides lines of credit for each
of the Company ($30 million), Housewares ($35 million) and Frem ($10 million).
Loans under the Group Credit Facility bear interest ranging from the bank's
prime rate to the bank's prime rate plus 0.25% or the LIBOR rate plus 1.25% to
1.75%, depending on the Company's borrowing strategy and the ratio of total
debt to cash flow (as defined). The facility will mature on December 1, 1998.
With the Group Credit Facility, the Company and its operating
subsidiaries have credit facilities of $75.0 million, of which $38.1 million
was outstanding at April 2, 1995. The Company believes it has sufficient
borrowing capacity to finance its ongoing operations through the end of Fiscal
1995. The Company may require additional funds to finance any additional
acquisitions.
The Company has land and buildings in Hudson, New Hampshire, Chicago,
Illinois, and a portion of its facilities in Lititz, Pennsylvania, held for
sale. The Company is actively pursuing the sale or lease of these properties,
and has partially leased the Hudson and Lititz facilities. The aggregate
carrying values of such properties are periodically reviewed and are stated at
the lower of cost or market.
11
<PAGE> 12
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company has provided approximately $3.6 million for environmental
remediation and ongoing operation, maintenance and ground water monitoring
costs associated with Kellogg-owned or occupied facilities. The Company
believes the provision is adequate but will continue to monitor and adjust the
provision, as appropriate, should additional sites be identified or further
remediation measures be required or undertaken or if interpretation of current
laws or regulations are modified.
12
<PAGE> 13
EKCO GROUP, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS
From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters
relating to the generation or handling of hazardous substances
by the Company or its predecessors and has incurred obligations for
investigations or remedial actions with respect to certain of such
matters. While the Company does not believe that any such claims
asserted or obligations incurred to date will result in a material
adverse effect upon the Company's financial position, results of
operations or liquidity, the Company is aware that with respect to
its operating facilities at Massillon and Hamilton Ohio, Easthampton,
Massachusetts, Hudson, New Hampshire, and Lititz, Pennsylvania
hazardous substances and oil have been detected and that additional
investigation will be, and remedial action will or may be, required.
Operations at these and other facilities currently or previously
owned or leased by the Company utilize, or in the past have utilized,
hazardous substances. There can be no assurance that activities at
these or any other facilities owned or operated by the Company or any
future facilities may not result in additional environmental claims
being asserted against the Company or additional investigations or
remedial actions being required.
<TABLE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K:
<CAPTION>
a) EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<S> <C>
10.28 Credit Agreement dated as of April 11, 1995 among the registrant, Ekco Housewares,
Inc., Frem Corporation, Fleet Bank of Massachusetts, N.A., as Agent, and the Lenders
party thereto.
</TABLE>
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EKCO GROUP, INC.
-------------------------------------
(Registrant)
Date: May 16, 1995 By: /s/ ROBERT STEIN
------------------------ -----------------------------------
Robert Stein,
President and
Chief Executive Officer
By: /s/ DONATO A. DENOVELLIS
-----------------------------------
Donato A. DeNovellis
Executive Vice President,
Finance and Administration, and
Chief Financial Officer
14
<PAGE> 15
<TABLE>
INDEX TO EXHIBITS FILED WITH FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED APRIL 2, 1995
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.28 Credit Agreement dated as of April 11, 1995 among the registrant, Ekco Housewares, Inc., Frem
Corporation, Fleet Bank of Massachusetts, N.A., as Agent, and the Lenders party thereto.
27 Financial Data Schedule
</TABLE>
15
<PAGE> 1
===============================================================================
EXHIBIT 10.28
-------------
CREDIT AGREEMENT
Dated as of April 11, 1995
Among
EKCO GROUP, INC.,
EKCO HOUSEWARES, INC.
and
FREM CORPORATION,
as Borrowers
FLEET BANK OF MASSACHUSETTS, N.A.,
as Agent
and
THE LENDERS PARTY HERETO
===============================================================================
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1.3. Terms Defined Elsewhere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 2. THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.1. The Revolving Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.2. Notice and Manner of Borrowing and Conversion of Loans . . . . . . . . . . . . . . . . . . 20
Section 2.3. Interest; Duration of Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.4. Additional Interest Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.5. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.6. Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.7. Termination or Reduction of Revolving Credit Facilities . . . . . . . . . . . . . . . . . . 24
Section 2.8. Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.9. Availability of LIBOR Pricing Option; Changed Circumstances . . . . . . . . . . . . . . . . 25
Section 2.10. Lender Certificates; Survival of Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.11. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 3. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.1. Conditions to the Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.2. Conditions to All Advances and Letters of Credit . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 4. PAYMENT AND REPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.1. Mandatory Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.2. Voluntary Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.3. Payment and Interest Cutoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.4. Payment or Other Actions on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.5. Method and Timing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.6. Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.7 Payments Not at End of Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.1. Corporate Existence, Good Standing, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.2. Principal Places of Business; Location of Records . . . . . . . . . . . . . . . . . . . . . 36
Section 5.3. Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.4. Subsidiaries; Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.5. Corporate Power, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.6. Valid and Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.7. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.8. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.9. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.10. Other Materials Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.11. Commitments to Issue Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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Section 5.12. Dividends and Capital Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.13. Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.14. Title to Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.15. Title to Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.16. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.17. Patents; Trademarks; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.18. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.19. Compliance with Laws and Contracts, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.20. Foreign Trade Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.21. Governmental Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.22. Pension Plans; Employees and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.23. Outstanding Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.24. Employment Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.25. Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.26. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.27. 12.70% Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 6. REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.1. Quarterly Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.2. Annual Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.3. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.4. Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.5. Communications with Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.6. Reportable Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.7. Annual Pension Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.8. Multiemployer Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.9. Environmental Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.10. Reports to Other Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.11. Management Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.12. Annual Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 7. FINANCIAL RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.1. Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.2. Ratio of Consolidated EBITA to Consolidated Interest Expense . . . . . . . . . . . . . . . 49
Section 7.3. Consolidated Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.4. Ratio of Consolidated Senior Funded Indebtedness to
Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.5. Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.6. Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 8. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.1. Taxes and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.2. Maintenance of Property; Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.3. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.4. Records, Accounts and Places of Business . . . . . . . . . . . . . . . . . . . . . . . . . 53
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Section 8.5. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.6. Change in Officers or Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.7. Existence and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.8. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.9 Group Common Stock; Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.10. Additional Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.11. Additional Housewares Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.12. Landlord Consent and Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 9. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.1. Restrictions on Borrowed Funds Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.2. Restrictions on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.3. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.4. Asset Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 9.5 Assumptions, Guarantees, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 9.6. Mergers and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9.7. Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 9.8. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 9.9. Restricted Payments and Restricted Investments . . . . . . . . . . . . . . . . . . . . . . . 62
Section 9.10. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.11. Restrictions on Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.12. Fiscal Year End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.13. Amendment to Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.14. Transactions with Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.15. Inactive Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 10. GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.1. Guaranties of Lender Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.2. Guarantors' Agreement to Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 10.3. Waivers by Guarantors; Agent's and Lenders' Freedom to Act . . . . . . . . . . . . . . . . . 65
Section 10.4. Unenforceability of Guaranteed Obligations Against the Obligors . . . . . . . . . . . . . . . 65
Section 10.5. Subrogation; Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 10.6. Security; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 10.7. Termination; Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 10.8. Liability of Guarantors; Additional Guaranties . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE 11. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.3. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 11.4. Cash Deposits to Support Outstanding Letters of Credit . . . . . . . . . . . . . . . . . . . 70
Section 11.5. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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ARTICLE 12. WAIVERS; CONSENTS; AMENDMENTS; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 12.1 Actions by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 12.2 Actions by Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 13. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 13.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 13.2. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 13.3. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE 14. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 14.1. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 14.2. Employees and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 14.3. Agent's Reliance, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 14.4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 14.5. Fleet and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 14.6. Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 14.7. Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 14.8. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 14.9. Collateral Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 14.10. Notification of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 14.11. Amendment of Article 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE 15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 15.1. Limitation of Liability; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 15.2. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 15.3. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 15.4. Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 15.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 15.6. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 15.7. Governing Law; Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 15.8. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 15.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 15.10. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 15.11. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 15.12. Nonliability of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 15.13. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of April 11, 1995, among EKCO
GROUP, INC., a Delaware corporation ("Group"), EKCO HOUSEWARES, INC., a
Delaware corporation and a wholly-owned subsidiary of Group ("Housewares"), and
FREM CORPORATION, a Massachusetts corporation and a wholly-owned subsidiary of
Housewares ("Frem"), FLEET BANK OF MASSACHUSETTS, N.A., a national banking
association ("Fleet"), as Agent for the Lenders referred to below (Fleet,
together with its successors in such capacity, the "Agent").
R E C I T A L S
- - - - - - - -
WHEREAS, as of the date of this Agreement, (i) Group is indebted to
Fleet and Shawmut Bank, N.A. in the aggregate principal amount of
$28,476,524.90, exclusive of reimbursement obligations in respect of letters of
credit (together with all accrued interest and fees thereon and all related
charges, the "Existing Group Indebtedness"), and (ii) Housewares is indebted to
Fleet and ABN AMRO Bank N.V., Boston Branch, in the aggregate principal amount
of $10,477,679.78 under the Housewares Credit Facility, exclusive of
reimbursement obligations in respect of letters of credit (together with all
accrued interest and fees thereon and all related charges, the "Existing
Housewares Indebtedness");
WHEREAS, the Borrowers have requested the Lenders to extend credit
facilities to the Borrowers for working capital purposes including, without
limitation, for the purposes of repaying and terminating all Existing Group
Indebtedness and Existing Housewares Indebtedness, for financing trade and
standby letters of credit, for repaying certain intercompany payables owing by
Frem and Housewares to Group, and for the Borrowers' general corporate
purposes; and
WHEREAS, the Lenders have agreed, on the terms and conditions set
forth in this Agreement, to provide credit facilities to the Borrowers for such
purposes.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereby agree as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. DEFINITIONS. In addition to the terms defined
elsewhere in this Agreement, unless otherwise specifically provided herein, the
following terms shall have the following meanings for all purposes when used in
this Agreement, and in any note, certificate, report or other document made or
delivered in connection with this Agreement:
"ADVANCE" shall mean any loan or extension of credit from the
Lenders to a Borrower pursuant to Section 2.1 hereof.
"AFFILIATE" shall mean, with respect to any Person, (i) any
director or officer of such Person, any Person owning, to the
knowledge of such Person more than 5% of the outstanding common stock
of such Person or any director or officer of such a Person, and (ii)
any Person of which any one or more of the Persons described in clause
(i) above is an
<PAGE> 7
officer, director, partner, trustee or holder of more than 5% of the
shares or other beneficial interest.
"AGREEMENT" shall mean this Credit Agreement, as amended or
supplemented from time to time. References to Articles, Sections,
Exhibits, Schedules and the like refer to the Articles, Sections,
Exhibits, Schedules and the like of this Agreement unless otherwise
indicated.
"APPLICABLE LIBOR RATE" shall mean, with respect to any
Advance, the aggregate of (i) the LIBOR Rate, plus (ii) the Applicable
Margin - LIBOR Rate, each as in effect from time to time.
"APPLICABLE MARGIN - LIBOR RATE" AND "APPLICABLE MARGIN - BASE
RATE" shall mean as to each of the Revolving Credit Facilities, during
each fiscal quarter of the Borrowers, the percentage set forth below
with respect to such Revolving Credit Facility opposite the
Consolidated Total Leverage Ratio in effect as of the last day of the
immediately preceding fiscal quarter:
<TABLE>
<S> <C> <C>
(a) Group Revolving Credit:
Consolidated Total Leverage
Ratio for the Immediately Applicable Margin -
Preceding Fiscal Quarter Base Rate LIBOR Rate
------------------------ --------- ----------
Greater than 2.25:1.0 .25% 1.75%
Equal to or less than
2.25:1.0 0 1.50%
(b) Housewares Revolving Credit:
Consolidated Total Leverage
Ratio for the Immediately Applicable Margin -
Preceding Fiscal Quarter Base Rate LIBOR Rate
------------------------ --------- ----------
Greater than 2.25:1.0 0 1.50%
Equal to or less than
2.25:1.0 0 1.25%
</TABLE>
2
<PAGE> 8
<TABLE>
<S> <C> <C>
(c) Frem Revolving Credit:
Consolidated Total Leverage
Ratio for the Immediately Applicable Margin -
Preceding Fiscal Quarter Base Rate LIBOR Rate
------------------------ --------- ----------
Greater than 2.25:1.0 0 1.50%
Equal to or less than
2.25:1.0 0 1.25%
</TABLE>
"APPLICABLE BASE RATE" shall mean, with respect to any
Advance, the aggregate of (i) the Prime Rate, plus (ii) the Applicable
Margin - Base Rate, each as in effect from time to time.
"ASSET DISPOSITION" shall mean the direct or indirect sale,
lease, assignment, transfer or other disposition (including, without
limitation, disposition pursuant to sale-leaseback transactions), in a
single transaction or a series of transactions, by a Borrower or any
of its Subsidiaries, of any assets, including shares of stock of a
Subsidiary, other than (i) in the ordinary course of business of the
applicable Borrower or Subsidiary, and (ii) to Group, Frem or a
Guarantor.
"ASSIGNMENT AND ACKNOWLEDGMENT" shall mean the Assignment and
Acknowledgment Agreement in substantially the form of EXHIBIT J hereto
to be executed and delivered by Group, Kellogg and Woodstream, as the
same may be amended, modified or supplemented from time to time.
"AVAILABLE RESTRICTED PAYMENTS FUND" shall mean, as of any
date, an amount equal to the difference between (a) the sum of (i)
$2,500,000,PLUS (ii) 25% (minus 100% in the case of a deficit) of
Group's cumulative Consolidated Net Income for the period beginning
after January 1, 1995 to the end of the fiscal quarter immediately
preceding the date of determination, PLUS (iii) the Net Proceeds of
Equity Issuances by Group for the period beginning after January 1,
1995 to the end of the fiscal quarter immediately preceding the date
of determination in an amount not to exceed $5,000,000, MINUS (b) the
aggregate amount of Restricted Payments and Restricted Investments
theretofore made by Group and its Subsidiaries pursuant to Section
9.9(e) hereof from and after January 1, 1995.
"AVERAGE LIFE" shall mean, as of any date of determination,
with respect to any Borrowed Funds Indebtedness, the quotient obtained
by dividing (i) the sum of the products of the number of years (or
fractions of years) from the date of determination to the date of each
successive scheduled principal payment under such Borrowed Funds
Indebtedness, multiplied by the amount of each such principal payment,
by (ii) the sum of all such principal payments.
"BASE RATE" shall mean for any date, the Prime Rate on such
date; PROVIDED, HOWEVER, that if the Prime Rate shall no longer be
available, the Base Rate shall be the Federal Funds Rate on such date
plus 1/2% per annum.
3
<PAGE> 9
"BASE RATE ADVANCE" shall mean any loan or Advance hereunder
upon which interest will accrue on the basis of a formula including as
a component thereof the Prime Rate.
"BORROWED FUNDS INDEBTEDNESS" shall mean any Indebtedness for
borrowed money, including, without limitation, the Lender Obligations
and all Capitalized Lease Obligations.
"BORROWERS" shall mean (i) when used in the singular, each of
Group, Housewares and Frem, and (ii) when used in the plural, all of
them, in each case together with their respective successors and
assigns.
"BUSINESS DAY" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day other than a Saturday, Sunday or
legal holiday on which banks in Boston, Massachusetts are open for the
conduct of a substantial part of their commercial banking business,
and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, LIBOR Rate Advances,
any day that is a Business Day described in clause (i) and that is
also a day for trading by and between banks in U.S. Dollar deposits in
the interbank Eurodollar market.
"CAPITAL EXPENDITURES" shall mean amounts paid or Indebtedness
incurred by the Borrowers and their Subsidiaries in connection with
the purchase or lease of capital assets that would be required to be
capitalized and shown on the consolidated balance sheet of Group in
accordance with GAAP.
"CAPITALIZED LEASE" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee in accordance with
GAAP.
"CAPITALIZED LEASE OBLIGATIONS" shall mean the amount of the
liability reflecting the aggregate discounted amount of future
payments under all Capitalized Leases calculated in accordance with
GAAP and Statement of Financial Accounting Standards No. 13.
"CHANGE IN CONTROL" shall mean the occurrence of any of the
following events: (i) any Person or group shall beneficially own (as
defined in Rule 13d-3 under the Exchange Act) 35% or more of the total
voting power of all classes of capital stock of Group entitled to vote
generally in the election of the Board of Directors of Group, without
the consent of a majority of the Continuing Directors of Group or (ii)
any Person or group, or any Affiliates thereof, shall succeed in
having sufficient of its or their nominees elected to the Board of
Directors of Group such that such nominees, when added to any existing
Directors remaining on the Board of Directors of Group after such
election who are Affiliates of such group, shall constitute a majority
of the Board of Directors of Group, without consent of a majority of
the Continuing Directors of Group.
"CLEANING" shall mean Cleaning Specialty Company, a Tennessee
corporation, and its successors and assigns.
"CLOSING DATE" shall mean April 11, 1995.
4
<PAGE> 10
"COLLATERAL" shall mean any and all property of the Borrowers,
the Guarantors or any other Person now or hereafter intended to be
subject to a lien or security interest in favor of the Agent, for the
ratable benefit of the Lenders, pursuant to the Security Documents.
"COMPLIANCE CERTIFICATE" shall mean a certificate in the form
of EXHIBIT H attached hereto and executed by the Chief Executive
Officer, Chief Financial Officer or Treasurer of the Borrower.
"CONSOLIDATED" or "CONSOLIDATED" shall mean, with reference to
any term defined herein, such term as applied to the accounts of the
applicable Person and all of its Subsidiaries, consolidated in
accordance with GAAP; PROVIDED, HOWEVER, that for purposes of
calculations under Article 7 hereof, (i) the assets, liabilities and
items of income and expense of Unrestricted Subsidiaries, and (ii)
100% of the positive net earnings (but none of the net losses) of any
Subsidiary of which the applicable Person owns, directly or
indirectly, less than 100% of the issued and outstanding stock
entitled to vote in the election of directors (other than director's
qualifying shares), shall not be included, except (in the case of this
clause (ii) only) to the extent of the lesser of (x) cash actually
distributed by such Subsidiary to such Person as a dividend, and (y)
the positive net earnings of such Subsidiary.
"CONSOLIDATED CASH FLOW" shall mean for any period, the sum of
(i) Consolidated Net Income for such period less all cash
Distributions paid during such period, PLUS (ii) depreciation expense,
amortization expense (but excluding amortization relating to marketing
arrangements with certain retail customers), Consolidated Interest
Expense, and other similar non-cash expenses of Group and its
Subsidiaries deducted in calculating Consolidated Net Income for such
period, including non-cash expenses relating to compensation in the
form of stock,MINUS (iii) Capital Expenditures of Group and its
Subsidiaries made or incurred during such period, all as determined in
accordance with GAAP.
"CONSOLIDATED CURRENT ASSETS" shall mean as of any date of
determination for any Person, all items which in accordance with GAAP
would be classified as current assets of such Person, after deduction
of depreciation, depletion, obsolescence, amortization, valuation,
contingency and other proper reserves in accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" shall mean as of any date
of determination for any Person, the sum of (i) that portion of the
principal of the Indebtedness of such Person due within one year from
such date of determination,PLUS (ii) all Indebtedness of such Person
payable on demand, PLUS (iii) all other items which in accordance with
GAAP would be included in determining current liabilities as shown on
the liability side of a balance sheet of such Person as of such date.
"CONSOLIDATED EBITA" shall mean for any period for any Person,
the sum of (i) Consolidated Net Income for such period, PLUS (ii)
amortization expense, (but excluding amortization relating to
marketing arrangements with certain retail customers) Consolidated
Interest Expense, other similar non-cash
5
<PAGE> 11
expenses (including non-cash expenses relating to compensation in the
form of stock) and federal, state and foreign income taxes of such
Person and its Subsidiaries deducted in calculating Consolidated Net
Income for such period, as determined in accordance with GAAP.
"CONSOLIDATED EBITDA" shall mean for any period for any
Person, the sum of (i) Consolidated Net Income for such period, PLUS
(ii) depreciation expense (but excluding amortization relating to
marketing arrangements with certain retail customers), amortization
expense, Consolidated Interest Expense, other similar non-cash
expenses (including non-cash expenses relating to compensation in the
form of stock) and federal, state and foreign income taxes of such
Person and its Subsidiaries deducted in calculating Consolidated Net
Income for such period, as determined in accordance with GAAP.
"CONSOLIDATED FIXED CHARGES" shall mean for any period for any
Person, the sum of (i) Consolidated Interest Expense, plus (ii) the
aggregate amount of scheduled term loan payments of principal by such
Person and its Subsidiaries on Borrowed Funds Indebtedness for such
period, including payments of principal at maturity unless such
Indebtedness is paid at maturity or renewed, extended or refinanced in
compliance with the terms of this Agreement.
"CONSOLIDATED INTEREST EXPENSE" shall mean for any period for
any Person, the aggregate amount of interest required by GAAP to be
expensed by such Person and its Subsidiaries during such period on all
Indebtedness outstanding during all or any part of such period.
"CONSOLIDATED NET INCOME" shall mean for any Person, the
consolidated net income (or deficit) from operations of such Person
and its Subsidiaries, after taxes, determined in accordance with GAAP.
"CONSOLIDATED NET TANGIBLE ASSETS" shall mean as of any date
of determination for any Person, the net book value of all assets of
such Person and its Subsidiaries determined on a consolidated basis,
LESS the sum, without duplication, of the then aggregate net book
value of all assets of such Person and its Subsidiaries which are
deemed to be intangible assets, including, without limitation: (i)
goodwill (including, without limitation, the excess of cost over the
book value of any asset resulting from the write-up of assets after
December 1, 1988), (ii) organization or experimental expenses, (iii)
unamortized debt discount and expense, (iv) stock discount and
expense, (v) patents, trademarks, tradenames and copyrights, (vi)
deferred charges, (vii) franchises, licenses and permits, (viii)
Excess Investments (as defined in the 12.70% Note Purchase Agreement
as in effect on the Closing Date), and (ix) any other assets which are
deemed intangible assets, all computed in accordance with GAAP applied
on a consistent basis. Notwithstanding the foregoing, for purposes of
computing Consolidated Net Tangible Assets of Housewares and its
Subsidiaries, intangible assets in an aggregate amount not to exceed
$98,400,000 which are intangible assets of Housewares or any of its
Subsidiaries on December 21, 1988, shall not be deducted from gross
assets, except to the extent that such assets are reduced in
accordance with GAAP.
6
<PAGE> 12
"CONSOLIDATED SENIOR FUNDED INDEBTEDNESS" shall mean for any
Person, the sum of all Borrowed Funds Indebtedness of such Person and
its Subsidiaries on a consolidated basisINCLUDING, without limitation,
the outstanding face amount of all Letters of Credit issued for the
account of such Person, butEXCLUDING in the case of Group all
Indebtedness of Group in respect of the 1818 Note.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean as of any date of
determination for any Person, the excess of such Person's Consolidated
Net Tangible Assets (other than, in the case of Housewares, the Group
Note) over the then outstanding amount of its liabilities (including,
without limitation, all Borrowed Funds Indebtedness of such Person).
"CONSOLIDATED TOTAL LEVERAGE RATIO" shall mean as of any date
of determination, the ratio of (i) all Borrowed Funds Indebtedness of
Group and its Subsidiaries determined on a consolidated basis, to (ii)
Group's Consolidated EBITDA for the four fiscal quarters ending on
such date.
"CONTINUING DIRECTORS" shall mean (i) the members of the Board
of Directors of Group, while such Persons are members of such Board,
who at the beginning of the period of two consecutive years (or, if
shorter, a period commencing on the date of this Agreement and) ending
immediately prior to the consent required by clauses (iii) or (iv) of
the definition of "Change in Control" above (not including any period
prior to the date of this Agreement) constituted Group's Board of
Directors, and (ii) any new directors, whose election by Group's Board
of Directors or nomination for election by stockholders was approved
by a vote of at least two-thirds (2/3) of Group's Directors then still
in office who either were Group's Directors at the beginning of the
period or whose election or nomination for election was previously so
approved.
"DEFAULT" shall mean an Event of Default as defined in Article
11, or an event or condition which with the passage of time or giving
of notice, or both, would become such an Event of Default.
"DISTRIBUTION" shall mean with respect to any Person: (i) the
declaration or payment of any dividend on or in respect of any shares
of any class of capital stock of such Person, other than dividends
payable solely in shares of common stock of such Person; (ii) the
purchase, acquisition, redemption or other retirement of any shares of
any class of capital stock of such Person, directly or indirectly;
(iii) any other distribution on or in respect of any shares of any
class of capital stock of such Person; and (iv) the forgiveness of any
Indebtedness owed to such Person by any of its Affiliates.
"1818 NOTE" shall mean the 7.0% Subordinated Convertible Note
due November 30, 2002, issued by Group pursuant to that certain
Securities Purchase Agreement dated as of December 15, 1992, between
Group and The 1818 Fund, L.P., which note, as of the Closing Date, is
in the aggregate principal balance of $22,000,000.
"ENVIRONMENTAL LAWS" shall mean any and all applicable
foreign, federal, state and local environmental, health or safety
statutes, laws, regulations, rules, ordinances, policies and rules or
common law (whether now existing or hereafter enacted or promulgated),
of
7
<PAGE> 13
all governmental agencies, bureaus or departments which may now or
hereafter have jurisdiction over the Borrowers and their respective
Subsidiaries, and all applicable judicial and administrative and
regulatory decrees, judgments and orders, including common law rulings
and determinations, relating to injury to, or the protection of, real
or personal property or human health or the environment, including,
without limitation, all requirements pertaining to reporting,
licensing, permitting, investigation, remediation and removal of
emissions, discharges, releases or threatened releases of Hazardous
Materials, chemical substances, pollutants or contaminants, whether
solid, liquid or gaseous in nature, into the environment or relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of such Hazardous Materials, chemical
substances, pollutants or contaminants.
"EQUITY ISSUANCE" shall mean (a) any issuance or sale by Group
(other than an issuance or sale to any Subsidiary) after the Closing
Date of (i) any of its capital stock, (ii) any warrants or options
exercisable in respect of its capital stock or (iii) any other
security or instrument representing an equity interest (or the right
to obtain any equity interest) in Group, or (b) the receipt by Group
after the Closing Date from any Person (other than a Subsidiary) of
any cash contribution to Group's capital (whether or not evidenced by
any equity security issued by the recipient of such contribution).
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ESOP" shall mean the Ekco Group, Inc. Employee's Stock
Ownership Plan Trust, as in effect on the Closing Date.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of
1934 and all rules and regulations promulgated thereunder, as amended
from time to time.
"EXISTING LETTERS OF CREDIT" shall mean each of the letters of
credit issued by Fleet for the account of Group and its Subsidiaries
which are identified on Schedule 1 attached hereto, as such letters of
credit may, from time to time, be amended or renewed from time to
time.
"FEDERAL FUNDS RATE" shall mean, as of any date, the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such date is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"FISCAL YEAR END" shall mean the last day of any designated
fiscal year of Group. For Fiscal Year 1995, Fiscal Year End shall
mean December 31, 1995.
8
<PAGE> 14
"FREM PAYABLE" shall mean the intercompany payable due from
Frem to Group from time to time, which as of January 1, 1995 was in
the aggregate amount of $10,760,000.
"GAAP" shall mean generally accepted accounting principles as
defined by controlling pronouncements of the Financial Accounting
Standards Board, as from time to time supplemented and amended.
"GROUP NOTE" shall mean the promissory note dated December 21,
1988, issued by Group to the order of Housewares in the original
principal amount of $26,100,000, and all amendments thereto and
substitutions and replacements therefor.
