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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NO. 1-7484
EKCO GROUP, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 11-21676167
(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)
</TABLE>
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 888-1212
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<S> <C>
Name of each exchange
Title of each class on which registered
Common Stock, $.01 par value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K. /X/
The aggregate market value of the shares of voting capital stock held by
non-affiliates (without admitting that any person whose shares are not included
in determining such value is an affiliate) was approximately $108 million based
upon the closing price of the shares on the New York Stock Exchange Composite
Tape on March 25, 1996.
As of March 25, 1996, there were issued and outstanding 18,417,907 shares
of Common Stock of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for the fiscal
year ended December 31, 1995: Parts I and II. Portions of the registrant's
definitive proxy statement with respect to the Annual Meeting of Stockholders to
be held on May 21, 1996: Part III.
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Part I
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Item 1. BUSINESS
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General
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Ekco Group, Inc. ("Ekco" or the "registrant" and, together with its
subsidiaries, the "Company") is a leading U.S. manufacturer and marketer of
multiple categories of branded houseware products for everyday home use. The
Company believes it is the leading U.S. supplier of metal bakeware, kitchen
tools and gadgets and non-toxic pest control products. In addition, the Company
believes it is a leading U.S. supplier of plastic storage products (including
crates, containers, baskets and office organizers), cleaning products (primarily
brushes, brooms and mops) and small animal care and control products. The
Company markets its products primarily in the U.S. through substantially all
distribution channels that sell houseware products for everyday home use,
including mass merchandisers, supermarkets, hardware, drug and specialty stores.
The Company was incorporated in Delaware in 1968. The current business
of the Company was established in 1987 through the Company's purchase of Ekco
Housewares, Inc. and through subsequent acquisitions and internal development.
The Company has acquired or developed the following businesses and product lines
(net of divestitures):
October 1987--acquisition of Ekco Housewares, Inc. ("Housewares"), a
manufacturer and marketer of bakeware and kitchen tools and gadgets.
January 1989--acquisition of Woodstream Corporation ("Woodstream"), a
manufacturer and marketer of non-toxic pest control products.
December 1989--acquisition of the non-toxic pest control product line
of McGill Metal Products Company.
December 1991--acquisition of the small animal care product line of
Beacon Industries, Inc.
January 1992--acquisition of Frem Corporation ("Frem"), a manufacturer
and marketer of molded plastic products.
April 1993--acquisition of Kellogg Brush Manufacturing Co. and
subsidiaries ("Kellogg"), a manufacturer and marketer of brushes,
brooms and mops.
January 1995--introduction of an internally developed line of upscale
bakeware and kitchen tools, gadgets and other houseware products by B.
VIA International Housewares, Inc. ("VIA!"), a newly formed subsidiary
of the Company.
The Company operates in one industry segment. See Note 14 of Notes to
Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated
herein by reference, for industry and geographic area information.
The Company's business strategy is to (i) leverage the Company's brand
names to further increase brand recognition and reputation among retailers and
consumers and expand sales to existing and future customers across multiple
product categories, (ii) focus on customer sales and service, (iii) increase
market and customer penetration by offering differentiated product lines and
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new and proprietary products and by cross-marketing the full range of the
Company's product lines, and (iv) pursue growth through acquisition of
additional consumer product lines and businesses.
Since the fourth quarter of Fiscal 1993, Ekco has taken a series of
actions to position the Company for long-term growth (the "Ekco Integration").
The Ekco Integration included (i) the combination of four of the Company's
principal business units into a single operating division, and (ii) the
introduction of a new branding strategy to capitalize on the strength of the
Ekco(R) brand name. The Ekco Integration combined the management and operations
of the Company's bakeware, kitchenware, cleaning products and molded plastic
products businesses, which sell through common channels of distribution and
accounted for over 75% of the Company's net revenues in Fiscal 1995. The newly
created single organization combines and coordinates the sales, marketing,
manufacturing, distribution, administrative and financial activities for the
four product categories. The Company also consolidated a large portion of the
distribution of bakeware and kitchenware products as well as certain cleaning
products into its new distribution facility in Bolingbrook, Illinois from four
separate warehousing and distribution locations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Notes to the
Consolidated Financial Statements appearing in Exhibit 13 hereto, incorporated
herein by reference.
As part of the Ekco Integration, in January 1996 the Company introduced
its new branding strategy in which the Ekco(R) brand name is used to market most
of the products in these four categories. The new strategy enables the Company
to capitalize on the strength of the Ekco(R) brand name by improving the brand
identification of these products by consumers and increasing promotional
opportunities for retailers. In addition, management believes that the new
branding strategy enhances the effectiveness of the Company's newly consolidated
sales and marketing effort by facilitating cross-marketing of the Company's
products to retail customers under Ekco(R), one of the strongest brand names in
the housewares industry.
Recent Developments -------------------
OFFERING OF SENIOR NOTES. On March 25, 1996, the Company completed a
private offering to institutional investors of an aggregate of $125 million
principal amount of 9 1/4% Senior Notes due 2006 (the "Senior Notes") at a price
of 99.291% of face value. The net proceeds of the offering were used by the
Company to (i) repurchase all of the outstanding 12.70% Senior Subordinated
Notes due 1998 of Housewares, (ii) repurchase the Company's outstanding 7.0%
Subordinated Convertible Note due 2002, and (iii) repay amounts outstanding
under the Company's existing $75 million revolving credit facility. The offering
was effected without registration under the Securities Act of 1933, as amended,
or any applicable state securities law. The Company, however, has agreed to file
with the Securities and Exchange Commission (the "Commission") and use its best
efforts to become effective, a registration statement with respect to a new
issue of senior notes (the "Exchange Notes") with terms substantially identical
to those of the Senior Notes and, upon becoming effective, to offer the holders
of the Senior Notes the opportunity to exchange their Senior Notes for a like
principal amount of Exchange Notes and, under certain circumstances, to file a
shelf registration statement to cover resales of the Senior Notes by the holders
thereof. Concurrently with the closing of the above-described private offering,
the Company amended its $75 million revolving credit facility (as so amended,
the "Revolving Credit Facility") by consolidating the outstanding debt and
borrowing capacity of the Company and its subsidiaries and by revising certain
financial covenants. See Note 19 to Notes to Consolidated Financial Statements
appearing in Exhibit 13 hereto, incorporated herein by reference, for further
information regarding the offering and the Revolving Credit Facility.
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Products
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BAKEWARE. The Company manufactures and markets a broad line of metal
bakeware for home use, including non-stick coated bakeware marketed under a
group of Baker's Secret(R) trademarks and uncoated bakeware marketed under the
Ekco(R) trademark. Through Housewares, the Company has over 100 years of
experience in the metal bakeware market, and its bakeware products include
cookie sheets, muffin tins, brownie pans, loaf pans and similar metal bakeware
items. The Company emphasizes value, quality, functionality and, in the case of
coated products, ease of cleaning and release. The Company believes it is the
leading U.S. supplier of metal bakeware in the U.S.
The Company regularly develops new products to capitalize on its high
consumer brand recognition and broad retail distribution. New product
development efforts are conducted by the Company's internal staff and by third
parties on a contract basis. In 1995, the Company introduced specialty muffin
pans marketed under the Baker's Secret(R) trademark. In January 1996, the
Company expanded its insulated, non-stick coated bakeware product line with the
introduction of a variety of baking sheets and baking pans marketed under the
Baker's Secret Air Insulated(TM) trademark. The Company also introduced its
"Healthy Cooking Made Simple" non-stick coated ovenware, including broiling pans
featuring porcelain-coated racks which double as grill tops, and non-stick
roasters which hold poultry vertically during cooking for self-basting. The
Company also introduced two new merchandising display systems for bakeware: a
"cross bar" system which provides full-view product presentation, and its Air
Pockets(TM) slanted-shelf peg-board system.
KITCHENWARE. The Company sells kitchen tools and gadgets under the
Ekco(R) and Ekco Pro(TM) trademarks. The Company markets more than 1,000
products in its kitchen tools and gadgets line, including multiple colors of the
same item and various packaging combinations. Kitchen tools include metal,
plastic and wooden spoons, spatulas, serving forks, ladles and other cooking
accessories. Gadgets include peelers, corkscrews, whisks, can openers, bottle
openers and similar items. The Company also markets stainless steel and carbon
steel cutlery and stainless steel flatware, mixing bowls and colanders. The
Company believes that it is the leading U.S. supplier of kitchen tools and
gadgets. The Company believes that it has obtained this position because of its
broad product lines, brand name recognition, quality and service.
The Company believes that the sale of kitchenware is more dependent on
impulse buying by the consumer than any other line of products the Company
offers. The Company regularly updates its kitchenware line and introduces new
items. For example, in January 1996 the Company introduced a line of upscale
kitchen tool, gadget and cutlery products under the Ekco Pro(TM) trademark. The
Company also introduced a line of boxed gadgets which include various
kitchenware items and sets such as spice racks, gadget organizers and canisters
and updated the colors of its Nova(TM) line of kitchen tools. In addition, the
Company supplemented its merchandising display program by adding a movable
vertical "power tower" which utilizes only one square foot of selling space.
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CLEANING PRODUCTS. The Company manufactures and markets a broad line of
cleaning products, including brushes, brooms and mops for home use, indoor and
outdoor specialty cleaning and janitorial use. The Company believes that it is a
leading manufacturer of cleaning brushes for household, kitchen and personal
use.
In 1995, the Company introduced a line of indoor and outdoor push
brooms and a line of professional-grade janitorial dust and wet mops. Consistent
with its strategy of leveraging the Ekco(R) brand name, in January 1996 the
Company reintroduced its cleaning products in new packaging utilizing the
Ekco(R) trademark for distribution in the mass merchandise and supermarket
distribution channels. The Company continues to market brooms and brushes under
the Wright-Bernet(TM) trademark to specialty hardware retailers, and mops to
janitorial supply and professional cleaning companies. In January 1996, the
Company introduced its line of short-handle and long-handle cleaning products
with comfortable non-slip grips marketed under the Clean Results(TM) trademark,
and further expanded its long-handle product line to include "better" and "best"
dust mops and a ceiling fan brush. The Company also expanded its cleaning
product line to include lint traps, dust, glass and quick wipes and scrub and
scour mitts.
PEST CONTROL AND SMALL ANIMAL CARE AND CONTROL PRODUCTS. The Company
manufactures and markets non-toxic pest control and small animal care and
control products under the Victor(R) and Havahart(R) trademarks, respectively.
The Company's products include spring-action rodent traps and glue-based rodent
and insect traps marketed under the Victor(R) trademark, pet cages marketed
under the Havahart(R) trademark and live animal cage traps marketed under the
Havahart(R) trademark, which are used to control garden pests and other nuisance
animals such as raccoons. The Company believes it is the leading supplier of
non-toxic pest control products, rodent traps and live animal cage traps in the
U.S. In 1995, the Company introduced a no-see, no-touch, pre-set and pre-baited
mouse trap, and the Roach Magnet(TM), a non-toxic roach trap containing a
pheromone attractant.
MOLDED PLASTIC PRODUCTS. The Company manufactures and markets injection
molded plastic housewares, office and juvenile products. The Company's
houseware products include a variety of storage crates and bins, laundry and
storage baskets, organizers, wastebaskets and utility caddies. Office products
include file crates, desk-top organizers, file caddies and carts. Juvenile
products include pocket trays, activity desks and organizing bins and baskets.
The Company's molded plastic products emphasize functionality as well as fashion
and color and currently consist of more than 60 products in a variety of
distinctive colors.
The Company develops new products and works with retailers on design
concepts. In January 1995, the Company introduced a storage locker with a lift
out tray, a flip-top storage crate for files and a smaller carry-all box.
Consistent with its strategy of leveraging the Ekco(R) brand name, in January
1996 the Company reintroduced its molded plastic products with new packaging
that utilizes the Ekco(R) brand name. In January 1996, the Company expanded its
plastic stacking bin product line to include big and jumbo-sized storage bins
for garage, pantry, closet and children's use, and added a jumbo-sized cart to
its line of plastic rolling carts. The Company introduced an expanded line of
laundry products, including a divided laundry basket organizer, a three-handle
"hip rider" laundry basket and a wheeled hamper with a built-in handle. The
Company also introduced a multi-purpose bin with a folding handle marketed under
the Tag Along(TM) trademark.
VIA! In January 1995, the Company introduced its VIA!(TM) line of
houseware products designed for the upscale and specialty marketplace.
Initial products included VIA!'s kitchen tools and gadgets such as "Tutto
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Italiano" pasta, garlic and pizza cooking and storage items, multi-function
items, such as a combination spoon rest/tea bag holder/utility dish, and
bakeware products, including cookie sheets, loaf pans and muffin tins in
heavy-gauge coated and uncoated steel, tin steel pans, and heavy-gauge coated
steel roasting pans, racks, bakers and broilers. In January 1996, the VIA!(TM)
product line was expanded to include tea kettles marketed under the "House
Blend" brand, pantryware marketed under the "Classic Pantry" brand, a line of
trivets and tool jugs and additional multi-function gadgets marketed under the
"2 Tools in 1" brand.
Customers and Distribution
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Management believes that the Company has one of the broadest
distribution networks of any company in the housewares industry. The Company
markets its products primarily in the U.S. through substantially all
distribution channels that sell houseware products for everyday home use,
including mass merchandisers, supermarkets, hardware stores, drug stores,
specialty stores and other retail channels. The Company sells its products to
each of the 30 largest mass merchandisers (as ranked by the July 3, 1995
Discount Industry Annual Report published by Discount Store News), including
Wal-Mart, Kmart and Target. The Company estimates that it sells its products in
over 90% of the approximately 38,000 U.S. supermarkets, including Winn-Dixie,
Kroger and Albertson's. The Company sells its products to many of the largest
hardware chains, including Ace Hardware, Home Depot, True Value, ServiStar and
Lowe's Home Centers. Of its customers, Wal-Mart and Kmart accounted for 13.4%
and 9.0%, respectively, of the Company's net revenues in Fiscal 1995. No other
customer accounted for more than 5% of the Company's net revenues in Fiscal
1995.
The Company's products are distributed through the following retail
channels: Bakeware is distributed primarily through mass merchandisers and
supermarkets; kitchenware is distributed primarily through supermarkets and mass
merchandisers, as well as hardware and drug stores; cleaning products are
marketed under the Ekco(R) trademark primarily to mass merchandisers and
supermarkets; broom and brush products are marketed under the Wright-Bernet(TM)
trademark to hardware retailers and mops are marketed to janitorial supply and
professional cleaning companies; pest control and small animal care and control
products are marketed to mass merchandisers, supermarkets, hardware, drug and
variety stores, agricultural centers and farm stores, home centers and
professional pest control companies; molded plastic products are distributed
through mass merchandisers, as well as large specialty retailers such as office
supply stores and drug stores; and VIA!(TM) products are distributed through
department stores and upscale and specialty stores, including Lechter's, Crate &
Barrel, Linens 'N Things and Bed, Bath & Beyond.
Sales and Marketing
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The Ekco Integration has enabled the Company to shift the focus of its
sales and marketing strategy from individual product categories to the broader
needs of each of its customers. Each of the Company's customers now has one Ekco
sales person responsible for selling and marketing most of the Company's
products. As part of the Ekco Integration, the Company has created a new Ekco(R)
logo and new "family" look packaging and marketing materials designed to present
consumers with a uniform message of Ekco(R) quality, value, design and
functionality.
The Company markets its product lines directly through its own sales
and marketing organization and through a network of representatives and brokers.
Outside the U.S., the Company's products are marketed through its Canadian and
U.K. subsidiaries and distributors and agents who
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provide marketing support to supermarkets, mass merchandising stores, specialty
stores and department stores. The Company's agreements with its distributors and
agents are generally terminable upon 30 days notice and are not deemed to be
material by the Company.
Manufacturing and Sourcing
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The Company manufactures most of its bakeware, cleaning, molded plastic
and pest control and small animal care and control products. High volume
kitchenware products (representing approximately 25% of kitchenware sales) are
generally manufactured and assembled by the Company and the remainder are
sourced from third parties. The Company utilizes a variety of standard
manufacturing processes, including metal stamping, injection molding, mesh
welding, wire forming, and automatic staple setting. The Company regularly
evaluates its manufacturing and third party sourcing options to maintain an
appropriate balance between quality and cost.
Raw Materials and Components
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The Company purchases primary raw materials, including plastic resin,
tin-plated steel, wood and corrugated boxes and packaging, from a number of
suppliers, including several major steel companies and a number of plastic resin
suppliers. All of these materials are subject to price fluctuations which may
adversely affect the Company's profitability. The Company purchases primarily on
the spot market and does not maintain long-term contracts with suppliers. The
Company also purchases components and complete products, primarily for kitchen
tools and gadgets, from several domestic and foreign suppliers. The Company
believes that raw materials, component items and complete products are available
from other suppliers, and that the loss of any one of its suppliers would not
have a material adverse effect on the Company.
Trademarks and Patents
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The Company believes that its Ekco(R) trademark, as well as its Baker's
Secret(R), Havahart(R), Victor(R), Wright-Bernet(TM) and VIA!(TM) trademarks are
significant to its competitive position. The Company holds a number of patents,
none of which is believed to be material to the Company's business.
Competition
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The Company believes that the markets for all of its product lines are
highly competitive and that competition for retail sales to consumers is based
on several factors, including brand name recognition, value, quality, price and
availability. Primary competitive factors with respect to selling such products
to retailers are brand reputation, number of product categories offered, broad
product coverage within each product category, support and service of the
retailer and price.