"GUARANTORS" shall mean individually, each of Kellogg,
Woodstream, Wright-Bernet, Cleaning, Via and any other Person that
shall become a guarantor of the Lender Obligations pursuant to the
provisions hereof, and collectively, all of them; provided, however,
that for purposes of Article 10 of this Agreement, the term
"Guarantor" shall have the meaning set forth in Section 10.1 hereof.
"GUARANTY" or "GUARANTEE" or "GUARANTIES" shall mean any
arrangement whereby any Person (for purposes of this definition, the
"guarantor") is or becomes liable in respect of any Indebtedness or
other obligation of another, and any other arrangement whereby credit
is extended to another obligor on the basis of any promise of the
guarantor, whether that promise is expressed in terms of an obligation
to pay the Indebtedness of such obligor, or to purchase or lease
assets under circumstances that would enable such obligor to discharge
one or more of its obligations, or to maintain the capital, the
working capital, solvency or general financial condition of such
obligor, whether or not such arrangement is listed in the balance
sheet of the guarantor or referred to in a footnote thereto, except
for endorsements made in connection with the deposit of items for
credit or collection in the ordinary course of business.
"GUARANTY AGREEMENTS" shall mean the several Guaranty
Agreements of even date herewith to be executed and delivered by each
of the Guarantors in favor of the Agent, substantially in the form of
Exhibit B hereto, as the same may be amended, modified or supplemented
from time to time.
"HOUSEWARES CREDIT FACILITY" shall mean the Indebtedness of
Housewares and Ekco Canada, Inc. ("Canada") under that certain Amended
and Restated Credit Agreement dated as of January 8, 1992, by and
among Housewares, Canada, Fleet, as agent, and the Lenders party
thereto, as amended from time to time.
"HOUSEWARES PAYABLE" shall mean the intercompany payable due
from Housewares to Group from time to time, which as of January 1,
1995 was in the aggregate amount of $16,902,000.
"INACTIVE SUBSIDIARIES" shall mean collectively, (i) Delhi
Manufacturing Corporation, a Delaware corporation, (ii) Ekco Wood
Products Co., a Delaware corporation, (iii) Fenwick, a California
corporation, (iv) FPI, Inc., a Washington corporation, (v) Trappe of
Aspen, Inc., a Pennsylvania corporation, and (vi) Ekco
9
<PAGE> 15
Consumer Products, Ltd., a Delaware corporation.
"INDEBTEDNESS" shall mean, as to any Person, all obligations,
contingent and otherwise, which in accordance with GAAP should be
classified upon such Person's balance sheet as liabilities.
"INTERCOMPANY PAYABLES" shall mean collectively, the
Housewares Payable, the Kellogg Payable, the Woodstream Payable and
the Indebtedness evidenced by the Kellogg Note.
"INTERCOMPANY SECURITY AGREEMENTS" shall mean the Security
Agreements in substantially the form of Exhibit D hereto, to be
executed and delivered by each of Woodstream and Kellogg in favor of
Group to secure their respective obligations under the Intercompany
Payables, as the same may be amended, modified or supplemented from
time to time.
"INTEREST PERIOD" shall mean with respect to any LIBOR Rate
Advance, the period commencing on the date of such LIBOR Rate Advance
and ending one, two, three or six months thereafter, as the applicable
Borrower may request as provided in Section 2.2 or 2.3(a) hereof,
PROVIDED, THAT:
(i) any Interest Period (other than an
Interest Period determined pursuant to clause (iii) below)
that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day;
(ii) any Interest Period that would
otherwise end after December 1, 1998 shall end on December 1,
1998; and
(iii) notwithstanding clause (ii) above,
no Interest Period shall have a duration of less than 30 days,
and if any Interest Period applicable to LIBOR Rate Advances
would be for a shorter period, such Interest Period shall not
be available hereunder.
"INVESTMENT" shall mean with respect to any Person, (i) any
stock, evidence of Indebtedness or other security of another Person,
(ii) any loan, advance, contribution to capital, extension of credit
(except for current trade and customer accounts receivable for
inventory sold or services rendered in the ordinary course of business
and payable in accordance with customary trade terms) to another
Person, and (iii) any purchase of (A) stock or other securities of
another Person, or (B) any business or undertaking of another Person
(whether by purchase of assets or securities), or any commitment or
option to make any such purchase, or (C) any other investment, whether
existing on the date of this Agreement or thereafter made. The term
"Investment" shall not include ordinary advances to employees for
travel expenses, drawing accounts and similar expenditures made in the
ordinary course of business.
"KELLOGG" shall mean Kellogg Brush Manufacturing Co., a
Massachusetts corporation, and its successors and assigns.
10
<PAGE> 16
"KELLOGG NOTE" shall mean that certain promissory note dated
March 31, 1993, issued by Kellogg to the order of Group in the
original principal amount of $25,927,627.80 and all amendments thereto
and substitutions and replacements therefor.
"KELLOGG PAYABLE" shall mean the intercompany payable due from
Kellogg to Group from time to time, which as of January 1, 1995 was in
the aggregate amount of $14,499,372.20.
"LENDER AGREEMENTS" shall mean this Agreement, the Notes, the
Security Documents, all letter of credit applications and other
agreements executed in connection with the issuance of Letters of
Credit, and any other present or future agreement from time to time
entered into between or among one or more Lenders and/or the Agent on
the one hand, and any one or more of the Borrowers, or the Guarantors,
or any Affiliate on the other hand, relating to this Agreement or
which a Borrower and the Majority Lenders have acknowledged is a
Lender Agreement, each as from time to time amended or modified, and
all statements, reports and certificates delivered by the Borrowers to
the Lenders and/or the Agent in connection therewith.
"LENDER(S)" shall mean (i) each Person signatory hereto as a
Lender, and (ii) from and after any time that any other Person becomes
a party hereto as a Lender, all Persons who are Lenders hereunder.
"LENDER OBLIGATIONS" shall mean all present and future
obligations and Indebtedness of the Borrowers or any Guarantor owing
to the Lenders or the Agent under this Agreement, the Notes or any
other Lender Agreement, of every kind and description, direct or
indirect, absolute or contingent, primary or secondary, due or to
become due, whether now existing or hereafter arising, including,
without limitation, the obligations to pay the Indebtedness from time
to time evidenced by the Notes and obligations to pay interest,
commitment fees and other fees and charges from time to time owed
under any Lender Agreement, and further including, without limitation,
all obligations of any Borrower or Guarantor arising under or in
connection with any checking or disbursement account maintained by the
Agent or any Lender.
"LETTERS OF CREDIT" shall mean all documentary and standby
letters of credit issued by the Agent for the account of a Borrower
pursuant to Section 2.11 hereof, each of which shall be in form
satisfactory to the Agent in its sole discretion.
"LIBOR PRICING OPTION" shall mean the option granted to the
Borrowers pursuant to Section 2.3 to have interest on all or a portion
of the Advances computed on the basis of the LIBOR Rate for an
applicable Interest Period.
"LIBOR RATE" shall mean for any Interest Period for any LIBOR
Rate Advance, the quotient of (i) the rate of interest determined by
the Agent, at about 11:00 a.m. (Boston, Massachusetts time) on the
Rate Fixing Day as being the rate at which deposits in U.S. dollars
are offered to it by first-class banks in the London Interbank Market
for deposit for such Interest Period in amounts comparable to the
aggregate principal amount of LIBOR Rate Advances to which such
Interest Period relates, divided by (ii) the
11
<PAGE> 17
difference between one (1) minus the Reserve Requirement (expressed as
a decimal) applicable to that Interest Period. The LIBOR Rate shall
be adjusted automatically as of the effective date of any change in
the Reserve Requirement.
"LIBOR Rate Advance" means any Advance hereunder upon which
interest will accrue on the basis of a formula including as a
component thereof the LIBOR Rate. The expiration date of any LIBOR
Rate Advance shall mean the last day of the Interest Period applicable
to such LIBOR Rate Advance.
"MAJORITY LENDERS" shall mean, at any time, the Lenders having
made not less than 51% of the outstanding principal amount of the
Advances hereunder, or, if no Advances have been made, the Lender or
Lenders having 51% of the aggregate Commitments; provided, however,
that at any time that there shall be at least three Lenders hereunder,
if one Lender holds more than 51% of the outstanding Advances or
Commitments, "Majority Lenders" shall mean two or more Lenders holding
at least 51% of the outstanding Advances or Commitments.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on the business, properties, assets, operations or condition of (i)
any of the Borrowers, or (ii) the Borrowers and the Guarantors taken
as a whole.
"MAXIMUM FREM REVOLVING CREDIT AMOUNT" shall mean $10,000,000,
as the same may be reduced from time to time pursuant to Section 2.7.
"MAXIMUM GROUP REVOLVING CREDIT AMOUNT" shall mean
$30,000,000, as the same may be reduced from time to time pursuant to
Section 2.7.
"MAXIMUM HOUSEWARES REVOLVING CREDIT AMOUNT" shall mean
$35,000,000, as the same may be reduced from time to time pursuant to
Section 2.7.
"MAXIMUM REVOLVING CREDIT AMOUNT" shall mean, as the context
requires, the Maximum Group Revolving Credit Amount, the Maximum
Housewares Revolving Credit Amount and/or the Maximum Frem Revolving
Credit Amount.
"MORTGAGES" shall mean collectively (i) the Mortgage and
Security Agreement and the Collateral Assignment of Leases and Rents
executed by Group with respect to the real property owned by Group in
Hudson, New Hampshire (collectively, the "New Hampshire Mortgage
Documents"), (ii) the Mortgage and Security Agreement executed by
Kellogg with respect to the real property owned by Kellogg located in
Easthampton, Massachusetts, (iii) the Mortgage and Security Agreement
executed by Frem with respect to the real property owned by Frem
located in Worcester, Massachusetts, (iv) the Deed of Trust executed
by Frem with respect to the real property owned by Frem located in
Phoenix, Arizona, (v) the Mortgage and Security Agreement executed by
Woodstream with respect to the real property owned by Woodstream
located in Lititz, Pennsylvania, and (vi) the Mortgage and Security
Agreement executed by Wright-Bernet with respect to the real property
owned by Wright-Bernet located in Hamilton, Ohio, each such document
12
<PAGE> 18
dated as of the Closing Date, and as the same may be amended, modified
or supplemented from time to time.
"MULTIEMPLOYER PENSION PLAN" shall mean a multiemployer plan
within the meaning of Section 4001(a)(3) of ERISA, to which any
Borrower or Subsidiary is required to make contributions.
"NET PROCEEDS" shall mean, in each case as set forth in a
statement in reasonable detail delivered by the applicable Borrower or
Subsidiary to the Agent: (a) with respect to any property or asset
subject to an Asset Disposition, the excess, if any, of (i) the cash
received in connection with such Asset Disposition (including cash
paid pursuant to the terms of any note or other deferred payment
obligation delivered as part of the purchase price in connection with
such Asset Disposition, when and as such cash is received) over (ii)
the sum of (A) the principal amount of any Indebtedness which is
secured by such property or asset and which is required to be repaid
in connection with such Asset Disposition, plus (B) the reasonable
out-of-pocket expenses incurred by the applicable Borrower or
Subsidiary, as the case may be, in connection with such Asset
Disposition, plus (C) provision for taxes, including income taxes,
attributable to such Asset Disposition; and (b) with respect to any
Equity Issuance of Group, the gross cash proceeds received by Group
from such issuance less all reasonable legal expenses, discounts and
commissions and other reasonable fees and expenses incurred or to be
incurred, and all federal, state, local and foreign taxes assessed or
to be assessed in connection therewith.
"1994 CONSOLIDATED FINANCIAL STATEMENTS" shall mean the
Consolidated Balance Sheet of the Borrower as of January 1, 1995 and
the related Consolidated Statements of Earnings and Retained Earnings
for the year then ended and notes to such financial statements.
"NOTES" shall mean the Revolving Credit Notes and any other
notes issued by the Borrowers to the Lenders from time to time
pursuant to this Agreement.
"OBLIGOR" shall mean (i) as to Group in its capacity as a
Guarantor under Article 10 of this Agreement, each of Housewares and
Frem, and (ii) as to Housewares in its capacity as a Guarantor under
Article 10 of this Agreement, Frem.
"PENSION PLAN" shall mean an employee benefit plan or other
plan maintained for the employees of any Borrower or Subsidiary as
described in Section 4021(a) of Title IV of ERISA.
"Permitted Liens" shall mean:
---------------
(i) Deposits or pledges made in connection with,
or to secure payment of, workmen's compensation, unemployment
insurance, old age pensions or other social security; liens in respect
of judgments or awards to the extent such judgments or awards do not
constitute a Default hereunder; and liens for taxes, assessments or
governmental charges or levies and liens to secure claims for labor,
material or supplies to the extent that
13
<PAGE> 19
payment thereof shall not at the time be required to be made in
accordance with Section 8.1 hereof;
(ii) Encumbrances in the nature of zoning
restrictions, easements, and rights or restrictions of record on the
use of real property which do not materially detract from the value of
such property or impair its use in the business of the owner or
lessee;
(iii) Liens (other than judgments and awards)
created by or resulting from any litigation or legal proceeding which
is currently being contested in good faith by appropriate proceedings
satisfactory to the Lenders;
(iv) Liens arising by operation of law to secure
landlords, lessors or renters under leases or rental agreements made
in the ordinary course of business and confined to the premises or
property rented; and
(v) Workmen's or materialmen's liens arising out
of construction, reconstruction, rehabilitation or maintenance of any
of the properties of the Borrowers or any of their Subsidiaries.
"Person" shall mean an individual, corporation, partnership,
joint venture, association, estate, joint stock company, trust,
organization, business, or a government or agency or political
subdivision thereof.
"PLEDGE AGREEMENTS" shall mean each of the Pledge Agreements
in substantially the form of Exhibit C hereto to be executed and
delivered by the Borrower, Kellogg and Woodstream, as the same may be
amended, modified or supplemented from time to time.
"PRIME RATE" shall mean the rate of interest from time to time
announced and made effective by the Agent as its "Prime Rate," it
being understood that such rate is a reference rate, not necessarily
the lowest, which serves as the basis upon which effective rates of
interest are calculated for obligations making reference thereto.
"RATE FIXING DAY" shall mean, in the case of a LIBOR Rate
Advance, the second Business Day preceding the Business Day on which
an Interest Period begins.
"REGULATION D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System from time to time in effect
and shall include any successor or other regulation or official
interpretation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve System.
"REGULATION U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System from time to time in effect
and shall include any successor or other regulation or official
interpretation of said Board of Governors relating to the extension of
credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
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<PAGE> 20
"REPORTABLE EVENT" shall mean an event reportable to the
Pension Benefit Guaranty Corporation under Section 4043 of Title IV of
ERISA, unless exempted from the reporting requirements by regulations
of the Pension Benefit Guaranty Corporation.
"RESERVE REQUIREMENT" shall mean the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other
reserves) which is imposed under Regulation D on the Lenders against
"Euro-currency Liabilities" as defined in Regulation D.
"RESTRICTED INVESTMENT" shall mean any Investment other than
those permitted under subsections 9.3(a) through (h) hereof.
"RESTRICTED PAYMENT" shall mean, with respect to any Person:
(i) any Distribution by such Person; or (ii) any payment of principal
or interest on, or any retirement of principal of, loans or advances
owed by such Person to any of its Affiliates, or (iii) any payment of
principal or interest on account of, or acquisition, redemption or
retirement of, any Subordinated Indebtedness of such Person.
"RESTRICTED STOCK PLANS" shall mean collectively, (i) The 1984
Ekco Group, Inc. Restricted Stock Plan, (ii) The 1985 Ekco Group, Inc.
Restricted Stock Plan, (iii) Group's 1984 Employee Stock Purchase
Plan, (iv) the Incentive Compensation Plan for Executive Employees of
Ekco Group, Inc. and its Subsidiaries, and (v) comparable plans
providing for the issuance of capital stock of Group to officers,
directors and employees of Group and its Subsidiaries having terms
similar to the foregoing, each as amended from time to time by a
resolution of the Board of Directors of Group or a duly authorized
committee thereof.
"RESTRICTED SUBSIDIARY" shall mean any Subsidiary other than
an Unrestricted Subsidiary.
"REVOLVING CREDIT COMMITMENT" shall mean, as to any Lender in
respect of any of the Revolving Credit Facilities, the amount set
forth below such Lender's name on an execution page hereof as its
Revolving Credit Commitment to such Revolving Credit Facility, which
amount equals the product of (i) the Maximum Revolving Credit Amount
in effect for such Revolving Credit Facility, times (ii) such Lender's
Revolving Credit Commitment Percentage.
"REVOLVING CREDIT COMMITMENT PERCENTAGE" shall mean, as to any
Lender, the percentage figure set forth below such Lender's name on an
execution page hereof as its Revolving Credit Commitment Percentage,
as the same may, from time to time, be modified pursuant to any
Assignment and Assumption Agreements executed by such Lender.
"REVOLVING CREDIT FACILITY" shall mean each of the Group
Revolving Credit, the Housewares Revolving Credit and the Frem
Revolving Credit.
15
<PAGE> 21
"REVOLVING CREDIT NOTES" shall mean the Revolving Credit Notes
executed by each of the Borrowers in favor of each Lender evidencing
the Indebtedness of such Borrower in respect of the Revolving Credit
Facility as to which it is the primary obligor. Each Revolving Credit
Note shall be in the amount of the applicable Lender's Revolving
Credit Commitment in respect of such Revolving Credit Facility, and
shall be substantially in the form of Exhibit A hereto.
"REVOLVING CREDIT TERMINATION DATE" means December 1, 1998.
"SECURITY AGREEMENTS" shall mean the several Security
Agreements in substantially the form of Exhibit D hereto, to be
executed and delivered by each of the Borrowers and each of the
Guarantors in favor of the Agent, as the same may be amended, modified
or supplemented from time to time.
"SECURITY DOCUMENTS" shall mean the Security Agreements, the
Intercompany Security Agreements, the Assignment and Acknowledgment,
the Kellogg Note, the Pledge Agreements, the Guaranty Agreements and
the Mortgages, and any other document, instrument or agreement from
time to time executed by a Borrower, a Guarantor or any other Person
guarantying or providing collateral security for the Lender
Obligations.
"STOCK OPTION PLANS" shall mean collectively, (i) Group's 1987
Stock Option Plan, (ii) The Ekco Group, Inc. 1988 Director's Stock
Option Plan, and (iii) comparable plans providing for the issuance of
options to purchase capital stock of Group to officers, directors and
employees of Group and its Subsidiaries having terms similar to the
foregoing, each as amended from time to time by a resolution of the
Board of Directors of Group or a duly authorized committee thereof.
"SUBORDINATED INDEBTEDNESS" shall mean as to any Borrower,
Indebtedness of such Borrower which is subordinated to the
Indebtedness of such Borrower hereunder, under the Notes and to all
other Lender Obligations, on terms and conditions approved in writing
by the Lenders. As used herein with respect to Group, the term
"Subordinated Indebtedness" shall include the 1818 Note.
"SUBSIDIARY" shall mean any Person of which a Borrower shall
now or hereafter at the time own, directly or indirectly through one
or more Subsidiaries or otherwise, sufficient voting stock (or other
beneficial interest) to entitle it to elect at least a majority of the
board of directors or trustees or similar managing body. The term
"Subsidiary" shall not include any employee benefit plan of the
Borrowers or any entity appointed or established by the Borrowers for
or pursuant to the terms of any such plan.
"12.70% NOTES" shall mean the 12.70% Senior Subordinated Notes
of Housewares due December 15, 1998, in the aggregate original
principal amount of $60,000,000, issued pursuant to the several
Purchase Agreements dated as of December 1, 1988, as amended by
Amendment No. 1 to Purchase Agreement dated as of March 15, 1991,
Amendment No. 2 to Purchase Agreement dated as of January 8, 1992, and
Amendment No. 3 to Purchase Agreement dated as of July 16, 1993
(collectively, as so amended, the "12.70%
16
<PAGE> 22
Note Purchase Agreement"), between Housewares and the purchasers of
the 12.70% Notes.
"UNIFORM CUSTOMS AND PRACTICE" shall mean the Uniform Customs
and Practice for Documentary Credits (1993 Revision) International
Chamber of Commerce Publication No. 500.
"UNRESTRICTED SUBSIDIARY" shall mean a Subsidiary formed or
acquired solely in connection with a transaction consummated with the
proceeds of the Available Restricted Payments Fund; provided, however,
that any Unrestricted Subsidiary may become a Restricted Subsidiary on
the date on which each of the following conditions shall have
occurred: (i) such Subsidiary shall have executed and delivered a
Guaranty of the Lender Obligations substantially in the form of the
Guaranty Agreements; (ii) such Subsidiary shall have executed and
delivered a Security Agreement, a Pledge Agreement, Uniform Commercial
Code financing statements on appropriate form, mortgages, and any
other documents required to grant to the Agent, for the benefit of the
Lenders, a perfected security interest and lien on all real and
personal property of such Subsidiary, subject to no other liens or
encumbrances other than liens permitted under Section 9.2 hereunder;
(iii) all of the representations and warranties set forth in Article 5
hereof shall be true and correct with respect to such Subsidiary in
all material respects (except for any such representations and
warranties which expressly relate to an earlier date, and except for
matters permitted under Articles 8 and 9 hereof); and (iv) no Default
shall occur after giving effect to the conversion of such Subsidiary
into a Restricted Subsidiary, provided, that for purposes of this
clause (iv) and the financial covenants set forth in Article 7 hereof,
such conversion shall be deemed to have occurred and become effective
on the last day of the immediately preceding fiscal quarter.
"VIA" shall mean B. Via International Housewares, Inc., a
Delaware corporation, and its successors and assigns.
"WOODSTREAM" shall mean Woodstream Corporation, a Pennsylvania
corporation, and its successors and assigns.
"WOODSTREAM PAYABLE" shall mean the intercompany payable due
from Woodstream to Group from time to time, which as of January 1,
1995 was in the aggregate amount of $4,403,000.
"WRIGHT-BERNET" shall mean Wright-Bernet, Inc., an Ohio
corporation, and its successors and assigns.
Section 1.2. ACCOUNTING TERMS. All accounting terms used and not
defined in this Agreement shall be construed in accordance with GAAP, and all
financial data required to be delivered hereunder shall be prepared in
accordance with such principles. If any changes in accounting principles are
hereafter occasioned by promulgation of rules, regulations, pronouncements or
opinions by or are otherwise required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions), and any of such changes results in
a change in the method of
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<PAGE> 23
calculation of, or affect the results of such calculation of, any of the
financial covenants, standards or terms found herein, then the parties hereto
agree to enter into and diligently pursue negotiations in order to amend such
financial covenants, standards or terms so as to reflect fairly and equitably
such changes, with the desired result that the criteria for evaluating the
financial condition and results of operations of the Borrowers and their
Subsidiaries shall be the same after such changes as if such changes had not
been made. If the parties are unable to agree upon the amendments to any such
financial covenants, standards or terms, the parties agree to submit any
remaining disputes to an independent third-party accounting firm (having no
substantial relationship with any party) of national recognition selected by
such parties for a determination of the appropriate amendments to such
financial covenant, standard or term, which determination shall be binding upon
the parties.
<TABLE>
Section 1.3. TERMS DEFINED ELSEWHERE. The following terms,
defined elsewhere in this Agreement as set forth below, shall have the
respective meanings therein defined:
<CAPTION>
Section of Agreement
Term Where Defined
---- --------------------
<S> <C>
"Acquiror" Section 9.6
"Assignment and Assumption Agreement" Section 13.2
"CERCLA" Section 5.19(b)(ii)
"Code" Section 6.7
"Commitment Fee" Section 2.5(a)
"Control Group Person" Section 6.8
"Credit Participants" Section 13.3
"Disbursement Date" Section 2.11.2
"Event of Default" Section 11.1
"Frem Revolving Credit" Article 2
"Group Revolving Credit" Article 2
"Hazardous Substances" Section 5.19(b)
"Housewares Revolving Credit" Article 2
"Letter of Credit Facility Fee" Section 2.5(b)
"Letter of Credit Notice" Section 2.11.1(b)
"Notice of Borrowing" Section 2.2(a)
"Officer's Certificate" Section 3.1
"Real Property" Section 5.14
"Revolving Credit Commitment Fee" Section 2.5(a)
"Reimbursement Amount" Section 2.11.3
"Register" Section 13.2(c)
"Revolving Credit" Article 2
"Successor Lender" Section 13.2(a)
"Supporting Schedules" Section 6.1
</TABLE>
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<PAGE> 24
ARTICLE 2. THE CREDITS
Subject to the terms and conditions hereof, and in reliance on the
representations and warranties contained herein, each of the Lenders hereby
establishes credit facilities in favor of the Borrowers in the respective
principal amounts of each Lender's Revolving Credit Commitments. The aggregate
principal amount of the Lenders' Revolving Credit Commitments is $75,000,000.
The credit facilities shall consist of (i) a secured revolving credit facility
in favor of Group in the maximum principal amount of $30,000,000 (the "Group
Revolving Credit"), (ii) a secured revolving credit facility in favor of
Housewares in the maximum principal amount of $35,000,000 (the "Housewares
Revolving Credit"), and (iii) a secured revolving credit facility in favor of
Frem in the maximum principal amount of $10,000,000 (the "Frem Revolving
Credit"). Without limiting the provisions of Article 10 of this Agreement,
each of the parties hereto acknowledges and agrees that the Revolving Credit
Facilities are the several and not joint obligations of the Borrowers; it being
understood that (i) in no event shall Housewares be liable for the obligations
of Group hereunder and under the other Lender Agreements, and (ii) in no event
shall Frem be liable for the obligations of Housewares or Group hereunder and
under the other Lender Agreements.
Section 2.1. The Revolving Credit Facilities.
-------------------------------
(a) Subject to the terms and conditions of this Agreement
and so long as there exists no Default, at any time prior to the Revolving
Credit Termination Date or the earlier acceleration of the Revolving Credit
Notes, each Lender shall severally make such Advances to the Borrowers as each
Borrower may from time to time request, by notice to the Agent in accordance
with Section 2.2, in an aggregate amount with respect to any Revolving Credit
Facility (i) as to each Lender, not to exceed at any time the amount of such
Lender's Revolving Credit Commitment with respect to such Revolving Credit
Facility, and (ii) as to all of the Lenders, not to exceed an amount determined
by subtracting (A) the aggregate outstanding balance of all Advances
theretofore made by the Lenders with respect to such Revolving Credit Facility
plus the aggregate amount available to be drawn under all Letters of Credit
issued by the Agent for the account of the applicable Borrower in accordance
with Section 2.11 hereof, plus the amount of any unreimbursed draws under
Letters of Credit from (B) the Maximum Revolving Credit Amount from time to
time in effect for such Revolving Credit Facility. Concurrently with the
execution of this Agreement, the Borrowers will execute and deliver to the
Lenders their Revolving Credit Notes to evidence the Advances under the
respective Revolving Credit Facilities.
(b) Subject to the foregoing limitations and the
provisions of Article 4 hereof, the Borrowers shall have the right to repay the
outstanding balance of the Advances and to request further Advances, by notice
to the Agent in accordance with Section 2.2; PROVIDED THAT the Agent and the
Lenders shall have the absolute right to refuse to make any Advances for so
long as there would exist any Default upon the making of such Advance or after
giving effect thereto. All outstanding Advances and all interest accrued and
unpaid thereon and all other amounts outstanding hereunder shall be paid in
full on the Revolving Credit Termination Date.
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<PAGE> 25
Section 2.2. Notice and Manner of Borrowing and Conversion of Loans.