The Company competes with established companies, several of which have
substantially greater resources than those of the Company. There are no
substantial regulatory or other barriers to entry of new competitors in the
housewares industry. However, suppliers that are able to maintain, or increase,
the amount of retail space allocated to a product may gain a competitive
advantage in that product market. The Company believes that the allocation of
space by retailers is influenced by many factors, including the brand name
recognition by consumers, quality and price of the supplier's products, the
level of service provided by the supplier and the supplier's ability to support
promotions.
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The Company believes that its ability to compete successfully is based
on the wide recognition of its brand names, its multiple category product
offerings, its ability to design, develop, acquire, manufacture and market
competitively priced products, its broad product coverage within most product
categories, its attention to retailer and consumer needs and its access to major
channels of distribution. There can be no assurance that the Company will be
able to compete successfully against current and future sources of competition
or that the competitive pressures faced by the Company will not adversely affect
its profitability or financial performance.
Seasonality
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Many of the Company's product categories are affected by seasonal
consumer purchasing patterns, including holiday cooking and baking,
back-toschool shopping and spring cleaning. Historically, the Company's revenues
in the last half of the fiscal year have been greater than in the first half.
See Note 16 of Notes to Consolidated Financial Statements appearing in Exhibit
13 hereto, incorporated herein by reference, for information regarding quarterly
results of operations.
Backlog
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Information as to backlog is not material to an understanding of the
Company's business because most of the Company's net revenues result from short
lead-time customer orders. The Company generally is able to fill orders from
inventory, and has generally been able to adjust production levels to meet
increases in customers' orders that cannot be filled from inventory.
Employees
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As of December 31, 1995, the Company employed 1,255 persons in the U.S.
of whom 671 were represented under collective bargaining agreements which expire
on dates ranging from February 1997 to February 2000. As of such date, the
Company also employed 33 persons in Canada, of whom 13 were represented under a
collective bargaining agreement which expires in July 1997, and three persons in
the U.K. The Company considers its employee relations to be satisfactory.
Business Outlook
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This annual report on Form 10-K, including "Business," "Properties,"
"Legal Proceedings" and "Management's Discussion and Analysis of Results of
Operations and Financial Condition" in Exhibit 13 hereto, contains
forward-looking statements within the meaning of the "safe-harbor" provisions of
the Private Securities Litigation Reform Act of 1995. Such statements are based
on management's current expectations and are subject to a number of factors and
uncertainties which could cause actual results to differ materially from those
described in the forward-looking statements. Such factors and uncertainties
include, but are not limited to: the impact of the level of the Company's
indebtedness; restrictive covenants contained in the Company's various debt
documents; general economic conditions and conditions in the retail environment;
the Company's dependence on a few large customers; price fluctuations in the raw
materials used by the Company; competitive conditions in the Company's markets;
the seasonal nature of the Company's business; and the impact of federal, state
and local environmental requirements (including the impact of current or future
environmental claims against the Company). As a result, the Company's operating
results may fluctuate, especially when measured on a quarterly basis.
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Item 2. PROPERTIES
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As of December 31, 1995, the Company owned or leased for use in its
business the properties set forth in the table below:
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Approximate Owned or Lease
Description of Property Location Square Footage Leased Expires
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Executive offices Nashua, New Hampshire 8,000 Leased 11/06/97
Administrative offices for the Franklin Park, Illinois 190,000 Leased 01/31/99
housewares division and warehousing
and distribution center for VIA!
products
Manufacturing, warehousing and Massillon, Ohio 244,000 Owned N/A
distribution center for bakeware
Warehousing and distribution center Bolingbrook, Illinois 260,000 Leased 06/30/02
for kitchen tools, gadgets, bakeware
and other Company products
Manufacturing, warehousing, Lititz, Pennsylvania 366,000 Owned N/A
distribution and office facility
for pest control and small animal
care and control products
Manufacturing, warehousing, office Easthampton, Massachusetts 326,000 Owned N/A
and distribution facility for brushes,
brooms and mops
Manufacturing, warehousing, Worcester, Massachusetts 170,000 Owned N/A
distribution and office facility for
molded plastic products
Warehousing facility for molded Worcester, Massachusetts 135,000 Leased 01/31/00
plastic products
Manufacturing, warehousing and Phoenix, Arizona 104,000 Owned N/A
distribution facility for molded
plastic products
Manufacturing, warehousing, Hamilton, Ohio 100,000 Owned N/A
distribution and office facility for
brushes, brooms and mops
Manufacturing and warehousing Obregon, Sonora, Mexico 27,000 Leased 12/23/96
facility for kitchen tools and
gadgets
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Office and warehousing facility Niagara Falls, Ontario 39,000 Owned N/A
for products for sale and Canada
distribution in Canada
Manufacturing and distribution Nashville, Tennessee 42,000 Leased 12/31/96
facility for institutional mop
and broom products
Office facility for VIA!(TM) Englewood Cliffs, New Jersey 3,000 Leased 07/31/96
products
Office facility for products for Caldicot, Gwent, U.K. 2,000 Leased 09/01/98
sale and distribution in the U.K.
<FN>
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(a) In addition to the properties listed in the table, as of December 31,
1995 the Company owned approximately 568,000 square feet of floor space
which is being held for sale or lease. Approximately 10% of this space
was under lease to a third party as of that date. The remaining space
is covered by a purchase and sale agreement. The Company leases other
real properties not set forth above which in the aggregate, are not
deemed material.
(b) Substantially all of the properties owned by the Company are subject to
mortgage liens granted in connection with the Revolving Credit
Facility. The Company believes that its properties are generally
suitable and adequate for its purposes for the foreseeable future.
</TABLE>
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Item 3. LEGAL PROCEEDINGS
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Environmental Regulation and Claims
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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 at
Massillon (more fully described below) and Hamilton, Ohio; Easthampton,
Massachusetts (more fully described in Note 13 of Notes to Consolidated
Financial Statements appearing in Exhibit 13 and incorporated herein by
reference); Chicago, Illinois and Lititz, Pennsylvania, and at its previously
owned facility in Hudson, New Hampshire hazardous substances and oil have been
detected and that additional investigations will be, and remedial actions will
or may be, required at such facilities. 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 or future facilities may not result in
additional environmental claims being asserted against the Company or additional
investigations or remedial actions being required.
Prior to the Company's acquisition of Housewares in 1987, Housewares'
Massillon, Ohio steel bakeware manufacturing facility was the subject of
administrative proceedings before the United States Environmental Protection
Agency by issuance of an administrative complaint alleging violations of the
Resource Conservation and Recovery Act resulting from operation of a wastewater
lagoon at the facility. American Home Products Corporation ("AHP"), a former
owner of Housewares, pursuant to an indemnity agreement (the "Indemnity
Agreement") with Housewares relating to acts occurring prior to September 7,
1984, assumed the costs of remediation measures in addition to the defense of
the administrative proceedings with federal and state environmental protection
agencies, as well as preparation of closure plans and other plans called for as
a result of these proceedings. While AHP has acknowledged its full
responsibility under the Indemnity Agreement with respect to the wastewater
lagoon, it has asserted that Housewares should contribute to the cost of a
remediation study and certain remediation measures to the extent that Housewares
exacerbated contamination at the facility since September 7, 1984. Housewares
has denied that it has exacerbated contamination at the facility since such
date. AHP and Housewares have agreed to allocate such costs in proportion to
their respective responsibilities based on the results of an engineering study
but in no event will Housewares' share with respect to the wastewater lagoon
exceed the lesser of 25% of the total cost or $750,000. The Company is unable to
determine to what extent, if any, it will be responsible to contribute to such
costs but the Company does not believe that any such contribution that it may be
required to make will have a material adverse effect on its financial position,
results of operations or liquidity.
In June 1992, the United States filed an action in the U.S. District
Court for the Northern District of Ohio against Housewares seeking penalties and
injunctive relief and alleging violations as a result of an alleged failure to
provide certain closure and post-closure financial assurances with respect to
the Massillon, Ohio site. Pursuant to the Indemnity Agreement and
11
<PAGE> 13
a confirmatory letter from AHP to Housewares on December 19, 1988 (the
"Indemnity Documents"), AHP conducted and controlled all matters relating to
such financial assurances and the defense of the action filed in June 1992. In
January 1994, the court entered judgment against Housewares in the amount of
$4.6 million in the lawsuit. AHP filed a notice of appeal on behalf of
Housewares. In March 1994, AHP informed Housewares that, should it be
unsuccessful in its appeal, it would attempt to hold Housewares responsible for
a portion of the penalties (approximately $600,000, exclusive of interest)
arising from Housewares' alleged delay in furnishing certain information to the
Ohio Environmental Protection Agency. In March 1994, Housewares notified AHP
that Housewares denies all liability and that AHP is liable for all liabilities,
losses, costs or damages arising from the lawsuit pursuant to the Indemnity
Documents. In August 1995, the Appeals Court affirmed the Company's liability,
reversed the imposition of civil penalties for certain periods of time and
remanded the redetermination of such penalties to the District Court. The
District Court has not yet completed its redetermination. The Company is unable
to predict the result of the redetermination or AHP's attempts to obtain
contribution from Housewares, but the Company does not believe that any such
liability will have a material adverse effect on its financial position, results
of operations or liquidity.
Litigation
- ----------
In addition to the environmental claims discussed above, from time to
time the Company is a party to litigation and other legal proceedings, including
product liability claims. In many cases, claims are covered by insurance,
subject to standard deductibles. Although the outcome of such proceedings cannot
be determined with certainty, the Company believes that the final outcome of
such proceedings will not have a material adverse effect on the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
Not applicable.
12
<PAGE> 14
<TABLE>
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
<CAPTION>
Name Age Office Held
- ---- --- -----------
<S> <C> <C>
Robert Stein 56 President and Chief Executive Officer,
February 1986 to present; Chief Financial
Officer, July 1980 to July 1993.
Jeffrey A. Weinstein 45 Executive Vice President, April 1985 to
present; Secretary, February 1988 to
present; General Counsel, October 1978 to
present.
Donato A. DeNovellis 51 Executive Vice President, October 1994 to
present; Chief Financial Officer, July
1993 to present; Vice President, July 1993
to October 1994. Prior to joining the
Company, from 1980 to 1992 Mr. DeNovellis
served Xerox Corporation and its
subsidiary companies in a number of
capacities, including the following:
Managing Director from May 1992 to October
1992, and Executive Vice President and
Chief Administrative Officer from April
1991 to May 1992 of Crum & Forster, Inc.
(a property/casualty insurance holding
company); and Senior Vice President,
Operations Analysis, from January 1990 to
April 1991 of Xerox Financial Services (a
financial services company).
Stuart Cohen 49 Vice President, Strategic Planning and
Business Development, June 1995 to
present. Prior to joining the Company,
from May 1991 to December 1994 Mr. Cohen
served as First Vice President of Van
Kampen Merritt, Inc. ("VKM") (an
investment products and management firm),
where he was responsible for strategic
planning and business development. From
August 1986 to April 1991, Mr. Cohen was
an investment banker and Vice President,
Mergers and Acquisitions, Capital Markets
Divisions of VKM.
John R. Haran 53 Vice President and Treasurer, February
1996 to present. From January 1994 to
March 1995, Mr. Haran served as Chief
Financial Officer of Strategic Realty
Advisors, Inc. (a commercial real estate
company) and from March 1990 to December
1993, he served as Chief Financial Officer
of VMS Realty Partners (a commercial real
estate partnership).
Brian R. McQuesten 46 Vice President, February 1996 to present;
Controller, May 1987 to present.
</TABLE>
13
<PAGE> 15
The executive officers of the Company are elected annually by the Board
of Directors and serve, subject to the provisions of any employment agreement
between the executive and the Company, until their respective successors are
chosen and qualified or until their earlier resignation or removal.
Part II
-------
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------- ---------------------------------------------------------------------
The information set forth in the section entitled "Common Stock Price
Range and Dividends" appearing in Exhibit 13 hereto is incorporated herein by
reference.
Item 6. SELECTED FINANCIAL DATA
- ------- -----------------------
The information set forth in the section entitled "Selected
Consolidated Financial Data" appearing in Exhibit 13 hereto is incorporated
herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The information set forth in the section entitled "Management's
Discussion and Analysis of Results of Operations and Financial Condition"
appearing in Exhibit 13 hereto is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
The information set forth in the consolidated financial statements and
notes thereto (including the note which sets forth certain supplementary
information) and the Report of Independent Auditors appearing in Exhibit 13
hereto are incorporated herein by reference. Reference is also made to Item
14(a)2 with respect to Financial Statement Schedules filed herewith.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
14
<PAGE> 16
Part III
--------
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
a) Directors - The information set forth in the section entitled
"Election of Directors" appearing in the Company's definitive proxy statement
with respect to the 1996 Annual Meeting of Stockholders is incorporated herein
by reference.
b) Executive Officers - See "Executive Officers of the Registrant"
appearing in Part I above.
Item 11. EXECUTIVE COMPENSATION
- -------- ----------------------
The information set forth in the sections entitled "Compensation of
Directors" and "Compensation of Executive Officers" (except for the information
under the captions "Report of the Compensation Committee on Executive
Compensation" and "Performance Graph") appearing in the Company's definitive
proxy statement with respect to the 1996 Annual Meeting of Stockholders is
incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
The information set forth in the section entitled "Security Ownership
of Certain Beneficial Owners and Management" appearing in the Company's
definitive proxy statement with respect to the 1996 Annual Meeting of
Stockholders is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The information set forth in the section entitled "Certain
Relationships and Related Transactions" appearing in the Company's definitive
proxy statement with respect to the 1996 Annual Meeting of Stockholders is
incorporated herein by reference.
15
<PAGE> 17
Part IV
-------
<TABLE>
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- -------- ----------------------------------------------------------------
<CAPTION>
Page Number in
Exhibit 13
--------------
<S> <C> <C>
(a) 1. Financial Statements:
- --- -- ---------------------
Report of independent auditors............. 48
Consolidated balance sheets at December 31,
1995 and January 1, 1995................... 30
Consolidated statements of operations for
the fiscal years ended December 31, 1995,
January 1, 1995 and January 2, 1994........ 31
Consolidated statements of stockholders'
equity for the fiscal years ended
December 31, 1995, January 1, 1995 and
January 2, 1994............................ 32
Consolidated statements of cash flows
for the fiscal years ended December 31,
1995, January 1, 1995 and January 2, 1994.. 33
Notes to consolidated financial
statements................................. 34
</TABLE>
<TABLE>
<CAPTION>
Page Number in
Form 10-K
--------------
<S> <C> <C>
Independent auditors' report............... 18
2. Financial Statement Schedules:
-- ------------------------------
III Condensed Financial Information
of the Registrant..................... 19
VIII Valuation and Qualifying Accounts..... 23
Schedules other than those listed above have been omitted because they are not
required, not applicable or the required information is furnished in the
consolidated financial statements or notes thereto.
3. Exhibits: (See Index to Exhibits beginning on page 24.)
-- ---------
(b) Reports on Form 8-K -- None.
- --- -------------------
</TABLE>
16
<PAGE> 18
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EKCO GROUP, INC.
By: /s/ ROBERT STEIN
------------------------------------
Robert Stein, President and Chief
Executive Officer
(Principal Executive Officer)
Date: March 29, 1996
By: /s/ DONATO A. DeNOVELLIS
------------------------------------
Donato A. DeNovellis, Executive Vice
President, Finance and Administration,
and Chief Financial Officer
(Principal Financial Officer)
Date: March 29, 1996
By: /s/ BRIAN R. McQUESTEN
------------------------------------
Brian R. McQuesten, Vice President and
Controller
(Principal Accounting Officer)
Date: March 29, 1996
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<S> <C> <C>
/s/ T. MICHAEL LONG Director March 29, 1996
- -------------------------
T. Michael Long
/s/ STUART B. ROSS Director March 29, 1996
- -------------------------
Stuart B. Ross
/s/ MALCOLM L. SHERMAN Director March 29, 1996
- -------------------------
Malcolm L. Sherman
/s/ BILL W. SORENSON Director March 29, 1996
- -------------------------
Bill W. Sorenson
/s/ HERBERT M. STEIN Director March 29, 1996
- -------------------------
Herbert M. Stein
/s/ ROBERT STEIN Director March 29, 1996
- -------------------------
Robert Stein
/s/ JEFFREY A. WEINSTEIN Director March 29, 1996
- -------------------------
Jeffrey A. Weinstein
</TABLE>
17
<PAGE> 19
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors and Stockholders
Ekco Group, Inc.
Under date of February 5, 1996, except as to note 19, which is as of
March 25, 1996, we reported on the consolidated balance sheets of Ekco Group,
Inc. and subsidiaries as of December 31, 1995 and January 1, 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the fiscal years in the three-year period ended December 31,
1995, as contained in the 1995 annual report to stockholders. These consolidated
financial statements and our report thereon are incorporated by reference in
this annual report on Form 10-K for the fiscal year 1995. In connection with our
audits of the aforementioned consolidated financial statements, we also audited
the related consolidated financial statement schedules as listed in Item 14(a)2
of this report. These financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth herein.
In 1993, the Company changed its method of accounting for income taxes,
post-retirement benefits other than pensions and post-employment benefits.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
March 25, 1996
18
<PAGE> 20
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
----------------- ---------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ - $ -
Prepaid expenses and other current assets 238 276
Investment pledged as collateral - 3,600
-------- --------
Total current assets 238 3,876
Furniture and equipment, net 143 103
Property held for sale or lease - 3,285
Deferred income taxes 1,383 2,265
Other assets 3,551 3,119
Investment in and advances to subsidiaries 191,840 206,176
-------- --------
Total assets $197,155 $218,824
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable $ - $ 3,643
Current portion of long-term obligation - -
Accounts payable 379 762
Accrued expenses 2,707 4,293
Income taxes 389 2,616
Deferred income taxes 2,063 1,279
-------- --------
Total current liabilities 5,538 12,593
-------- --------
Long-term obligation, less current portion 829 22,223
-------- --------
Non-interest bearing note payable to Ekco
Housewares, Inc. 26,100 26,100
-------- --------
Other long-term liabilities 2,486 2,979
-------- --------
7% Convertible Subordinated Note 22,000 22,000
-------- --------
Series B ESOP Convertible Preferred
Stock, net; outstanding 1,488 shares and
1,568 shares, respectively,
redeemable at $3.61 per share 3,458 3,096
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value - -
Common stock, $.01 par value; outstanding
18,414 shares and 18,069 shares, respectively 184 181
Capital in excess of par value 106,916 105,448
Retained earnings 33,614 27,172
Unearned compensation (3,970) (2,968)
-------- --------
136,744 129,833
-------- --------
Total liabilities and stockholders' equity $197,155 $218,824
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated condensed
financial statements.
19
<PAGE> 21
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT (CONTINUED)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
FISCAL YEARS ENDED
------------------
DECEMBER 31, 1995 JANUARY 1, 1995 JANUARY 2, 1994
----------------- --------------- ---------------
<S> <C> <C> <C>
Revenues
Investment income $ 71 $ 224 $ 500
Equity in earnings of subsidiaries 14,530 18,132 10,627
------- ------- -------
14,601 18,356 11,127
------- ------- -------
Costs and expenses:
General and administrative 1,606 4,070 3,374
Restructuring/reorganization and excess
facilities charge - - 3,631
Interest expense 3,187 3,103 2,508
------- ------- -------
4,793 7,173 9,513
------- ------- -------
Income before income taxes and
cumulative effect of accounting changes 9,808 11,183 1,614
------- ------- -------
Income taxes (credit) 1,763 (240) (645)
------- ------- -------
Income before cumulative effect of
accounting changes 8,045 11,423 2,259
Cumulative effect of changes in method
of accounting for post-retirement
and post-employment benefits (net of
income taxes of $1,954) - - (3,247)
------- ------- -------
Net income (loss) $ 8,045 $11,423 $ (988)
======= ======= =======
Per share data
Earnings before cumulative effect of
accounting changes $ .40 $ .57 $ .11
Cumulative effect of accounting changes - - (.19)
------- ------- -------
Net income (loss) $ .40 $ .57 $ (.08)
======= ======= =======
Weighted average number of shares used
in computation of per share data
Earnings before cumulative effect
of accounting changes 20,318 20,115 19,999
Cumulative effect of accounting
changes - - 17,148
</TABLE>
The accompanying notes are an integral part of the consolidated condensed
financial statements.
20
<PAGE> 22
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT (CONTINUED)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<CAPTION>
FISCAL YEARS ENDED
------------------
DECEMBER 31, JANUARY 1, JANUARY 2,
------------ ---------- ----------
1995 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 8,045 $ 11,423 $ (988)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operations:
Depreciation 100 51 643
Amortization of unearned compensation 1,363 1,120 1,129
Equity in earnings of subsidiaries (14,530) (18,132) (10,627)
Deferred income taxes 1,666 929 201
Cumulative effect of accounting change - - 3,247
Other (5) (134) 1,085
Change in certain assets and liabilities
affecting cash provided by (used in)
operations:
Other assets (41) 5,069 (1,750)
Accounts payable and accrued expenses (1,949) 946 879
Income taxes payable (2,227) (2,337) 1,075
-------- -------- --------
Net cash used in operations (7,578) (1,065) (5,106)
-------- -------- --------
Cash flows from investing activities:
Proceeds from sale of property and equipment 2,772 - 42
Capital expenditures (135) (181) (79)
Investment in and advances to subsidiaries 28,866 (13,896) (11,882)
-------- -------- --------
Net cash used in investing activities 31,503 (14,077) (11,919)
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term
obligations 5,820 22,223 -
Proceeds from sale of investment held as
collateral 3,600 - 750
Payments of dividends (1,603) - -
Purchases of treasury stock (1,180) - -
Purchase of common stock for employee stock
ownership plan - (950) -
Payment of notes and long-term obligation (30,857) (7,615) (993)
Other 295 1,484 913
-------- -------- --------
Net cash provided by financing
activities (23,925) 15,142 670
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents - - (16,355)
Cash and cash equivalents at beginning
of year - - 16,355
-------- -------- --------
Cash and cash equivalents at end of year $ - $ - $ -
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated condensed
financial statements.
21
<PAGE> 23
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT (CONTINUED)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND OTHER MATTERS:
The condensed consolidated financial statements included herein have
been prepared by the Company pursuant to the rules and regulations of the
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 suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and the notes
included in this Form 10-K.
The consolidated condensed financial statements include the accounts of
the Company and its subsidiaries all of which are reported under the equity
method of accounting. The accompanying condensed financial statements include
the fiscal years ended December 31, 1995 ("Fiscal 1995"), January 1, 1995
("Fiscal 1994") and January 2, 1994 ("Fiscal 1993"). Certain amounts from
prior periods have been reclassified to conform with the presentation for the
current fiscal year.
Equity in earnings of the Company's subsidiaries is presented after
elimination of management fees payable to the Company, for Fiscal 1995 $4.4
million, for Fiscal 1994 $4.3 million and for Fiscal 1993 $4.2 million and
interest payable of $4.9 million for Fiscal 1995.
Under the terms of the Ekco Housewares' 12.70% Notes, the amount which
may be paid to the Company by Ekco Housewares is limited in accordance with a
formula, which is based primarily on the consolidated net revenues and net
income of Ekco Housewares, plus reimbursement for expenses and amounts due
pursuant to a tax sharing arrangement. At December 31, 1995, the amount
payable to the Company by Ekco Housewares was approximately $800,000.
During Fiscal 1995, Fiscal 1994 and Fiscal 1993, no dividends were paid
to the Company by its subsidiaries.
2. Income taxes:
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect, if
any, on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
22
<PAGE> 24
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(AMOUNTS IN THOUSANDS)
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------------------
--ADDITIONS TO RESERVES-- --DEDUCTIONS FROM RESERVES--
BALANCE AT ADDITIONS CHARGED TO SETTLEMENTS BALANCE
BEGINNING CHARGED TO OTHER OR WRITE- AT CLOSE
DESCRIPTION OF PERIOD INCOME OR LOSS ACCOUNTS PAYMENTS OFFS OF PERIOD
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful
accounts $ 1,739 $ (442) $ - $ - $ 249 $ 1,048
Reserves related to plant
consolidations 3,305 - - 3,305 - -
------- ------ ---- ------ ------ -------
$ 5,044 $ (442) $ - $3,305 $ 249 $ 1,048
======= ====== ==== ====== ====== =======
YEAR ENDED JANUARY 1, 1995:
Allowance for doubtful
accounts $ 1,758 $ 247 $ - $ - $ 266 $ 1,739
Provisions related to
restructuring/reorganization
and excess facilities cost 8,323 - - 5,018 - 3,305
------- ------- ---- ------ ------ -------
$10,081 $ 247 $ - $5,018 $ 266 $ 5,044
======= ======= ==== ====== ====== =======
YEAR ENDED JANUARY 2, 1994:
Allowance for doubtful
accounts $ 1,607 $ 449 $375 (1) $ - $ 673 $ 1,758
Provisions related to
restructuring/reorganization
and excess facilities cost - 11,000 - - 2,677 8,323
------- ------- ---- ------ ------ -------
$ 1,607 $11,449 $375 $ - $3,350 $10,081
======= ======= ==== ====== ====== =======
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Included in valuation of assets of Kellogg Brush Manufacturing Co. acquired April 1, 1993.
</TABLE>
23
<PAGE> 25
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Exhibit
Number Exhibit Description
- ------ -------------------
<S> <C>
3.1(i)(a) Restated Certificate of Incorporation dated February 17, 1987,
as amended, originally filed as Exhibit 3.1(a) to Form 10-K for
the year ended December 31, 1989.
3.1(i)(b) Certificate of Designations of Series A Junior Participating
Preferred Stock, originally filed as Exhibits 3.1(b) and 4.2(c)
to Form 10-K for the year ended December 28, 1986, included in
Exhibit 4.1 (incorporated herein by reference to Exhibit 3.1(b)
to Form 10-K for the year ended January 1, 1995).
3.1(i)(c) Certificate of Designations of Series B ESOP Convertible
Preferred Stock, originally filed as Exhibit 3.1(d) to Form 10-
K for the year ended January 1, 1989 (incorporated herein by
reference to Exhibit 3.1(c) to Form 10-K for the year ended
January 1, 1995).
3.1(ii) By-Laws as currently in effect (incorporated herein by reference
to Exhibit 3.2 to Form 10-K for the year ended December 29,
1991).
4.1 Rights Agreement dated as of March 27, 1987, including Form of
Rights Certificate and Form of Certificate of Designations of
Series A Junior participating Preferred Stock, originally filed
as Exhibit 4.2(c) to Form 10-K for the year ended December 28,
1986; First Amendment dated as of June 9, 1988, originally filed
as Exhibit 4.2(a)(2) to Form 10-K for the year ended January 1,
1989; [Second] Amendment dated as of January 10, 1989,
originally filed as Exhibit 4.2(a)(3) to Form 10-K for the year
ended January 1, 1989; Third Amendment dated as of March 23,
1992, originally filed as Exhibit 8 to Form 8 Amendment No. 2 to
Form 8-A dated June 30, 1992; and Fourth Amendment dated as of
December 22, 1992, originally filed as Exhibit 9 to Form 8
Amendment No. 3 dated January 8, 1993 to Form 8-A (incorporated
herein by reference to Exhibit 4.2 to Form 10-K for the year
ended January 3, 1993).
4.2(a) Indenture dated as of March 25, 1996 among the registrant, its
U.S. operating subsidiaries and Fleet National Bank of
Connecticut.
4.2(b) Form of 9 1/4% Senior Note due 2006, included in Exhibit 4.2(a).
<FN>
- --------------------------------------------------------------------------------
(1) Numbered in accordance with Item 601 of Regulation S-K.
(2) An asterisk (*) denotes the Company's management contracts or
compensatory plans or arrangements.
</TABLE>
24
<PAGE> 26
<TABLE>
<CAPTION>
<S> <C>
4.2(c) Registration Rights Agreement dated as of March 25, 1996 among
the registrant, its U.S. operating subsidiaries, Bear,
Stearns & Co. Inc. and Smith Barney Inc.
4.3 Ekco Group, Inc. Dividend Reinvestment and Stock Purchase Plan.
4.4 Form of Purchase Agreement dated as of December 1, 1988 among
Ekco Housewares, Inc., Teachers Insurance and Annuity
Association of America, The Mutual Life Insurance Company of New
York, MONY Life Insurance Company of America, MONY Legacy Life
Insurance Company, Kemper Investors Life Insurance Company and
Federal Kemper Life Insurance Company, as amended (incorporated
herein by reference to Exhibit 4.1 to Form 8-K as of December
21, 1988, Exhibit 4.3(b) to Form 10-K for the year ended
December 30, 1990, Exhibit 28.2 to Form 8-K as of January 8,
1992, and Exhibit 4.3(a) to Form 10-Q for the quarterly period
ended July 4, 1993.
10.1(a)* 1984 Restricted Stock Purchase Plan, as amended (incorporated
herein by reference to Exhibit 10.1(a) to Form 10-K for the year
ended December 29, 1991).
10.1(b)* 1985 Restricted Stock Purchase Plan, as amended (incorporated
herein by reference to Exhibit 10.3(a) to Form 10-K for the year
ended December 29, 1991).
10.1(c)(1)* Form of Restricted Stock Purchase Agreement (incorporated
herein by reference to Exhibit 10.1(b) to Form 10-K for the
year ended January 1, 1995).
10.1(c)(2)* Schedule to Form of Restricted Stock Purchase Agreement.
10.1(c)(3)* Form of Amendment to Restricted Stock Purchase Agreement.
10.1(d)* Form of Restricted Stock Purchase Agreement, as amended, for the
quarterly purchase of restricted stock.
10.2(a)* 1987 Stock Option Plan, as amended, and form of incentive stock
option and non-qualified stock option agreements (incorporated
herein by reference to Exhibit 10.11(a) to Form 10-K for the
year ended December 29, 1991).
10.2(b)(1)* Form of Non-Qualified Stock Option and Repurchase Agreement
dated as of September 8, 1987, as amended.
10.2(b)(2)* Form of Non-Qualified Stock Option and Repurchase Agreement
dated various dates, as amended.
10.2(c)* Form of Incentive Stock Option Agreement with Ronald N. Fox and
Richard J. Corbin dated as of October 28, 1988 and May 9, 1994,
respectively (incorporated herein by reference to Exhibit
10.3(c) to Form 10-K for the year ended January 1, 1995).
</TABLE>
25
<PAGE> 27
<TABLE>
<CAPTION>
<S> <C>
10.3(a)* Form of Indemnity Agreement for officers and directors
(incorporated herein by reference to Exhibit 10.3(c) to Form 10-
K for the year ended January 1, 1995).
10.3(b) Schedule to Form of Indemnity Agreement.
10.4* Ekco Group, Inc. 1988 Directors' Stock Option Plan, originally
filed as Exhibit 10.15 to Form 10-K for the year ended December
31, 1989, as amended.
10.5(a)* Ekco Group, Inc. Employees' Stock Ownership Plan effective as of
January 1, 1989, originally filed as Exhibit 10.13(a) to Form
10-K for the year ended January 1, 1989, as amended
(incorporated herein by reference to Exhibits 10.6(a)(1) and (2)
to Form 10-K for the year ended January 1, 1995).
10.5(b) ESOP Loan Agreement dated as of October 1, 1990, originally
filed as Exhibit 10.10(c) to Form 10-K for the year ended
December 30, 1990.
10.5(c) ESOP Loan Agreement dated as of March 30, 1995.
10.6* Amended and Restated Employment Agreement with Robert Stein
dated as of May 25, 1995 (incorporated herein by reference to
Exhibit 10.1 to Form 10-Q for the quarterly period ended October
1, 1995).
10.8* Amended and Restated Employment Agreement with Jeffrey A.
Weinstein dated as of May 25, 1995 (incorporated herein by
reference to Exhibit 10.2 to Form 10-Q for the quarterly period
ended October 1, 1995).
10.9* Amended and Restated Employment Agreement with Donato A.
DeNovellis dated as of May 25, 1995 (incorporated herein by
reference to Exhibit 10.3 to Form 10-Q for the quarterly period
ended October 1, 1995).
10.10* Employment Agreement with Stuart W. Cohen dated as of June 12,
1995 (incorporated herein by reference to Exhibit 10.4 to Form
10-Q for the quarterly period ended October 1, 1995).
10.10* Amended and Restated Employment Agreement with Brian R.
McQuesten and certain other Company employees dated as of May
25, 1995 (incorporated herein by reference to Exhibit 10.5 to
Form 10-Q for the quarterly period ended October 1, 1995).
10.11* Ekco Group, Inc. Incentive Compensation Plan for Executive
Employees of Ekco Group, Inc. and Subsidiaries, as amended
(incorporated herein by reference to Exhibit 10.9 to Form 10-K
for the year ended December 29, 1991 and Exhibit 10.12(b) to
Form 10-K for the year ended January 1, 1995).
</TABLE>
26
<PAGE> 28
<TABLE>
<CAPTION>
<S> <C>
10.12* 1995 Restatement of Incentive Compensation Plan for Executive
Employees of Ekco Group, Inc. and its Subsidiaries (incorporated
herein by reference to Exhibit 10.13 to Form 10-K for the year
ended January 1, 1995).
10.13* Ekco Group, Inc. Supplemental Executive Retirement Plan dated as
of July 1, 1992 (incorporated herein by reference to Exhibit
10.13 to Form 10-K for the year ended January 2, 1994).
10.14(a)* Form of Split Dollar Agreement (incorporated herein by reference
to Exhibit 10.14 to Form 10-K for the year ended January 2,
1994).
10.14(b)* Schedule to Form of Split Dollar Agreement.
10.15* Severance Agreement with Richard J. Corbin dated September 28,
1995.
10.16* Severance Agreement with Ronald N. Fox dated September 21, 1995.
10.17(a)* Severance Agreement with Neil R. Gordon dated December 28, 1995
10.17(b)* Consulting Agreement with N.R. Gordon & Company dated December
28, 1995.
10.18 Standstill Agreement with Stephen Weinroth dated as of March 27,
1987, originally filed as Exhibit 10.15 to Form 10-K for the
year ended December 28, 1986 (incorporated herein by reference
to Exhibit 10.13 to Form 10-K for the year ended January 3,
1993).
10.19 Standstill Agreement with G. Chris Andersen dated as of March
30, 1987, originally filed as Exhibit 10.17 to Form 10-K for the
year ended December 28, 1986 (incorporated herein by reference
to Exhibit 10.14 to Form 10-K for the year ended January 3,
1993).
10.20(a) Indemnification Letter from American Home Products Corporation
dated February 8, 1985 to The Ekco Group, Inc., originally filed
as Exhibit 2.2 to Form 8-K as of October 23, 1987 (incorporated
herein by reference to Exhibit 10.15(a) to Form 10-K for the
year ended January 3, 1993).
10.20(b) Letter of Restatement and Confirmation of the Indemnification of
American Home Products Corporation to The Ekco Group, Inc. from
American Home Products Corporation to Centronics Corporation
dated October 1, 1987, originally filed as Exhibit 2.3 to Form
8-K as of October 23, 1987 (incorporated herein by reference to
Exhibit 10.15(b) to Form 10-K for the year ended January 3,
1993).