------------------------------------------------------
(a) Whenever a Borrower desires to obtain or continue an
Advance hereunder or to convert an outstanding Advance into an Advance of
another type provided for in this Agreement, such Borrower shall notify the
Agent (which notice shall be irrevocable) by telephone, telecopy, telex or
cable received no later than (i) 12:00 noon (Boston, Massachusetts time) on the
date on which the requested Advance is to be made or continued as or converted
to a Base Rate Advance, and (ii) 12:00 noon (Boston, Massachusetts time) on the
date two (2) Business Days before the day on which the requested Advance is to
be made or continued as or converted to a LIBOR Rate Advance. Each such notice
shall be made to the Agent by the President, Chief Executive Officer, Vice
President, Treasurer, Assistant Treasurer or Chief Financial Officer of the
applicable Borrower, or by any individual who is an employee or representative
of the applicable Borrower and who has been designated in writing to the Agent
by any of the foregoing officers to be authorized to act in such capacity on
behalf of the applicable Borrower, and shall specify (A) the applicable
Borrower and Revolving Credit Facility with respect to such Advance, (B) the
effective date of each Advance (or portion thereof) to be borrowed, continued
or converted (which date must be a Business Day), (C) the amount of such
Advance (which must be a minimum of $100,000 for a Base Rate Advance and
$500,000 and in integral multiples of $100,000 for a LIBOR Rate Advance), (D)
the interest rate option to be applicable thereto, and (E) if applicable, the
duration of the requested Interest Period (subject to the provisions of the
definition of Interest Period and Section 2.3). Each such notification (a
"Notice of Borrowing or Conversion") shall be immediately followed by a written
confirmation thereof by the applicable Borrower in substantially the form of
Exhibit E attached hereto, provided that if such written confirmation differs
in any material respect from the action taken by the Agent, the records of the
Agent shall control absent manifest error.
The Borrowers agree to indemnify and hold the Lenders harmless
for any action, including the making of any Advances hereunder, or loss or
expense, taken or incurred by the Lenders in good faith reliance upon any
telephonic Notice of Borrowing or Conversion. In the event a Borrower shall
fail to state the choice of an interest rate to apply to any Advance in
accordance with this Section 2.2, or if a Borrower shall select a LIBOR Rate
Advance but shall fail to select an Interest Period with respect to such
Advance, such Borrower shall be deemed to have chosen a Base Rate Advance. At
the time of the initial request for an Advance made under this Section 2.2, the
Borrowers shall have provided the Agent with a Compliance Certificate. The
Borrowers hereby agree (i) that the Lenders shall be entitled to rely upon the
Compliance Certificate most recently delivered to the Agent until it is
superseded by a more recent Compliance Certificate, and (ii) that each request
for an Advance, whether by telephone or in writing or otherwise, shall
constitute a confirmation of the truth and accuracy in all material respects of
the representations and warranties contained in the most recent Compliance
Certificate then in the Agent's possession (except as to changes which are
permitted under this Agreement and the other Lender Agreements).
Notwithstanding the provisions of this Section 2.2 and Section 2.3 hereof, the
Borrowers may not request the making, conversion or continuation of LIBOR Rate
Advances if it would result in there being more than fifteen (15) LIBOR Pricing
Options in the aggregate outstanding at any one time.
(b) Subject to the terms and conditions of this
Agreement, each Lender shall make available on or before 3:00 p.m. (Boston,
Massachusetts time) on the date of each proposed
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<PAGE> 26
Advance, to the Agent at the Agent's address and in immediately available
funds, such Lender's Revolving Credit Commitment Percentage of such Advance.
After the Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article 3, the Agent will credit such funds to the
applicable Borrower on the date of the proposed Advance.
(c) Unless the Agent shall have received notice from a
Lender prior to the date of any Advance that such Lender will not make
available to the Agent such Lender's Revolving Credit Commitment Percentage of
such Advance, the Agent may assume that such Lender has made such amount
available to the Agent on the date of such Advance in accordance with and as
provided in this Section 2.2 and the Agent may, in reliance upon such
assumption, make available on such date a corresponding amount to the
applicable Borrower. If and to the extent such Lender shall not have so made
its Revolving Credit Commitment Percentage of such Advance available to the
Agent and the Agent shall have made available such corresponding amount to the
Borrower, such Lender agrees to pay to the Agent forthwith on demand, and the
applicable Borrower agrees to repay to the Agent within thirty (30) days after
demand (but only after demand for payment has first been made to such Lender
and such Lender has failed to make such payment), an amount equal to such
corresponding amount together with interest thereon for each day from the date
the Agent shall make such amount available to such Borrower until the date such
amount is paid or repaid to the Agent, at an interest rate equal to the Federal
Funds Rate in effect from time to time plus one-half of one percent (1/2%). If
such Lender shall pay to the Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance for purposes of this Agreement. If
a Borrower makes a repayment required by the foregoing provisions of this
Section 2.2(c) and thereafter the applicable Lender or Lenders make the
payments to the Agent required by this Section 2.2(c), the Agent shall promptly
refund the amount of such Borrower's payment.
(d) The failure of any Lender to make the Advance to be
made by it on any date shall not relieve such Lender or any other Lender of its
obligation, if any, hereunder to make its Advance on such date, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender.
(e) Notwithstanding the foregoing, the requirements of
notice and minimum amounts with respect to Advances imposed by Section 2.2(a)
shall not apply to Advances made pursuant to Section 2.11.3(a).
Section 2.3. Interest; Duration of Interest Periods.
--------------------------------------
(a) Subject to the terms of Sections 2.4 and 2.9 hereof,
each Borrower shall pay interest on the unpaid balance of the Advances from
time to time outstanding at the Applicable Base Rate or the Applicable LIBOR
Rate, as elected by such Borrower in accordance with Section 2.2 and this
Section 2.3.
(b) With respect to Base Rate Advances, interest shall be
payable in arrears on the last day of each calendar month, commencing April 30,
1995, and continuing until all amounts of principal which are Base Rate
Advances shall have been fully paid. With respect to LIBOR Rate Advances,
interest shall be payable in arrears on the last day of the applicable Interest
Period and, if such Interest Period is more than three months, interest shall
be paid in three month
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<PAGE> 27
intervals from the first day of such Interest Period and on the last day of
such Interest Period, for interest accrued to each such date.
(c) Subject to the provisions of the definition of
Interest Period, the duration of each Interest Period applicable to a LIBOR
Rate Advance shall be as specified in the applicable Notice of Borrowing or
Conversion. The Borrowers shall have the option to elect a subsequent Interest
Period to be applicable to such LIBOR Rate Advance by delivering to the Agent a
Notice of Borrowing or Conversion evidencing such election received no later
than (i) 12:00 noon (Boston, Massachusetts time) on the last day of the then
applicable Interest Period if such LIBOR Rate Advance is to be continued as or
converted to a Base Rate Advance, and (ii) two (2) Business Days before the end
of the then applicable Interest Period if such LIBOR Rate Advance is to be
continued as or converted to a LIBOR Rate Advance; PROVIDED, HOWEVER, that no
Borrower may elect to continue or convert any Advance as a LIBOR Rate Advance
if any Default shall exist. The Agent will promptly inform each Lender of a
Notice of Borrowing or Conversion electing a LIBOR Rate Advance received by the
Agent pursuant to this Section 2.3(c) and of the duration of the Interest
Period specified by the applicable Borrower therein.
(d) If the Agent does not receive a notice of election of
duration of an Interest Period for a LIBOR Rate Advance pursuant to subsection
(c) above within the applicable time limits specified therein, or if, when such
notice must be given, a Default exists, the applicable Borrower shall be deemed
to have elected to convert such Advance in whole into a Base Rate Advance on
the last day of the then current Interest Period with respect thereto.
Section 2.4. ADDITIONAL INTEREST PAYMENTS. During the continuance
of any Event of Default, the Borrowers shall, on demand, pay to the Lenders
interest on the unpaid principal balance of the Advances and, to the extent
permitted by law, on any overdue installments of interest, at a rate per annum
equal to the lesser of (i) the applicable interest rate on Advances hereunder
plus three percent (3%), or (ii) the maximum rate of interest permitted to be
charged under applicable law.
Section 2.5. Fees.
----
(a) Each Borrower shall pay to the Agent, for the account
of the Lenders with respect to the Revolving Credit Facility under which such
Borrower is the primary obligor, in proportion to each Lender's respective
Revolving Commitment Percentage, a credit commitment fee (the "Revolving Credit
Commitment Fee") of three-eighths of one percent (.375%) per annum of the
difference between (i) the Maximum Revolving Credit Amount with respect to such
Revolving Credit Facility, and (ii) the daily average principal amount of the
Advances and face amount of all Letters of Credit outstanding under such
Revolving Credit Facility from time to time, from the date hereof to and
including the Revolving Credit Termination Date. The Revolving Credit
Commitment Fee shall be payable quarterly in arrears on the last day of each
March, June, September and December, commencing June 30, 1995, for the quarter
then ended (and in the case of the payment due on June 30, 1995, for the period
from the Closing Date to June 30, 1995).
(b) Each Borrower shall pay to the Agent for the account
of the Lenders, in proportion to each Lender's Revolving Credit Commitment
Percentage, a fee (the "Letter of
22
<PAGE> 28
Credit Facility Fee") with respect to each Letter of Credit issued for the
account of such Borrower hereunder, calculated at a rate of one and one-quarter
percent (1.25%) per annum on the aggregate amount available to be drawn on all
such outstanding Letters of Credit, from and including the date of issuance of
each Letter of Credit until the expiration date thereof. The Letter of Credit
Facility Fee shall be payable quarterly in advance, on the date of issuance of
the initial Letter(s) of Credit hereunder and thereafter on the last day of
each March, June, September and December.
(c) AGENCY FEE. On the Closing Date and on each
anniversary thereof, the Borrowers shall pay to the Agent, for its own account,
the agency fee described in the side letter agreement dated the Closing Date
between Fleet and the Borrower.
Section 2.6. Computation of Interest and Fees.
--------------------------------
(a) All computations of interest and fees hereunder shall
be made by the Agent on the basis of a year of 360 days for the actual number
of days (including the first day but excluding the last day) elapsed. No
interest payment or interest rate charged hereunder shall exceed the maximum
rate authorized from time to time by applicable law. The outstanding principal
balance of the Notes as reflected on the Agent's records from time to time
shall be considered correct and binding on the Borrowers and the Lenders
(absent manifest error) unless within sixty (60) days after receipt of any
notice by the Agent of such outstanding amount, the Borrowers or any Lender
notifies the Agent to the contrary.
(b) Any change in the rate of interest resulting from a
change in the Base Rate shall become effective as of the opening of business on
the day on which such change in the Base Rate becomes effective.
Section 2.7. TERMINATION OR REDUCTION OF REVOLVING CREDIT
FACILITIES. Each Borrower may at any time terminate or reduce the Revolving
Credit Facility under which it is the primary obligor in whole or in part,
subject to Section 4.7 hereof, without premium or penalty, upon not less than
three (3) Business Days prior written notice to the Agent; provided that any
such partial reduction or termination shall be in a minimum amount of
$1,000,000 and integral multiples of $1,000,000. Following termination or
reduction of all or part of any Revolving Credit Facility, such terminated
portion may not be reinstated. On the date of any such termination or
reduction the applicable Borrower shall pay all interest and Revolving Credit
Commitment Fees accrued to such date under the applicable Revolving Credit
Facility.
Section 2.8. YIELD PROTECTION. If any law or any governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any interpretation thereof, or compliance of the Lenders with
such:
(i) subjects any of the Lenders to any tax, duty,
charge or withholding on or from payments due from the Borrowers
(excluding taxation of the overall net income of the Lenders), or
changes the basis of taxation of payments to such Lender in respect of
its loans or Advances or other amounts due it hereunder; or
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(ii) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any of the Lenders (other than the Reserve
Requirement, to the extent it is taken into account in determining the
interest rate applicable to LIBOR Rate Advances); or
(iii) imposes any other condition the result of which
is to increase the cost to any Lender of making, funding or maintaining
loans or Advances hereunder or issuing Letters of Credit or maintaining
participations therein or reduces any amount receivable by any Lender in
connection with such loans, Advances or Letters of Credit, or requires
any Lender to make any payment calculated by reference to the amount of
loans held or interest received by it, by an amount deemed material by
such Lender; or
(iv) affects the amount of capital required or
expected to be maintained by any Lender or any corporation controlling
any Lender and such Lender determines the amount of capital required is
increased by or based upon the existence of this Agreement or its
obligation to make loans or Advances or issue Letters of Credit
hereunder or of commitments of this type;
then, within fifteen (15) days of demand by such Lender, the Borrowers shall
pay such Lender that portion of such increased expense incurred (including, in
the case of the preceding clause (iv), any reduction in the rate of return on
capital to an amount below that which such Lender could have achieved but for
such change in regulation after taking into account such Lender's policies as
to capital adequacy) or reduction in an amount received which such Lender
determines is attributable to making, funding and maintaining its loans and
Advances hereunder.
Section 2.9. AVAILABILITY OF LIBOR PRICING OPTION; CHANGED
CIRCUMSTANCES. In the event that:
(a) on any date on which the LIBOR Rate would otherwise
be set, the Agent shall have determined in good faith (which determination
shall be final and conclusive) that adequate and fair means do not exist for
ascertaining the LIBOR Rate; or
(b) at any time the Agent shall have determined in good
faith (which determination shall be final and conclusive) that
(i) the implementation of the LIBOR Pricing
Option has been made impracticable or unlawful by (A) the occurrence
of a contingency that materially and adversely affects the interbank
Eurodollar market, or (B) compliance by any Lender in good faith with
any applicable law or governmental regulation, guideline or order or
interpretation or change thereof by any governmental authority charged
with the interpretation or administration thereof or with any request
or directive of any such governmental authority (whether or not having
the force of law); or
(ii) the LIBOR Rate shall no longer represent the
effective cost to the Lenders for U.S. dollar deposits in the
interbank market for deposits in which they regularly participate;
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then, and in such event, the Agent shall forthwith so notify the Borrowers
thereof. Until the Agent notifies the Borrowers that the circumstances giving
rise to such notice no longer apply, the obligation of the Lenders and the
Agent to allow election by the Borrowers of LIBOR Rate Advances shall be
suspended. If at the time the Agent so notifies the Borrowers, any Borrower
has previously given the Agent a Notice of Borrowing or a notice pursuant to
Section 2.3(c) requesting a LIBOR Rate Advance, but such LIBOR Pricing Option
has not yet gone into effect, such Notice of Borrowing or notice shall
automatically be deemed to be a request for a Base Rate Advance. Upon such
date as shall be specified in such notice (which shall not be earlier than the
date such notice is given) all outstanding LIBOR Rate Advances shall
automatically convert to Base Rate Advances and, in the event of an occurrence
of the type specified in Section 2.9(b), to the extent that the Agent or any
Lender has incurred any so-called "LIBOR breakage costs" relating to such
outstanding LIBOR Rate Advances, the applicable Borrower shall pay any amounts
required to be paid pursuant to Section 4.7 with respect to such Advances.
Section 2.10. LENDER CERTIFICATES; SURVIVAL OF INDEMNITY. If any
Lender shall seek reimbursement or indemnification pursuant to Section 2.8 or
4.7, such Lender shall deliver a certificate to the Borrowers stating the
amount due thereunder. Such certificate as to the amount due under Section 2.8
or 4.7 shall be final, conclusive and binding on the Borrowers in the absence
of manifest error. Determination of amounts payable under Section 2.8 or 4.7
in connection with a LIBOR Rate Advance shall be calculated as though the
Lenders funded the LIBOR Rate Advance through the purchase of a deposit of the
type and maturity corresponding to the deposit used as a reference in
determining the LIBOR Rate applicable to such LIBOR Rate Advance, whether in
fact that is the case. Unless otherwise provided herein, the amount specified
in the certificate shall be payable within fifteen (15) days after receipt by
the Borrowers of the certificate. The obligations of the Borrowers under
Section 2.8 shall survive for six months following payment of all Lender
Obligations and termination of this Agreement; provided that such continuation
shall not affect the obligation of the Agent to release the liens granted
pursuant to the Security Documents upon termination of this Agreement and the
Security Documents.
Section 2.11. Letters of Credit.
-----------------
Section 2.11.1. Issuing Letters of Credit.
-------------------------
(a) Subject to the terms and conditions hereof,
including satisfaction of the conditions set forth in Sections 3.1 and
3.2 hereof, and provided no Default has occurred and is continuing,
the Agent shall at any time prior to the Revolving Credit Termination
Date, upon the request of a Borrower pursuant to Section 2.11.1(b)
hereof, issue Letters of Credit for the account of such Borrower;
provided, however, that (i) the aggregate face amount of all
outstanding Letters of Credit shall not at any time exceed
$12,000,000, and (ii) the aggregate face amount under all outstanding
Letters of Credit issued for the account of such Borrower plus the
aggregate of all Advances theretofore made by the Lenders to such
Borrower plus all unreimbursed draws under Letters of Credit shall not
at any time exceed such Borrower's Maximum Revolving Credit Amount.
The parties hereto acknowledge and agree that on the Closing Date, all
Existing Letters of Credit shall automatically and without any further
action become Letters of Credit hereunder, subject, in all respects,
to the provisions of this Section 2.11 and the other provisions of
this Agreement.
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(b) Each Borrower may request that the Agent
issue a Letter of Credit for the account of such Borrower by written
notice in the form attached hereto as EXHIBIT F (a "Letter of Credit
Notice") given to the Agent not less than three (3) Business Days
prior to the proposed date of issuance of such Letter of Credit. The
Letter of Credit Notice shall (i) specify the Borrower requesting the
issuance of such Letter of Credit, (ii) the proposed date of issuance,
beneficiary, amount and expiry date (which shall not be later than one
year after the date of issuance of such Letter of Credit or later than
the Revolving Credit Termination Date) of such Letter of Credit, (iii)
specify whether such request is for a standby or a documentary letter
of credit, and (iv) be accompanied by a letter of credit application
on the appropriate form completed to the satisfaction of, and with
such amendments and modifications as may be deemed necessary by, the
Agent. Subject to the terms and conditions thereof, the Agent shall,
as soon as practicable and in any event within three (3) Business Days
of receipt of the Letter of Credit Notice, issue the proposed Letter
of Credit. The Agent shall notify each Lender of the Letter of Credit
Notice prior to the date of issuance of the applicable Letter of
Credit.
SECTION 2.11.2. LENDERS' PARTICIPATION. Upon the issuance by
the Agent of a Letter of Credit, and without further action, each
Lender shall be deemed to have irrevocably purchased, to the extent of
its Revolving Credit Commitment Percentage, a participation interest
in such Letter of Credit and any Letter of Credit application or other
documents relating thereto. The Agent shall notify each Lender of the
presentment for payment of any draft under a Letter of Credit,
together with notice of the date (the "Disbursement Date") on which
such payment shall be made. On the Disbursement Date each Lender
shall deliver to the Agent by wire funds transfer such Lender's
Revolving Credit Commitment Percentage of the draft paid by the Agent
under the applicable Letter of Credit.
Section 2.11.3. Reimbursement and other Payments.
--------------- --------------------------------
(a) Each Borrower hereby agrees to pay to the
Agent on the date on which the Agent shall be required to pay any
draft presented under any Letter of Credit issued for the account of
such Borrower, a sum (the "Reimbursement Amount") equal to: (i) the
amount so paid under such Letter of Credit, plus (ii) interest on any
amount remaining unpaid by such Borrower to the Agent under clause (i)
from and including the date on which such amount becomes payable
pursuant to clause (i) until payment in full, payable on demand, at a
per annum rate of interest equal to the rate applicable to Base Rate
Advances of such Borrower under Section 2.3(a). If the Borrower shall
fail to pay to the Agent the Reimbursement Amount on the date on which
the Agent shall be required to pay any draft presented under any such
Letter of Credit, the Agent shall, to the extent such Borrower has
availability under its Revolving Credit Facility to request an Advance
and in the absence of an event of the type referred to in Section
11.1(f) hereof, consider such failure to be a request for a Base Rate
Advance in the amount of the unpaid Reimbursement Amount, and, to the
extent the Agent has received each Lender's Revolving Credit
Commitment Percentage of the amount paid by the Agent under such
Letter of Credit, the Agent shall apply the proceeds of such Advance
to reimburse the Lenders for such amounts received from the Lenders.
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(b) Each Borrower hereby agrees to pay to the
Agent, for its own account, sums equal to any and all customary fees
and expenses which the Agent may pay or incur relative to the issuance
of any Letter of Credit issued for the account of such Borrower, any
amendment, transfer or negotiation thereof or any payment by the Agent
thereunder.
SECTION 2.11.4. OBLIGATIONS ABSOLUTE. The obligations of the
Borrowers with respect to the Letters of Credit shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without
limitation, the following circumstances:
(a) any lack of validity or enforceability of any Letter
of Credit or this Agreement;
(b) any amendment or waiver of or any consent to or actual
departure from this Agreement;
(c) the existence of any claim, set-off, defense
or other right which any Borrower may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any Persons or
entities for which any such beneficiary or any such transferee may be
acting), the Agent, any Lender or any other Person or entity, whether
in connection with this Agreement, the transactions contemplated
herein or in any other agreements or any unrelated transaction;
(d) any statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(e) payment by the Agent under a Letter of Credit
against presentation by the beneficiary thereof of a draft or
certificate which does not comply with the terms of such Letter of
Credit; or
(f) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
SECTION 2.11.5. THE UNIFORM CUSTOMS AND PRACTICE. The
Uniform Customs and Practice shall be binding on the Borrowers, the
Agent and the Lenders. The Borrowers assume all risks of the acts or
omissions of the beneficiary of each Letter of Credit with respect to
such Letter of Credit. In furtherance of, and not in limitation of
the Agent's rights and powers under the Uniform Customs and Practice,
but subject to all other provisions of this Section 2.11.5, it is
understood and agreed that the Agent and the Lenders shall not have
any liability for, and that the Borrowers assume all responsibility
for: (a) the genuineness of any signature; (b) the form, correctness,
validity, sufficiency, genuineness, falsification and legal effect of
any draft, certification or other document required by a Letter of
Credit or the authority of the Person signing the same; (c) the
failure of any instrument to bear any reference or adequate reference
to a Letter of Credit or the failure of any Persons to note the amount
of any instrument on the reverse of a
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Letter of Credit or to surrender a Letter of Credit or otherwise to
comply with the terms and condition of a Letter of Credit; (d) the
good faith or acts of any Person other than the Agent and its agents
and employees; (e) the existence, form or sufficiency or breach or
default under any agreement or instrument of any nature whatsoever;
(f) any delay in giving or failure to give any notice, demand or
protest; and (g) any error, omission, delay in or nondelivery of any
notice or other communication, however sent. The determination as to
whether the required documents are presented prior to the expiration
of a Letter of Credit and whether such other documents are in proper
and sufficient form for compliance with a Letter of Credit shall be
made by the Agent in its sole discretion, which determination shall be
conclusive and binding upon the Borrowers and the Lenders absent
manifest error. It is agreed that the Agent may honor, as complying
with the terms of a Letter of Credit and this Agreement, any documents
otherwise in order and signed or issued by the beneficiary thereof.
Any action, inaction or omission on the part of the Agent under or in
connection with any Letter of Credit or any related instruments or
documents, if in good faith and in conformity with such laws,
regulations or commercial or banking customs as the Agent may
reasonably deem to be applicable, shall be binding upon the Borrowers
and the Lenders, shall not place the Agent under any liability to the
Borrowers and the Lenders, and shall not affect, impair or prevent the
vesting of any of the Agent's rights or powers hereunder or the
Borrowers' obligation to make full reimbursement or the Lenders'
obligations to purchase participations in amounts paid by the Agent
pursuant to Section 2.11.2.
SECTION 2.11.6. MODIFICATION, CONSENT, ETC. If any Borrower,
either in writing or orally, requests or consents to any modification
or extension of a Letter of Credit or waives failure of any draft,
certificate or other documents to comply with the terms of a Letter of
Credit, the Agent and the Lenders shall be entitled to rely and shall
be deemed to have relied on such request, consent or waiver with
respect to any action taken or omitted by the Agent pursuant to any
such request, consent or waiver, and such extension, modification or
waiver shall be binding upon such Borrower.
SECTION 2.11.7. LIABILITY OF THE AGENT AND THE LENDERS.
Neither the Agent, the Lenders nor any of their respective officers,
directors or employees shall be liable or responsible for: (a) the use
which may be made of any Letter of Credit or any acts or omissions of
any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Agent against presentation of documents which do not
comply with the terms of a Letter of Credit, including failure of any
documents to bear any reference or adequate reference to a Letter of
Credit; or (d) any other circumstances whatsoever in making or failure
to make payment under a Letter of Credit. In furtherance and not in
limitation of the foregoing, the Agent may accept documents that
appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the
contrary. Notwithstanding anything in this Section 2.11 to the
contrary, the Borrowers shall have a claim against the Agent, and the
Agent shall be liable to the Borrowers, to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered
by the Borrowers which were caused by the Agent's failure to conform
to the standards of the Uniform Customs and Practice.
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ARTICLE 3. CONDITIONS OF LENDING
SECTION 3.1. CONDITIONS TO THE INITIAL ADVANCE. The Lenders'
obligations to make available the Revolving Credit Facilities provided for
herein and to make the initial Advance(s) and/or issue the initial Letter(s) of
Credit thereunder shall be subject to compliance by the Borrowers with their
obligations contained herein, and to the satisfaction or waiver by the Lenders,
at or before the Closing Date, of all the following conditions precedent:
(a) RECEIPT OF DOCUMENTS. The Agent shall have received
each of the following, in form and substance satisfactory to the Agent and its
counsel or in the form attached hereto as an Exhibit, as the case may be:
(1) REVOLVING CREDIT NOTES. The Revolving Credit
Notes duly executed by the Borrowers;
(2) SECURITY DOCUMENTS. (i) the Guaranty
Agreements duly executed by each Guarantor; (ii) the Security
Agreements duly executed by each of the Borrowers and the Guarantors,
as appropriate; (iii) the Intercompany Security Agreements and the
Assignment and Acknowledgment duly executed by Kellogg, Woodstream and
Group, as appropriate; (iv) the Pledge Agreements duly executed by
Group, Kellogg and Woodstream, together with (A) certificates
representing all of the issued and outstanding stock of Kellogg,
Woodstream, Housewares, Wright-Bernet, Via and Cleaning (except for
certain outstanding shares of Woodstream's preferred stock), with
stock powers duly executed in blank, (B) certificates representing all
of the capital stock of the Borrower owned by Woodstream, with stock
powers duly executed in blank, and (C) the original Kellogg Note, duly
endorsed by Group in blank; and (v) the Mortgages duly executed by the
Borrowers and the Guarantors, as appropriate;
(3) CERTIFICATE OF CORPORATE ACTION BY THE
BORROWERS. A certificate of the Clerk or Secretary of each of the
Borrowers, dated the Closing Date, certifying the names and true
signatures of the officers of such Borrower authorized to sign this
Agreement, the Revolving Credit Notes and the other Lender Agreements
to which such Borrower is a party;
(4) OFFICER'S CERTIFICATES. A certificate
regarding places of business and locations of collateral duly executed
by the Chairman, President, Treasurer or Chief Financial Officer of
each of the Borrowers and the Guarantors, in the form attached hereto
as EXHIBIT G;
(5) RESOLUTIONS. Copies of all resolutions of
the Executive Committee of, or the Board of Directors of, each of the
Borrowers and the Guarantors, certified by the Secretary or Clerk of
the applicable Borrower and Guarantor, as being contained in the
minutes of each such Committee or Board of Directors, and all such
other documents, similarly certified, evidencing all other necessary
corporate actions by the Borrowers and the Guarantors, duly
authorizing the execution, delivery and performance by the Borrowers
and each Guarantor of the Lender Agreements to which each of them is a
party
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and all other transactions contemplated hereby and thereby;
(6) CERTIFICATES OF CORPORATE ACTION BY
GUARANTORS. A certificate of the Secretary or Clerk of each
Guarantor, dated the Closing Date, certifying the names and true
signatures of the officers of the Guarantor authorized to sign the
Guaranty Agreements and the other Lender Agreements to which such
Guarantor is a party;
(7) OPINION OF COUNSEL TO BORROWERS AND
GUARANTORS. The opinion of Messrs. Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., counsel to the Borrowers and the Guarantors,
dated the Closing Date, in the form attached hereto as Exhibit I;
(8) CERTIFICATES OF GOOD STANDING, ETC.