</TABLE>
27
<PAGE> 29
<TABLE>
<CAPTION>
<S> <C>
10.20(c) Letter from American Home Products Corporation dated December
19, 1988, originally filed as Exhibit 10.17(d) to Form 10-K for
the year ended January 1, 1989 (incorporated herein by reference
to Exhibit 10.18(c) to Form 10-K for the year ended January 1,
1995).
10.21 Agreement dated as of March 7, 1989 with Howard R. Curd et al.,
originally filed as Exhibit 10.16 to Form 10-K for the year
ended January 1, 1989 (incorporated herein by reference to
Exhibit 10.19 to Form 10-K for the year ended January 1, 1995).
10.22 Securities Purchase Agreement dated as of December 22, 1992 with
The 1818 Fund, L.P., originally filed as Exhibit 10.20(a) to
Form 10-K for the year ended January 3, 1993; Subordinated
Convertible Note dated December 22, 1992, originally filed as
Exhibit 10.20(b) to Form 10-K for the year ended January 3,
1993; Registration Rights Agreement with The 1818 Fund, L.P.,
originally filed as Exhibit 10.20(c) to Form 10-K for the year
ended January 3, 1993; and Standstill Agreement dated April 28,
1992 with Brown Brothers Harriman & Co. and The 1818 Fund, L.P.,
originally filed as Exhibit 10.20(d) to Form 10-K for the year
ended January 3, 1993 (incorporated herein by reference to
Exhibit 10.22 to Form 10-K for the year ended January 2, 1994).
10.23(a) 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
(incorporated herein by reference to Exhibit 10.28 to Form 10-Q
for the quarterly period ended April 2, 1995).
10.23(b) First Amendment to Revolving Credit Agreement dated as of
December 31, 1995 (incorporated herein by reference to Exhibit
10.28(b) to Form 8-K as of December 31, 1995).
10.23(c) Second Amendment to Credit Agreement dated as of March 25, 1996.
11 Statement re computation of per share earnings. (Reference is
made to Note 13 of Notes to Consolidated Financial Statements in
Exhibit 13 hereto.)
13 1995 Annual Report to Stockholders (Sections entitled "Common
Stock Price Range and Dividends," "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of
Results of Operations and Financial Condition," "Consolidated
Balance Sheets," "Consolidated Statement of Operations,"
"Consolidated Statements of Stockholders' Equity," "Consolidated
Statements of Cash Flows," "Notes to Consolidated Financial
Statements", and "Report of Independent Auditors").
21 Subsidiaries of the registrant.
23 Consent of KPMG Peat Marwick LLP.
</TABLE>
28
<PAGE> 30
27 Financial Data Schedule.
- --------------------------------------------------------------------------------
Schedules to Exhibits 10,21, 10.22, 10.23(a) and 10.23(c) will be supplied upon
request by the Commission.
THE FOREGOING EXHIBITS WILL NOT BE INCLUDED IN COPIES OF THIS ANNUAL REPORT ON
FORM 10-K SUPPLIED TO STOCKHOLDERS. A COPY OF THESE EXHIBITS WILL BE FURNISHED
TO STOCKHOLDERS UPON WRITTEN REQUEST ADDRESSED TO JOHN T. HARAN, VICE PRESIDENT
AND TREASURER, EKCO GROUP, INC., 98 SPIT BROOK ROAD, NASHUA, NEW HAMPSHIRE
03062.
29
<PAGE> 31
<TABLE>
INDEX TO EXHIBITS FILED WITH FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1(i)(a) Restated Certificate of Incorporation dated February 17, 1987,
as amended, originally filed as Exhibit 3.1(a) to Form 10-K for
the year ended December 31, 1989.
4.2(a) Indenture dated as of March 25, 1996 among the registrant, its
U.S. operating subsidiaries and Fleet National Bank of Connecticut.
4.2(b) Form of 9 1/4% Senior Note due 2006, included in Exhibit 4.2(a).
4.2(c) Registration Rights Agreement dated as of March 25, 1996 among
the registrant, its U.S. operating subsidiaries, Bear,
Stearns & Co. Inc. and Smith Barney Inc.
4.3 Ekco Group, Inc. Dividend Reinvestment and Stock Purchase Plan.
10.1(c)(2) Schedule to Form of Restricted Stock Purchase Agreement.
10.1(c)(3) Form of Amendment to Restricted Stock Purchase Agreement.
10.1(d) Form of Restricted Stock Purchase Agreement, as amended, for the
quarterly purchase of restricted stock.
10.2(b)(1)* Form of Non-Qualified Stock Option and Repurchase Agreement
dated as of September 8, 1987, as amended.
10.2(b)(2)* Form of Non-Qualified Stock Option and Repurchase Agreement
dated various dates, as amended.
10.3(b) Schedule to Form of Indemnity Agreement.
10.4* Ekco Group, Inc. 1988 Directors' Stock Option Plan, originally
filed as Exhibit 10.15 to Form 10-K for the year ended December
31, 1989, as amended.
10.5(b) ESOP Loan Agreement dated as of October 1, 1990, originally
filed as Exhibit 10.10(c) to Form 10-K for the year ended
December 30, 1990.
10.5(c) ESOP Loan Agreement dated as of March 30, 1995.
10.14(b)* Schedule to Form of Split Dollar Agreement.
10.15* Severance Agreement with Richard J. Corbin dated September 28,
1995.
</TABLE>
30
<PAGE> 32
<TABLE>
INDEX TO EXHIBITS FILED WITH FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.16* Severance Agreement with Ronald N. Fox dated September 21, 1995.
10.17(a)* Severance Agreement with Neil R. Gordon dated December 28, 1995
10.17(b)* Consulting Agreement with N.R. Gordon & Company dated December
28, 1995.
10.23(c) Second Amendment to Credit Agreement dated as of March 25, 1996.
11 Statement re computation of per share earnings. (Reference is
made to Exhibit 13, Note 13 of Notes to Consolidated Financial
Statements.)
13 1995 Annual Report to Stockholders (Sections entitled "Common
Stock Price Range and Dividends," "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of
Results of Operations and Financial Condition," "Consolidated
Balance Sheets," "Consolidated Statement of Operations,"
"Consolidated Statements of Stockholders' Equity," "Consolidated
Statements of Cash Flows," "Notes to Consolidated Financial
Statements" [which includes "Selected Quarterly Financial
Data"], and "Report of Independent Auditors").
21 Subsidiaries of the registrant.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.
</TABLE>
31
<PAGE> 1
EXHIBIT 3.1(i)(a)
----------------
Certificate of Amendment of Certificate of Incorporation
of
CENTRONICS CORPORATION
It is hereby certified:
1.The name of the corporation (hereinafter called the "Corporation")
is CENTRONICS CORPORATION.
2.Article I of the restated certificate of incorporation of the
Corporation is hereby amended by striking out Article FIRST thereof
and by substituting in lieu of said Article the following new Article:
"FIRST.The name of the corporation is Ekco Group, Inc."
3.The amendment of the restated certificate of incorporation
herein certified has been duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of
the State of Delaware.
Signed and attested to on April 26, 1988.
CENTRONICS DATA COMPUTER CORP.
By: /s/ ROBERT STEIN
---------------------------
Robert Stein, President
and Chief Executive Officer
(Corporate Seal)
Attest:
By: /s/ JEFFREY A. WEINSTEIN
-------------------------------
Jeffrey A. Weinstein, Executive
Vice President, Secretary and
General Counsel
<PAGE> 2
RESTATED CERTIFICATE OF INCORPORATION
OF
CENTRONICS DATA COMPUTER CORP.
CENTRONICS DATA COMPUTER CORP., a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is CENTRONICS DATA COMPUTER
CORP. The date of filing the Corporation's original Certificate of Incorporation
with the Secretary of the State of Delaware was July 3, 1968.
2. The text of the Certificate of Incorporation of the
Corporation, as amended or supplemented heretofore and herewith, is
hereby restated to read as herein set forth in full:
FIRST. The name of the Corporation is Centronics
Corporation.
SECOND. The address of its registered office in the State of
Delaware is 229 South State Street, in the City of Dover, County of Kent. The
name of its registered agent at such address is the Prentice-Hall Corporation
System, Inc.
THIRD. The nature of the business or purpose to be
conducted or promoted is:
To manufacture, lease, sell, operate and generally deal in and
with electronic data processing and computer equipment and devices.
To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
To acquire, and pay for in cash, stock or bonds of this
Corporation or otherwise, the good will, rights, assets and property, and to
undertake or assume the whole or any part of the obligations or liabilities of
any person, firm, association or Corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in
respect of, mortgage or otherwise dispose of letters patent of the United States
or any foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating to
or useful in connection with any
1
<PAGE> 3
business of this Corporation.
To acquire by purchase, subscription or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge or otherwise dispose of or deal in and with any of the shares of capital
stock, or any voting trust certificates in respect of the shares of capital
stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and
other securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trusts or persons, public or private, or by the
government of the United States of America, or by any foreign government, or by
any state, territory, province, municipality or other political subdivision or
by any governmental agency, and as owner thereof to possess and exercise all the
rights, powers and privileges of ownership, including the right to execute
consents and vote thereon, and to do any and all acts and things necessary or
advisable for the preservation, protection, improvement and enhancement in value
thereof.
To borrow or raise moneys for any of the purposes of the
Corporation and, from time to time without limit as to amount, to draw, make,
accept, endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiables or non-negotiable instruments
and evidence of indebtedness, and to secure the payment of any thereof and of
the interest thereon by mortgage upon pledge, conveyance or assignment in trust
of the whole or any part of the property of the Corporation, whether at the time
owned or thereafter acquired, and to sell, pledge or otherwise dispose of such
bonds or other obligations of the Corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease or otherwise acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal property, or any interest therein,
wherever situated, and to sell, convey, lease, exchange, transfer or otherwise
dispose of, or mortgage or pledge, all or any of the Corporation's property and
assets, or any interest therein, wherever situated.
In general, to possess and exercise all the powers and
privileges granted by the General Corporation Law of Delaware or by any other
law of Delaware or by this certificate of incorporation together with any powers
incidental thereto, so far as any such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business or purposes
of the Corporation.
The business and purposes specified in the foregoing clauses
shall, except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference from, the terms of any other clause in this
certificate of incorporation, but the business and purposes specified in each of
the foregoing clauses of this article shall be regarded as independent business
and purposes.
2
<PAGE> 4
FOURTH. The aggregate number of shares which this
Corporation shall have the authority to issue is Sixty Million (60,000,000)
shares of Common Stock of the par value of $0.01 per share and Twenty Million
(20,000,000) shares of Preferred Stock, of the par value of $0.01 per share.
The Preferred Stock may be divided into and issued into
series. If the shares of any such class are to be issued in series, then each
series shall be so designated as to distinguish the shares thereof from the
shares of all other series and classes. Any or all of the series of any such
class and variations and the relative rights and preferences as between
different series can be fixed and determined by the Board of Directors. The
authority of the Board of Directors with respect to each series shall include,
without limitation thereto, the determination of any or all of the following and
the shares of each series may vary from the shares of any other series in the
following respects:
The Board of Directors of this Corporation is hereby
authorized to issue the Preferred Stock at any time and from time to time, in
one (1) or more series and for such consideration as may be fixed from time to
time by the then Board of Directors, but not less than the par value thereof.
The number of shares to comprise each such series, which number may be increased
(except where otherwise provided by the Board of Directors in creating such
series) or decreased (but not below the number of shares thereof then
outstanding) shall be determined, from time to time, by the Board of Directors.
The Board of Directors is hereby expressly authorized, before issuance of any
shares of a particular series, to determine any and all rights, preferences and
limitations pertaining to such series including but not limited to:
(1) Voting rights, if any, including, without limitation, the
authority to confer multiple votes per share, voting rights as to specified
matters or issues such as mergers, consolidations or sales of assets, or voting
rights to be exercised either together with holders of Common Stock as a single
class, or independently as a separate class;
(2) Rights, if any, permitting the conversion or exchange of
any such shares, at the option of the holder, into any other class or series of
shares of this Corporation and the price or prices or the rates of exchange and
any adjustment thereto at which such shares will be convertible or exchangeable;
(3) The rates of dividends, if any, payable on shares of such
series, the conditions and the dates upon which such dividends shall be payable
and whether such dividends shall be cumulative or non-cumulative;
(4) The amount payable on shares of such series in the event
of any liquidation, dissolution or winding up of the affairs of this
Corporation;
3
<PAGE> 5
(5) Redemption, repurchase, retirement and sinking fund
rights, preferences and limitations, if any, the amount payable on shares of
such series in the event of such redemption, repurchase or retirement, the terms
and conditions of any sinking fund, the manner of creating such fund or funds
and whether any of the foregoing shall be cumulative or non-cumulative; and
(6) Any other preference and relative, participating, optional
or other special rights and qualifications, limitations or restrictions of
shares of such series not fixed and determined herein, to the extent permitted
to do so by law.
All shares of Preferred Stock shall be of equal rank and shall
be identical, except with respect to the particulars that may be fixed by the
Board of Directors as above provided and as to the date from which dividends
thereon, if any, shall be cumulative if made cumulative by the Board of
Directors.
No stockholder shall be entitled, as a matter of right, to
purchase or subscribe for or receive additional shares of any class of stock of
the Corporation, whether now or hereafter authorized, including, but not limited
to, treasury stock, or any notes, debentures, bonds or other securities
convertible into or carry warrants or options to purchase shares of any class
now or hereafter authorized. Any such securities or additional shares of stock
may be issued or disposed of by the Board of Directors to such persons and on
such terms as in its discretion may be deemed advisable.
At each election for directors every stockholder entitled to
vote at such election shall have the right to cast, in person or by proxy, the
number of votes represented by the shares owned by him for as many persons as
there are directors to be elected and for whose election he has a right to vote.
Each share of Common Stock shall be entitled to one vote. Cumulative voting, for
the election of directors or otherwise, is expressly prohibited. On all matters
coming before the shareholders, other than the election of directors, each share
of issued and outstanding Common Stock shall be entitled to one (1) vote.
<TABLE>
FIFTH. The name and mailing address of each incorporator is
as follows:
<CAPTION>
Name Mailing Address
---- ---------------
<S> <C>
B.J. Consono 100 West Tenth Street
Wilmington, Delaware
F.J. Obara, Jr. 100 West Tenth Street
Wilmington, Delaware
A.D. Grier 100 West Tenth Street
Wilmington, Delaware
</TABLE>
4
<PAGE> 6
SIXTH. The Corporation is to have perpetual existence.
SEVENTH. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly
authorized:
To make, alter or repeal the by-laws of the Corporation.
To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation.
To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more
committees, each committee to consist of two or more of the directors of the
Corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee, to the extent provided in the
resolution or in the by-laws of the Corporation, shall have and may exercise the
powers of the board of directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; provided, however, the by-laws may provide
that in the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
When and as authorized by the affirmative vote of the holders
of a majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called upon such notice as is required by the statute
or when authorized by the written consent of the holders of a majority of the
voting stock issued and outstanding, to sell, lease or exchange all or
substantially all of the property and assets of the Corporation, including its
good will and its corporate franchises, upon such terms and conditions and for
such consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or other securities of, any other Corporation
or corporations, as its board of directors shall deem expedient and for the best
interests of the Corporation.
EIGHTH. Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof, or on
the application of any receiver or receivers appointed for this Corporation
under the
5
<PAGE> 7
provisions of section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of section 279 of Title 8 of the Delaware Code
order a meeting of creditors or class of creditors, and/or if the stockholders
or class of stockholders of this Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
NINTH. Meetings of stockholders may be held within or
without the State of Delaware, as the by-laws may provide. The books of the
Corporation may be kept (subject to any provisions contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the by-laws of the Corporation.
Elections of directors need not be by written ballot unless the by-laws of the
Corporation shall so provide.
TENTH. As authorized by section 102(b)(7) of subsection (b)
of Section 102, Title 8, of the Delaware Code, as the same may be interpreted or
amended from time to time, no director shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided, however, that the foregoing shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware Code, or (iv) for any transaction
from which the director derived an improper personal benefit. This Article TENTH
shall not apply to any act or omission occurring prior to the date this Article
TENTH becomes effective.
ELEVENTH. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this certificate of incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
3. This Restated Certificate of Incorporation shall become
effective upon approval of the stockholders and filing with the Secretary of
State.
4. This Restated Certificate of Incorporation was duly adopted
by the stockholders of the Corporation in accordance with the provisions of
Section 242 and Section 245 of the General Corporation
6
<PAGE> 8
Law of the State of Delaware.
IN WITNESS WHEREOF, said CENTRONICS DATA COMPUTER CORP. has
caused its corporate seal to be hereto affixed and this Restated Certificate of
Incorporation to be signed by Robert Stein, its President, and attested by
Edmond Coller, its Secretary, this 13th day of February, 1987.
CENTRONICS DATA COMPUTER CORP.