Certificates of legal existence and good standing for each of the
Borrowers and the Guarantors issued by the Secretary of State of its
respective state of incorporation, and certificates of due
qualification of the Borrowers issued by the Secretary of State of the
states in which each of them are qualified or registered to do
business as foreign corporations;
(9) UNIFORM COMMERCIAL CODE FINANCING STATEMENTS.
Evidence of the filing of (i) Uniform Commercial Code Financing
Statements in all jurisdictions where such filings are necessary to
perfect the security interests created under the Security Documents,
and (ii) Uniform Commercial Code Assignments sufficient to assign to
the Agent all security interests created pursuant to the Intercompany
Note Security Agreements;
(10) CERTIFICATES OF INSURANCE. Certificates of
insurance issued to the Agent from an independent insurance broker
dated the Closing Date, in form and substance satisfactory to the
Agent, certifying as to the insurance on the assets of the Borrowers
and the Guarantors as required hereunder and under the Security
Agreements and naming the Agent as a loss payee, insured mortgagee and
additional insured, as applicable;
(11) THE 1994 CONSOLIDATED FINANCIAL STATEMENTS.
The 1994 Consolidated Financial Statements, together with the
management letter prepared by such accountants for Fiscal Year 1994;
(12) CERTIFICATE OF EXECUTIVE VICE PRESIDENT OR
TREASURER. A Certificate in the form of Exhibit K attached hereto,
dated the Closing Date, executed by the Executive Vice President,
Finance and Administration or Treasurer of Group.
(13) FEES. The Borrowers shall have executed and
delivered the side letter agreements referred to in Section 2.5(c)
hereof, and the Borrowers shall have paid the fee described therein;
(14) MORTGAGE DOCUMENTS. (i) The opinion of
Messrs. Devine, Millimet and Branch, special counsel to the Borrower,
relating to the New Hampshire Mortgage Documents; (ii) Lenders
Policies of Title Insurance relating to each of the Real Properties
subject to the Mortgages; (iii) copies of all most recent surveys,
plot plans and
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environmental studies and reports relating to the Real Properties
subject to the Mortgages that are reasonably available to the
Borrowers and the Guarantor; and (iv) such other documents and
materials regarding the Mortgages and the Real Property subject
thereto as the Lenders shall reasonably require, all in form and
substance satisfactory to the Lenders; and
(14) OTHER DOCUMENTs. Such other documents,
certificates and opinions as the Agent may reasonably request.
(b) REPRESENTATIONS AND WARRANTIES. The representations
and warranties herein and those made by or on behalf of the Borrowers or any
Subsidiary in any other Lender Agreement shall be true and correct as of the
date of execution of this Agreement, with the same effect as if made at and as
of such time.
(c) NO DEFAULT, ETC. There shall exist no Default or any
other condition which, after the passage of time or giving of notice or both,
would result in a Default upon the making of the Advances or the issuance of
the Letters of Credit.
(d) LEGALITY. The making of the Advances and the
issuance of the Letters of Credit shall not be prohibited by any law or
governmental order or regulation applicable to the Lenders, the Agent or to the
Borrowers, and all necessary consents, approvals and authorizations of any
Person for all the credits made pursuant to this Agreement shall have been
obtained.
(e) LITIGATION. Except as set forth in SCHEDULE 5.18
attached hereto, there shall exist no litigation, at law or in equity, or any
proceeding before any federal, state, provincial or municipal board or other
governmental or administrative agency pending or, to the best knowledge of the
Borrowers, threatened, or any basis therefore, (i) with respect to the
Revolving Credit Facilities, or (ii) which, if determined adversely to any
Borrower or Guarantor, is reasonably likely to have a Material Adverse Effect
or a material adverse effect on the ability of any Borrower or Guarantor to
perform its obligations to the Lenders and the Agent under the Lender
Agreements to which it is a party.
Section 3.2. CONDITIONS TO ALL ADVANCES AND LETTERS OF CREDIT.
The Lenders' obligations to make any Advance or the Agent's obligation to issue
any Letter of Credit from time to time pursuant to this Agreement shall be
subject to compliance by the Borrowers with its obligations contained in this
Agreement and each other Lender Agreement, and to the satisfaction, at or
before making of each Advance or issuance of each Letter of Credit, as the case
may be, of all of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties herein and those made by or on behalf of the Borrowers or any
Subsidiary in any other Lender Agreement shall be correct in all material
respects as of the date on which any Advance is made or any Letter of Credit is
issued, as the case may be, with the same effect as if made at and as of such
time, except that references in Article 5 to the 1994 Consolidated Financial
Statements shall refer to the most recent annual financial statements furnished
to the Lenders pursuant to Article 6 hereof, and references in Section 5.9(b)
to the financial projections dated March 7, 1995 shall refer to the most recent
annual financial projections furnished to the Lenders pursuant to Section
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6.12 hereof, and except as to changes which are permitted under this Agreement
and the other Lender Agreements.
(b) NO DEFAULT. On the date of any Advance or issuance
of any Letter of Credit hereunder, there shall exist no Default upon the making
of, or after giving effect to, the Advance or the issuance of, and after giving
effect to, the Letter of Credit, as the case may be.
(c) LEGALITY. The making of the requested Advance or the
issuance of the requested Letter of Credit, as the case may be, shall not be
prohibited by any law or governmental order or regulation applicable to the
Lenders, the Agent or the Borrowers and all necessary consents, approvals and
authorizations of any Person for any such Advance or Letter of Credit shall
have been obtained.
(d) NOTICE OF BORROWING. The Agent shall have received a
Notice of Borrowing in accordance with Section 2.2 or a Letter of Credit Notice
in accordance with Section 2.11.1(b), as the case may be, duly executed and
completed by the applicable Borrower, in form and substance satisfactory to the
Agent.
The request of any Borrower for each Advance and Letter of Credit, and
the acceptance by such Borrower of each such Advance, shall be deemed a
representation and warranty by all of the Borrowers that the conditions
specified above in this Section 3.2 have been satisfied.
ARTICLE 4. PAYMENT AND REPAYMENT
Section 4.1. MANDATORY PAYMENT. If at any time the Maximum
Revolving Credit Amount with respect to any Revolving Credit Facility shall be
less than the aggregate outstanding principal balance of all Advances made
under such Revolving Credit Facility, plus the aggregate amount available to be
drawn under, and all unreimbursed drawings under, all Letters of Credit issued
by the Agent for the account of the Borrower under such Revolving Credit
Facility, the applicable Borrower shall immediately repay to the Agent for the
account of the Lenders an amount equal to the difference between such Maximum
Revolving Credit Amount then in effect and such amount.
Section 4.2. VOLUNTARY PREPAYMENT. The Borrowers may make
prepayments to the Agent for the account of the Lenders of any outstanding
principal amount of the Advances which are Base Rate Advances at any time prior
to 12:30 p.m. (Boston, Massachusetts time) on any Business Day without premium
or penalty. The Borrowers may make prepayments to the Agent for the account of
the Lenders of any outstanding principal amount of Advances which are LIBOR
Rate Advances at any time prior to 12:30 p.m. (Boston, Massachusetts time) on
any Business Day, subject, however, to the premiums and penalties set forth in
Section 4.7.
Section 4.3. PAYMENT AND INTEREST CUTOFF. Notice of each
prepayment pursuant to Section 4.2 shall be given to the Agent (i) in the case
of prepayment of Prime Rate Advances, not later than 12:00 noon (Boston,
Massachusetts time) on the date of payment, and (ii) in the case of prepayment
of LIBOR Rate Advances on any day other than the last day of the Interest
Period applicable thereto, not later than 12:00 noon (Boston, Massachusetts
time) one Business Day
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prior to the proposed date of payment, and, in each case, shall specify the
total principal amount of the Advances to be paid on such date. Notice of
prepayment having been given in compliance with this Section 4.3, the amount
specified to be prepaid shall become due and payable on the date specified for
prepayment, and from and after said date (unless the applicable Borrower shall
default in the payment thereof) interest thereon shall cease to accrue. Unpaid
interest on the principal amount of any LIBOR Rate Advance so prepaid accrued
to the date of prepayment shall be due on the date of prepayment.
Section 4.4. PAYMENT OR OTHER ACTIONS ON NON-BUSINESS DAYS.
Subject to clause (i) of the definition of Interest Period, whenever any
payment to be made hereunder shall be stated to be due on a day other than a
Business Day such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest, Revolving Credit Commitment Fees or Letter of Credit
Facility Fees, as the case may be. In the case of any other action the last
day for performance of which shall be a day other than a Business Day, the date
for performance shall be extended to the next succeeding Business Day.
Section 4.5. Method and Timing of Payments.
-----------------------------
(a) All payments required to be made pursuant to the
provisions of this Agreement and any other Lender Agreement, and all
prepayments pursuant to Section 4.1, may be charged by the Agent against the
Borrowers' accounts with the Agent, for the account of the respective Lenders
in proportion to their respective Commitments hereunder. Each Borrower hereby
authorizes the Agent and the Lenders, without notice to such Borrower, to
charge against any account of such Borrower with the Agent or such Lender an
amount equal to the accrued interest, principal, Reimbursement Amounts and
other amounts from time to time due and payable to the Agent and the Lenders
hereunder and under all other Lender Agreements which are owed by such
Borrower.
(b) The Borrowers shall make each payment to be made by
them hereunder not later than 12:00 noon (Boston time) on the day when due in
lawful money of the United States to the Agent at its address set forth in
Section 14.5 in immediately available funds. The Agent will, after its receipt
thereof, distribute like funds relating to the payment of principal, interest,
Reimbursement Amounts, Revolving Credit Commitment Fees or any other amounts
payable hereunder ratably to the Lenders.
Section 4.6. SHARING OF PAYMENTS, ETC. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Advances in excess of its ratable
share of payments in respect thereof, such Lender shall forthwith notify the
Agent thereof and purchase from each other Lender such participations in the
Advances held by such other Lenders as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each other Lender;
PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and each Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with an amount equal
to such Lender's ratable share (according to the proportion of (i) the amount
of such Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or
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<PAGE> 39
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 4.6 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrowers in the amount of such
participation.
Section 4.7 PAYMENTS NOT AT END OF INTEREST PERIOD. If a
Borrower for any reason makes any payment of principal with respect to any
LIBOR Rate Advance on any day other than the last day of the Interest Period
applicable to such LIBOR Rate Advance, including without limitation by reason
of acceleration, or fails to borrow an Advance after electing a LIBOR Pricing
Option with respect thereto pursuant to Section 2.2, such Borrower shall pay to
the Agent, for the ratable account of the Lenders, an amount computed pursuant
to the following formula:
L = (R - T) x P x D
---------------
360
L = amount payable to the Agent
R = interest rate on such LIBOR Rate Advance
T = effective interest rate per annum at which any readily
marketable bond or other obligation of the United States,
selected at the Agent's reasonable discretion, maturing on or
near the last day of the then applicable Interest Period of
such LIBOR Rate Advance and in approximately the same amount
as such LIBOR Rate Advance can be purchased by the Agent on
the day of such payment of principal or failure to borrow
P = the amount of principal prepaid or the amount of the requested
LIBOR Rate Advance
D = the number of days remaining in the Interest Period as of the
date of such payment or the number of days of the requested
Interest Period
The Borrower shall pay such amount upon presentation by the Agent of a
statement setting forth the amount and the Agent's calculation thereof pursuant
hereto, which statement shall be deemed true and correct absent manifest error.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and extend
the Revolving Credit Facilities contemplated hereby, the Borrowers hereby make
the following representations and warranties.
Section 5.1. CORPORATE EXISTENCE, GOOD STANDING, ETC. Each
Borrower and each of its Restricted Subsidiaries is a corporation validly
organized, legally existing and in good standing under the laws of the
jurisdiction in which it is organized, with all requisite corporate power and
authority and full legal right to own or to hold under lease its properties and
conduct its business as now conducted and as proposed to be conducted by it.
Each Borrower has the corporate power to enter into and perform this Agreement
and all other Lender Agreements to which it is a party and to execute and
deliver the Revolving Credit Notes to be issued by it. Certified copies of
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<PAGE> 40
the charter documents and By-laws of each of the Borrowers have been previously
delivered to the Agent and are true, accurate and complete as of the date
hereof.
Section 5.2. PRINCIPAL PLACES OF BUSINESS; LOCATION OF RECORDS.
The principal places of business of each of the Borrowers and its respective
Subsidiaries as of the date hereof are listed on SCHEDULE 5.14 attached hereto.
All of the books and records or true and complete copies thereof relating to
the respective accounts and contracts of the Borrowers and their respective
Restricted Subsidiaries are and will be kept at such locations or such other
locations as to which the Borrowers provide the Agent at least 15 days' prior
written notice.
Section 5.3. QUALIFICATION. Each of the Borrowers and its
respective Restricted Subsidiaries is duly qualified, licensed and authorized
to do business and is in good standing as a foreign corporation in each
jurisdiction where its failure to be so qualified, licensed or authorized to do
business would have a Material Adverse Effect.
Section 5.4. SUBSIDIARIES; CAPITAL STOCK. As of the date hereof,
the Borrowers have no Subsidiaries other than those listed on SCHEDULE 5.4
attached hereto. There are presently issued by the Subsidiaries of the
Borrowers and outstanding the shares of capital stock indicated on SCHEDULE 5.4
attached hereto. Each such Subsidiary has received the consideration for which
such stock was authorized to be issued and has otherwise complied with all
legal requirements relating to the authorization and issuance of shares of
stock and all such shares are validly issued, fully paid and non-assessable.
Except as set forth on Schedule 5.4, no Subsidiary has any other capital stock
of any class outstanding.
Section 5.5. CORPORATE POWER, ETC. The execution, delivery and
performance of this Agreement, the Revolving Credit Notes and all other Lender
Agreements, and the incurrence of Indebtedness to the Lenders hereunder or
thereunder, now or hereafter owing:
(a) are within the corporate powers of each of the
Borrowers and the Guarantors, having been duly authorized by its respective
Board of Directors or applicable Committee thereof or other similar governing
body, and, if required by law, by its charter documents, By-laws and
stockholders;
(b) do not require any approval or consent of, or filing
with, any governmental agency or other Person (or such approvals and consents
have been obtained and delivered to the Agent) and are not in contravention of
law or the terms of the charter documents or By-laws of such Borrower or
Guarantor or any amendment thereof, except to such extent as shall have no
practical adverse effect, as determined by the Lenders in their sole
discretion;
(c) do not and will not
(i) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which such Borrower or Guarantor is
a party or by which such Borrower or Guarantor, or any of their
respective properties are bound or affected (including, without
limitation, the 12.70% Note Purchase Agreement), except to such extent
as shall have no practical adverse effect, as determined by the
Lenders in their sole discretion,
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<PAGE> 41
(ii) result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature on any property
now owned or hereafter acquired by such Borrower or Guarantor, except
as provided in the Lender Agreements, or
(iii) result in a violation of or default under any
law, rule, regulation, order, writ, judgment, injunction, decree,
determination, award, indenture, agreement, lease or instrument now in
effect having applicability to such Borrower or Guarantors, or to any
of their respective properties, except to such extent as shall have no
practical adverse effect, as determined by the Lenders in their sole
discretion.
Section 5.6. VALID AND BINDING OBLIGATIONS. This Agreement, the
Revolving Credit Notes and all the other Lender Agreements executed in
connection herewith and therewith constitute, or will constitute when
delivered, the valid and binding obligations of the Borrowers and the
Guarantors party thereto, as the case may be, enforceable in accordance with
their respective terms.
Section 5.7. OTHER AGREEMENTS. No Borrower or Guarantor is a
party to any indenture, loan or credit agreement, or any lease or other
agreement or instrument, or subject to any charter or corporate restriction,
which is likely to have a Material Adverse Effect, or a material adverse effect
on the ability of such Borrower or Guarantor to carry out any of the provisions
of this Agreement, the Revolving Credit Notes or any of the other Lender
Agreements to which it is a party.
Section 5.8. PAYMENT OF TAXES. Each Borrower and its Restricted
Subsidiaries has filed all federal, state, county, local, foreign or other
income tax, excise tax, sales tax, use tax, gross receipts tax, franchise tax,
employment and payroll related tax, property tax and all other tax returns
which are required to be filed by it and has paid, or made adequate provision
for the payment of, all taxes which have or may become due pursuant to said
returns or to assessments received, for which the failure to file or pay would
have a Material Adverse Effect. The federal tax returns of Group have been
audited by the Internal Revenue Service through its Fiscal Year End 1987. The
Borrowers know of no material additional assessments for any taxes for which
adequate reserves appearing in the balance sheet contained in the 1994
Consolidated Financial Statements have not been established. Each Borrower and
its Restricted Subsidiaries have made adequate provisions for all current
taxes, and in the opinion of the Borrowers there will not be any additional
assessments for any fiscal periods prior to and including that which ended on
the date of said balance sheet in excess of the amounts reserved therefor.
Section 5.9. Financial Statements.
---------------------
(a) The 1994 Consolidated Financial Statements and the
unaudited consolidating balance sheet of Group and its Subsidiaries as of
January 1, 1995, and the related consolidating statements of income for the
fiscal quarter then ended, have been prepared in accordance with GAAP (subject,
in the case of such consolidating statements, to the absence of footnotes and
ordinary year-end audit adjustments) and present fairly the consolidated (and,
in the case of such consolidating statements, consolidating) financial
condition of Group and its
36
<PAGE> 42
Subsidiaries; and all information contained therein is true, complete and
correct in all material respects.
(b) The consolidated and consolidating financial
projections of Group and its Subsidiaries dated March 7, 1995, copies of which
have been delivered to the Agent and the Lenders, (i) have been prepared in
accordance with GAAP, (ii) are based upon reasonable estimates and assumptions,
(iii) have been prepared based on the assumptions stated therein and the
Borrowers' reasonable estimates of the results of operations of Group and its
Subsidiaries for the subject period, and (iv) represent reasonably attainable
results of operations of Group and its Subsidiaries for such period.
Section 5.10. OTHER MATERIALS FURNISHED. No written information,
exhibits, memoranda or reports furnished by the Borrowers or any of their
Subsidiaries to the Lenders in connection with the negotiation of this
Agreement contains any material misstatement of fact or omit to state a
material fact necessary to make the statements contained therein not misleading
in the context in which such statements were made.
Section 5.11. COMMITMENTS TO ISSUE SECURITIES. There are no
outstanding securities exchangeable for or convertible into or carrying any
rights to acquire from any Subsidiary of Group shares of any class of capital
stock of such Subsidiary, and there are no outstanding options, warrants or
other similar rights to acquire from any Subsidiary of Group any shares of any
class of capital stock of such Subsidiary. There are no outstanding
commitments, agreements or obligations binding on any Subsidiary of Group which
require or could require any such Subsidiary (i) to issue, sell, transfer,
pledge or otherwise dispose of any shares of any class of capital stock of such
Subsidiary, or (ii) to issue, sell or grant (A) any securities exchangeable for
or convertible into or carrying any rights to acquire any shares of any class
of capital stock of such Subsidiary, or (B) any option, warrants or any other
rights to acquire any shares of any class of capital stock of any such
Subsidiary.
Section 5.12. DIVIDENDS AND CAPITAL DISTRIBUTIONS. Except as
described on SCHEDULE 5.12 attached hereto, since the date of the balance sheet
contained in the 1994 Consolidated Financial Statement, (a) Group has not
declared or paid or otherwise agreed to pay any dividends on any shares of any
class of its capital stock, (b) no Borrower has made or agreed to make any
payments on account of the purchase or other acquisition or redemption or other
retirement of any shares of any class of its capital stock or any warrants or
options to purchase any such shares, and or (c) no Borrower has made or agreed
to make any other distributions of any kind in respect of any shares of any
class of its capital stock or in respect of any such warrants or options,
except for (i) distributions by Group made in accordance with the terms of the
Restricted Stock Plans, (ii) the declaration and payment by Woodstream of
regularly scheduled dividends on its Preferred Stock in an aggregate amount not
in excess of $30,000, and (iii) redemptions by Group of shares of its Preferred
Stock, and issuance by Group of shares of its common stock in respect of the
conversion of shares of its Preferred Stock, as required under the terms of the
ESOP.
Section 5.13. CHANGES IN CONDITION. Except as set forth in
SCHEDULE 5.13 attached hereto, since the date of the balance sheet contained in
the 1994 Consolidated Financial Statements, there has been no material adverse
change in the business or assets or in the financial condition of any of the
Borrowers, or of the Borrowers and the Guarantors taken as a whole, or
37
<PAGE> 43
of Group and its Subsidiaries taken as a whole, and no Borrower or Guarantor
has entered into any transaction outside of the ordinary course of business
which is material to such Borrower or Guarantor.
Section 5.14. TITLE TO REAL PROPERTY. Each Borrower and its
Restricted Subsidiaries has good and marketable title in fee simple to the real
property described as owned by them in SCHEDULE 5.14 attached hereto
(collectively, the "Real Property"), subject only to Permitted Liens and the
liens and other encumbrances described in said SCHEDULE 5.14. Except as set
forth in SCHEDULE 5.14, the buildings of each of the Borrowers and its
Restricted Subsidiaries located on the Real Property do not encroach on the
property of others and none of the buildings, structures or other appurtenances
or improvements on the Real Property (or any equipment therein), nor the
operation or maintenance thereof, violate any restrictive covenant or any
provision of any federal, state or local law, ordinance, rule or regulation
which could have a material adverse effect on the value of the applicable Real
Property. Except as set forth in SCHEDULE 5.14, no condemnation proceeding is
pending or threatened which would preclude or impair the use of any of the Real
Property by the Borrowers and their Restricted Subsidiaries for the purposes
for which it is used. Each lease of Real Property set forth on SCHEDULE 5.14 is
in full force and effect, all rents and additional rents due have been paid,
and no material default thereunder exists or has been claimed.
Section 5.15. TITLE TO PERSONAL PROPERTY. Except as set forth on
SCHEDULE 5.15 attached hereto, each Borrower and its Restricted Subsidiaries
has good and marketable title to all personal property and assets of every type
and description used by it in its business, other than property held under
leases, free and clear of any and all mortgages, liens, pledges, privileges,
charges or encumbrances of every kind, nature and description other than
Permitted Liens and liens and encumbrances noted in SCHEDULE 5.15; and all
properties and assets of the Borrowers and their Restricted Subsidiaries are in
their respective possession or custody or under their respective control and
all of their respective operating assets are in good operating condition and
repair, normal wear and tear excepted.
Section 5.16. ABSENCE OF UNDISCLOSED LIABILITIES. None of the
Borrowers or any of their Restricted Subsidiaries has any material liabilities
or obligations of any nature or of any amount whatsoever, whether accrued,
absolute, liquidated or unliquidated, contingent or otherwise, including,
without limitation, tax liabilities due or to become due and whether incurred
in respect of or measured by the income of such Borrower or Restricted
Subsidiary for any period prior to the date hereof, or arising out of
transactions entered into or any state of facts existing prior thereto, except
(i) to the extent reflected in the 1994 Consolidated Financial Statements and
not heretofore paid or discharged, (ii) those since January 1, 1995 which have
been incurred in or as a result of the normal and ordinary course of business
and consistent with the prior practice of the Borrowers and their Restricted
Subsidiaries, none of which liabilities or obligations, singly or in the
aggregate, have a Material Adverse Effect, and (iii) those contemplated by this
Agreement or disclosed in SCHEDULE 5.16 attached hereto.
Section 5.17. Patents; Trademarks; Etc.
-------------------------
(a) Each Borrower and its Restricted Subsidiaries has
sufficient rights in all patents, trade secrets, trademarks, trade names, brand
names, service marks and copyrights, as well as all designs, permits, labels,
packages and displays used or in connection with such rights,
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used in the business or operations of such Borrower and its Restricted
Subsidiaries or the use of which are necessary or desirable in any material
respect for the business or operations of such Borrower and its Restricted
Subsidiaries as now conducted or as proposed to be conducted. Except as
provided on SCHEDULE 5.15, no Borrower or any Restricted Subsidiary has
pledged, assigned or otherwise encumbered any such rights or properties, except
to a Borrower or another Restricted Subsidiary or pursuant to licenses granted
in the ordinary course of business. None of the Borrowers or any Restricted
Subsidiary is in default in any material respect under or in relation to any
license, sublicense, or other agreement relating to any such rights or
properties as to which it is the licensee, except for such defaults which,
singly or in the aggregate, could not have a Material Adverse Effect.
(b) There is no claim by or demand of any Person
pertaining to, and there is no pending or (to the best knowledge of the
Borrowers) threatened action, suit, proceeding or investigation relating to, or
the outcome of which, either individually or in the aggregate with any other
such claim or demand, could have a Material Adverse Effect; nor to the best
knowledge of the Borrowers is there a basis for any such claim, suit,
proceeding or investigation. Each Borrower and its Restricted Subsidiaries has
taken all reasonable steps to protect its right, title and interest in and to
such intellectual property rights which are material to the operation of its
business.
(c) Except as set forth on SCHEDULE 5.17 attached hereto,
to the best knowledge of the executive officers of each of the Borrowers, no
Person who is a director, officer or key employee of any of the Borrowers or
any Restricted Subsidiary is presently obligated under or presently bound by
any terms or provisions of any agreements or contracts (including licenses,
covenants or commitments of any nature), or subject to any judgments, decrees
or orders of any court or administrative agency, that conflict or may conflict
with his agreements and obligations to use his best efforts to promote the
interests of the Borrower or Subsidiary by which he is employed, or that
conflict with or may conflict with the business or operations of the Borrower
or Restricted Subsidiary by which he is employed as presently conducted or as
proposed to be conducted.
(d) Except as set forth on SCHEDULE 5.17 attached hereto,
no Borrower or any Restricted Subsidiary is a party to or bound by any
agreement or contract (whether written or oral) containing any covenant
prohibiting it from competing in any business with any Person in any territory
presently conducted or proposed to be conducted by it, or from competing with
any Person, or prohibiting it from doing any kind of business presently
conducted or proposed to be conducted by it.
Section 5.18. LITIGATION. Except as set forth in SCHEDULE 5.18
attached hereto, there is no litigation, at law or in equity, or any proceeding
before any federal, state, provincial or municipal board or other governmental
or administrative agency pending or threatened against any of the Borrowers or
any of their Restricted Subsidiaries, or any basis therefor, which involves a
material risk of any judgment or liability not fully covered by insurance which
may have, either individually or in the aggregate, a Material Adverse Effect,
and no judgment, decree, or order of any federal, state, provincial or
municipal court, board or other governmental or administrative agency has been
issued against any Borrower or Restricted Subsidiary which has or may have a
Material Adverse Effect.
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Section 5.19. Compliance with Laws and Contracts, Etc.