By: /s/ ROBERT STEIN
---------------------------
Robert Stein, President
(Corporate Seal)
Attest:
By: /s/ EDMOND M. COLLER
---------------------------
Edmond M. Coller, Secretary
7
<PAGE> 1
EXHIBIT 4.2(a)
EXECUTION COPY
================================================================================
EKCO GROUP, INC.,
Issuer,
and
THE GUARANTORS NAMED HEREIN
and
FLEET NATIONAL BANK OF CONNECTICUT,
Trustee
-------------------
INDENTURE
Dated as of March 25, 1996
-------------------
$125,000,000
9 1/4% Senior Notes due 2006
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE............................... 1
SECTION 1.1 Definitions............................................ 1
SECTION 1.2 Incorporation by Reference of TIA...................... 27
SECTION 1.3 Rules of Construction.................................. 27
ARTICLE II
THE SECURITIES........................................................... 28
SECTION 2.1 Form and Dating........................................ 28
SECTION 2.2 Execution and Authentication........................... 28
SECTION 2.3 Registrar and Paying Agent............................. 30
SECTION 2.4 Paying Agent to Hold Assets in Trust................... 30
SECTION 2.5 Securityholder Lists................................... 31
SECTION 2.6 Transfer and Exchange.................................. 31
SECTION 2.7 Replacement Securities................................. 34
SECTION 2.8 Outstanding Securities................................. 40
SECTION 2.9 Treasury Securities.................................... 40
SECTION 2.10 Temporary Securities................................... 41
SECTION 2.11 Cancellation........................................... 41
SECTION 2.12 Defaulted Interest..................................... 41
ARTICLE III
REDEMPTION............................................................... 43
SECTION 3.1 Right of Redemption.................................... 43
SECTION 3.2 Notices to Trustee..................................... 44
SECTION 3.3 Selection of Securities to Be Redeemed................. 44
SECTION 3.4 Notice of Redemption................................... 45
SECTION 3.5 Effect of Notice of Redemption......................... 46
SECTION 3.6 Deposit of Redemption Price............................ 47
SECTION 3.7 Securities Redeemed in Part............................ 47
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IV
COVENANTS................................................................. 48
SECTION 4.1 Payment of Securities................................... 48
SECTION 4.2 Maintenance of Office or Agency......................... 48
SECTION 4.3 Limitation on Restricted Payments. .................... 49
SECTION 4.4 Corporate Existence..................................... 51
SECTION 4.5 Payment of Taxes and Other Claims....................... 51
SECTION 4.6 Maintenance of Properties and Insurance................. 52
SECTION 4.7 Compliance Certificate; Notice of Default............... 52
SECTION 4.8 Reports and Other Information........................... 53
SECTION 4.9 Limitation on Status as Investment
Company................................................. 54
SECTION 4.10 Limitation on Transactions with Affiliates.............. 54
SECTION 4.11 Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital
Stock................................................... 55
SECTION 4.12 Limitations on Dividends and Other
Payment Restrictions Affecting Subsidiaries............. 58
SECTION 4.13 Limitation on Liens..................................... 59
SECTION 4.14 Limitation on Asset Sales............................... 59
SECTION 4.15 Waiver of Stay, Extension or Usury
Laws.................................................... 62
SECTION 4.16 Limitation on Sale and Leaseback
Transactions............................................ 63
SECTION 4.17 Limitation on Lines of Business......................... 63
SECTION 4.18 Future Guarantors....................................... 63
ARTICLE V
SUCCESSOR CORPORATION..................................................... 64
SECTION 5.1 Limitation on Merger, Sale or Consolidation............. 64
SECTION 5.2 Successor Corporation Substituted....................... 64
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES............................................. 65
SECTION 6.1 Events of Default........................................ 65
SECTION 6.2 Acceleration of Maturity Date; Rescission and Annulment.. 68
SECTION 6.3 Collection of Indebtedness and Suits
for Enforcement by Trustee............................... 70
SECTION 6.4 Trustee May File Proofs of Claim......................... 70
SECTION 6.5 Trustee May Enforce Claims Without
Possession of Securities................................. 71
SECTION 6.6 Priorities............................................... 72
SECTION 6.7 Limitation on Suits...................................... 72
SECTION 6.8 Unconditional Right of Holders to Receive Principal,
Premium, Interest and Liquidated Damages................. 73
SECTION 6.9 Rights and Remedies Cumulative........................... 74
SECTION 6.10 Delay or Omission Not Waiver............................. 74
SECTION 6.11 Control by Holders....................................... 74
SECTION 6.12 Waiver of Past Default................................... 75
SECTION 6.13 Undertaking for Costs.................................... 75
SECTION 6.14 Restoration of Rights and Remedies....................... 76
ARTICLE VII
TRUSTEE.................................................................... 76
SECTION 7.1 Duties of Trustee........................................ 76
SECTION 7.2 Rights of Trustee........................................ 78
SECTION 7.3 Individual Rights of Trustee............................. 79
SECTION 7.4 Trustee's Disclaimer..................................... 79
SECTION 7.5 Notice of Default........................................ 79
SECTION 7.6 Reports by Trustee to Holders............................ 80
SECTION 7.7 Compensation and Indemnity............................... 80
SECTION 7.8 Replacement of Trustee................................... 81
SECTION 7.9 Successor Trustee by Merger, Etc......................... 83
SECTION 7.10 Eligibility; Disqualification............................ 83
SECTION 7.11 Preferential Collection of Claims
Against Company.......................................... 83
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE; SATISFACTION AND
DISCHARGE ............................................................... 83
SECTION 8.1 Option to Effect Legal Defeasance or
Covenant Defeasance.................................... 83
SECTION 8.2 Legal Defeasance and Discharge......................... 83
SECTION 8.3 Covenant Defeasance.................................... 84
SECTION 8.4 Conditions to Legal or Covenant Defeasance............. 85
SECTION 8.5 Deposited Cash and U.S. Government
Obligations to be Held in Trust; Other
Miscellaneous Provisions............................... 87
SECTION 8.6 Repayment to the Company............................... 87
SECTION 8.7 Reinstatement.......................................... 88
SECTION 8.8 Satisfaction and Discharge............................. 88
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS...................................... 89
SECTION 9.1 Supplemental Indentures Without Consent of Holders..... 89
SECTION 9.2 Amendments, Supplemental Indentures
and Waivers with Consent of Holders.................... 90
SECTION 9.3 Compliance with TIA.................................... 92
SECTION 9.4 Revocation and Effect of Consents...................... 92
SECTION 9.5 Notation on or Exchange of Securities.................. 93
SECTION 9.6 Trustee to Sign Amendments, Etc........................ 93
ARTICLE X
RIGHT TO REQUIRE REPURCHASE.............................................. 94
SECTION 10.1 Repurchase of Securities at Option of
the Holder Upon a Change of Control.................... 94
ARTICLE XI
GUARANTEE................................................................ 97
SECTION 11.1 Guarantee.............................................. 97
SECTION 11.2 Execution and Delivery of Guarantee.................... 100
</TABLE>
iv
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<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 11.3 Future Guarantors..................................... 100
SECTION 11.4 Release of a Guarantor................................ 101
SECTION 11.5 Certain Bankruptcy Events............................. 101
SECTION 11.6 Ranking of Guarantee.................................. 102
ARTICLE XII
MISCELLANEOUS........................................................... 102
SECTION 12.1 TIA Controls.......................................... 102
SECTION 12.2 Notices............................................... 102
SECTION 12.3 Communications by Holders with Other
Holders............................................... 103
SECTION 12.4 Certificate and Opinion as to Conditions Precedent.... 103
SECTION 12.5 Statements Required in Certificate or
Opinion............................................... 104
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar............. 104
SECTION 12.7 Non-Business Days..................................... 104
SECTION 12.8 Governing Law......................................... 105
SECTION 12.9 No Adverse Interpretation of Other
Agreements............................................ 105
SECTION 12.10 No Recourse Against Others............................ 105
SECTION 12.11 Successors............................................ 106
SECTION 12.12 Duplicate Originals................................... 106
SECTION 12.13 Severability.......................................... 106
SECTION 12.14 Table of Contents, Headings, Etc...................... 106
SECTION 12.15 Qualification of Indenture............................ 106
SECTION 12.16 Registration Rights................................... 107
SIGNATURES.............................................................. 108
EXHIBIT A - FORM OF SECURITY............................................ A-1
</TABLE>
v
<PAGE> 7
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1)......................................................... 7.10
(a)(2)......................................................... 7.10
(a)(3)......................................................... N.A.
(a)(4)......................................................... N.A.
(a)(5)......................................................... 7.10
(b)............................................................ 7.8;
7.10
(c) ........................................................... N.A.
311(a)............................................................ 7.11
(b)............................................................ 7.11
(c) ........................................................... N.A.
312(a)............................................................ 2.5
(b)............................................................ 12.3
(c) ........................................................... 12.3
313(a)............................................................ 7.6
(b)(1)......................................................... N.A.
(b)(2)......................................................... 7.6
(c) ........................................................... 7.6;
12.2
(d)............................................................ 7.6
314(a)............................................................ 4.7(a);
4.8;
11.2
(b)............................................................ N.A.
(c)(1)......................................................... 2.2;
7.2;
12.4
(c)(2)......................................................... 7.2;
12.4
(c)(3)......................................................... N.A.
(d)............................................................ N.A.
(e) ........................................................... 12.5
(f) ........................................................... N.A.
</TABLE>
vi
<PAGE> 8
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
315(a)............................................................ 7.1(b)
(b)............................................................ 7.5;
7.6;
12.2
(c) 7.1(a)
(d)............................................................ 2.8;
6.11;
7.1(b),
(c)
(e) 6.13
316(a)(last sentence)............................................. 2.9
(a)(1)(A)...................................................... 6.11
(a)(1)(B)...................................................... 6.12
(a)(2)......................................................... N.A.
(b)............................................................ 6.12;
6.7
(c) 6.11
317(a)(1)......................................................... 6.3
(a)(2)......................................................... 6.4
(b)............................................................ 2.4
318(a)............................................................ 12.1
</TABLE>
- --------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture.
vii
<PAGE> 9
INDENTURE, dated as of March 25, 1996, among Ekco Group, Inc., a
Delaware corporation (the "Company"), the Guarantors referred to below and Fleet
National Bank of Connecticut, as Trustee.
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Company's 9 1/4%
Senior Notes due 2006 to be issued on the Issue Date (the "Initial Securities")
and the 9 1/4% Senior Notes due 2006 (the "Exchange Securities") to be exchanged
for the Initial Securities in connection with the Exchange Offer (as defined
herein):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1 Definitions.
"Acceleration Notice" shall have the meaning specified in Section 6.2.
"Acquired Indebtedness" means Indebtedness or Disqualified Capital
Stock of any Person existing at the time such Person becomes a Subsidiary of the
Company or is merged or consolidated into or with the Company or one of its
Subsidiaries.
"Acquisition" means the purchase or other acquisition of any Person or
substantially all the assets of any Person by any other Person, whether by
purchase, merger, consolidation or other transfer, and whether or not for
consideration.
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract
or otherwise, provided that a beneficial owner of 10% or more of the total
voting power normally entitled to vote in the election of directors, managers or
trustees, as applicable, shall for such purposes be deemed to constitute
control.
<PAGE> 10
"Affiliate Transaction" shall have the meaning specified in Section
4.10.
"Agent" means any Registrar, Paying Agent or co- Registrar.
"Asset Sale" means, with respect to any Person, the sale, lease,
disposition or other transfer by such Person of any of its property or assets
(including a Sale and Leaseback Transaction or the sale or other transfer of any
Capital Stock of any Subsidiary) other than (i) the sale, lease, disposition or
other transfer of obsolete, damaged, materially worn or unusable equipment in
the ordinary course of business consistent with past practice, (ii) the sale,
lease, disposition or other transfer of inventory acquired and held for resale
in the ordinary course of business consistent with past practice, (iii) the
issuance by the Company of its Capital Stock, (iv) Investments in compliance
with Section 4.3 hereof, (v) the sale, lease, disposition or other transfer of
all or substantially all of the assets of the Company governed by the provisions
of Article V hereof, (vi) Sale and Leaseback Transactions in compliance with
clause (a) of Section 4.16 hereof, (vii) the sale, lease, disposition or other
transfer of any property or assets by a Subsidiary to the Company or by the
Company or a Subsidiary to a Wholly Owned Guarantor, (viii) the sale, lease,
disposition or other transfer of the property classified as "Property held for
sale or lease" in the Company's audited Consolidated Financial Statements for
the fiscal year ended December 31, 1995, and without giving effect to any events
that may occur subsequent to the date of such Consolidated Financial Statements
and (ix) the sale of the Capital Stock of an Unrestricted Subsidiary.
"Asset Sale Offer" shall have the meaning specified in Section 4.14.
"Asset Sale Offer Period" shall have the meaning specified in Section
4.14.
"Asset Sale Offer Price" shall have the meaning specified in Section
4.14.
"Asset Sale Payment Date" shall have the meaning specified in Section
4.14.
2
<PAGE> 11
"Attributable Indebtedness" means, with respect to any particular lease
under which any Person is at the time liable and at any date as of which the
amount thereof is to be determined, the present value of the total net amount of
rent required to be paid by such Person under the lease during the primary term
thereof, without giving effect to any renewals at the option of the lessee,
discounted from the respective due dates thereof to such date at the rate of
interest per annum implicit in the terms of the lease. As used in the preceding
sentence, the net amount of rent under any lease for any such period shall mean
the sum of rental and other payments required to be paid with respect to such
period by the lessee thereunder excluding any amounts required to be paid by
such lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges. In the case of any lease which is
terminable by the lessee upon payment of a penalty, such net amount of rent
shall also include the amount of such penalty, but no rent shall be considered
as required to be paid under such lease subsequent to the first date upon which
it may be so terminated.
"Average Life" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of the
product of (a) the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"Beneficial Owner," for purposes of the definition of Change of
Control, has the meaning attributed to it in Rules 13d-3 and 13d-5 under the
Exchange Act (as in effect on the Issue Date), whether or not applicable, except
that a "person" (as such term is used for purposes of such Rules) shall be
deemed to have "beneficial ownership" of all shares that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time.
3
<PAGE> 12
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person. With respect to any Person that is not
organized as a corporation, "Board of Directors" shall refer to the entity or
entities having similar powers.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Borrowing Base" means, as of any date, an amount equal to (a) the
"Borrowing Base" as defined in the Credit Agreement or, if not so defined in the
Credit Agreement, (b) any amount equal to the sum of (i) 85% of all eligible
accounts receivable owned by the Company or any of its Subsidiaries as of such
date that are not more than 90 days past due, plus (ii) 60% of the book value of
all inventory owned by the Company or any of its Subsidiaries as of such date,
all as calculated on a consolidated basis and in accordance with GAAP.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York or
the city in which the principal office of the Trustee is located are authorized
or obligated by law or executive order to close.
"Capitalized Lease Obligation" means rental obligations under a lease
that are required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligations shall be the capitalized amount of such obligations, as determined
in accordance with GAAP.
"Capital Stock" means, (i) with respect to any Person formed as a
corporation, any and all shares, interests, rights to purchase (other than
convertible or exchangeable Indebtedness), warrants, options, participations or
other equivalents of or interests (however designated) in stock issued by that
corporation and (ii) with respect to any Person formed other than as a
corporation, any and all partnership or other equity interests of such Person.
4
<PAGE> 13
"Cash" means such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) maturing within one year after
the date of acquisition, (ii) time deposits, certificates of deposit, bankers'
acceptances and commercial paper issued by the parent corporation of any
domestic commercial bank of recognized standing having capital and surplus in
excess of $500 million, in each case maturing within one year after the date of
acquisition, (iii) commercial paper issued by any other issuer which is rated
(A) in the case of commercial paper which matures one year or more after the
date of acquisition, at least A-1 or the equivalent thereof by Standard & Poor's
Corporation ("S&P") or at least P-1 or the equivalent thereof by Moody's
Investors Service, Inc. ("Moody's"), or (B) in the case of commercial paper
which matures within one year after the date of acquisition, at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's,
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (i) and (ii) above
entered into with any commercial bank meeting the qualifications specified in
clause (ii) above and (v) shares of any money market fund, or similar fund, in
each case having assets in excess of $500 million, which invests predominantly
in investments of the type described in clauses (i), (ii), (iii) or (iv) above.
"Change of Control" means (i) any sale, merger or consolidation with or
into any Person or any transfer or other conveyance, whether direct or indirect,
of all or substantially all of the assets of the Company, on a consolidated
basis, in one transaction or in a series of related transactions, if,
immediately after giving effect to such transaction, any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable) is or becomes the "beneficial owner," directly
or indirectly, of more than 50% of the total voting power in the aggregate
normally entitled to vote in the election of directors, managers or trustees, as
applicable, of the transferee or surviving entity, (ii) any "person" or "group"
(as such terms are used for purposes of
5
<PAGE> 14
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) is or
becomes the "beneficial owner," directly or indirectly, of more than 50% of the
total voting power in the aggregate of all classes of Capital Stock of the
Company then outstanding normally entitled to vote in elections of directors or
(iii) during any period of 12 consecutive months after the Issue Date,
individuals who at the beginning of any such 12-month period constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election, recommendation, or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors of the
Company then in office.
"Change of Control Offer" shall have the meaning specified in Section
10.1.
"Change of Control Offer Period" shall have the meaning specified in
Section 10.1.
"Change of Control Purchase Date" shall have the meaning specified in
Section 10.1.
"Change of Control Purchase Price" shall have the meaning specified in
Section 10.1.
"Change of Control Put Date" shall have the meaning specified in
Section 10.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the Indenture, and thereafter means such
successor.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the Consolidated Net Income of such Person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) consolidated
income tax expense for such period, (ii) consolidated depreciation and
amortization expense for such period, (iii)
6
<PAGE> 15
non-cash charges of such Person and its Consolidated Subsidiaries during such
period less the amount of all cash payments made during such period to the
extent such payments relate to non-cash charges that were added back in
determining Consolidated EBITDA for such period, (iv) Consolidated Interest
Expense for such period and (v) to the extent not excluded from the Consolidated
Net Income of such Person for such period, losses (determined on a consolidated
basis in accordance with GAAP) (1) which are either extraordinary (as determined
in accordance with GAAP) or are unusual or nonrecurring or (2) from Asset Sales
or other dispositions of assets not in the ordinary course of business, up to an
aggregate of $6.0 million for such period.
"Consolidated Interest Coverage Ratio" of any Person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of such Person attributable to
continuing operations and businesses (exclusive of amounts, whether positive or
negative, attributable to operations and businesses permanently discontinued or
disposed of) for the Reference Period to (b) the aggregate Consolidated Interest
Expense of such Person (exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of, but only to the extent that
the obligations giving rise to such Consolidated Interest Expense would no
longer be obligations contributing to such Person's Consolidated Interest
Expense subsequent to the Transaction Date) during the Reference Period;
provided, that for purposes of such calculation, (i) Acquisitions which occurred
during the Reference Period or subsequent to the Reference Period and on or
prior to the Transaction Date (including any Consolidated EBITDA associated with
such Acquisition) shall be assumed to have occurred on the first day of the
Reference Period, (ii) transactions giving rise to the need to calculate the
Consolidated Interest Coverage Ratio shall be assumed to have occurred on the
first day of the Reference Period, (iii) the incurrence or repayment of any
Indebtedness or issuance of any Disqualified Capital Stock during the Reference
Period or subsequent to the Reference Period and on or prior to the Transaction
Date (and the application of the proceeds therefrom to the extent used to
refinance or retire other Indebtedness), other than under a revolving credit or
similar facility to the extent that the proceeds were used to finance working
capital requirements in the ordinary course of business, shall be assumed to
have occurred on the first day of such Reference Period and (iv)
7
<PAGE> 16
the Consolidated Interest Expense of such Person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be computed on a pro forma basis as if the
rate in effect on the Transaction Date had been the applicable rate for the
entire period, unless such Person or any of its Subsidiaries is a party to a
Hedging and Interest Swap Obligation (which shall remain in effect for the
12-month period immediately following the Transaction Date) that has the effect
of fixing the interest rate on the date of computation, in which case such rate
(whether higher or lower) shall be used.
"Consolidated Interest Expense" of any Person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capitalized Lease Obligations) of such Person
and its Consolidated Subsidiaries during such period, including (i) original
issue discount and noncash interest payments or accruals on any Indebtedness,
(ii) the interest portion of all deferred payment obligations and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financing and currency and Hedging and
Interest Swap Obligations, in each case to the extent attributable to such
period and (b) the amount of dividends accrued or payable (other than in
additional shares of such Preferred Stock) by such Person or any of its
Consolidated Subsidiaries in respect of Preferred Stock (other than by
Subsidiaries of such Person to such Person or such Person's Consolidated
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP, (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed, and (z)
dividends in respect of Preferred Stock shall be deemed to be an amount equal to
the actual dividends paid divided by one minus the applicable actual combined
Federal, state, local and foreign income tax rate of the Company and its
Consolidated Subsidiaries (expressed as a decimal).
8
<PAGE> 17
"Consolidated Net Income" means, with respect to any Person for any
period, the net income (or loss) of such Person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, (i) adjusted to exclude (only to the extent included in computing
such net income (or loss) and without duplication): (a) net gains (but not net
losses) from Asset Sales and other dispositions of assets not in the ordinary
course of business; (b) net gains (but not net losses) which are either
extraordinary (as determined in accordance with GAAP) or are either unusual or
nonrecurring, (c) the net income, if positive, of any other Person accounted for
by the equity method of accounting, except to the extent of the amount of any
dividends or distributions actually paid in cash to such Person or a
Consolidated Subsidiary of such Person during such period, but in any case not
in excess of such Person's pro rata share of such Person's net income for such
period, (d) the net income, if positive, of any Person acquired in a
pooling-of-interests transaction for any period prior to the date of such
acquisition, (e) the net income, if positive, of any of such Person's
Consolidated Subsidiaries in the event and solely to the extent that the
declaration or payment of dividends or similar distributions is not at the time
permitted by operation of the terms of its charter or bylaws or any other
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Consolidated Subsidiary, (f) all gains (but not
losses) from currency exchange transactions not in the ordinary course of
business consistent with past practice, (g) any non-cash expense determined in
accordance with GAAP in connection with a transaction between the Company and
the ESOP and (h) Refinancing Expenses; and (ii) adjusted to include the amount
of any dividends or distributions actually paid in cash to such Person or a
Consolidated Subsidiary of such Person by an Unrestricted Subsidiary in an
amount not to exceed such Person's pro rata share of such Unrestricted
Subsidiary's net income.
"Consolidated Net Worth" of any Person at any date means the aggregate
consolidated stockholders' equity of such Person (plus amounts of equity
attributable to Preferred Stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such Person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such Person and its
9
<PAGE> 18
Consolidated Subsidiaries, (b) all upward revaluations and other write-ups in
the book value of any asset of such Person or a Consolidated Subsidiary of such
Person subsequent to the Issue Date and (c) all investments in Subsidiaries that
are not Consolidated Subsidiaries and in Persons that are not Subsidiaries.
"Consolidated Subsidiary" means, for any Person, each Subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such Person in accordance with GAAP.
"Covenant Defeasance" shall have the meaning specified in Section 8.3.
"Credit Agreement" means the credit agreement dated as of April 11,
1995, as amended on the Issue Date, by and among the Company, the Guarantors,
certain financial institutions, and Fleet Bank of Massachusetts, N.A., as agent,
providing for an aggregate $75.0 million revolving credit facility, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as such credit agreement and/or related
documents may be amended, restated, supplemented, renewed, replaced or otherwise
modified from time to time whether or not with the same agent, trustee,
representative lenders or holders, and, subject to the proviso to the next
succeeding sentence, irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "Credit
Agreement" shall include any amendment, amendment and restatement, renewal,
extension, restructuring, supplement or modification to any Credit Agreement and
all refundings, refinancings and replacements of any such Credit Agreement,
including any agreement (i) extending the maturity of any Indebtedness incurred
thereunder or contemplated thereby, (ii) adding or deleting borrowers or
guarantors thereunder, so long as borrowers and issuers include one or more of
the Company and its Subsidiaries and their respective successors and assigns,
(iii) increasing the amount of Indebtedness incurred thereunder or available to
be borrowed thereunder, provided that on the date such Indebtedness is incurred
it would not be prohibited by paragraph (c) of Section 4.11 hereof or (iv)
otherwise altering the terms and conditions thereof in a manner not prohibited
by the terms hereof.
10
<PAGE> 19
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section 2.12.
"Definitive Securities" means Securities that are in the form of
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 1 and 5 thereof.
"Depository" means, with respect to the Securities issuable or issued
in whole or in part in global form, the Person specified in Section 2.3 as the
Depository with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any Person, Capital Stock of such Person that, by its terms or by the
terms of any security into which it is then convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such Person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Securities and (b) with respect to any
Subsidiary of such Person (including with respect to any Subsidiary of the
Company), any Capital Stock other than any common stock with no preference,
privileges, or redemption or repayment provisions.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ESOP" means the Ekco Group, Inc. Employee Stock Ownership Plan or any
successor employee stock ownership plan having terms similar to the foregoing,
as amended from time to time by a resolution of the Board of Directors of the
Company or a duly authorized committee thereof.
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"Event of Default" shall have the meaning specified in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Exchange Offer" shall mean the offer by the Company and the Guarantors
to exchange Exchange Securities for the Initial Securities pursuant to the
Registration Rights Agreement.
"Exchange Securities" means the 9 1/4% Senior Notes due 2006 to be
issued pursuant to this Indenture in connection with the Exchange Offer.
"Excess Proceeds" shall have the meaning specified in Section 4.14(b).
"Exempted Affiliate Transaction" means (a) transactions solely between
the Company and any of its wholly owned Subsidiaries or solely among wholly
owned Subsidiaries of the Company, (b) transactions permitted under Section 4.3
hereof, (c) customary employee compensation arrangements approved by a majority
of independent (as to such transactions) members of the Board of Directors of
the Company and (d) reasonable fees and compensation paid to, and indemnities
to, and directors and officers and ERISA-based fiduciary liability insurance
provided on behalf of, officers, directors, agents or employees of the Company
or any of its Subsidiaries or the ESOP or any trustee thereof, in each case in
the ordinary course of business and as determined in good faith by the Board of
Directors of the Company.
"Foreign Subsidiary" means any Subsidiary of the Company that (a) is
not organized under the laws of the United States, any state thereof or the
District of Columbia, (b) conducts its principal operations outside the United
States and (c) has not, directly or indirectly, secured the payment of,
guaranteed, assumed or in any manner become liable with respect to any
Indebtedness of the Company or any Guarantor or any other Person organized under
the laws of the United States.
"Foreign Subsidiary Borrowing Base" means, with respect to any Foreign
Subsidiary, as of any date, an amount equal to the sum of (i) 80% of all
eligible accounts receiv-
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able owned by such Foreign Subsidiary or any of its Subsidiaries as of such date
that are not more than 90 days past due, plus (ii) 50% of the book value of all
inventory owned by such Foreign Subsidiary or any of its Subsidiaries as of such
date, all as calculated on a consolidated basis and in accordance with GAAP.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.
"Global Security" means a Security that contains the paragraph referred
to in footnote 1 and the additional schedule referred to in footnote 5 to the
form of Security attached hereto as Exhibit A.
"Guarantors" means (i) the Initial Guarantors identified in the
following sentence and (ii) any future Guarantors that become Guarantors
pursuant to the terms of this Indenture, but excluding any Person whose
Guarantee have been released pursuant to the terms of this Indenture and
excluding any Unrestricted Subsidiary. The Initial Guarantors consist of: B. Via
International Housewares, Inc., a Delaware corporation, Cleaning Specialty
Company, a Tennessee corporation, Ekco Distribution of Illinois, Inc., a
Delaware corporation, Ekco Housewares, Inc., a Delaware corporation, Ekco
Manufacturing of Ohio, Inc., a Delaware corporation, Frem Corporation, a
Massachusetts corporation, Kellogg Brush Manufacturing Co., a Massachusetts
corporation, Woodstream Corporation, a Pennsylvania corporation, and
Wright-Bernet, Inc., an Ohio corporation.
"Guarantee" shall have the meaning provided in Section 11.1.
"Hedging and Interest Swap Obligations" means, with respect to any
Person, the obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
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"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Indebtedness" of any Person means, without duplication: (a) all
liabilities and obligations, contingent or otherwise, of any such Person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors
which have remained unpaid for greater than 90 days past their original due
date, unless contested in good faith) those incurred in the ordinary course of
its business that would constitute ordinarily a trade payable to trade
creditors, (iv) evidenced by bankers' acceptances or similar instruments issued
or accepted by banks, (v) for the payment of money relating to a Capitalized
Lease Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such Person with respect to any letter of credit; (b) all net
obligations of such Person under Hedging and Interest Swap Obligations; (c) all
liabilities and obligations of others of the kind described in the preceding
clauses (a) or (b) that such Person has guaranteed or that is otherwise its
legal liability or which are secured by any assets or property of such Person;
and (d) all immediately enforceable obligations to purchase, redeem or acquire
any Capital Stock of such Person (other than, in the case of the Company or any
of its Subsidiaries, obligations under the Restricted Stock Plans or the Stock
Option Plans).
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Independent Committee" shall have the meaning set forth in Section
4.10.
"Initial Purchasers" means Bear, Stearns & Co. Inc. and Smith Barney
Inc.
"Initial Securities" means the 9 1/4% Senior Notes due 2006, as
supplemented from time to time in accordance with the terms hereof, issued on
the Issue Date.
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<PAGE> 23
"Interest Payment Date" means the stated due date of an installment of
interest and Liquidated Damages, if any, on the Securities.
"Investment" by any person in any other person means (without
duplication): (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of Capital Stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (b) the making
by such Person of any deposit with, or advance, loan or other extension of
credit to, such other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable or deposits
arising in the ordinary course of business); (c) other than guarantees of
Indebtedness of the Company or any Guarantor to the extent permitted by Section
4.11 hereof, the entering into by such Person of any guarantee of, or other
credit support or contingent obligation with respect to, Indebtedness or other
liability of such other Person; (d) the making of any capital contribution by
such Person to such other Person; and (e) the designation by the Board of
Directors of the Company of any Person to be an Unrestricted Subsidiary. The
Company shall be deemed to make an Investment in an amount equal to the fair
market value of the net assets of any subsidiary (or, if neither the Company nor
any of its Subsidiaries has theretofore made an Investment in such subsidiary,
in an amount equal to the Investments being made), at the time that such
subsidiary is designated an Unrestricted Subsidiary, and any assets or property
transferred to an Unrestricted Subsidiary from the Company or a Subsidiary shall
be deemed an Investment valued at its fair market value at the time of such
transfer.
"Issue Date" means the date of first issuance of the Securities under
this Indenture.
"Legal Defeasance" shall have the meaning specified in Section 8.2.
"Lien" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, whether
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<PAGE> 24
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement and any lease deemed to
constitute a security interest and any option or other agreement to give any
security interest).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Maturity Date" means, when used with respect to any Security, the date
specified on such Security as the fixed date on which the final installment of
principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to the provisions of this Indenture regarding
acceleration of Indebtedness or any redemption thereof pursuant to Article III
of this Indenture, or any Change of Control Offer or Asset Sale Offer).
"Net Cash Proceeds" means the aggregate amount of Cash and Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock and by the Company and its Subsidiaries in respect of an Asset Sale plus,
in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Company that were issued for cash on or
after the Issue Date, the amount of cash originally received by the Company upon
the issuance of such securities (including options, warrants, rights and
convertible or exchangeable debt) less, in each case, the sum of all payments,
fees, commissions and (in the case of Asset Sales, reasonable and customary)
expenses (including, without limitation, the fees and expenses of legal counsel
and investment banking fees and expenses) incurred in connection with such Asset
Sale or sale of Qualified Capital Stock, and, in the case of an Asset Sale only,
less the amount (estimated reasonably and in good faith by the Company) of
income, franchise, sales and other applicable taxes required to be paid by the
Company or any of its respective Subsidiaries in connection with such Asset
Sale.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness (i) as to which neither the Company nor any of its Subsidiaries (a)
provide credit support (including any undertaking, agreement or instrument which
would constitute Indebtedness), (b) is directly or
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<PAGE> 25
indirectly liable or (c) constitutes the lender and (ii) with respect to which
no default would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company or any Subsidiary to declare a default on such
other Indebtedness or cause the payment therefor to be accelerated or payable
prior to its stated maturity.
"Notice of Default" shall have the meaning specified in Section 6.1(4).
"Obligation" means any principal, premium, interest, penalties, fees,
reimbursements, damages, indemnification and other liabilities relating to
obligations of the Company or any Guarantor under the Securities, the Guarantees
or this Indenture, including any Liquidated Damages pursuant to the Registration
Rights Agreement.
"Officer" means, with respect to the Company or a Guarantor, the Chief
Executive Officer, the President, any Executive or Senior Vice President, the
Chief Financial Officer, the Treasurer, the Controller, or the Secretary of the
Company or such Guarantor.
"Officers' Certificate" means, with respect to the Company or a
Guarantor, a certificate signed by two Officers or by an Officer and an
Assistant Secretary of the Company or such Guarantor (as applicable) and
otherwise complying with the requirements of Sections 12.4 and 12.5.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
12.4 and 12.5.
"outstanding," as used with reference to the Securities shall have the
meaning specified in Section 2.8.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Permitted Lien" means any of the following:
(a) Liens existing on the Issue Date;
(b) Liens imposed by governmental authorities for taxes, assessments or
other charges not yet subject to penalty or which are being contested in
good faith and by appropriate proceedings, if adequate reserves with
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<PAGE> 26
respect thereto are maintained on the books of the Company in accordance
with GAAP;
(c) statutory Liens of carriers, warehousemen, mechanics, materialmen,
landlords, repairmen or other like Liens arising by operation of law in the
ordinary course of business provided that (i) the underlying obligations
are not overdue for a period of more than 30 days or (ii) such Liens are
being contested in good faith and by appropriate proceedings and adequate
reserves with respect thereto are maintained on the books of the Company in
accordance with GAAP;
(d) Liens securing the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other
similar encumbrances or title defects which, singly or in the aggregate, do
not in any case materially detract from the value of the property, subject
thereto (as such property is used by the Company or any of its
Subsidiaries) or interfere with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(f) Liens arising by operation of law in connection with judgments,
only to the extent, for an amount and for a period not resulting in an
Event of Default with respect thereto;
(g) pledges or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security legislation;
(h) Liens on the property or assets of a Person existing at the time
such Person becomes a Subsidiary or is merged with or into the Company or a
Subsidiary, provided in each case that such Liens were in existence prior
to the date of such acquisition, merger or consolidation, were not incurred
in anticipation thereof and do not extend to any other assets;
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(i) Liens on property or assets existing at the time of the acquisition
thereof by the Company or any of its Subsidiaries, provided that such Liens
were in existence prior to the date of such acquisition and were not
incurred in anticipation thereof;
(j) Liens securing Refinancing Indebtedness incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to
the Holders of the Securities than the terms of the Liens securing such
refinanced Indebtedness;
(k) Liens securing Indebtedness permitted to be incurred under clauses
(c), (i), (j) and (l) of Section 4.11 hereof;
(l) Liens securing Purchase Money Indebtedness or Capitalized Lease
Obligations permitted to be incurred under clause (d) or (k) of Section
4.11 hereof;
(m) Liens in favor of the Company or any Guarantor; and
(n) Liens securing the Securities or the Guarantees.
"Person" or "person" means any corporation, individual, limited
liability company, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other entity.
"principal" of any Indebtedness means the principal of such
Indebtedness plus, without duplication, any applicable premium, if any, on such
Indebtedness.
"Pro Rata Portion" shall have the meaning set forth in Section 11.1(d).
"property" means any right or interest in or to property or assets of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Money Indebtedness" means Indebtedness of the Company, the
Guarantors or the Foreign Subsidiaries to the extent that (i) such Indebtedness
is incurred in connection with the acquisition of specified assets and
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<PAGE> 28
property (the "Subject Assets") for the business of the Company, the Guarantors
or the Foreign Subsidiaries, including Indebtedness which existed at the time of
the acquisition of such Subject Asset and was assumed in connection therewith,
and (ii) the Liens securing such Indebtedness are limited to the Subject Asset.