----------------------------------------
(a) Except as provided on Schedule 5.19 attached hereto,
to the best of the Borrowers' knowledge, each Borrower and its Restricted
Subsidiaries have complied in all material respects with, and do not violate or
contravene in any material respect, any provision of any applicable law, or any
judgment, decree or order of any court or governmental or regulatory authority,
bureau, agency or official applicable to such Borrower or its Restricted
Subsidiaries or the business or operations of such Borrower and its Restricted
Subsidiaries, the violation or contravention of which are reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
(b) Except as set forth in Schedule 5.19 attached hereto:
-------------
(i) None of the Borrowers, any of their
respective Subsidiaries, or any operator of any of their respective
properties, is in violation or, to the Borrowers' knowledge, is in
alleged violation, of any Environmental Law, which violation would
have a Material Adverse Effect;
(ii) None of the Borrowers nor any Subsidiary has
received written notice from any third party, including without
limitation any federal, state, county, or local governmental
authority, (A) that it has been identified as a potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended ("CERCLA") or any
equivalent state law, with respect to any site or location, (B) that
any hazardous waste, as defined in 42 U.S.C. Section 6903(5), any
hazardous substances, as defined in 42 U.S.C. Section 9601(14), any
pollutant or contaminant, as defined in 42 U.S.C. Section 9601(33),
or any toxic substance, oil or hazardous materials or other chemicals
or substances regulated by any Environmental Laws ("Hazardous
Substances") which it has generated, transported or disposed of, has
been found at any site at which a federal, state, county, or local
agency or other third party has conducted or has ordered the Borrower,
any Subsidiary or another third party or parties (e.g. a committee of
potentially responsible parties) to conduct a remedial investigation,
removal or other response action pursuant to any Environmental Law, or
(C) that it is or shall be a named party to any claim, action, cause
of action, complaint (contingent or otherwise) or legal or
administrative proceeding arising out of any actual or alleged release
or threatened release of Hazardous Substances, in each case, which
singly or in the aggregate is not reasonably likely to have a Material
Adverse Effect. For purposes of this Agreement, "release" means any
past or present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, disposing or
dumping of Hazardous Substances into the environment;
(iii) (A) Each of the Borrowers, each Subsidiary
and, to the best of the Borrowers' knowledge, each operator of any
real property owned or operated by any of the Borrowers or any
Subsidiary is in compliance with all provisions of Environmental Laws
relating to the handling, manufacturing, processing, generation,
storage or disposal of any Hazardous Substances except to the extent
such noncompliance is not reasonably likely to have a Material Adverse
Effect, (B) no portion of property owned, operated or controlled by
any of the Borrowers or any Subsidiary has been used for the handling,
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manufacturing, processing, generation, storage or disposal of
Hazardous Substances except in accordance with applicable
Environmental Laws or except to the extent the same is not reasonably
likely to have a Material Adverse Effect, (C) there have been no
releases or threatened releases of Hazardous Substances on, upon, into
or from any property owned, operated or controlled by any of the
Borrowers or any Subsidiary, which releases could reasonably be
expected to have a Material Adverse Effect, (D) to the best of the
Borrowers' knowledge, there have been no releases of Hazardous
Substances on, upon, from or into any real property in the vicinity of
the real properties owned, operated or controlled by any of the
Borrowers or any Subsidiary which, through soil or groundwater
contamination, may have come to be located on the properties of any
Borrower or Subsidiary and which are reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect (E) to the best
of the Borrowers' knowledge, there have been no releases of Hazardous
Substances on, upon, from or into any real property formerly but no
longer owned, operated or controlled by any Borrower or Subsidiary
which, directly or indirectly, is reasonably likely to result in a
Material Adverse Effect;
(iv) None of the properties of any of the
Borrowers or their Subsidiaries is subject to any applicable
environmental cleanup responsibility law or environmental restrictive
transfer law or regulation unless the effect thereof is not reasonably
likely to result in a Material Adverse Effect.
(c) None of the Borrowers nor any of their Restricted
Subsidiaries is in violation of or in default under any provision of its
charter documents or By-laws, or any provision of any contract, agreement or
instrument (including, without limitation, any writing evidencing any
Indebtedness or any guarantee) to which such Borrower or any such Restricted
Subsidiary is a party or by which such Person or any of its property is bound
or affected, the violation or default under or in respect of which are
reasonably likely to, individually or in the aggregate, have a Material Adverse
Effect.
(d) To the best of Borrowers' knowledge, none of the
Borrowers nor any of their Restricted Subsidiaries have made any illegal
payment to officers or employees of any governmental or regulatory body, or
made any illegal payment to customers for the sharing of fees or to customers
or suppliers for rebating of charges, or engaged in any other reciprocal
practices, or made any illegal payment or given any other illegal consideration
to purchasing agents or other representatives of customers with respect to any
sales made or to be made by any of the Borrowers or any such Subsidiary.
Section 5.20. FOREIGN TRADE REGULATIONS. None of the Borrowers nor
any Guarantor is (a) a person included within the definition of "designated
foreign country" or "national" of a "designated foreign country" in Executive
Order No. 8389, as amended, in Executive Order No. 9193, as amended, in the
Foreign Assets Control Regulations (31 C.F.R., Chapter V, Part 500, as
amended), in the Cuban Assets Control Regulations of the United States Treasury
Department (31 C.F.R., Chapter V, Part 515, as amended) or in the Regulations
of the Office of Alien Property, Department of Justice (8 C.F.R., Chapter II,
Part 507, as amended) or within the meanings of any of the said Orders or
Regulations, or of any regulations, interpretations, or rulings issued
thereunder, or in violation of said Orders or Regulations or of any
regulations,
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interpretations or rulings issued thereunder; or (b) an entity listed in
Section 520.101 of the Foreign Funds Control Regulations (31 C.F.R., Chapter V,
Part 520, as amended).
Section 5.21. GOVERNMENTAL REGULATIONS. None of the Borrowers, any
Guarantor or any corporation controlling any of the Borrowers or under common
control with any of the Borrowers is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940, or is a common carrier under the Interstate Commerce Act,
or is subject to any statute or regulation which regulates the incurrence by a
Borrower of indebtedness for borrowed money, including statutes or regulations
relating to common or contract carriers or to the sale of electricity, gas,
steam, water, telephone or telegraph or other public utility services.
Section 5.22. Pension Plans; Employees and Benefits.
--------------------------------------
(a) SCHEDULE 5.22 attached hereto sets forth employee
pension benefit plans of the Borrowers and their Subsidiaries, all of which are
in material compliance with the provisions of ERISA. None of such plans which
are subject to the minimum funding or termination insurance provisions of ERISA
have a funding deficiency as of the date hereof.
(b) None of the Borrowers or any of their Subsidiaries
(i) has any obligation to contribute to a Multiemployer Pension Plan, and (ii)
has incurred (and/or does not expect to incur) any withdrawal liability to a
Multiemployer Pension Plan under the provisions of Section 4201 of ERISA.
(c) No event which constitutes a "reportable event" as
defined in Section 4043 of ERISA has occurred with respect to any employee
pension benefit plan maintained by any of the Borrowers or their Subsidiaries
on behalf of their respective employees. Each Borrower and its Subsidiaries
have timely paid all withholding, FICA and other taxes required to be paid by
it on behalf of its respective employees.
Section 5.23. OUTSTANDING INDEBTEDNESS. The outstanding amount of
Borrowed Funds Indebtedness (including Capitalized Lease Obligations) and all
Guarantees of each of the Borrowers and the Restricted Subsidiaries is
correctly set forth in SCHEDULE 5.23 attached hereto, and said Schedule
correctly describes all security interests securing such Indebtedness.
Section 5.24. EMPLOYMENT PRACTICES. No Borrower or any Restricted
Subsidiary has received notice that it is not in substantial compliance with
all federal and state laws respecting employment and employment practices,
terms and conditions of employment and wages and hours. No Borrower or any
Restricted Subsidiary is engaged in any unfair labor practice. SCHEDULE 5.24
attached hereto lists all collective bargaining agreements covering any
employees of the Borrowers and their Restricted Subsidiaries.
Section 5.25. REGULATION U. Margin stock (as defined in Regulation
U) constitutes less than 25% of those assets of the Borrowers and their
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder and under the other Lender Agreements.
42
<PAGE> 48
Section 5.26. SOLVENCY. No Borrower or any Guarantor is now, and,
after giving effect to the transactions contemplated by this Agreement and the
other Lender Agreements, no Borrower or any Guarantor will be, (i) "insolvent"
as defined in Section 101(32) of the Bankruptcy Code of 1978, as amended, (ii)
engaged in business or a transaction or about to engage in business or a
transaction for which its property is an unreasonably small capital, or (iii)
incurring or intending to incur debts beyond its ability to pay such debts as
they mature.
Section 5.27. 12.70% NOTES. As of the Closing Date and after
giving effect to (i) the execution and delivery by the Borrowers of this
Agreement and the other Lender Agreements to which they are parties, (ii) the
incurrence by Housewares and Frem of the full amounts of the Housewares
Revolving Credit Facility and the Frem Revolving Credit Facility, respectively
(as if the full amounts thereof were advanced on the Closing Date), and (iii)
the repayment in part by Housewares and Frem of the Housewares Payable and the
Frem Payable, respectively, no Event of Default (as defined in the 12.70% Note
Purchase Agreement) (or event which with the passage of time, the giving of
notice, or both, would constitute such an Event of Default) will have occurred
under the 12.70% Note Purchase Agreement.
ARTICLE 6. REPORTS
Section 6.1. QUARTERLY FINANCIAL STATEMENTS. As soon as
available, and in any event within fifty (50) days after the end of each fiscal
quarter of the Borrowers, the Borrowers shall furnish the Agent and the Lenders
with (i) unaudited consolidated and consolidating balance sheets of Group and
its Subsidiaries, as of the end of such quarter and related consolidated and
consolidating statements of income, and consolidated statements of
stockholders' equity and cash flows of Group and its Subsidiaries for such
quarter and for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, (ii) the unaudited consolidated
balance sheet of Housewares and its Subsidiaries as of the end of such quarter
and related consolidated statements of income for the period commencing at the
end of the previous fiscal year and ending with the end of such quarter,
together with supporting schedules (collectively, the "Supporting Schedules")
describing depreciation expense, amortization expense, interest expense, other
similar non-cash expenses, non-cash expenses related to compensation in the
form of stock, and federal, state and foreign income tax expense for Housewares
and its Subsidiaries, each prepared on a consolidated and consolidating basis
for Housewares and its Subsidiaries, for such quarter and such period, and
(iii) a Compliance Certificate.
Section 6.2. ANNUAL FINANCIAL STATEMENTS. As soon as available,
but in any event within ninety-five (95) days after the end of each fiscal
year, the Borrowers shall furnish to the Agent and the Lenders (i) a
consolidated balance sheet of Group and its Subsidiaries as of the end of such
fiscal year and related consolidated statements of income, stockholders' equity
and cash flows of Group and its Subsidiaries for such fiscal year, in each case
reported on by independent certified public accountants of recognized national
standing reasonably acceptable to the Agent, which report shall express,
without reliance upon others (except for other independent certified public
accountants of recognized national standing acceptable to the Agent), a
positive opinion regarding the fairness of the presentation of such financial
statements in accordance with GAAP, said report to be without qualification,
except in cases of unresolved litigation and accounting changes with which such
accountants concur, together with the statement of such accountants that they
have
43
<PAGE> 49
caused the provisions of this Agreement to be reviewed and that nothing has
come to their attention to lead them to believe that any Default exists
hereunder or specifying any Default and the nature thereof, (ii) a
consolidating balance sheet of Group and its Subsidiaries as of the end of such
fiscal year and related consolidated and consolidating statements of income of
Group and its Subsidiaries for such fiscal year and for the period ending at
the end of such fiscal year, together with Supporting Schedules prepared on a
consolidated and consolidating basis for Group and its Subsidiaries, all in
reasonable detail and prepared in accordance with GAAP, (iii) a consolidated
balance sheet of Housewares and its Subsidiaries as of the end of such fiscal
year and related consolidated statements of income of Housewares and its
Subsidiaries for such fiscal year, together with Supporting Schedules prepared
on a consolidated basis for Housewares and its Subsidiaries, all in reasonable
detail and prepared in accordance with GAAP, (iv) a consolidated balance sheet
of Group and its Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income of Group and its Subsidiaries for such fiscal
year, together with Supporting Schedules prepared on a consolidated basis for
Group and its Subsidiaries, all in reasonable detail and prepared in accordance
with GAAP, (v) a Compliance Certificate, (vi) a Certificate of the Executive
Vice President - Finance and Administration or the Treasurer of Group in the
form of EXHIBIT K hereto, and (vii) a certificate of the Chief Executive
Officer, Vice President-Finance or Treasurer of Housewares setting forth in
reasonable detail a calculation as of the end of such fiscal year of (A) the
aggregate amount of Indebtedness permitted to be incurred by Housewares and its
Restricted Subsidiaries (as defined in the 12.70% Note Purchase Agreement)
under Section 8.1 of the 12.70% Note Purchase Agreement, (B) the aggregate
amount of Indebtedness permitted to be incurred by Frem under Section 8.2(d) of
the 12.70% Note Purchase Agreement, (C) the Base Amount and the Available Fund
(as such terms are defined in the 12.70% Note Agreement), and (D) such other
matters relating to the 12.70% Notes as the Agent may reasonably request.
Section 6.3. NOTICE OF DEFAULTS. As soon as possible, and in any
event within one Business Day after any executive officer of any Borrower knows
or in the exercise of reasonable care should have known of the occurrence of
any Default, the Borrowers shall furnish the Agent and the Lenders with the
statement of the Chief Executive Officer, Chief Financial Officer, Vice
President-Finance, or Treasurer of Group setting forth details of such Default
and the action which the Borrowers have taken or propose to take with respect
thereto.
Section 6.4. NOTICE OF LITIGATION. Promptly after the
commencement thereof, the Borrowers shall furnish the Agent and the Lenders
with written notice of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting any of the Borrowers or their respective
Subsidiaries, which, if adversely determined, would have a Material Adverse
Effect.
Section 6.5. COMMUNICATIONS WITH OTHERS. Promptly after the
sending thereof, Group shall furnish the Agent and the Lenders with copies of
all proxy statements, financial statements and reports which Group sends to its
stockholders as a group, and copies of all regular, periodic and special
reports and all registration statements which Group or any of its Subsidiaries
files with the Securities and Exchange Commission or any governmental authority
which may be substituted therefor, or with any national or regional securities
exchange.
44
<PAGE> 50
Section 6.6. REPORTABLE EVENTS. At any time that any Borrower or
Subsidiary has a Pension Plan, the Borrowers shall furnish to the Agent and the
Lenders, as soon as possible, but in any event within thirty (30) days after
the Borrowers know or have reason to know that any Reportable Event with
respect to any Pension Plan has occurred, the statement of the Chief Executive
Officer, Chief Financial Officer, Vice President-Finance or Treasurer of Group
setting forth the details of such Reportable Event and the action which the
applicable Borrower or Subsidiary has taken or proposes to take with respect
thereto, together with a copy of the notice of such Reportable Event to the
Pension Benefit Guaranty Corporation.
Section 6.7. ANNUAL PENSION REPORTS. At any time that any
Borrower or Subsidiary has a Pension Plan, the Borrowers shall furnish to the
Agent and the Lenders, promptly after the filing thereof with the Internal
Revenue Service, the Secretary of Labor, the Pension Benefit Guaranty
Corporation or other appropriate government agency, copies of each annual
report which is filed with respect to each Pension Plan for each plan year,
including:
(a) a statement of assets and liabilities of such Pension
Plan as of the end of such plan year and statements of changes in fund balance
and in financial position, or a statement of changes in net assets available
for plan benefits, for such plan year;
(b) an opinion of a firm of independent certified public
accountants of recognized standing acceptable to the Lenders relating to such
Pension Plan to the extent that any such opinion for the Pension Plan is
required by law; and
(c) an actuarial statement of such Pension Plan
applicable to such plan year, together with an opinion of an enrolled actuary
of recognized standing acceptable to the Lenders, to the extent that any such
statement or opinion for the Pension Plan is required by law.
Section 6.8. MULTIEMPLOYER PENSION PLANS. If any Borrower, any
Subsidiary or any Person which is a member of the controlled group or under
common control with any Borrowers or any Subsidiary (within the meaning of
Section 414(b) of the Internal Revenue Code of 1986, as amended (the "Code"),
or Section 4001(b)(1) of ERISA) (a "Control Group Person") is required to make
contributions to a Multiemployer Pension Plan, (i) the Borrowers shall notify
the Agent and the Lenders within thirty (30) days after the withdrawal from
such Multiemployer Pension Plan by any Borrower, any Subsidiary or any Control
Group Person of the details of any such withdrawal if such withdrawal could
reasonably result in the imposition of any withdrawal liability on any
Borrower, any Subsidiary, or any Control Group Person pursuant to Section 4201
of ERISA, and (ii) the Borrowers shall promptly provide the Agent and the
Lenders with copies of all assessments of such withdrawal liability received by
any Borrower, any Subsidiary or any Control Group Person.
Section 6.9. ENVIRONMENTAL REPORTS. The Borrowers shall provide
the Agent and each Lender: (a) not later than seven days after notice
thereof, notice of any enforcement actions, or, to the knowledge of the
Borrowers, threatened enforcement actions affecting any of the Borrowers or any
Subsidiary by any federal, state or municipal governmental authority or agency
related to all Environmental Laws which could have a Material Adverse Effect;
(b) copies, promptly after they are received, of all orders, notices of
responsibility, notices of violation, notices of enforcement actions, and
assessments which could have a Material Adverse Effect,
45
<PAGE> 51
and other written communications pertaining to any such orders, notices, claims
and assessments received by any of the Borrowers or any Subsidiary from any
federal, state or municipal governmental authority or agency; (c) not later
than seven days after notice thereof, notice of any civil claims or threatened
civil claims affecting any of the Borrowers or any Subsidiary by any third
party alleging any violation of any Environmental Laws which could have a
Material Adverse Effect; (d) copies of all cleanup plans, site assessment
reports, response plans, remedial proposals, or other submissions of any of the
Borrowers or any Subsidiary, other third party (e.g., committee of potentially
responsible parties at a Superfund site), or any combination of same, submitted
to a federal, state or municipal governmental agency in response to any
communication referenced in subsections (a) and (b) herein simultaneously with
their submission to such governmental agency; and (e) from time to time, on
request of the Agent, evidence satisfactory to the Lenders of the Borrowers'
insurance coverage, if any, for any environmental liabilities.
Section 6.10. REPORTS TO OTHER CREDITORS. Promptly after filing
the same, the Borrowers shall furnish to the Agent and the Lenders copies of
any compliance certificate and other information furnished to any other holder
of the securities (including debt obligations) of any of the Borrowers or
Guarantors pursuant to the terms of any indenture, loan or credit or similar
agreement and not otherwise required to be furnished to the Agent or the
Lenders pursuant to any other provision of this Agreement.
Section 6.11. MANAGEMENT LETTERS. Promptly after the receipt
thereof, the Borrowers shall furnish to the Agent and the Lenders copies of any
written recommendations concerning the management, finances, financial
controls, or operations of the Borrowers received from the Borrowers'
independent public accountants.
Section 6.12. ANNUAL PROJECTIONS. Promptly after approval by
Group's Board of Directors and in any event no later than March 1, of each
year, the Borrowers shall furnish to the Agent and the Lenders (i) a
consolidated and consolidating budget forecast for Group and its Subsidiaries
for the immediately following fiscal year, and (ii) consolidated and
consolidating financial projections for Group and its Subsidiaries for the
immediately following fiscal year, such projections to include consolidated and
consolidating balance sheets and related consolidated and consolidating
statements of income and cash flow, and shall be prepared on a
quarter-by-quarter basis in accordance with GAAP consistently applied. All
such projections shall be based upon reasonable estimates and assumptions, and
shall have been prepared based on the assumptions stated therein and the
Borrowers' reasonable estimates of the results of operations of Group and its
Subsidiaries for the subject period and other information provided therein.
Section 6.13. MISCELLANEOUS. The Borrowers shall provide the Agent
and the Lenders with such other information as the Agent or the Lenders may
from time to time reasonably request respecting the business, properties,
condition or operations, financial or otherwise, of the Borrowers and their
Subsidiaries.
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<PAGE> 52
ARTICLE 7. FINANCIAL RESTRICTIONS
On and after the date hereof, until all of the Lender Obligations
shall have been paid in full and the Borrowers shall have no further right to
borrow hereunder, the Borrowers shall observe the following covenants.
<TABLE>
Section 7.1. Minimum Consolidated EBITDA.
----------------------------
(a) The Consolidated EBITDA of Group and its Subsidiaries
shall not be less than the amount set forth below during the periods indicated,
as measured at the end of each fiscal quarter on the basis of the fiscal
quarter ending on such date and the three immediately preceding fiscal
quarters:
<CAPTION>
Period Consolidated EBITDA (Group)
------ ---------------------------
<S> <C>
Closing Date through the date preceding
Fiscal Year End 1995 $45,000,000
Fiscal Year End 1995 through the date preceding
Fiscal Year End 1996 48,000,000
Fiscal Year End 1996 through the date preceding
Fiscal Year End 1997 51,000,000
Fiscal Year End 1997 and thereafter 54,000,000
</TABLE>
<TABLE>
(b) The Consolidated EBITDA of Housewares and its
Subsidiaries shall not be less than the amount set forth below during the
periods indicated, as measured at the end of each quarter on the basis of the
fiscal quarter ending on such date and the three immediately preceding fiscal
quarters:
<CAPTION>
Period Consolidated EBITDA (Housewares)
------ --------------------------------
<S> <C>
Closing Date through the date
preceding Fiscal Year End 1995 $30,000,000
Fiscal Year End 1995 through the
date preceding Fiscal Year End
1996 33,000,000
Fiscal Year End 1996 through the
date preceding Fiscal Year End
1997 36,000,000
Fiscal Year End 1997 and thereafter 40,000,000
</TABLE>
Section 7.2. Ratio of Consolidated EBITA to Consolidated Interest Expense.
-------------------------------------------------------------
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<PAGE> 53
(a) The ratio of Group's Consolidated EBITA to
Consolidated Interest Expense shall at no time be less than 2.75:1.0, as
measured at the end of each fiscal quarter on the basis of the fiscal quarter
ending on such date and the three immediately preceding fiscal quarters.
(b) The ratio of Housewares' Consolidated EBITA to
Consolidated Interest Expense shall at no time be less than 2.75:1.0, as
measured at the end of each fiscal quarter on the basis of the fiscal quarter
ending on such date and the three immediately preceding fiscal quarters.
<TABLE>
Section 7.3. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The ratio
of Group's Consolidated Cash Flow to Consolidated Fixed Charges shall at no
time be less than the ratios set forth below during the periods indicated, as
measured at the end of each fiscal quarter on the basis of the fiscal quarter
ending on such date and the three immediately preceding fiscal quarters:
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through the date preceding
Fiscal Year End 1996 1.50:1.0
Fiscal Year End 1996 and thereafter 1.00:1.0
</TABLE>
In the event that the 12.70% Notes are refinanced, replaced or
restructured in a manner which extends the maturity dates of principal payments
thereunder, then the numerator of the required ratio for periods from and after
Fiscal Year End 1996 shall no longer be 1.00, but shall be equal to the sum of
(a) one (1) plus (b) the product of .50 times a fraction, the numerator of
which is the aggregate scheduled payments of principal on the 12.70% Notes for
the preceding four fiscal quarters after giving effect to such refinancing,
replacement or restructuring, and the denominator of which is the aggregate
scheduled payments of principal on the 12.70% Notes for the preceding four
fiscal quarters as such instruments are in effect as of the Closing Date.
<TABLE>
Section 7.4. RATIO OF CONSOLIDATED SENIOR FUNDED INDEBTEDNESS TO
CONSOLIDATED EBITDA. The ratio of Group's Consolidated Senior Funded
Indebtedness to Consolidated EBITDA shall at no time exceed the ratios set
forth below during the periods indicated, as measured at the end of each fiscal
quarter on the basis of the fiscal quarter ending on such date and the three
immediately preceding fiscal quarters:
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through the date preceding
Fiscal Year End 1994 2.75:1.0
Fiscal Year End 1994 through the date preceding
Fiscal Year End 1995 2.50.1.0
Fiscal Year End 1995 through the date preceding
Fiscal Year End 1996 2.25:1.0
Fiscal Year End 1996 and thereafter 2.00:1.0
</TABLE>
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<PAGE> 54
Section 7.5. CURRENT RATIO. The ratio of Housewares' Consolidated
Current Assets to Consolidated Current Liabilities shall at no time be less
than 1.25:1.0.
Section 7.6. CONSOLIDATED TANGIBLE NET WORTH. The Consolidated
Tangible Net Worth of Housewares and its Subsidiaries shall at no time be less
than the greater of (i) $35,000,000 and (ii) 90% of Consolidated Tangible Net
Worth of Housewares and its Subsidiaries as of the end of the then most
recently completed fiscal year of Housewares.
ARTICLE 8. AFFIRMATIVE COVENANTS
On and after the date hereof, until all of the Lender Obligations
shall have been paid in full and the Borrowers shall have no further right to
borrow hereunder, the Borrowers covenant and agree as follows:
Section 8.1. TAXES AND OTHER OBLIGATIONS. Each Borrower will, and
will cause each of its Subsidiaries to, (i) duly pay and discharge, or cause to
be paid and discharged, when the same shall become due and payable, all
material taxes, assessments and other governmental charges, imposed upon it and
its properties, sales and activities, or upon the income or profits therefrom,
as well as the claims for labor, materials, or supplies which if unpaid might
by law become a lien or charge upon any of its properties, and (ii) promptly
pay or cause to be paid when due, or in conformance with customary trade terms
(but not later than 60 days from the due date in the case of trade debt), all
lease obligations, trade debt and all other Indebtedness incident to its
operations; PROVIDED, HOWEVER, that the Borrowers and their Subsidiaries shall
not be required to make any such payment at any time while a Borrower or a
Subsidiary shall be contesting in good faith by appropriate actions its
obligations to do so if it shall have set aside on its books reserves
(segregated to the extent required by GAAP) adequate with respect thereto, all
determined in accordance with GAAP and reflected in the financial statements to
be delivered to the Agent and the Lenders under Sections 6.1 and 6.2. Each
Borrower shall cause all required tax returns and all amounts shown as due
therein to be timely filed and paid, as the case may be, and take all other
steps necessary to maintain its and its Subsidiaries' good standing under the
laws of their respective states of incorporation and the laws of any
jurisdiction where they are qualified, licensed and authorized to do business
as a foreign corporation, except where the failure to be so qualified, licensed
or authorized to do business as a foreign corporation would not have a Material
Adverse Effect.
Section 8.2. MAINTENANCE OF PROPERTY; LEASES. The Borrowers will,
and will cause each of the Guarantors to, (a) maintain its respective property
in good repair and working order, ordinary wear and tear excepted, (b) replace
and improve its respective property as necessary for the conduct of its
business, and (c) comply in all material respects with all material leases
naming it as lessee.
Section 8.3. Insurance.
----------
(a) The Borrowers will, and will cause each of the
Guarantors to, (i) keep its principal assets which are of an insurable
character insured by financially sound and reputable
49
<PAGE> 55
insurers against loss or damage by fire, explosion or hazards, by extended
coverage in an amount not less than 80% of the insurable value of the property
insured, and (ii) maintain with financially sound and reputable insurers
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner as reasonably requested by the Agent, and in
any event as customary for companies in similar businesses similarly situated;
PROVIDED, HOWEVER, that the Borrowers and the Guarantors may effect workmen's
compensation insurance or similar coverage with respect to operations in any
particular state or other jurisdiction through an insurance fund operated by
such state or jurisdiction and may also be a self-insurer with respect to
workmen's compensation and with respect to group medical benefits under any
medical benefit plan of the applicable Borrower or Guarantor.
Contemporaneously with the issuance, renewal, extension or replacement of any
such policy or policies, the Borrowers will render to the Agent and the Lenders
a certificate or binder evidencing the same. A description of the material
elements of insurance coverage of the Borrowers and the Guarantors as of the
Closing Date is set forth on SCHEDULE 8.3 attached hereto.
(b) All insurance policies required to be maintained
hereunder shall name the Agent on behalf of the Lenders as an additional named
insured (without the Agent or the Lenders being liable for premiums or other
costs or expenses) and as loss payee or insured mortgagee, as appropriate.
(c) The Borrowers shall furnish to the Agent on the
Closing Date insurance certificates, in form and substance reasonably
satisfactory to the Agent, evidencing compliance by the Borrowers with the
terms of this Section 8.3. The Borrowers shall from time to time, upon
request, furnish to the Agent copies of each policy of insurance maintained
pursuant to this Section 8.3.