"Qualified Capital Stock" means any Capital Stock of the Company that
is not Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Subordinated
Indebtedness of the Company issued on or after the Issue Date with the Net Cash
Proceeds received by the Company from the substantially concurrent (i.e., within
60 days) sale (other than to a Subsidiary of the Company or the ESOP) of
Qualified Capital Stock or any issuance of Qualified Capital Stock in exchange
for any Capital Stock or Subordinated Indebtedness issued on or after the Issue
Date.
"Record Date" means a Record Date specified in the Securities whether
or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Paragraph 5
in the form of Security, which shall include, without duplication, in each case,
accrued and unpaid interest to the Redemption Date.
"Reference Period" with regard to any Person means the four full fiscal
quarters (or such lesser period during which such Person has been in existence)
of such Person ended immediately preceding any date upon which any determination
is to be made pursuant to the terms of the Securities or this Indenture.
"Refinancing Expenses" means any premiums paid in connection with any
repayment, repurchase, redemption or defeasance of the 12.70% Notes or the 7.0%
Note.
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"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of (each of (a) and (b) above is a "Refinancing"), any Indebtedness or
Disqualified Capital Stock in a principal amount or, in the case of Disqualified
Capital Stock, liquidation preference, not to exceed (after deduction of
reasonable and customary fees and expenses incurred in connection with the
Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so refinanced and (ii) if such Indebtedness being
refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, that (A) such Refinancing Indebtedness of any Subsidiary of the
Company shall only be used to refinance outstanding Indebtedness or Disqualified
Capital Stock of such Subsidiary, (B) Refinancing Indebtedness shall (x) not
have an Average Life shorter than the Indebtedness or Disqualified Capital Stock
to be so refinanced at the time of such Refinancing and (y) in all respects, be
no less subordinated or junior, if applicable, to the rights of Holders of the
Securities than was the Indebtedness or Disqualified Capital Stock to be
refinanced and (C) such Refinancing Indebtedness shall have no installment of
principal (or redemption payment) scheduled to come due earlier than the
scheduled maturity of any installment of principal of the Indebtedness or
Disqualified Capital Stock to be so refinanced which was scheduled to come due
prior to the Stated Maturity.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, by and among the Company, the Guarantors
and the Initial Purchasers, as such agreement may be amended, modified or
supplemented from time to time.
"Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that
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<PAGE> 30
in the good faith judgment of the Board of Directors of the Company are
materially related businesses.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than (i) Investments in Cash Equivalents,
(ii) Investments in the Company or a Wholly-Owned Guarantor, (iii) Investments
in any Person engaged in a Related Business if, as a consequence of such
Investment, (a) such Person becomes a Wholly-Owned Guarantor or (b) such Person
is merged, consolidated or amalgamated with or into, or conveys substantially
all of its assets to the Company or a Wholly-Owned Guarantor; (iv) loans or
advances made in the ordinary course of business to officers, directors,
employees or agents of the Company or any of its Subsidiaries not exceeding $2.0
million outstanding in the aggregate at any one time; (v) Investments existing
on the Issue Date or (vi) Investments made as a result of the receipt of
non-cash consideration from an Asset Sale made pursuant to Section 4.14 hereof.
"Restricted Payment" means, with respect to any Person, (a) the
declaration or payment of any dividend or other distribution in respect of any
Capital Stock of such Person or any Subsidiary of such Person, (b) any payment
on account of the purchase, redemption or other acquisition or retirement for
value of Capital Stock of such Person or any Subsidiary of such Person, (c)
other than with the proceeds from the substantially concurrent (i.e., within 60
days) sale of, or in exchange for, Refinancing Indebtedness, any purchase,
redemption or other acquisition or retirement for value of, any payment in
respect of any amendment of the terms of or any defeasance of, any Subordinated
Indebtedness of such Person or any Affiliate or Subsidiary of such Person,
directly or indirectly, by such Person or any Subsidiary of such Person prior to
the scheduled maturity, any scheduled repayment of principal, or any scheduled
sinking fund payment, as the case may be, of such Subordinated Indebtedness and
(d) any Restricted Investment by such Person; provided, however, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on or with respect to, or on account of the purchase, redemption or
other acquisition or retirement for value of, Capital Stock of an issuer to the
extent payable solely in shares of Qualified Capital Stock of such issuer or
(ii) any dividend, distribution or other payment to the Company or to any of its
Wholly-Owned Guarantors by the Company or any of its Subsidiaries.
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"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) the Company'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 the Company to officers, directors and employees of the Company 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 the Company or a duly
authorized committee thereof.
"Sale and Leaseback Transaction" means any arrangement relating to any
property owned on the date of the Indenture or acquired thereafter whereby the
Company, a Guarantor or one of their Subsidiaries transfers such property to a
Person and leases such property back from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the Initial Securities and, when and
if issued as provided in the Registration Rights Agreement, the Exchange
Securities.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor entity thereto.
"Securityholder" or "Holder" means the Person in whose name a Security
is registered on the Registrar's books.
"Senior Indebtedness" of the Company or any Guarantor means any
Indebtedness of the Company or such Guarantor, whether outstanding on the Issue
Date or thereafter created, incurred, assumed or guaranteed by the Company or
such Guarantor, other than Indebtedness as to which the instrument creating or
evidencing the same or the assumption or guarantee thereof expressly provides
that such Indebtedness is subordinated or junior to the Securities. Notwith-
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<PAGE> 32
standing the foregoing, however, in no event shall Senior Indebtedness include
(a) Indebtedness to any Subsidiary of the Company or any officer, director or
employee of the Company or any Subsidiary of the Company or (b) Indebtedness
incurred in violation of the terms of this Indenture.
"7.0% Note" shall mean the 7.0% Subordinated Convertible Note due
November 30, 2002 of the Company.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article I, Rule 1-02-w of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issue Date.
"Special Record Date" for payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Security, means April
1, 2006.
"Stock Option Plans" shall mean collectively, (i) the Company'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 the Company to officers, directors and/or employees of the
Company 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 the
Company or a duly authorized committee thereof.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor that is (i) subordinated in right of payment to the Securities or such
Guarantor's Guarantee, as applicable, in any respect or (ii) any Indebtedness
which is expressly subordinate to Senior Indebtedness and has a stated maturity
on or after the Stated Maturity.
"Subsidiary" with respect to any Person, means (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by such Person and one or more Subsidiaries of such Person or by one or more
Subsidiaries of such Person, or (ii) any other Person (other than a corporation)
in which such Person, one or more Subsidiaries of such Person, or such Person
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<PAGE> 33
and one or more Subsidiaries of such Person, directly or indirectly, at the date
of determination thereof has at least majority ownership interest.
Notwithstanding the foregoing, an Unrestricted Subsidiary shall not constitute a
Subsidiary of the Company or of any of the Company's Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of the execution of this
Indenture.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.6 hereof.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust division
(or any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"12.70% Notes" shall mean the 12.70% Senior Subordinated Notes due
December 15, 1998 of Ekco Housewares, Inc.
"Unrestricted Subsidiary" means any subsidiary of the Company that does
not own any Capital Stock of, or own or hold any Lien on any property of, the
Company or any other Subsidiary of the Company and that, at the time of
determination, shall then be an Unrestricted Subsidiary (as designated by the
Board of Directors of the Company); provided, that (i) such subsidiary shall not
engage, to any substantial extent, in any line or lines of business activity
other than a Related Business, (ii) neither immediately prior thereto nor after
giving pro forma effect to such designation would there exist a Default or Event
of Default and (iii) immediately after giving pro forma effect thereto, the
Company could incur at least $1.00 of Indebtedness pursuant to the Consolidated
Interest Coverage Ratio in
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paragraph (a) of Section 4.11 hereof. The Board of Directors of the Company may
designate any Unrestricted Subsidiary to be a Subsidiary, provided, that (i) no
Default or Event of Default is existing or will occur as a consequence thereof
and (ii) immediately after giving effect to such designation, on a pro forma
basis, the Company could incur at least $1.00 of Indebtedness pursuant to the
Consolidated Interest Coverage Ratio in paragraph (a) of Section 4.11 hereof.
Each such designation shall be evidenced by filing with the Trustee a certified
copy of the resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
"U.S. Government Obligations" means direct non-callable obligations of,
or noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"Voting Stock" means Capital Stock of the Company having generally the
right to vote in the election of a majority of the directors of the Company or
having generally the right to vote with respect to the organizational matters of
the Company.
"Wholly Owned" or "wholly owned" with respect to a Subsidiary of any
Person means (i) a Subsidiary of such Person of which all of the outstanding
Capital Stock or other ownership interests (other than directors' qualifying
shares) shall at the time be owned by such Person or by one or more Wholly-Owned
Subsidiaries of such Person or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, and (ii) Woodstream Corporation, a Pennsylvania
corporation, shall be deemed to be a Wholly-Owned Subsidiary of the Company for
so long as Woodstream Corporation meets the ownership test in clause (i), except
for the shares of preferred stock of Woodstream Corporation not owned by the
Company on the Issue Date.
"Wholly-Owned Guarantor" means (i) a Subsidiary of the Company (other
than a Foreign Subsidiary) of which all of the outstanding Capital Stock or
other ownership interests (other than directors' qualifying shares) shall at the
time be owned by the Company or by one or more Wholly- Owned Guarantors of the
Company or by the Company and one or more Wholly-Owned Guarantors of the Company
and (ii) Woodstream
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Corporation, a Pennsylvania corporation, for so long as Woodstream Corporation
meets the ownership test in clause (i), except for the shares of preferred stock
of Woodstream Corporation not owned by the Company on the Issue Date.
SECTION 2 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture security" means any of the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, each Guarantor
and any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 3 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
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<PAGE> 36
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
SECTION 1 Form and Dating.
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto, which
Exhibit is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained in the form of
Security attached as Exhibit A hereto shall be delivered in writing to the
Trustee. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the forms of Securities
shall constitute, and are hereby expressly made, a part of this Indenture and,
to the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.
SECTION 2 Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Security for the Company by manual or facsimile signature.
The Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at
the time of such execution but no longer holds that office at the time the
Trustee authenticates the Secu-
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<PAGE> 37
rity, the Security shall be valid nevertheless and the Company shall
nevertheless be bound by the terms of the Securities and this Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Initial Securities for original
issue in the aggregate principal amount of up to $125,000,000 and shall
authenticate Exchange Securities for original issue in the aggregate principal
amount of up to $125,000,000, in each case upon a written order of the Company
in the form of an Officers' Certificate; provided that such Exchange Securities
shall be issuable only upon the valid surrender for cancellation of Initial
Securities of a like aggregate principal amount in accordance with the
Registration Rights Agreement. The Officers' Certificate shall specify the
amount of Securities to be authenticated and the date on which the Securities
are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $125,000,000, except as provided in
Section 2.7. Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
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SECTION 3 Registrar and Paying Agent.
The Company and the Guarantors shall maintain an office or agency
in the Borough of Manhattan, The City of New York, where Securities may be
presented or surrendered for payment ("Paying Agent"), where Securities may be
surrendered for registration of transfer or exchange ("Registrar") and where
notices and demands to or upon the Company and the Guarantors in respect of the
Securities and this Indenture may be served. The Company may act as Registrar or
Paying Agent, except that, for the purposes of Articles III, VIII, X and Section
4.14 and as otherwise specified in this Indenture, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Company hereby
initially appoints the Trustee as Registrar and Paying Agent, and the Trustee
hereby initially agrees so to act.
The Company shall enter into an appropriate written agency
agreement with any Agent not a party to this Indenture, which agreement shall
implement the provisions of this Indenture that relate to such Agent, and shall
furnish a copy of each such agreement to the Trustee. The Company shall promptly
notify the Trustee in writing of the name and address of any such Agent. If the
Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as
such.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depository with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
SECTION 4 Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that such Paying Agent shall hold in trust for the benefit
of Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, premium, if any, or interest or Liquidated Damages, if any, on,
the Securities (whether such assets
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<PAGE> 39
have been distributed to it by the Company or any other obligor on the
Securities), and shall notify the Trustee in writing of any Default in making
any such payment. If either of the Company or a Subsidiary of the Company acts
as Paying Agent, it shall segregate such assets and hold them as a separate
trust fund for the benefit of the Holders or the Trustee. The Company at any
time may require a Paying Agent to distribute all assets held by it to the
Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default or any Event of Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent (if other than the Company) shall
have no further liability for such assets.
SECTION 5 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee on or before the
third Business Day preceding each Interest Payment Date and at such other times
as the Trustee may request in writing a list in such form and as of such date as
the Trustee reasonably may require of the names and addresses of Holders and
shall otherwise comply with TIA Section 312(a).
SECTION 6 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar or a co-Registrar with a
request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that
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<PAGE> 40
the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company and
the Registrar or co-Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Securities are being
delivered to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such Holder to that
effect (in substantially the form set forth on the reverse of the
Security); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, or to an
"institutional accredited investor" within the meaning of Rule 501
(A)(1), (2), (3) or (7) under the Securities Act that is acquiring the
security for its own account, or for the account of such an
institutional accredited investor, in each case in a minimum principal
amount of the Securities of $250,000, not with a view to or for offer
or sale in connection with any distribution in violation of the
Securities Act, a certification to that effect (in substantially the
form set forth on the reverse of the Security); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that ef-
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<PAGE> 41
fect (in substantially the form set forth on the reverse of the
Security) and an Opinion of Counsel reasonably acceptable to the
Company and to the Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, a certification, substantially in the form set forth on the
reverse of the Security, that such Definitive Security is being transferred
to a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to make, or
to direct the Securities Custodian to make, an endorsement on the Global
Security to reflect an increase in the aggregate principal amount of the
Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depository therefor.
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(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security. Upon receipt by the Trustee of written instructions or
such other form of instructions as is customary for the Depository from the
Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Security and upon receipt by the Trustee of a written
order or such other form of instructions as is customary for the Depository
or the Person designated by the Depository as having such a beneficial
interest in a Transfer Restricted Security only, the following additional
information and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depository as being the beneficial owner,
a certification from such Person to that effect (in substantially the
form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act or pursuant to an effective registration
statement under the Securities Act, or to an "institutional accredited
investor" within the meaning of Rule 501 (A)(1), (2), (3) or (7) under
the Securities Act that is acquiring the security for its own account,
or for the account of such an institutional accredited investor, in
each case in a minimum principal amount of the Securities of $250,000,
not with a view to or for offer or sale in connection with any
distribution in violation of the Securities Act, a certification to
that effect from the transferor (in substantially the form set forth on
the reverse of the Security); or
(C) if such beneficial interest is being transferred in
reliance on another ex-
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<PAGE> 43
emption from the registration requirements of the Securities Act, a
certification to that effect from the transferee or transferor (in
substantially the form set forth on the reverse of the Security) or an
Opinion of Counsel from the transferee or transferor reasonably
acceptable to the Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act,
then the Trustee or the Securities Custodian, at the direction of the
Trustee, will cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian,
the aggregate principal amount of the Global Security to be reduced and,
following such reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate, the Trustee
will authenticate and deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Security
may not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in Absence of
Depository. If at any time:
(i) the Depository for the Securities notifies the Company
that the Depository is unwilling or unable to continue as Depository for
the Global
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<PAGE> 44
Securities and a successor Depository for the Global Securities is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Securities
under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of the Global Securities, in exchange for
such Global Securities.
(g) Legends.
(i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
PERSON EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) WHICH
IS AN INSTITUTION (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (2)
AGREES THAT IT WILL NOT PRIOR TO THE DATE WHICH IS THREE YEARS
AFTER THE LATER OF THE DATE OF ORIGINAL ISSUANCE OF THIS SECURITY
AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
ISSUER WAS THE OWNER OF THIS SECURITY (THE "RESALE RESTRICTION
TERMINATION DATE") RESELL, PLEDGE OR OTHERWISE TRANSFER THIS
SECURITY, EXCEPT (A) TO THE COMPANY, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITU-
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<PAGE> 45
TIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
ANOTHER QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH THE
RESALE PROVISIONS OF RULE 144A UNDER THE SECURITIES ACT, (C) TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A WRITTEN CERTIFICATION CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) PURSUANT TO THE
RESALE LIMITATIONS PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO ANY
REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE
PROPERTY OF SUCH ACCOUNT BE AT ALL TIMES WITHIN ITS CONTROL AND TO
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE FOREGOING RESTRICTIONS ON
RESALE WILL NOT APPLY SUBSEQUENT TO THE RESALE RESTRICTION
TERMINATION DATE.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Act or an effective
registration statement under the Act:
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<PAGE> 46
(A) in the case of any Transfer Restricted Security that
is a Definitive Security, the Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Security for a Definitive Security
that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
(B) any such Transfer Restricted Security represented by
a Global Security shall not be subject to the provisions set forth in
(i) above (such sales or transfers being subject only to the provisions
of Section 2.6(c) hereof); provided, however, that with respect to any
request for an exchange of a Transfer Restricted Security that is
represented by a Global Security for a Definitive Security that does
not bear a legend, which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such certification to be
substantially in the form set forth on the reverse of the Security).
(h) Cancellation and/or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or cancelled, such Global
Security shall be returned to or retained and cancelled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Security
is exchanged for Definitive Securities, redeemed, repurchased or cancelled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) Obligations with respect to Transfers and Exchanges of
Definitive Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-Registrar's
request.
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<PAGE> 47
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer taxes,
assessments, or similar governmental charge payable upon exchanges not
involving any transfer pursuant to Section 2.2 (fourth paragraph), 2.10,
3.7, 4.14(e), 9.5, or 10.1 (final paragraph)).