(d) Within thirty (30) days after the renewal of each
such policy of insurance, the Borrowers shall furnish the Agent with evidence
satisfactory to the Agent of the payment of premiums and the reissuance of a
policy continuing insurance in force as required by this Agreement. All such
policies or certificates shall contain a provision that such policies will not
be canceled without at least 30 days' prior written notice by such insurer to
the Agent. In the event the Borrowers fail to provide, maintain, keep in force
or deliver and furnish to the Agent the policies of insurance required by this
Section 8.3, the Agent may, but shall not be obligated to, upon prior written
notice to the Borrowers procure such insurance or single interest insurance for
such risks covering the Agent's and the Lenders' interest, and the Borrowers
will pay all premiums thereon promptly upon demand by the Agent, together with
interest thereon at the highest rate then applicable to the Advances from the
date of expenditure until reimbursement by the Borrowers.
(e) All policies of insurance required to be furnished by
the Borrowers pursuant to this Section 8.3 shall have attached thereto a
lender's loss payable endorsement or its equivalent, or a loss payable clause,
reasonably acceptable to the Agent.
(f) The Borrowers shall observe and comply in all
material respects with the requirements of all policies of insurance required
to be maintained in accordance with this Agreement.
50
<PAGE> 56
(g) Upon request by the Agent, the Borrowers shall
furnish to the Agent a certificate of a duly authorized officer of the
Borrowers containing a detailed list of the insurance policies of the Borrowers
required by or referred to in this Section 8.3 then outstanding and in force.
Section 8.4. RECORDS, ACCOUNTS AND PLACES OF BUSINESS. The
Borrowers and their Subsidiaries shall maintain comprehensive and accurate
records and accounts in accordance with GAAP. The Borrowers and their
Subsidiaries shall maintain adequate and proper reserves in accordance with
GAAP. The Borrowers will provide Agent with fifteen days' prior written notice
of (i) any changes in the places of business of any of the Borrowers or the
Guarantors, and (ii) any additional places of business of any Borrower or
Guarantor which may arise hereafter.
Section 8.5. INSPECTION. At any reasonable time and from time to
time, the Borrowers shall permit the Agent, the Lenders and any of their agents
or representatives under reasonable circumstances to examine and make copies of
and abstracts from the records and books of account of, and visit the
properties of, the Borrowers and their Subsidiaries and to discuss the affairs,
finances and accounts of the Borrowers and their Subsidiaries with any of the
Borrowers' executive officers or directors.
Section 8.6. CHANGE IN OFFICERS OR DIRECTORS. The Borrowers will
promptly notify the Agent in writing if there occurs any change in the senior
officers or directors of the Borrowers.
Section 8.7. EXISTENCE AND BUSINESS. Except as permitted by
Section 9.6 hereof, each Borrower and its Subsidiaries will maintain its
corporate existence and comply in all material respects with all valid and
applicable statutes, rules and regulations. The Borrowers and the Guarantors
shall continue to engage primarily in the businesses in which they are engaged
on the Closing Date and/or similar businesses related to the manufacture and
distribution of consumer housewares products.
Section 8.8. USE OF PROCEEDS. Group will use the proceeds of the
Group Revolving Credit for working capital purposes, including, without
limitation, to pay off the Existing Group Indebtedness, and for general
corporate purposes. Housewares will use the proceeds of the Housewares
Revolving Credit for working capital purposes, including, without limitation,
to pay off the Existing Housewares Indebtedness, to pay off a portion of the
Housewares Payable, and for general corporate purposes. Frem will use the
proceeds of the Frem Revolving Credit for working capital purposes, including,
without limitation, to pay off a portion of the Frem Payable, and for general
corporate purposes. In addition, the Borrowers will use the Revolving Credit
Facilities to provide for Letters of Credit to replace the Existing Letters of
Credit and to provide for standby letters of credit to support the Borrowers'
and their Subsidiaries' obligations in respect of employment contracts and
workers compensation and similar insurance in the ordinary course of their
business. The Borrowers will not use any of the proceeds of any loans or
Advances made by the Lenders hereunder to purchase or carry "margin stock" (as
defined in Regulation U).
Section 8.9 Group Common Stock; Ownership of Subsidiaries.
----------------------------------------------
(a) Group will at all times remain a publicly traded
company with its common stock listed for trading on the National Market System
of The National Association of Securities
51
<PAGE> 57
Dealers, Inc. Automated Quotation System, the New York Stock Exchange or
another national securities exchange.
(b) Except to the extent permitted under Sections 9.4 and
9.6 hereof, each Borrower will, and will cause each of its Subsidiaries to,
maintain ownership as constituted on the Closing Date of the issued and
outstanding stock of each of their respective Subsidiaries.
Section 8.10. Additional Mortgages.
---------------------
(a) The Borrowers shall use all reasonable efforts
following the Closing Date to obtain all requisite consent of the Lancaster
Industrial Development Agency with respect to Woodstream's premises at Building
#4 in Lititz, Pennsylvania, to enable Woodstream to grant a mortgage on such
property and a security interest in equipment, furnishings and fixtures located
thereon to the Agent for the ratable benefit of the Lenders.
(b) Each Borrower shall, and shall cause each of its
Subsidiaries which are Guarantors to, promptly after the acquisition of a fee
interest in any real property or a leasehold interest in any real property
which the Lenders reasonably determine is of material value, deliver to the
Agent (i) a mortgage in favor of the Agent, for the benefit of the Lenders,
relating to such real property, (ii) a title insurance policy relating thereto,
(iii) an opinion of counsel as to the enforceability of said mortgage, and (iv)
an endorsement to such Borrower's or such Subsidiary's flood insurance policy,
if any, relating to such real property naming the Agent as loss payee, each of
which shall be in form and content reasonably satisfactory to the Agent. The
provisions of this Section 8.10(b) shall not apply to Housewares and its
Restricted Subsidiaries (as defined in the 12.70% Note Purchase Agreement)
other than Frem, so long as the 12.70% Notes shall remain outstanding.
Section 8.11. ADDITIONAL HOUSEWARES COVENANTS. Upon the repayment,
retirement, redemption or defeasance of all of the 12.70% Notes (provided that
such 12.70% Notes are not refinanced or replaced as provided in Section 9.1(d)
of this Agreement), or the acquisition by Housewares or any of its Affiliates
of all of the 12.70% Notes, or the amendment or modification of the 12.70% Note
Purchase Agreement permitting the actions contemplated by this Section 8.11,
Housewares shall, and shall cause each of its Restricted Subsidiaries to,
execute and deliver a Guaranty of the Lender Obligations and grant to the
Agent, for the benefit of the Lenders, a first priority lien on all of its
assets not then included in the Collateral, including, without limitation, all
stock of Subsidiaries.
Section 8.12. LANDLORD CONSENT AND ESTOPPEL CERTIFICATES. The
Borrowers shall use all reasonable efforts to deliver to the Agent, within
thirty (30) days after the Closing Date, Landlord Consent and Estoppel
Certificates executed by the landlords with respect to Cleaning's premises
located Nashville, Tennessee, and Housewares' premises located in Franklin Park
and Elk Grove Village, Illinois, all in form and substance satisfactory to the
Lenders.
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ARTICLE 9. NEGATIVE COVENANTS
On and after the date hereof, until all of the Lender Obligations
shall have been paid in full and Borrowers shall have no further right to
borrow hereunder, the Borrowers covenant and agree as follows:
Section 9.1. RESTRICTIONS ON BORROWED FUNDS INDEBTEDNESS. The
Borrowers shall not, and shall not permit any of their Restricted Subsidiaries
to, create, incur, suffer or permit to exist, or assume or guarantee, either
directly or indirectly, or otherwise become or remain liable with respect to,
any Borrowed Funds Indebtedness, except the following:
(a) Borrowed Funds Indebtedness consisting of Lender
Obligations, including the Advances and the Letters of Credit;
(b) Borrowed Funds Indebtedness of the Borrowers and
their Restricted Subsidiaries outstanding at the date of this Agreement as set
forth on Schedule 5.23 attached hereto, less, in each case, payments required
to be made in respect of such Borrowed Funds Indebtedness in accordance with
the payment provisions thereof;
(c) Indebtedness of the Borrowers and their Restricted
Subsidiaries in respect of purchase money security interests permitted under
Section 9.2(b) hereof in an aggregate principal amount not to exceed $2,000,000
outstanding at any time;
(d) Borrowed Funds Indebtedness of Housewares and/or its
Restricted Subsidiaries or Group incurred in connection with the refinancing or
replacement of the 12.70% Notes, provided, however, that (i) the aggregate
principal amount of such Indebtedness shall not exceed the then outstanding
principal balance of the 12.70% Notes, (ii) the periodic installments of
interest or fees required under such Indebtedness shall not exceed the periodic
installments of interest or fees required under the 12.70% Notes, (iii) the
final maturity of such Borrowed Funds Indebtedness shall not be earlier than
the final maturity date of the 12.70% Notes, and (iv) the Average Life of such
Borrowed Funds Indebtedness shall not be less than the Average Life of the
12.70% Notes;
(e) Guarantees of the Borrowers and their Restricted
Subsidiaries permitted under this Agreement;
(f) Borrowed Funds Indebtedness of Group in an amount not
to exceed $5,000,000 incurred in connection with a financing of the ESOP's
purchase or carrying of capital stock of Group, provided that simultaneously
with the incurrence of such Indebtedness Group makes a loan to the ESOP in a
similar amount evidenced by a promissory note of the ESOP secured by capital
stock of Group held by the ESOP;
(g) Borrowed Funds Indebtedness (i) of any Borrower in
respect of loans by any other Borrower or any Subsidiary, (ii) of any
Restricted Subsidiary in respect of loans by a Borrower or any other
Subsidiary; and
(h) Additional Subordinated Indebtedness of Group.
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Section 9.2. RESTRICTIONS ON LIENS. The Borrowers shall not, and
shall not permit any of their Restricted Subsidiaries to, create or incur or
suffer to be created or incurred or to exist any encumbrance, mortgage, pledge,
lien, charge or other security interest of any kind upon any of its property or
assets of any character, whether now owned or hereafter acquired, or transfer
any of such property or assets for the purposes of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors, or acquire or agree or have an option to
acquire any property or assets upon conditional sale or other title retention
agreement, device or arrangement (including Capitalized Leases) or suffer to
exist for a period of more than 30 days after the same shall have been incurred
(without posting adequate security therefor) any Indebtedness against it which
if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given
any priority whatsoever over its general creditors, or sell, assign, pledge or
otherwise transfer for security any of its accounts, contract rights, general
intangibles, or chattel paper (as those terms are defined in the Massachusetts
Uniform Commercial Code) with or without recourse; PROVIDED, HOWEVER, that the
Borrowers and the Restricted Subsidiaries may create or incur or suffer to be
created or incurred or to exist:
(a) Existing liens and security interests described in
SCHEDULES 5.14 and 5.15 securing Indebtedness outstanding as of the Closing
Date permitted by Section 9.1(b);
(b) Purchase money security interests (which term shall
include mortgages, conditional sale contracts, Capitalized Leases and all other
title retention or deferred purchase devices) to secure the purchase price of
property acquired hereafter by a Borrower or a Restricted Subsidiary, or to
secure Indebtedness incurred solely for the purpose of financing such
acquisitions; PROVIDED, HOWEVER, that no such purchase money security interest
shall extend to or cover any property other than the property the purchase
price of which is secured thereby, and that the principal amount of
Indebtedness (whether or not assumed) with respect to each item of property
subject to such a security interest shall not exceed the fair value of such
item on the date of its acquisition; and
(c) Permitted Liens.
Nothing contained in this Section 9.2 shall permit the Borrowers or
any Restricted Subsidiary to incur any Indebtedness or take any other action or
permit to exist any other condition to exist which would be in contravention of
any other provision of this Agreement.
Section 9.3. INVESTMENTS. The Borrowers shall not, and shall not
permit any of their Restricted Subsidiaries to, have outstanding or hold or
acquire or make or commit itself to acquire or make any Investment, including,
without limitation, any Investment in any Affiliate, except the following:
(a) Investments having a maturity of less than one year
from the date thereof in:
(i) commercial paper rated P-2 or better by
Moody's Investors Service, Inc., or A-2 or better by Standard & Poor's
Corporation or similarly rated by any successor to either of such
rating services;
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(ii) certificates of deposit or eurodollar
deposits of any Lender or certificates of deposit or eurodollar
deposits of commercial banks organized in the United States or Canada
having capital and surplus in excess of $500,000,000 and whose
short-term debt is rated AA or better by Standard & Poor's Corporation
or Aa2 or better by Moody's Investors Service, Inc., or similarly
rated by any successor to either of such rating services;
(iii) obligations of the United States government
or any agency thereof which are backed by the full faith and credit of
the United States and which mature not more than one year from the
date of acquisition thereof; or
(iv) repurchase agreements with a term of three
months or less which (A) are entered into with (x) any Lender or (y)
any commercial bank organized in the United States or Canada having
capital and surplus in excess of $500,000,000 and whose short-term
debt is rated AA or better by Standard & Poor's Corporation or Aa2 or
better by Moody's Investor Service, Inc., or similarly rated by any
successor to either of such rating services, or (z) any nationally
recognized member firm of the New York Stock Exchange, (B) are secured
by a fully perfected Lien in any obligation of the types described in
clauses (i) through (iii) above, and (C) has a market value at the
time such repurchase agreement is entered into of not less than 100%
of the repurchase obligation of such Lender (or other commercial bank)
thereunder.
PROVIDED, that to the extent that any such Investment is evidenced by a
"certificated security" or an "instrument" (as defined in the Uniform
Commercial Code in effect in the Commonwealth of Massachusetts), such
instrument shall promptly be delivered and pledged to the Agent, for the
benefit of the Lenders pursuant to a pledge agreement in form reasonably
satisfactory to the Agent;
(b) Investments consisting of loans and advances to
employees of the Borrowers or any Restricted Subsidiary not exceeding $500,000
in the aggregate at any time outstanding and having a maturity of not greater
than one year;
(c) Investments permitted in accordance with Section 9.6
hereof;
(d) Investments consisting of securities received by a
Borrower or any Restricted Subsidiary as a creditor in a bankruptcy,
reorganization or other insolvency proceeding;
(e) Investments held by a Borrower or any Restricted
Subsidiary that would not otherwise be permitted hereunder, which are
Investments of not more than $100,000 individually and not more than $1,000,000
in the aggregate (in each case valued at cost);
(f) The Group Note, the Kellogg Note, the Intercompany
Payables and other Investments in Group and in Restricted Subsidiaries
(provided, however, that in the case of any non-cash Investment the Agent
retains a first priority perfected security interest in the applicable
property);
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(g) Investments of the Borrowers and their Restricted
Subsidiaries existing as of the Closing Date as set forth on SCHEDULE 9.3
attached hereto;
(h) Investments consisting of non-cash proceeds of Asset
Dispositions permitted under Section 9.4 hereof in an aggregate principal
amount not to exceed $2,000,000 at any time, provided that in the case of any
Asset Disposition (other than an Asset Disposition by Housewares) the
applicable Borrower or Restricted Subsidiary grants to the Agent, for the
benefit of the Lenders, a perfected, first-priority security interest in such
non-cash proceeds, and shall have assigned to the Agent, for the benefit of the
Lenders, any collateral security granted to such Borrower or Restricted
Subsidiary to secure payment or performance by the obligor of its obligations
with respect to such non-cash proceeds; and
(i) Restricted Investments and Investments in
Unrestricted Subsidiaries as and to the extent permitted under Section 9.9(g).
The Borrowers shall not, and shall not permit any of their Restricted
Subsidiaries to, make any Investment permitted by this Section 9.3 unless
immediately after such Investment there would exist no Default.
Notwithstanding anything to the contrary contained herein, in no event
shall any Borrower or Subsidiary, directly or indirectly, acquire any further
beneficial interest in (including stock, partnership interest or other
securities of), or make any loan, advance, capital contribution to, or transfer
any property or assets to, any of the Inactive Subsidiaries.
Section 9.4. ASSET DISPOSITIONS. The Borrowers shall not, and
shall not permit any of their Restricted Subsidiaries to, enter into, effect or
consummate any Asset Disposition; provided, however, that the Borrowers and
their Restricted Subsidiaries may enter into an Asset Disposition so long as:
(a) (i) The applicable Borrower or Restricted Subsidiary
receives Net Proceeds equal to at least the fair market value of the assets
subject to the Asset Disposition, (ii) based upon the historical operating
results of Group and its Restricted Subsidiaries for the four most recently
ended fiscal quarters as set forth in the consolidating financial statements
delivered by the Borrowers to the Lenders pursuant to Sections 6.1 and 6.2, and
after giving effect to all previous Asset Dispositions consummated during such
period, no Default would have occurred under Article 7 hereof as of the last
day of the most recently ended fiscal quarter IF, for purposes of this
determination, the subject Asset Disposition had occurred immediately prior to
the four fiscal quarters ending on such date, (iii) the consummation of such
Asset Disposition will not, in the sole (but reasonable) judgment of the
Majority Lenders, have a Material Adverse Effect, (iv) concurrently with the
consummation of any such Asset Disposition (other than an Asset Disposition
relating to the stock or assets of an Unrestricted Subsidiary), the Net
Proceeds payable to the applicable Borrower or Restricted Subsidiary in respect
of the Asset Disposition are applied in accordance with Article 4 hereof to
repay the Advances incurred by such Borrower or, in the case of Net Proceeds
payable to a Restricted Subsidiary (other than Housewares) to repay the
Advances incurred by its corporate parent, and the applicable Borrower or
Restricted Subsidiary grants to the Agent, for the
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benefit of the Lenders, a perfected, first-priority security interest in any
non-cash proceeds of such Asset Disposition, and assigns to the Agent, for the
benefit of the Lenders, any collateral security granted to such Borrower or
Restricted Subsidiary to secure payment or performance by the obligor of its
obligations with respect to such non-cash proceeds, and (v) prior to such Asset
Disposition no Default has occurred and is continuing or would, after giving
effect to such Asset Disposition, occur; and
(b) In the case of any Asset Disposition involving
aggregate consideration in excess of $3,000,000, (i) at least five (5) Business
Days prior to the consummation of such Asset Disposition, the Borrower shall
have delivered to the Agent and the Lenders a certificate, executed by the
Chief Executive Officer, Chief Financial Officer or Treasurer of Group, setting
forth the calculation required under subsection (a)(ii) of this Section 9.4 in
reasonable detail, and certifying to the effect of clauses (i) through (v) of
Section 9.4(a), and (ii) based upon such certificate, the Agent, at the
direction of the Majority Lenders, shall have acknowledged that the conditions
described in clauses (i) through (v) of Section 9.4(a) shall have been
satisfied. If in the case of any Asset Disposition the Majority Lenders shall
disagree with the method or results of the calculation prepared by the
Borrowers with respect to Section 9.4(a)(i), and the parties are unable to
resolve such disagreement in a manner satisfactory to the Borrowers and the
Majority Lenders, then the parties hereto agree to submit the calculation
required under Section 9.4(a)(i) with respect to such Asset Disposition to an
independent third-party accounting firm of nationally recognized standing
(having no relationship with any party) selected by the parties, for
determination of the applicable calculation, which determination shall be
binding on the parties.
In connection with any Asset Disposition permitted under this Section
9.4, the Agent and the Lenders agree, at the Borrowers' sole expense, to take
all such actions as are reasonably required to release the liens granted under
the Security Documents on the assets subject to such Asset Disposition
including, without limitation, the execution of appropriate U.C.C. releases
and terminations and discharges of mortgages.
Section 9.5 ASSUMPTIONS, GUARANTEES, ETC. The Borrowers shall
not, and shall not permit any of their Restricted Subsidiaries to, enter into
any Guaranty, except for (i) the Guaranty Agreements, (ii) Guarantees of the
Lender Obligations, (iii) Guarantees by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business, (iv) Guarantees of the obligations of the Borrowers or any Guarantor,
provided the obligations to which such Guaranty relates are not otherwise
prohibited by the terms of this Agreement, and provided further that in no
event shall any Borrower or Restricted Subsidiary issue any Guaranty in respect
of all or any portion of the 12.70% Notes or any Borrowed Funds Indebtedness
incurred under Section 9.1(d) hereof, and (v) a Guaranty by Group of
Indebtedness of the ESOP incurred by the ESOP in order to purchase, own or
carry capital stock of Group, provided that the maximum aggregate principal
amount to which such Guaranty relates shall not exceed $5,000,000.
Section 9.6. MERGERS AND ACQUISITIONS. The Borrowers shall not,
and shall not permit any of their Restricted Subsidiaries to, enter into any
merger or consolidation with, or acquire all or substantially all of the assets
or stock of, any Person, or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to
any Person, except for:
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(a) The acquisition by any Borrower or Restricted
Subsidiary (for purposes of this definition, the "Acquiror") of all or
substantially all of the assets or stock of another Person (including, without
limitation, acquisition by merger), PROVIDED THAT (i) prior to the consummation
of such acquisition Group has delivered to the Agent and the Lenders a
certificate to the effect that no Default has then occurred and continues to
exist or would, after giving effect to such acquisition, occur, which
certificate shall be accompanied by consolidated and consolidating financial
statements of the Acquiror prepared on a pro forma basis after giving effect to
such acquisition, and (ii) simultaneously with the consummation of such
acquisition any new Subsidiary arising as a result of or in connection with
such acquisition shall enter into a Guaranty substantially in the form of the
Guaranty Agreements and the Acquiror and such new Subsidiary shall grant to the
Agent and the Lenders a first priority security interest in the assets and/or
stock so acquired, provided, however, that the requirement to enter into a
Guaranty and grant such security interest shall not apply to any new Subsidiary
whose assets have a fair market value of $50,000 or less or any new Subsidiary
which is an Unrestricted Subsidiary; and
(b) In addition to acquisitions permitted under Section
9.6(a), the acquisition by Housewares or any of its Subsidiaries of all or
substantially all of the assets or stock of another Person (including, without
limitation, acquisition by merger), PROVIDED, HOWEVER that, (i) the aggregate
consideration paid or delivered by Housewares and its Subsidiaries in
connection with all such acquisitions shall not exceed $2,500,000, (ii) any
Subsidiary of Housewares arising as a result of or in connection with such
acquisition shall constitute an "Unrestricted Subsidiary" under the 12.70% Note
Purchase Agreement (as such term is defined therein), and (iii) any such
Subsidiary shall enter into a Guaranty substantially in the form of the
Guaranty Agreements, and such Subsidiary and, to the extent permitted by the
12.70% Note Purchase Agreement, Housewares, shall grant to the Agent and the
Lenders a first priority interest in the assets and/or stock so acquired;
(c) Mergers of a Borrower or a Guarantor with and into
any other Borrower or Guarantor, PROVIDED, HOWEVER, that the surviving
corporation shall be a Borrower or Guarantor;
(d) Asset Dispositions permitted under Section 9.4
hereof; and
(e) Restricted Investments permitted under Section 9.9(g).
Section 9.7. PAYMENT OF OBLIGATIONS. The Borrowers shall not, and
shall not permit any Restricted Subsidiary to, fail to make payment of
principal or interest or any other amount due with respect to (i) any Lender
Obligations, or (ii) any other Indebtedness in an outstanding principal amount
greater than $2,000,000, beyond the period of grace provided with respect
thereto; or fail to perform or observe any other material agreement to which
any Borrower or any of its Restricted Subsidiaries is a party or by which any
Borrower or any Restricted Subsidiary or any of their respective properties are
bound or affected; PROVIDED, HOWEVER, that with respect to any Indebtedness
other than Lender Obligations and any agreements other than Lender Agreements,
the Borrowers and their Restricted Subsidiaries may refuse to make any payment
or refuse to perform or observe any covenant or agreement, the validity or
application of which is being contested in good faith by appropriate
proceedings, if such refusal or failure could not, in
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the sole (but reasonable) judgment of the Majority Lenders, result in a
Material Adverse Effect, or if:
(a) The applicable Borrower or Restricted Subsidiary has
set aside reserves deemed by the independent certified public accountants of
the Borrowers to be adequate for the payment, performance or observance of the
Indebtedness or agreement or provision so contested;
(b) Such contest could not result in the loss of any
rights or properties of the applicable Borrower or Restricted Subsidiary, which
loss would have a Material Adverse Effect; and
(c) Such failure to pay or perform does not otherwise
constitute a Default hereunder or under any other Lender Agreement.
Section 9.8. ERISA. The Borrowers shall not, and shall not permit
any of their respective Subsidiaries to:
(a) At any time while any Borrower or Subsidiary
maintains a Pension Plan subject to Section 412 of the Code, (i) permit any
accumulated funding deficiency to occur with respect to such Pension Plan, (ii)
not comply in all material respects with the provisions of ERISA and the Code
which are applicable to the Pension Plans, or (iii) permit circumstances to
exist under which the lien provided for in Section 4068 of ERISA would attach
to the assets of the applicable Borrower or Subsidiary as a result of the
voluntary or involuntary termination of a Pension Plan and a subsequent failure
of such Borrower or Subsidiary to pay termination liability to the Pension
Benefit Guaranty Corporation.
(b) At any time while any Borrower or Subsidiary
participates in a Multiemployer Pension Plan, voluntarily incur withdrawal
liability pursuant to Section 4201 of ERISA; PROVIDED that all amounts of
potential withdrawal liability (as hereinafter defined) pursuant to Section
4201 of ERISA (whether or not an assessment has been issued by a Multiemployer
Pension Plan and whether or not any liability therefor should be disclosed on
such Borrower's balance sheet in accordance with GAAP) with respect to the
Borrowers, the Subsidiaries and any Control Group Person (as such term is
defined in ERISA) shall be deemed to be outstanding Indebtedness of the
applicable Borrower or Subsidiary for all purposes of this Agreement. For
purposes of the preceding sentence, any Borrower; any, Subsidiary or any
Control Group Person shall at any point in time have a "potential withdrawal
liability," with respect to a Multiemployer Pension Plan to which such
Borrower, Subsidiary or Control Group Person contributes, in an amount equal to
the liability which would be imposed under Section 4201 of ERISA if such
Borrower, Subsidiary or Control Group Person withdrew from such Multiemployer
Pension Plan in a complete withdrawal at such point in time; PROVIDED, HOWEVER,
that such "potential withdrawal liability" at any time shall not be greater
than the withdrawal liability as set forth in the most recent notice or letter
received from the Multiemployer Pension Plan by such Borrower, Subsidiary or
Control Group Person setting forth the amount of withdrawal liability which
would be incurred upon a complete withdrawal by such Borrower, Subsidiary or
Control Group Person; and FURTHER PROVIDED that such "potential withdrawal
liability" shall be considered to be zero until the applicable Borrower,
Subsidiary or Control Group Person has received such a notice or letter setting
forth the amount of withdrawal liability
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which would be incurred upon a complete withdrawal of such Borrower, Subsidiary
or Control Group Person. During the period in which any Borrower, Subsidiary
or any Control Group Person makes contributions to a Multiemployer Pension
Plan, such Borrower, Subsidiary or Control Group Person shall request the
Multiemployer Pension Plan to notify such Borrower, Subsidiary or Control Group
Person on an annual basis of the amount of withdrawal liability which would be
incurred upon a complete withdrawal of such Borrower, Subsidiary or Control
Group Person and shall pay any reasonable fee required by the Multiemployer
Pension Plan to perform such calculation.
Section 9.9. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS. The
Borrowers shall not, and shall not permit any of their Restricted Subsidiaries
to, make any Restricted Payment, except for the following:
(a) Regularly scheduled payments of principal and
interest required to be paid in respect of (i) Subordinated Indebtedness, which
payments are permitted to be paid and retained by the holder of such
Subordinated Indebtedness by the subordination provisions applicable thereto,
and (ii) other Borrowed Funds Indebtedness expressly permitted under this
Agreement;
(b) Payments in respect of Borrowed Funds Indebtedness in
connection with the refinancing of such Indebtedness which is permitted under
this Agreement;
(c) Restricted Payments by a Subsidiary to its corporate
parent which is a Borrower or a Restricted Subsidiary;
(d) Distributions by a Borrower or any Subsidiary payable
solely in shares of capital stock of such Borrower or Subsidiary, as the case
may be;
(e) Restricted Payments by Group in an aggregate amount
of up to $1,500,000 in respect of (i) redemptions of stock required to be made
under the Restricted Stock Plans, (ii) redemptions of stock required to be made
under the Stock Option Plans to the extent of the proceeds of the exercise of
options by option holders thereunder, (iii) redemptions by Group of shares of
its Preferred Stock held by the ESOP, as and to the extent required under
Group's Certificate of Incorporation as in effect on the Closing Date, and (iv)
repurchases by Group of shares of its common stock and the transfer of such
shares to the ESOP, or the funding of cash by Group to the ESOP;
(f) So long as no Default has occurred and is continuing
or would, after giving effect to such Distribution, occur, dividends by
Woodstream on its preferred stock in an aggregate principal amount not to
exceed $30,000 in any calendar year; and
(g) So long as no Default has occurred and is continuing
or would, after giving effect to the making of such Restricted Payment or
Restricted Investment, occur, additional Restricted Payments and/or Restricted
Investments in an aggregate amount not to exceed at any time the Available
Restricted Payments Fund; PROVIDED, HOWEVER, that (i) in the case of Restricted
Investments made pursuant to this Section 9.9(g), the applicable Borrower or
Subsidiary shall pledge to the Agent, for the benefit of the Lenders, any
Investment so generated (including, without limitation, any stock or other
Investments in an Unrestricted Subsidiary) pursuant to a
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pledge agreement in form reasonably satisfactory to the Agent, and (ii) the
aggregate amount of all such Restricted Investments shall not exceed
$5,000,000.
Section 9.10. TRANSACTIONS WITH AFFILIATES. Except for
transactions with Affiliates expressly permitted by Sections 9.3, 9.4, 9.5, 9.6
and 9.9, the Borrowers will not, and will not permit any of their Restricted
Subsidiaries to, sell or transfer any assets to, or purchase or acquire any
assets of, or otherwise engage in any transaction with, any of their respective
Affiliates, except in the ordinary course of business and upon fair and
reasonable terms comparable to those the applicable Borrower or Subsidiary
could obtain or could become entitled to in an arm's-length transaction with a
Person who was not an Affiliate.
Section 9.11. RESTRICTIONS ON NEGATIVE PLEDGES. The Borrowers
shall not, and shall not permit any of their Restricted Subsidiaries to, create
or incur or agree, consensually or otherwise, to the terms of, any negative
pledge or other agreement restricting the granting of liens with respect to its
properties and assets or the properties and assets of its Restricted
Subsidiaries, except to the extent set forth in the 12.70% Note Purchase
Agreement as in effect on the Closing Date.
Section 9.12. FISCAL YEAR END. The Borrowers will not change their
Fiscal Year End without the prior written consent of the Agent, which consent
will not be unreasonably withheld.
Section 9.13. AMENDMENT TO CERTAIN AGREEMENTS. Group shall not
agree to any amendment to the terms and provisions of the 1818 Notes, and Group
and Housewares shall not agree to any amendment to the terms and provisions of
the 12.70% Notes (or any agreements relating to Indebtedness incurred to
refinance the 12.70% Notes) relating to an increase in fees or interest rates
thereunder, an increase in principal or interest payment amounts or total
principal amounts thereunder, an acceleration of the maturity thereof or the
scheduled dates of principal and interest payments thereunder, any change to
the subordination provisions contained therein, if any, or any change to the
financial covenants or other material covenants contained therein making such
covenants more restrictive to Group or Housewares or their Restricted
Subsidiaries, as the case may be.
Section 9.14. TRANSACTIONS WITH HOUSEWARES. Notwithstanding
anything to the contrary contained herein, Group will not, directly or
indirectly, make any additional Investments in Housewares or its Subsidiaries
after the Closing Date in the form of, or convert any existing Investment in
Housewares or its Subsidiaries to, equity, capital stock or capital
contributions. In addition, Group will not prepay the Group Note or offset its
obligations under the Group Note against any obligations of Housewares to Group
or any other Subsidiary.
Section 9.15. INACTIVE SUBSIDIARIES. In the event that any
Inactive Subsidiary shall obtain any assets with a fair market value in excess
of $50,000, or shall commence to transact business in any material manner,
subject to the provisions of the 12.70% Note Purchase Agreement, if applicable,
the Borrowers will cause the corporate parent of such Inactive Subsidiary to
pledge the capital stock of such Subsidiary to the Agent and the Lenders, and
will cause such Subsidiary to enter into a Guaranty substantially in the form
of the Guaranty Agreements, and to grant to the Agent and the Lenders a first
priority security interest in the assets of such Subsidiary.
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ARTICLE 10. GUARANTIES
Section 10.1. GUARANTIES OF LENDER OBLIGATIONS. For value received
and hereby acknowledged, and as an inducement to the Lenders to make the
Revolving Credit Facilities and the Advances available hereunder, each of Group
and Housewares (for purposes of this Article 10 each such Person, in its
capacity as a guarantor hereunder, is hereinafter referred to as the
"Guarantor") hereby guarantees to the Lenders the full and punctual payment
when due (whether at maturity, by acceleration or otherwise), and the
performance by each applicable Obligor of, all Lender Obligations of such
Obligor, whether now existing or hereafter arising (collectively, the
"Guaranteed Obligations"). This Guaranty is an absolute, unconditional and
continuing guaranty by each of the Guarantors of the full and punctual payment
and performance of the Guaranteed Obligations and not of their collectibility
only and is in no way conditioned upon any requirement that the Agent or the
Lenders first attempt to collect any of the Guaranteed Obligations from the
applicable Obligor(s) or resort to any security or other means of obtaining
payment thereof. Should any applicable Obligor default in the payment or
performance of any of the Guaranteed Obligations, the obligations of the
Guarantors under this Article 10 shall become immediately due and payable to
the Lenders, without demand or notice of any nature, all of which are expressly
waived by each Guarantor. Payments by the Guarantors under this Article 10 may
be required by the Agent or the Lenders on any number of occasions.
Section 10.2. GUARANTORS' AGREEMENT TO PAY. Each Guarantor further
agrees, as the principal obligor and not as a guarantor only, to pay, on
demand, all reasonable costs and expenses (including court costs and legal
expenses) incurred or expended by the Agent or the Lenders in connection with
the Guaranteed Obligations, this Guaranty and the enforcement thereof, together
with interest on amounts recoverable under this Guaranty from the time such
amounts become due until payment, at the rate per annum applicable to the
Advances under Section 2.4 hereof; provided that if such interest exceeds the
maximum amount permitted to be paid under applicable law, then such interest
shall be reduced to such maximum permitted amount; and provided further that
any such costs recovered from the Guarantors under this Article 10 shall not be
duplicative of costs recovered by the Agent or the Lenders from the Borrowers
under the other provisions of this Agreement. The liability of each Guarantor
hereunder shall be unlimited.
Section 10.3. WAIVERS BY GUARANTORS; AGENT'S AND LENDERS' FREEDOM
TO ACT. Each Guarantor agrees that the Guaranteed Obligations will be paid and
performed strictly in accordance with their respective terms. Each Guarantor
waives presentment, demand, protest, notice of acceptance, notice of Guaranteed
Obligations incurred and all other notices of any kind, all defenses which may
be available by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshaling of assets
of the applicable Obligor(s), and all suretyship defenses generally. Without
limiting the generality of the foregoing, each Guarantor agrees to the
provisions of any instrument evidencing, securing or otherwise executed in
connection with any
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Guaranteed Obligation and agrees that its obligations hereunder shall not be
released or discharged, in whole or in part, or otherwise affected by (i) the
failure of the Agent or the Lenders to assert any claim or demand or to enforce
any right or remedy against any applicable Obligor; (ii) any extensions or
renewals of any Guaranteed Obligation; (iii) any rescissions, waivers,
amendments or modifications of any of the terms or provisions of any agreement
evidencing, securing or otherwise executed in connection with any Guaranteed
Obligation; (iv) the substitution or release of any entity primarily or
secondarily liable for any Guaranteed Obligation; (v) the adequacy of any
rights the Agent or the Lenders may have against any collateral or other means
of obtaining repayment of the Guaranteed Obligations; (vi) the impairment of
any collateral securing the Guaranteed Obligations, including without
limitation, the failure to perfect or preserve any rights the Agent or the
Lenders might have in such collateral or the substitution, exchange, surrender,
release, loss or destruction of any such collateral; or (vii) any other act or
omission which might in any manner or to any extent vary the risk of the
Guarantor or otherwise operate as a release or discharge of the Guarantor, all
of which may be done without notice to the Guarantor.
Section 10.4. UNENFORCEABILITY OF GUARANTEED OBLIGATIONS AGAINST
THE OBLIGORS. If for any reason any Obligor has no legal existence or is under
no legal obligation to discharge any of the Guaranteed Obligations, or if any
of the Guaranteed Obligations have become irrecoverable from any applicable
Obligor by operation of law or for any other reason, this Guaranty shall
nevertheless be binding on the Guarantors to the same extent as if each
Guarantor at all times had been the principal obligor on all such Guaranteed
Obligations. In the event that acceleration of the time for payment of the
Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of any applicable Obligor, or for any other reason, all such
amounts otherwise subject to acceleration under the terms of any agreement
evidencing, securing or otherwise executed in connection with any Guaranteed
Obligation shall be immediately due and payable by each Guarantor.
Section 10.5. SUBROGATION; SUBORDINATION. Until the payment and
performance in full of all Guaranteed Obligations: (i) no Guarantor shall
exercise any rights against any applicable Obligor arising as a result of
payment by such Guarantor hereunder, by way of subrogation or otherwise, and
will not prove any claim in competition with the Agent and the Lenders or their
affiliates in respect of any payment hereunder in bankruptcy or insolvency
proceedings of any nature; (ii) no Guarantor will claim any set-off or
counterclaim against any applicable Obligor in respect of any liability of such
Guarantor to such Obligor; and (iii) each Guarantor waives any benefit of and
any right to participate in any collateral which may be held by the Agent or
the Lenders or any such affiliate. The payment of any amounts due with respect
to any Indebtedness of any applicable Obligor now or hereafter held by any
Guarantor is hereby subordinated to the prior payment in full of the Guaranteed
Obligations. Each Guarantor agrees that after the occurrence and during the
continuance of any Default, the Guarantor will not demand, sue for or otherwise
attempt to collect any such Indebtedness of the Obligors to the Guarantor until
the Guaranteed Obligations shall have been paid in full. If, notwithstanding
the foregoing sentence, the Guarantor shall collect, enforce or receive any
amounts in respect of such Indebtedness, such amounts shall be collected,
enforced and received by the Guarantor as trustee for the Lenders and shall be
paid over to the Agent, for the benefit of the Lenders, on account of the
Guaranteed Obligations without affecting in any manner the liability of the
Guarantor under the other provisions of this Guaranty.
Section 10.6. SECURITY; SET-OFF. Each Guarantor (other than
Housewares) grants to the Agent, for the benefit of the Lenders, as security
for the full and punctual payment and performance of such Guarantor's
obligations under this Article 10, a continuing lien on and security interest
in all securities or other property belonging to such Guarantor now or
hereafter held by the Agent or the Lenders and in all deposits (general or
special, time or demand,
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provisional or final) and other sums credited by or due from the Agent or the
Lenders to such Guarantor or subject to withdrawal by such Guarantor.
Regardless of the adequacy of any collateral or other means of obtaining
repayment of the Guaranteed Obligations, the Agent and the Lenders are hereby
authorized at any time and from time to time, during the continuance of an
Event of Default, without notice to the Guarantors (any such notice being
expressly waived by the Guarantors) and to the fullest extent permitted by law,
to set off and apply such deposits and other sums against the obligations of
each of the Guarantors (including Housewares) under this Guaranty, whether or
not the Agent or the Lenders shall have made any demand under this Guaranty.
The Agent and the Lenders acknowledge and agree that although the obligations
of Housewares as a Borrower hereunder and under the other Lender Agreements are
secured pursuant to the terms of the Security Documents to which Housewares is
a party, the obligations of Housewares in its capacity as a Guarantor under
this Agreement are not secured by any assets or other property of Housewares.
Section 10.7. TERMINATION; REINSTATEMENT. This Guaranty shall
remain in full force and effect as to any Guarantor until the Agent is given
written notice of such Guarantor's intention to discontinue this Guaranty,
notwithstanding any intermediate or temporary payment or settlement of the
whole or any part of the Guaranteed Obligations. No such notice shall be
effective unless received by an officer of the Agent at its address set forth
in Section 15.5 hereof. No such notice shall affect any rights of the Agent or
the Lenders hereunder with respect to Guaranteed Obligations incurred prior to
the receipt of such notice or Guaranteed Obligations incurred pursuant to any
contract or commitment in existence prior to such receipt, and all checks
drafts, notes, instruments (negotiable or otherwise) and writings made by or
for the account of any applicable Obligor and drawn on the Agent or any Lender
or any of their agents purporting to be dated on or before the date of receipt
of such notice, although presented to and paid or accepted by the Agent or such
Lender after that date, shall form part of the Guaranteed Obligations. This
Guaranty shall continue to be effective or be reinstated, notwithstanding any
such notice, if at any time any payment made or value received with respect to
any Guaranteed Obligation is rescinded or must otherwise be returned by the
Agent or any Lender upon the insolvency, bankruptcy or reorganization of any
applicable Obligor, or otherwise, all as though such payment had not been made
or value received.
Section 10.8. LIABILITY OF GUARANTORS; ADDITIONAL GUARANTIES. The
Guarantees established under this Article 10 are unlimited as to each
Guarantor, and each Guarantor shall be jointly and severally liable with each
other and with any other guarantor of the Lender Obligations, in respect of the
applicable Guaranteed Obligations for which such Guarantor is liable hereunder.
These Guarantees shall be separate and in addition to any and all other
Guaranties of the Guaranteed Obligations, including, without limitation, the
Guaranty Agreements.
ARTICLE 11. EVENTS OF DEFAULT AND REMEDIES
Section 11.1. EVENTS OF DEFAULT. Each of the following events
shall be deemed to be Events of Default hereunder:
(a) Any Borrower shall fail to make any payment in
respect of (i) the principal of any of the Lender Obligations as the same shall
become due, whether at the stated payment
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dates or by acceleration or otherwise, or (ii) interest or fees on or in
respect of any of the Lender Obligations as the same shall become due, and such
failure to pay interest or fees shall continue for a period of five (5) days.
(b) Any Borrower shall fail to perform or observe any of
the terms, covenants, conditions or provisions of Article 8 hereof and such
failure shall continue for a period of ten (10) days after any executive
officer of the Borrowers knows or in the exercise of reasonable care should
have known of the occurrence of such failure.
(c) Any Borrower shall fail to perform or observe (i) any
of the terms, covenants, conditions or provisions to be performed or observed
by the Borrowers under Article 7 or Article 9 of this Agreement, or (ii) any of
the other terms, covenants, conditions or provisions of this Agreement and the
other Lender Agreements, and such failure shall continue for a period of 10
days.
(d) Any representation or warranty of any of the
Borrowers herein or in any other Lender Agreement or any amendment to any
thereof shall have been materially false or misleading at the time made or
intended to be effective and continues to be materially false or misleading.
(e) Any Borrower or any Restricted Subsidiary shall fail
to make any payment on account of Borrowed Funds Indebtedness with a
then-outstanding principal amount of $2,000,000 or more when such payment is
due after the expiration of any applicable grace periods (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), or shall
fail to perform or observe any provision of any agreement or instrument
relating to such Indebtedness, and such failure shall permit the holder thereof
to accelerate or demand payment of such Indebtedness.
(f) Any Borrower or any Restricted Subsidiary shall be
involved in financial difficulties as evidenced:
(1) by its commencement of a voluntary case under
Title 11 of the United States Code as from time to time in effect, or
by its authorizing, by appropriate proceedings of its board of
directors or other governing body, the commencement of such a
voluntary case;
(2) by its filing an answer or other pleading
admitting or failing to deny the material allegations of a petition
filed against it commencing an involuntary case under said Title 11,
or seeking, consenting to or acquiescing in the relief therein
provided, or by its failing to controvert timely the material
allegations of any such petition;
(3) by the entry of an order for relief in any
involuntary case commenced under said Title 11;
(4) by its seeking relief as a debtor under any
applicable law, other than said Title 11, of any jurisdiction relating
to the liquidation or reorganization of debtors or
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to the modification or alteration of the rights of creditors, or by
its consenting to or acquiescing in such relief;
(5) by the entry of an order by a court of
competent jurisdiction (i) finding it to be bankrupt or insolvent,
(ii) ordering or approving its liquidation, reorganization or any
modification or alteration of the rights of its creditors, or (iii)
assuming custody of, or appointing a receiver or other custodian for
all or a substantial part of its property and such order shall not be
vacated or stayed on appeal or otherwise stayed within 60 days;
(6) by the filing of a petition against any
Borrower or any Restricted Subsidiary under said Title 11 which shall
not be vacated within 30 days; or
(7) by its making an assignment for the benefit
of, or entering into a composition with, its creditors, or appointing
or consenting to the appointment of a receiver or other custodian for
all or a substantial part of its property.
(g) There shall have occurred a final judgment against
any Borrower or any Restricted Subsidiary in any court for an amount in excess
of $1,000,000, and from which no appeal has been taken or with respect to which
all appeal periods have expired, unless such judgment is, to the Lenders'
satisfaction, insured against in full or shall have been satisfied by the date
on which all appeal periods shall have expired.
(h) Any Security Document shall at any time after its
execution and delivery and for any reason (except as a result of action of the
Lenders) cease (i) to create a valid and perfected first priority security
interest in and to the property purported to be subject to such Security
Document, or (ii) to be in full force and effect, or shall be declared null and
void, or the validity or enforceability thereof shall be contested or denied by
the applicable Borrower or Subsidiary.
(i) Any Guarantor shall notify the Agent or the Lender of
its intention to terminate its obligations under the Guaranty Agreement to
which it is a party, or any Borrower shall notify the Agent or the Lenders of
its intention to terminate its obligations under Article 10 hereof, or any such
Guaranty Agreement or Guaranty shall otherwise cease to be in full force and
effect, or shall be declared null and void, or the validity or enforceability
thereof shall be contested or denied by the applicable Guarantor or Borrower.
(j) Any Event of Default as defined in the 12.70% Note
Purchase Agreement (or event which with the giving of notice, the passage of
time, or both, would constitute such an Event of Default) shall occur under the
12.70% Notes or any Indebtedness incurred pursuant to Section 9.1(d) hereof.
(k) A Change in Control shall be deemed to have occurred.
(l) Any "Event of Default" under any other Lender
Agreement shall have occurred.
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Section 11.2. REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, in each and every case, the Agent and the
Lenders may proceed to protect and enforce their rights by suit in equity,
action at law and/or other appropriate proceeding either for specific
performance of any covenant or condition contained in this Agreement or any
other Lender Agreement or in any instrument delivered to the Agent or the
Lenders pursuant hereto or thereto, or in aid of the exercise of any power
granted in this Agreement, any Lender Agreement or any such instrument, and
(unless there shall have occurred an Event of Default under Section 11.1(f), in
which case the unpaid balance of all Lender Obligations shall automatically
become due and payable) the Agent may, at the direction of the Majority Lenders
(or, in the case of an Event of Default under Section 11.1(a), with the written
consent of any Lender), by notice in writing to the Borrowers declare all or
any part of the unpaid balance of the Lender Obligations then outstanding to be
forthwith due and payable, whereupon such unpaid balance or part thereof shall
become so due and payable without presentation, protest or further demand or
notice of any kind, all of which are hereby expressly waived, and the Agent and
the Lenders may proceed to enforce payment of such balance or part thereof in
such manner as they may elect, including without limitation by the exercise of
the rights of the Lenders under the Security Documents.
Section 11.3. Setoff.
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(a) In addition to, and without limitation of, any rights
of the Agent or the Lenders under applicable law, upon the occurrence of an
Event of Default, any Indebtedness from the Agent or any Lender to any Borrower
or Guarantor (including all account balances, whether provisional or final and
whether or not collected or available) may be offset and applied toward the
payment of the Lender Obligations then due and owing to the Lenders. The
Borrowers agree that any holder of a participation in the Lender Obligations
may, to the fullest extent permitted by law, exercise all its rights of payment
with respect to such participation as if such holder were the direct creditor
of the Borrowers in the amount of the participation.
(b) Subject to the provisions of applicable law, in the
event of a bankruptcy, receivership or similar proceeding with respect to any
Lender, all cash of the Borrowers and the Guarantors on deposit with or held by
such Lender shall automatically, and without any further action, be deemed to
be a prepayment of the Advances owing to such Lender. Each of the Lenders, the
Agent and the Borrowers agree that the provisions of Article 4 hereof
(including, without limitation Section 4.6, but excluding, however, Section
4.7) shall not apply to any such prepayment. The Borrowers and the Guarantors
agree that no Lender, nor any of its successors or assigns (including, without
limitation, any trustee in bankruptcy or receiver) shall have any liability to
the Borrowers or the Guarantors if this provision is for any reason determined
or deemed to be unenforceable in whole or in part.
Section 11.4. CASH DEPOSITS TO SUPPORT OUTSTANDING LETTERS OF
CREDIT. In case any Event of Default shall have occurred and be continuing,
and whether or not the Lenders shall have accelerated the maturity of the
Lender Obligations, the Agent may, or at the request of the Majority Lenders
shall, require the Borrowers, upon one day's notice, to deposit cash with the
Agent in an amount equal to one hundred five percent (105%) of the outstanding
face amount of each Letter of Credit outstanding as of such date, according to
such terms as the Agent shall reasonably require.
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Section 11.5. APPLICATION OF PROCEEDS. Notwithstanding anything to
the contrary contained herein and in the Security Documents, in the event that
following the occurrence and during the continuance of any Event of Default,
the Agent or any Lender receives any monies on account of the Lender
Obligations from any Borrower, or Guarantor, from the proceeds of Collateral or
otherwise, such monies shall be distributed for application as follows:
(a) FIRST, to the payment of or the reimbursement of the
Agent for or in respect of all costs, expenses, disbursements and losses
incurred or sustained by the Agent in connection with the collection of such
monies by the Agent, or in connection with the exercise, protection or
enforcement by the Agent of any of the rights, remedies, powers and privileges
of the Agent and/or the Lenders under this Agreement or any other Lender
Agreements;
(b) SECOND, to the payment of all interest, including
interest on overdue amounts, and late charges, then due and payable with
respect to the Advances and any outstanding Reimbursement Amounts;
(c) THIRD, to the payment of the outstanding principal
balance of the Revolving Credit Commitments, allocated among the Lenders in
proportion to their respective Revolving Credit Commitments;
(d) FOURTH, to any other outstanding Lender Obligations,
allocated among the Lenders in proportion to their respective interests in such
Lender Obligations; and
(e) FIFTH, the excess, if any, shall be returned to the
Borrowers or to such other Persons as are entitled thereto.
ARTICLE 12. WAIVERS; CONSENTS; AMENDMENTS; REMEDIES
Section 12.1 ACTIONS BY LENDERS. Except as otherwise expressly
set forth in any particular provision of this Agreement, any consent or
approval required or permitted by this Agreement or in any other Lender
Agreement to be given by the Lenders, including under Section 12.2, may be
given, and any term or condition of this Agreement or of any Lender Agreement
may be amended, and the performance or observance by the Borrowers of any term
of this Agreement or any other Lender Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) with,
but only with, the written consent of the Majority Lenders; PROVIDED, HOWEVER,
that without the written consent of all of the Lenders:
(a) no reduction of interest rates on, Revolving Credit
Commitment Fee, Letter of Credit Commitment Fee or any other fee relating to
the Revolving Credit Commitments or the Advances shall be made;
(b) no extension or postponement of the stated time of
payment of the principal amount of, interest on, or Revolving Credit Commitment
Fee, Letter of Credit Commitment Fee or any other fee relating to the Revolving
Credit Commitments or the Advances shall be made;
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(c) no increase in the amount, or extension of the term,
of the Revolving Credit Commitments beyond those provided for hereunder and no
extension of the Revolving Credit Termination Date shall be made;
(d) no release of any portion of the collateral for the
Lender Obligations having a fair market value in excess of $1,000,000 in any
calendar year shall be made, or any release of any guarantor of the Lender
Obligations shall be made, except to the extent such release is expressly
contemplated by Section 9.4 hereof;
(e) no change in the definition of "Majority Lenders"
shall be made; and
(f) no change in the language of this Section 12.1 shall
be made.
Section 12.2 ACTIONS BY BORROWERS. No delay or omission on the
Agent's or the Lenders' part in exercising their rights and remedies against
the Borrowers or any other interested party shall constitute a waiver. A
breach by the Borrowers of their obligations under this Agreement may be waived
only by a written waiver executed by the Agent, acting with the consent of the
Majority Lenders. The waiver of the Borrowers' breach in one or more instances
shall not constitute or otherwise be an implicit waiver of subsequent breaches.
To the extent permitted by applicable law, each Borrower hereby agrees to
waive, and does hereby absolutely and irrevocably waive (a) all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest and notices of dishonor in connection with any of the Indebtedness
evidenced by the Notes, (b) any requirement of diligence or promptness on the
Agent's or on the Lenders' part in the enforcement of their rights under the
provisions of this Agreement or any other Lender Agreement, and (c) any and all
notices of every kind and description which may be required to be given by any
statute or rule of law with respect to its liability (i) under this Agreement
or in respect of the Indebtedness evidenced by the Notes or any other Lender
Obligation or (ii) under any other Lender Agreement, except as may be expressly
provided under such Agreement. No course of dealing between the Borrowers, the
Agent and the Lenders shall operate as a waiver of any of the Agent's or the
Lenders' rights under this Agreement or any other Lender Agreement or with
respect to any of the Lender Obligations. This Agreement shall be amended only
by a written instrument executed by the Borrowers, the Agent and the Majority
Lenders making explicit reference to this Agreement. The Agent's and the
Lenders' rights and remedies under this Agreement and under all subsequent
agreements between or among the Borrowers and the Agent and/or the Lenders
shall be cumulative and any rights and remedies expressly set forth herein
shall be in addition to, and not in limitation of, any other rights and
remedies which may be applicable to the Agent and the Lenders in law or at
equity.
ARTICLE 13. SUCCESSORS AND ASSIGNS
Section 13.1. GENERAL. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns, except that (a) no Borrower may assign its rights or
obligations under this Agreement, and (b) each Lender may assign its rights in
this Agreement only as set forth below in this Article 13.
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Section 13.2. Assignments.
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(a) ASSIGNMENTS. In compliance with applicable laws with
respect to such assignment and with the prior written consent of the Agent and
the Borrowers, which consents will not be unreasonably withheld, a Lender may
assign to one or more financial institutions (each a "Successor Lender") a
proportionate part of its rights and obligations in connection with this
Agreement, its Notes and the related Lender Agreements, and each such Successor
Lender shall assume such rights and obligations pursuant to an Assignment and
Assumption Agreement in the form of EXHIBIT L attached hereto duly executed by
such Successor Lender and such Lender. Any assignment under this Section
13.2(a) shall be in a minimum amount of $10,000,000. In connection with any
assignment under this Section 13.2(a) there shall be paid to the Agent by the
assigning Lender or the Successor Lender an administrative processing fee in
the amount of $3,000. Notwithstanding the foregoing provisions of this Section
13.2(a), without obligating Fleet to purchase any additional Commitments
hereunder, Fleet agrees that it shall at all times hold Revolving Credit
Commitments greater than those held by any other individual Lender as of the
date of any assignment by Fleet.
(b) ASSIGNMENT PROCEDURES. In the event of an assignment
under Section 13.2(a), upon execution and delivery of an Assignment and
Assumption Agreement at least five (5) Business Days prior to the proposed
assignment date, and payment by such assignee to the assignor making such
assignment of an amount equal to the purchase price agreed between such Lender
and such assignee, such assignee shall become party to this Agreement as a
signatory hereto and shall have all the rights and obligations of a Lender
under this Agreement and the other Lender Agreements with an interest therein
as set forth in such Assignment and Assumption Agreement, and such assignor
making such assignment shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any such assignment, the assignor, the
Successor Lender and the Borrowers shall make appropriate arrangements so that,
if required, new Notes are issued to the Successor Lender and replacement Notes
are issued to the assignor in principal amounts reflecting their respective
revised interests.
(c) REGISTER. The Agent shall maintain a register (the
"Register") for the recordation of (i) the names and addresses of the Successor
Lenders which assume rights and obligations pursuant to an assignment
hereunder, (ii) the interests of each Lender, and (iii) the amounts of the
Advances owing to each Lender from time to time and the amounts of
participations purchased by Lenders in Letters of Credit pursuant to Section
2.11 from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrowers, the Agent and the Lenders may
treat each Person whose name is registered therein for all purposes as a party
to this Agreement. The Register shall be available for inspection by the
Borrowers or any Lenders at any reasonable time and from time to time upon
reasonable prior notice.
(d) FURTHER ASSURANCES. The Borrowers shall sign such
documents and take such other actions from time to time reasonably requested by
the Agent or a Lender to enable any assignee to share in the benefits and
rights created by the Lender Agreements.
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(e) ASSIGNMENTS TO FEDERAL RESERVE BANK AND AFFILIATES.
Any Lender at any time may assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank. No such assignment shall
release the transferor Lender from its obligations hereunder. Any Lender may
at any time assign all or a portion of its rights under this Agreement and its
Notes, in a minimum amount of $500,000, to any affiliate of such Lender which
is wholly-owned by the same bank holding company parent.
Section 13.3. PARTICIPATIONS. Any Lender may at any time grant or
offer to grant to one or more financial institutions ("Credit Participants")
participating interests in its rights and obligations in this Agreement, its
Notes and the related Lender Agreements, and each such Credit Participant shall
acquire such participation subject to the terms set forth below.
(a) AMOUNT. Each such participation shall be in a
minimum amount of $5,000,000.
(b) PROCEDURE. Each Lender granting such participation
shall comply with all applicable laws with respect to such transfer and shall
remain responsible for the performance of its obligations hereunder and under
the other Lender Agreements and shall retain the sole right and responsibility
to exercise its rights and to enforce the obligations of the Borrowers
hereunder and under the other Lender Agreements, including the right to consent
to any amendment, modification or waiver of any provision of any Lender
Agreement, except for the matters referred to in Section 12.1 requiring the
consent of all Lenders, which may require consent of each participant.
(c) DEALING WITH LENDERS. The Borrowers shall continue
to deal solely and directly with the Lenders in connection with their rights
and obligations under this Agreement and the other Lender Agreements.
(d) RIGHTS OF PARTICIPANTS. The Borrowers agree that
each Credit Participant shall, to the extent provided in its participation
instrument, be entitled to the benefits of Sections 2.6, 2.8, 2.9, 2.10 and
15.11, and the setoff rights in Section 11.3 with respect to its participating
interest; provided, however, that no Credit Participant shall be entitled to
receive any greater payment under such Sections than the Lender granting such
participation would have been entitled to receive with respect to the interests
transferred.
(e) AFFILIATES. Notwithstanding the provisions of
Section 13.3(a), a Lender may at any time grant participations in its rights
and obligations herein to its affiliates in minimum amounts of $500,000;
provided, however, that in the event of such grant, all other provisions of
this Section 13.3 shall apply.
(f) CONSENT OF AGENT; NOTICE TO BORROWERS. Promptly
following the grant of any participation, the Lender granting such
participation shall notify the Agent and the Borrowers thereof.
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ARTICLE 14. THE AGENT
Section 14.1. Authorization and Action.
-------------------------
(a) Each Lender hereby appoints and authorizes the Agent
to take such action on its behalf and to exercise such powers under this
Agreement and the other Lender Agreements as are delegated to the Agent by the
terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement and the other Lender Agreements (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Lenders, and such instructions shall
be binding upon all Lenders; PROVIDED, HOWEVER, that the Agent shall not be
required to take any action which exposes the Agent to liability or which is
contrary to this Agreement or the other Lender Agreements or applicable law.
Subject to the foregoing provisions and to the other provisions of this Article
14, the Agent shall, on behalf of the Lenders: (i) execute the Security
Documents on behalf of the Lenders; (ii) hold and apply any and all Collateral,
and the proceeds thereof, at any time received by it, in accordance with the
provisions of the Security Documents and this Agreement; (iii) exercise any and
all rights, powers and remedies of the Lenders under this Agreement or any of
the Security Documents, including the giving of any consent or waiver or the
entering into of any amendment, subject to the provisions of Section 12.1; (iv)
at the direction of the Lenders, execute, deliver and file UCC financing
statements, mortgages, deeds of trust, lease assignments and other such
agreements in respect of the Collateral, and possess instruments included in
the Collateral on behalf of the Lenders; and (v) in the event of acceleration
of the Borrowers' Indebtedness hereunder, act at the direction of the Lenders
to exercise the rights of the Lenders hereunder and under the Security
Documents.
(b) The relationship between the Agent and each of the
Lenders is that of an independent contractor. The use of the term "Agent" is
for convenience only and is used to describe, as a form of convention, the
independent contractual relations between the Agent and each of the Lenders.
Nothing contained in this Agreement or any other Lender Agreement shall be
construed to create an agency, trust or other fiduciary relationship between
the Agent and any of the Lenders.
(c) As an independent contractor empowered by the Lenders
to exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Lender Agreements, the Agent is nevertheless a
"representative" of the Lenders, as that term is defined in Article 1 of the
Uniform Commercial Code, for purpose of actions for the benefit of the Lenders
and the Agent with respect to all collateral security and guaranties
contemplated by the Lender Agreements. Such actions include the designation of
the Agent as "secured party", "mortgagee" or the like on all financing
statements and other documents and instruments, whether recorded or otherwise,
relating to the attachment, perfection, priority or enforcement of any security
interests, mortgages or deeds of trust in collateral security intended to
secure the payment or performance of any of the Lender Obligations.
Section 14.2. EMPLOYEES AND AGENTS. The Agent may exercise its
powers and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of
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counsel concerning all matters pertaining to its rights and duties under this
Agreement and the other Lender Agreements. The Agent may utilize the services
of such Persons as the Agent in its sole discretion may reasonably determine,
and all reasonable fees and expenses of any such Persons shall be paid by the
Borrowers.
Section 14.3. AGENT'S RELIANCE, ETC. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable to the Lenders for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Lender Agreements, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality
of the foregoing, the Agent: (i) may treat the payee of any Note as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (ii) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representations to any
Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with this Agreement or
the other Lender Agreements; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Lender Agreements on the part of the
Borrowers or any other Person or to inspect the property (including the books
and records) of the Borrowers or any of their Subsidiaries; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the
other Lender Agreements or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall incur no liability under or in respect of
this Agreement or the other Lender Agreements by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopy,
telegram, cable or telex) believed by it to be genuine and signed or sent by
the proper party or parties.
Section 14.4. Payments.
---------
(a) A payment by any Borrower to the Agent hereunder or
any of the other Lender Agreements, for the account of any Lender, shall
constitute a payment to such Lender. The Agent agrees promptly to distribute
to each Lender such Lender's PRO RATA share of payments received by the Agent
for the account of the Lenders except as otherwise expressly provided herein or
in any of the other Lender Agreements.
(b) If in the opinion of the Agent the distribution of
any amount received by it in such capacity hereunder, under the Notes or under
any of the other Lender Agreements might involve it in liability, it may
refrain from making such distribution until its right to make distribution
shall have been adjudicated by a court of competent jurisdiction. If a court
of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over
the same in such manner and to such Persons as shall be determined by such
court.
(c) Notwithstanding anything to the contrary contained in
this Agreement or any of the other Lender Agreements, any Lender that fails (i)
to make available to the Agent its PRO RATA share of any Revolving Credit
Advance or (ii) to comply with the provisions of Section
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4.6 with respect to making dispositions and arrangements with the other
Lenders, where such Lender's share of any payment received, whether by setoff
or otherwise, is in excess of its PRO RATA share of such payments due and
payable to all of the Lenders, in each case to the full extent required by the
provisions of this Agreement, shall be deemed delinquent (a "Delinquent
Lender") until such time as such delinquency is satisfied. A Delinquent Lender
shall be deemed to have assigned any and all payments due to it from the
Borrowers, whether on account of outstanding Advances, interest, fees or
otherwise, to the remaining nondelinquent Lenders for application to, and
reduction of, their respective PRO RATA shares of all outstanding Advances.
The Delinquent Lender hereby authorizes the Agent to distribute such payments
to the nondelinquent Lenders in proportion to their respective PRO RATA shares
of all outstanding Advances. A Delinquent Lender shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Advances of the nondelinquent Lenders, the
Lenders' respective PRO RATA shares of all outstanding Advances have returned
to those in effect immediately prior to such delinquency and without giving
effect to the nonpayment causing such delinquency.
Section 14.5. FLEET AND AFFILIATES. With respect to its Revolving
Credit Commitment hereunder, Fleet shall have the same rights and powers under
this Agreement and the other Lender Agreements as any other Lender and may
exercise the same as though it were not the Agent; and the term "Lender" or
"Lender(s)" shall, unless otherwise expressly indicated, include Fleet in its
individual capacity. Fleet and its Affiliates may lend money to, and generally
engage in any kind of business with, the Borrowers, any of their Subsidiaries
and any Person who may do business with or own securities of Borrowers or any
such Subsidiary, all as if Fleet were not the Agent and without any duty to
account therefor to the Lenders.
Section 14.6. LENDER CREDIT DECISION. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements referred to in Section 5.9 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
Section 14.7. INDEMNIFICATION OF AGENT. Each Lender agrees to
indemnify the Agent (to the extent that the Agent is not reimbursed by the
Borrowers), ratably according to its Revolving Credit Commitment Percentage,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement or
any other Lender Agreement or any action taken or omitted by the Agent in such
capacity under this Agreement, PROVIDED that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or wilful misconduct. Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this
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Agreement and each other Lender Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Borrowers.
Section 14.8. SUCCESSOR AGENT. Except as provided below, the Agent
may resign at any time by giving written notice thereof to the Lenders and the
Borrowers. Upon any such resignation, the Lenders shall have the right to
appoint a successor Agent which shall be reasonably acceptable to the
Borrowers. If no successor Agent shall have been so appointed by the Lenders
(other than the resigning Agent) and shall have accepted such appointment,
within thirty (30) days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank or financial institution
organized under the laws of the United States of America or of any state
thereof and having a combined capital and surplus of at least $50,000,000 and
which shall be reasonably acceptable to the Borrowers. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement and the other
Lender Agreements. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Article 14 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement and
the other Lender Agreements.
Section 14.9. COLLATERAL SECURITY. The Agent acknowledges to the
Lenders that it is acting in an agency capacity hereunder and that the security
interest in the Collateral granted under the Security Documents secures the
Lender Obligations owing to all of the Lenders. Notwithstanding anything to
the contrary contained herein or in the Security Documents, the Agent and the
Lenders agree, as among themselves, that the Agent shall not, without the
consent of the Majority Lenders, make any sale or disposition of the Collateral
pursuant to any of the Security Documents. The Agent will be reimbursed or
properly indemnified by the Lenders in the event the Agent is requested by the
Lenders to take or omit to take any action with respect to the Collateral (any
such reimbursement or indemnification to be PRO RATA as provided in Section
14.7). The Agent shall have the right to retain counsel to advise it as to any
action or decision with respect to the Collateral and its and the Lenders'
rights and obligations with respect thereto, and shall be reimbursed by the
Lenders for the cost of the same (to the extent the Agent is not reimbursed by
the Borrowers) prior to distributing any of the Collateral or any proceeds
thereof.
Section 14.10. NOTIFICATION OF DEFAULTS. Each Lender hereby agrees
that upon learning of the existence of a Default it shall promptly notify the
Agent thereof. The Agent hereby agrees that upon receipt of any notice under
this Section 14.8 it shall promptly notify the other Lenders of the existence
of such Default.
Section 14.11. AMENDMENT OF ARTICLE 14. The Borrowers hereby agree
that the foregoing provisions of this Article 14 constitute an agreement among
the Agent and the Lenders (and the Agent and the Lenders acknowledge that
except for the provisions of Section 14.8, the Borrower is not a party to or
bound by such foregoing provisions) and that any and all of the provisions of
this Article 14 may be amended at any time by the Lenders without the consent
or approval of, or notice to, the Borrowers (other than the requirement of
notice to the Borrowers of the resignation of the Agent).
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ARTICLE 15. MISCELLANEOUS
Section 15.1. LIMITATION OF LIABILITY; INDEMNIFICATION. Any
instrument made by or transferred from any Borrower and released or endorsed by
any Lender is without recourse against the Lenders, and the Borrowers agree
that the Lenders are not responsible for the accuracy or authenticity of any
such document. Each Borrower agrees that neither the Agent nor the Lenders
have responsibility for any of the debts of the Borrowers, including, without
limitation, claims for wages or claims for payment for material supplied to the
Borrowers. The Borrowers shall defend the Agent and the Lenders against all
claims that the Agent and/or the Lenders are responsible for any matter
referred to in this Article 15.1. The Borrowers shall indemnify the Agent and
the Lenders and hold the Agent and the Lenders harmless in respect to all such
claims.
Section 15.2. CONFIDENTIALITY. The Agent and the Lenders agree
that they will not disclose any information provided to them by the Borrowers
pursuant to Sections 6.11 or 6.12 without the prior consent of the Borrowers,
which consent will not be unreasonably withheld, except for disclosure (i) to
the Agent's or the Lenders' legal counsel, accountants and other professional
advisors, (ii) to regulatory officials in their official capacities, (iii) as
required by law, regulation or legal process or (iv) in connection with any
legal proceeding to which either of the Agent or any Lender is a party. The
Agent and the Lenders agree to hold any other confidential information which
they may receive from the Borrowers pursuant to this Agreement in confidence,
except for disclosure (i) as permitted under the next succeeding sentence, (ii)
to legal counsel, accountants, and other professional advisors to the Agent or
the Lenders, (iii) to regulatory officials in their official capacities, (iv)
as required by law, regulation, or legal process, and (v) in connection with
any legal proceeding to which the Agent or any Lender is a party. The
Borrowers authorize the Agent and the Lenders to disclose to any purchaser or
prospective purchaser of an interest in any Lender Obligations any financial or
other information pertaining to the Borrowers, after five Business Days written
notice to the Borrowers, and the Agent and the Lenders agree, upon the
reasonable request of the Borrowers, not to disclose such information to any
Person to which the Borrowers reasonably object (other than a Person controlled
by or under common control with any Lender and its successors and assigns), it
being understood, however, that the Lenders may provide any Affiliate with such
information without prior notice to the Borrowers. The Agent and the Lenders
agree to inform any such purchaser or prospective purchaser of their
obligations pursuant to this Section 15.2 and to obtain the written agreement
of such purchaser or prospective purchaser to be similarly bound and deliver
such agreement to the Borrowers.
Section 15.3. SURVIVAL OF REPRESENTATIONS. All representations and
warranties of the Borrowers contained in this Agreement shall survive the
execution of this Agreement and the delivery of the Notes and the making of the
loans and Advances herein contemplated.
Section 15.4. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, neither the Agent nor any Lender
shall be obligated to extend credit to the Borrowers in violation of any
limitation or prohibition provided by any applicable statute or regulation.
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Section 15.5. NOTICES. Unless specified otherwise, all notices and
other communications made or required to be given pursuant to this Agreement
shall be in writing and shall be mailed by United States mail, postage prepaid,
or delivered by hand or by nationally-recognized overnight courier service, or
sent by telegraph, telex or electronic facsimile transmission, confirmed in
writing, addressed to the parties hereto at its address indicated below or at
any other address as any party shall from time to time designate in writing to
the other parties hereto:
(a) If to the Agent, as follows:
Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, Massachusetts 02109
Attention: Thomas F. McNamara,
Vice President
Telefax: (617) 346-1837
With a copy to:
Goodwin, Procter & Hoar
Exchange Place
53 State Street
Boston, MA 02109-2881
Attention: Jon D. Schneider, P.C.
Telefax: (617) 523-1231
(b) If to any Lender, at the address set forth below such
Lender's name on an execution page to this Agreement.
(c) If to the Borrowers, at:
Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: Neil R. Gordon, Treasurer
Telefax: (603) 888-1427
With copies to:
Jeffrey A. Weinstein, Esq.
Executive Vice President and
General Counsel
Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Telefax: (603) 888-1427
and
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Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attention: Peter F. Demuth, Esq.
Telefax: (617) 542-2241
Any notice so addressed shall be deemed to have been given (i) when
delivered by hand, (ii) three Business Days after deposited in the United
States mails, registered or certified mail, postage prepaid, (iii) one Business
Day after deposit with a nationally-recognized overnight courier or delivery
service, and (iv) when sent by telex, telegraph or electronic facsimile
transmission, answer back received.
Section 15.6. ENTIRE AGREEMENT. This Agreement and the documents and
other materials contemplated hereby constitute the entire agreement of the
Borrowers, the Agent and the Lenders and express their entire understanding
with respect to credit advanced or to be advanced by the Lenders to the
Borrowers.
Section 15.7. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by and construed and enforced under the internal laws (and
not the law of conflicts) of The Commonwealth of Massachusetts, but giving
effect to federal laws applicable to national banks. Each Borrower and Lender
hereby irrevocably submits to the non-exclusive jurisdiction of any United
States federal or Massachusetts state court sitting in Boston in any action or
proceeding arising out of or relating to any Lender Agreements and the Borrower
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court.
Section 15.8. HEADINGS. Section headings in this Agreement are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of this Agreement.
Section 15.9. COUNTERPARTS. This Agreement and amendments to it may
be executed in several counterparts, each of which shall be an original. The
several counterparts shall constitute a single Agreement.
Section 15.10. Expenses; Indemnification.
--------------------------
(a) The Borrowers shall reimburse the Agent and the
Lenders for any reasonable costs and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Agent and the
Lenders, including internal charges for attorneys which may be employees of the
Agent or the Lenders, as the case may be) paid or incurred by the Lenders in
connection with the preparation, review, execution, delivery, administration,
amendment, modification, administration or syndication of this Agreement and
any of the other Lender Agreements and related instruments and documents, and
the Borrowers shall reimburse the Agent and the Lenders for any reasonable
costs, internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Agent or the Lenders,
including internal charges for attorneys which may be employees of the Agent or
the Lenders) paid or incurred by any of them in connection with the collection
and enforcement of this
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Agreement and any of the other Lender Agreements and related instruments and
documents; PROVIDED, HOWEVER, that prior to the occurrence of an Event of
Default hereunder, the Borrowers shall not be responsible for more than one set
of counsel for the Agent and the Lenders, unless the Borrower has otherwise
agreed in writing.
(b) Without limitation of any other obligation or
liability of the Borrowers or right or remedy of the Agent or the Lenders
contained herein, the Borrowers hereby covenant and agree to indemnify and hold
the Agent, the Lenders, and the shareholders, directors, agents, officers,
partners, subsidiaries and affiliates of the Agent and the Lenders, harmless
from and against any and all damages, losses, settlement payments, obligations,
liabilities, claims, including, without limitation, claims for finder's or
broker's fees, actions or causes of action, and reasonable costs and expenses
incurred, suffered, sustained or required to be paid by any such indemnified
party in each case by reason of or resulting from any claim relating to the
transactions contemplated hereby, other than any such claims which arise as a
result of the gross negligence or willful misconduct of the Agent, the Lenders
or any such indemnified party. Promptly upon receipt by any indemnified party
hereunder of notice of the commencement of any action against such indemnified
party for which a claim is to be made against any Borrower hereunder, such
indemnified party shall notify the Borrowers in writing of the commencement
thereof, although the failure to provide such notice shall not affect the
indemnification rights of any such indemnified party hereunder to the extent
such indemnified party demonstrates to the reasonable satisfaction of the
Borrowers that such failure to provide notice does not prejudice the Borrowers
in its defense of such claim. The Borrowers shall have the right, at their
option upon notice to the indemnified parties, to defend any such matter at
their own expense and with their own counsel, except as provided below, which
counsel must be reasonably acceptable to the indemnified parties. The
indemnified party shall cooperate with the Borrowers in the defense of such
matter. The indemnified party shall have the right to employ separate counsel
and to participate in the defense of such matter at its own expense. In the
event that (a) the employment of separate counsel by an indemnified party has
been authorized in writing by the Borrowers, (b) the Borrowers have failed to
assume the defense of such matter within twenty (20) days of notice thereof
from the indemnified party or (c) the named parties to any such action
(including impleaded parties) include any indemnified party who has been
advised in writing by counsel that there may be one or more legal defenses
available to it or prospective bases for liability against it, which are
different from those available to or against the Borrowers, then the Borrowers
shall not have the right to assume the defense of such matter with respect to
such indemnified party. The indemnified party shall not compromise or settle
any such matter without the written consent of the Borrowers, which consent
shall not be unreasonably withheld or delayed. The Borrowers shall not
compromise or settle any such matter against an indemnified party without the
written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed.
Section 15.11. SEVERABILITY OF PROVISIONS. Any provision in any
Lender Agreement that is held to be inoperative, unenforceable, or invalid in
any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or invalid without affecting the remaining provisions in that jurisdiction or
the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Lender Agreements are
declared to be severable.
Section 15.12. NONLIABILITY OF LENDERS. The relationship between
the Borrowers and the Lenders shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have
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any fiduciary responsibilities to the Borrowers. The Agent and the Lenders
undertake no responsibility to the Borrowers to review or inform the Borrowers
of any matter in connection with any phase of the Borrowers' business or
operations.
Section 15.13. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE
BORROWERS AGREE THAT NONE OF THEM NOR ANY OF THEIR RESPECTIVE ASSIGNEES OR
SUCCESSORS SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM
OR ANY OTHER ACTION BASED UPON OR ARISING OUT OF, THIS AGREEMENT, THE NOTES,
ANY LENDER AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS
OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE
ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS
NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY
THE AGENT, THE LENDERS AND THE BORROWERS, AND THESE PROVISIONS SHALL BE SUBJECT
TO NO EXCEPTIONS. NONE OF THE AGENT, THE LENDERS OR THE BORROWERS HAS AGREED
WITH OR REPRESENTED TO THE OTHERS THAT THE PROVISIONS OF THIS PARAGRAPH WILL
NOT BE FULLY ENFORCED IN ALL INSTANCES.
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IN WITNESS WHEREOF, the Borrowers, the Agent and the Lenders have
caused this Credit Agreement to be executed by their duly authorized officers
as of the date first above written.
BORROWERS:
EKCO GROUP, INC.
By:/S/ NEIL R. GORDON
-------------------------------------------
Name: Neil R. Gordon
Title: Treasurer
EKCO HOUSEWARES, INC.
By:/S/ NEIL R. GORDON
-------------------------------------------
Name: Neil R. Gordon
Title: Treasurer
FREM CORPORATION
By:/S/ NEIL R. GORDON
-------------------------------------------
Name: Neil R. Gordon
Title: Vice President, Treasurer and Clerk
AGENT:
FLEET BANK OF MASSACHUSETTS, N.A., as Agent
By:/S/ THOMAS F. McNAMARA
-------------------------------------------
Name: Thomas F. McNamara
Title: Vice President
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LENDERS:
FLEET BANK OF MASSACHUSETTS, N.A.
By:/S/ THOMAS F. McNAMARA
-------------------------------------------
Name: Thomas F. McNamara
Title: Vice President
Address: Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, Massachusetts 02109
Attn: Thomas F. McNamara,
Vice President
Telefax: (617) 346-1837
Revolving Credit
Commitment Percentage: 40%
Revolving Credit Commitments:
Group: $12,000,000
Housewares: $14,000,000
Frem: $4,000,000
ABN AMRO BANK N.V., BOSTON BRANCH
By:/S/ R.E. JAMES HUNTER
-------------------------------------------
Name: R.E. James Hunter
Title: Group Vice President
By:/S/ CHARLES J. WAHLE
-------------------------------------------
Name: Charles J. Wahle
Title: Corporate Banking Officer
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Address: ABN AMRO Bank N.V.,
Boston Branch
One Post Office Square - 39th Floor
Boston, Massachusetts 02109
Attn: R.E. James Hunter, Group Vice
President
Telefax:
---------------------------
Revolving Credit
Commitment Percentage: 20.0%
Revolving Credit Commitments:
Group: $6,000,000
Housewares: $7,000,000
Frem: $2,000,000
THE DAIWA BANK, LIMITED
By:/S/ STEPHEN F. O'SULLIVAN
-------------------------------------------
Name: Stephen F. O'Sullivan
Title: Executive Officer
By:/S/ DANIEL G. EASTMAN
-------------------------------------------
Name: Daniel G. Eastman
Title: Vice President & Manager
Address: Daiwa Bank, Limited
One Post Office Square - Suite 3820
Boston, Massachusetts 02109
Attn: Alfred DeGemmis,
Vice President
Telefax: (617) 423-4884
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Revolving Credit
Commitment Percentage: 13.33333%
Revolving Credit Commitments:
Group: $4,000,000
Housewares: $4,666,665
Frem: $1,333,333
PNC BANK, NATIONAL ASSOCIATION
By:/S/ KWAN L. GRAYS
-------------------------------------------
Name: Kwan L. Grays
Title: Commercial Banking Officer
Address: PNC Bank, National Association
335 Madison Avenue
New York, New York 10017
Attn: Kwan L. Grays,
Commercial Banking Officer
Telefax: (212) 557-5461
Revolving Credit
Commitment Percentage: 13.33333%
Revolving Credit Commitments:
Group: $4,000,000
Housewares: $4,666,665
Frem: $1,333,333
SHAWMUT BANK, N.A.
By:/S/ AMY TSOKANIS
-------------------------------------------
Name: Amy Tsokanis
Title: Vice President
84
<PAGE> 90
Address: Shawmut Bank, N.A.
One Federal Street
Boston, Massachusetts 02111
Attn: Amy Tsokanis,
Vice President
Telefax: (617) 292-3241
Revolving Credit
Commitment Percentage: 13.33333%
Revolving Credit Commitments:
Group: $4,000,000
Housewares: $4,666,665
Frem: $1,333,333
85
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF EKCO GROUP, INC. FOR THE THREE
MONTHS ENDED APRIL 2, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-02-1995
<EXCHANGE-RATE> 1
<CASH> 185
<SECURITIES> 0
<RECEIVABLES> 37,925
<ALLOWANCES> 1,580
<INVENTORY> 54,291
<CURRENT-ASSETS> 104,311
<PP&E> 85,367
<DEPRECIATION> 31,969
<TOTAL-ASSETS> 310,333
<CURRENT-LIABILITIES> 47,756
<BONDS> 120,276
<COMMON> 3,264
0
183
<OTHER-SE> 128,928
<TOTAL-LIABILITY-AND-EQUITY> 310,333
<SALES> 58,732
<TOTAL-REVENUES> 58,732
<CGS> 40,725
<TOTAL-COSTS> 54,010
<OTHER-EXPENSES> 1,109
<LOSS-PROVISION> (146)
<INTEREST-EXPENSE> 3,433
<INCOME-PRETAX> 255
<INCOME-TAX> 121
<INCOME-CONTINUING> 134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 134
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