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article III, except
the unredeemed portion of any Definitive Security being redeemed in part,
(b) any Security for a period beginning 15 Business Days before the mailing
of a notice of an offer to repurchase pursuant to Article X or Section 4.14
hereof or redeem Securities pursuant to Article III hereof and ending at
the close of business on the day of such mailing or (c) any Security which
has been surrendered for repurchase at the option of the Holder pursuant to
Article X or Section 4.14 hereof, except the portion, if any, of such
Security not to be so repurchased.
(iv) Prior to due presentment for registration or transfer of
any Security, the Trustee, any Agent and the Company may deem and treat the
Person in whose name the Security is registered as the absolute owner of
such Security, and none of the Trustee, Agent or the Company shall be
affected by notice to the contrary.
SECTION 7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory to
the Trustee, to the effect that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any
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<PAGE> 48
Agent from any loss which any of them may suffer if a Security is replaced. The
Company may charge such Holder for its reasonable, out-of-pocket expenses in
replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 8 Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee (including any Security represented by a
Global Security) except those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Security effected by
the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security, except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than an Company or an Affiliate of the Company) holds Cash or U.S. Government
Obligations sufficient to pay all of the principal of, premium, if any, interest
and Liquidated Damages, if any, due on the Securities payable on that date and
payment of the Securities called for redemption is not otherwise prohibited
pursuant to this Indenture, then on and after that date such Securities shall
cease to be outstanding and interest on them shall cease to accrue.
SECTION 9 Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company or Affiliates of the Company shall be
disregarded, except that, for the purposes of determining
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<PAGE> 49
whether the Trustee shall be protected in relying on any such direction,
amendment, supplement, waiver or consent, only Securities that a Trust Officer
of the Trustee knows are so owned shall be disregarded.
SECTION 10 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare, the Guarantors shall endorse and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company reasonably and in
good faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare, the Guarantors shall endorse and the Trustee
shall authenticate definitive Securities in exchange for temporary Securities.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as permanent Securities authenticated
and delivered hereunder.
SECTION 11 Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel and, at the written direction of the Company, shall dispose of all
Securities surrendered for transfer, exchange, payment or cancellation. Except
as set forth in Section 2.7, the Company may not issue new Securities to replace
Securities that have been paid or delivered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section 2.11, except as expressly permitted in the
form of Securities and as permitted by this Indenture.
SECTION 12 Defaulted Interest.
Interest and Liquidated Damages, if any, on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
predecessor Securities) is registered at the close of busi-
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<PAGE> 50
ness on the Record Date for such interest or Liquidated Damages.
Any interest or Liquidated Damages, if any, on any Security which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date plus, to the extent lawful, any interest payable on the defaulted
interest or Liquidated Damages (herein called "Defaulted Interest") shall
forthwith cease to be payable to the registered holder on the relevant Record
Date, and such Defaulted Interest may be paid by the Company, at its election in
each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of Cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such Cash when deposited to be
held in trust for the benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in
the Security register not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names the
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Securities (or their respective predecessor Securities) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, if any, and upon
such notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this clause,
such manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest and Liquidated Damages, if
any, accrued and unpaid, and to accrue, which were carried by such other
Security.
ARTICLE III
REDEMPTION
SECTION 1 Right of Redemption.
Redemption of Securities, as permitted by any provision of this
Indenture, shall be made in accordance with such provision and this Article III.
The Company will not have the right to redeem any Securities prior to April 1,
2001. On or after April 1, 2001, the Company will have the right to redeem all
or any part of the Securities at the Redemption Prices specified in the form of
Security attached as Exhibit A set forth in Paragraph 5 thereof, in each case
(subject to the right of the Holders of record on a Record Date to receive
interest and Liquidated Damages, if any, due on an Interest Payment Date that is
on or prior to such Redemption Date), including accrued and unpaid interest and
Liquidated Damages, if any, thereon to the Redemption Date.
SECTION 2 Notices to Trustee.
If the Company elects to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall notify the Trustee in writing of the Redemption Date
and the principal
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amount of Securities to be redeemed and whether it wants the Trustee to give
notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for in this
Section 3.2 at least 45 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee). Any such notice may be cancelled at any
time prior to notice of such redemption being mailed to any Holder and shall
thereby be void and of no effect.
SECTION 3 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed by
lot or by such other method as the Trustee shall determine to be fair and
appropriate and in such manner as complies with any applicable Depository, legal
or stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 4 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee and each Holder whose Securities are to be redeemed to
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such Holder's last address as then shown on the registry books of the Registrar.
At the Company's written request made at least five days prior to the date on
which notice is to be given (or such shorter period as the Trustee shall
reasonably permit), the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. Each notice for redemption shall
identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued and
unpaid interest and Liquidated Damages, if any, to be paid upon such
redemption;
(3) the name, address and telephone number of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent at the address specified in such notice to collect the
Redemption Price;
(5) that, unless (a) the Company defaults in its obligation to
deposit Cash or U.S. Government Obligations which through the scheduled
payment of principal, interest and Liquidated Damages, if any, in respect
thereof in accordance with their terms will provide, not later than one day
before the due date of any payment, Cash in an amount to fund the
Redemption Price with the Paying Agent in accordance with Section 3.6
hereof or (b) such redemption payment is otherwise prohibited, interest and
Liquidated Damages, if any, on Securities called for redemption ceases to
accrue on and after the Redemption Date and the only remaining right of the
Holders of such Securities shall be to receive payment of the Redemption
Price, including accrued and unpaid interest to the Redemption Date, upon
surrender to the Paying Agent of the Securities called for redemption and
to be redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and upon
surrender of such Security, a new Security or Securities in aggregate
principal amount equal
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to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be redeemed; and
(9) that the notice is being sent pursuant to this Section 3.4 and
pursuant to the optional redemption provisions of Paragraph 5 of the
Securities.
SECTION 5 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption shall become due and payable on the Redemption
Date and at the Redemption Price, including accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date. Upon surrender to the
Trustee or Paying Agent, such Securities called for redemption shall be paid at
the Redemption Price, including interest and Liquidated Damages, if any, accrued
and unpaid to the Redemption Date; provided that if the Redemption Date is after
a regular Record Date and on or prior to the Interest Payment Date to which such
Record Date relates, the accrued interest or Liquidated Damages shall be payable
to the Holder of the redeemed Securities registered on the relevant Record Date;
and provided, further, that if a Redemption Date is not a Business Day, payment
shall be made on the next succeeding Business Day and no interest shall accrue
for the period from such Redemption Date to such succeeding Business Day.
SECTION 6 Deposit of Redemption Price.
Prior to 10:00 A.M. on the Redemption Date, the Company shall deposit
with the Paying Agent (other than the Company or an Affiliate of the Company)
Cash or U.S. Government Obligations sufficient to pay the Redemption Price of,
including accrued and unpaid interest and Liquidated Damages, if any, on, all
Securities to be redeemed on such Redemption Date (other than Securities or
portions thereof called for redemption on that date that have been delivered
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by the Company to the Trustee for cancellation). The Paying Agent shall promptly
return to the Company any Cash or U.S. Government Obligations so deposited which
is not required for that purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not prohibited under this Indenture, interest and Liquidated
Damages, if any, on the Securities to be redeemed will cease to accrue on the
applicable Redemption Date, whether or not such Securities are presented for
payment. Notwithstanding anything herein to the contrary, if any Security
surrendered for redemption in the manner provided in the Securities shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest and Liquidated Damages, if any,
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest or
Liquidated Damages, if any, not paid on such unpaid principal, in each case at
the rate and in the manner provided in Section 4.1 hereof and the Security.
SECTION 7 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute, the Guarantors shall endorse and the Trustee shall
authenticate and deliver to the Holder, without service charge to the Holder, a
new Security or Securities equal in principal amount to the unredeemed portion
of the Security surrendered.
ARTICLE IV
COVENANTS
SECTION 1 Payment of Securities.
The Company shall pay the principal of, premium, if any, interest and
Liquidated Damages, if any, on the Securities on the dates and in the manner
provided herein and in the Securities. An installment of principal of, premium,
if any, interest or Liquidated Damages, if any, on the Securities shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
the Company,
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a Subsidiary of the Company or an Affiliate of the Company) holds for the
benefit of the Holders, on or before 10:00 A.M., New York City time on that
date, Cash deposited and designated for and sufficient to pay such installment.
The Company shall pay interest on overdue principal and premium, if
any, and on overdue installments of interest and Liquidated Damages, if any, at
the rates specified in the Securities compounded semi-annually, to the extent
lawful.
SECTION 2 Maintenance of Office or Agency.
The Company and the Guarantors shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantors in respect of the Securities and this Indenture
may be served. The Company and the Guarantors shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Company and the Guarantors shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 12.2.
The Company and the Guarantors may also from time to time designate one
or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company and the Guarantors of their obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York,
for such purposes. The Company and the Guarantors shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. The Company and the Guarantors
hereby initially designate the Corporate Trust Office of the Trustee located at
14 Wall Street, New York, New York 10005.
SECTION 3 Limitation on Restricted Payments.
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The Company and the Guarantors shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, make any Restricted Payment, if,
after giving effect thereto on a pro forma basis, (a) a Default or an Event of
Default shall have occurred and be continuing, (b) the Company is not permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated
Interest Coverage Ratio in Section 4.11(a) or (c) the aggregate amount of all
Restricted Payments made by the Company and its Subsidiaries, including after
giving effect to such proposed Restricted Payment, from and after the Issue
Date, would exceed the sum of (i) $4.0 million, plus (ii) 50% of the aggregate
Consolidated Net Income of the Company for the period (taken as one accounting
period), commencing on the first day of the first full fiscal quarter commencing
after the Issue Date, to and including the last day of the fiscal quarter ended
immediately prior to the date of each such calculation (or, in the event
Consolidated Net Income for such period is a deficit, then minus 100% of such
deficit), plus (iii) 100% of the aggregate Net Cash Proceeds received by the
Company from the issue or sale after the Issue Date of its Qualified Capital
Stock or its debt securities that have been converted into Qualified Capital
Stock (other than (i) to a Subsidiary of the Company and (y) to the extent
applied in connection with a Qualified Exchange, but including the Net Cash
Proceeds received by the Company upon the exercise, exchange or conversion of
securities into Qualified Capital Stock), plus (iv) an amount equal to the
portion (proportionate to the Company's or a Subsidiary's equity interest in
such Unrestricted Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a
Subsidiary; provided, however, that such amount shall not exceed, in the case of
any Unrestricted Subsidiary, the amount of any Restricted Payments previously
made by the Company or any Subsidiary to such Unrestricted Subsidiary which were
permitted to be made pursuant to this Section, plus (v) the Net Cash Proceeds
received by the Company or any Guarantor from its investment in, and the sale,
disposition or other liquidation of, any Restricted Investment.
The foregoing clauses (b) and (c) of the immediately preceding
paragraph, however, will not prohibit (v) a Qualified Exchange, (w) the payment
of any dividend on Qualified Capital Stock within 60 days after the date of its
declaration if such dividend could have been made on the date of such
declaration in compliance with the foregoing
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provisions, (x) any redemption or repurchase or payment on account of Capital
Stock of the Company required to be made under (i) the Restricted Stock Plans or
(ii) the Stock Option Plans, in an amount equal to the sum of the exercise
prices paid to the Company by the holder of such Capital Stock upon the exercise
of such stock options, (y) (i) any redemption or repurchase by the Company of
its Capital Stock, (ii) any contribution or dividend paid by the Company to the
ESOP or (iii) any loan made by the Company to the ESOP, in each case only to the
extent made in connection with the distribution of retirement, termination or
diversification withdrawal benefits to ESOP participants or beneficiaries
pursuant to the terms of the ESOP and the provisions of ERISA and the Code and
(z) any contribution or dividend paid by the ESOP, in each case only to the
extent used by the ESOP (i) to pay administrative expenses of the ESOP in an
amount not to exceed $200,000 per year or (ii) to repay Indebtedness of the ESOP
owed to the Company or its Subsidiaries. The full amount of any Restricted
Payment made pursuant to the foregoing clauses (w), (x), (y) and (z) of the
immediately preceding sentence, however, will be deducted in the calculation of
the aggregate amount of Restricted Payments available to be made which is
referred to in clause (c) of the immediately preceding paragraph.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.3 were computed, which calculations may
be based upon the Company's latest available internal financial statements;
provided, however, that a failure to so deliver such Officers' Certificate shall
not constitute a Default if the Company provides the Officers' Certificate
within 30 days of the date of making such Restricted Payment and conclusively
demonstrates therein that the Restricted Payment was permitted to be made on the
date made. The Trustee may rely on such Officers' Certificate without further
inquiry.
SECTION 4 Corporate Existence.
Subject to Article V, the Company and the Guarantors shall do or cause
to be done all things necessary to preserve and keep in full force and effect
their respective corporate existence and the corporate existence of each of
their Subsidiaries in accordance with the respective orga-
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nizational documents of each of them (as the same may be amended from time to
time) and the rights (charter and statutory) and corporate franchises of the
Company, the Guarantors and each of their respective Subsidiaries; provided,
however, that neither the Company nor any Guarantor shall be required to
preserve, with respect to themselves, any right or franchise, and with respect
to any of their respective Subsidiaries, any such existence, right or franchise,
if (a) the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
such entity and (b) the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 5 Payment of Taxes and Other Claims.
Except with respect to immaterial items, the Company and the Guarantors
shall, and shall cause each of their Subsidiaries to, pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Company,
any Guarantor or any of their Subsidiaries or any of their respective properties
and assets and (ii) all lawful claims, whether for labor, materials, supplies,
services or anything else, which have become due and payable and which by law
have or may become a Lien upon the property and assets of the Company, any
Guarantor or any of their Subsidiaries; provided, however, that neither the
Company nor any Guarantor shall be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which disputed amounts adequate reserves with respect
thereto are maintained on the books of the Company in accordance with GAAP.
SECTION 6 Maintenance of Properties and Insurance.
The Company and the Guarantors shall cause all material properties used
or useful to the conduct of their business and the business of each of their
Subsidiaries to be maintained and kept in good condition, repair and working
order (reasonable wear and tear excepted) and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in their reasonable
judgment
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may be necessary, so that the business carried on in connection therewith may be
properly conducted at all times; provided, however, that nothing in this Section
4.6 shall prevent the Company or any Guarantor from discontinuing any operation
or maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is (a), in the judgment of the Board of Directors of
the Company or Guarantor, as applicable, desirable in the conduct of the
business of such entity and (b) not disadvantageous in any material respect to
the Holders.
The Company and the Guarantors shall provide, or cause to be provided,
for themselves and each of their Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith opinion of the Company is adequate and appropriate for the conduct of
the business of the Company, the Guarantors and such Subsidiaries.
SECTION 7 Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within 120 days after
the end of its fiscal year (commencing with the Company's 1996 fiscal year) an
Officers' Certificate complying with Section 314(a)(4) of the TIA and stating
that a review of its activities and the activities of its Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture and further
stating, as to each such Officer signing such certificate, whether or not the
signer knows of any failure by the Company, any Guarantor or any Subsidiary of
the Company to comply with any conditions or covenants in this Indenture and, if
such signer does know of such a failure to comply, the certificate shall
describe such failure with particularity. The Officers' Certificate shall also
notify the Trustee should the relevant fiscal year end on any date other than
the current fiscal year end date.
(b) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto. The Trustee shall not be deemed
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to have knowledge of any Default, any Event of Default or any such fact unless
one of its Trust Officers receives written notice thereof from the Company or
any of the Holders.
SECTION 8 Reports and Other Information.
(a) Whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
deliver to the Trustee and to each Holder and to prospective purchasers of
Securities identified to the Company by the Holders of Transfer Restricted
Securities within 10 days after it is or would have been required to file them
with the SEC, annual and quarterly financial statements substantially equivalent
to financial statements that would have been included in reports filed with the
SEC, if the Company were subject to the requirements of Section 13 or 15(d) of
the Exchange Act, including, with respect to annual information only, a report
thereon by the Company's certified independent public accountants as such would
be required in such reports to the SEC, and, in each case, together with
management's discussion and analysis of financial condition and results of
operations which would be so required. Whether or not required by the rules and
regulations of the SEC, the Company shall file a copy of all such information
and reports with the SEC for public availability (unless the SEC will not accept
such a filing).
(b) During any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Company shall furnish to the
Holders of Transfer Restricted Securities and prospective purchasers of Transfer
Restricted Securities, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act until such time
as either the Company has concluded an offer to exchange the Exchange Securities
for the Initial Securities or a registration statement relating to resales of
the Securities has become effective under the Securities Act. The Company shall
also furnish such information during the pendency of any suspension of
effectiveness of such resale registration statement.
SECTION 9 Limitation on Status as Investment Company.
Neither the Company nor any of its Subsidiaries shall be required
to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940,
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as amended), or otherwise become subject to regulation as an investment company
under the Investment Company Act.
SECTION 10 Limitation on Transactions with Affiliates.
The Company and the Guarantors shall not, and shall not permit any of
their Subsidiaries to, enter into any contract, agreement, arrangement or
transaction with any Affiliate (an "Affiliate Transaction") or any series of
related Affiliate Transactions (other than Exempted Affiliate Transactions),
unless such Affiliate Transaction is made in good faith, the terms of such
Affiliate Transaction are fair and reasonable to the Company, such Guarantor or
such Subsidiary, as the case may be, and are on terms at least as favorable as
the terms which could be obtained by the Company, such Guarantor or such
Subsidiary, as the case may be, in a comparable transaction made on an
arm's-length basis with Persons who are not Affiliates.
Without limiting the foregoing, any Affiliate Transaction or series of
related Affiliate Transactions (other than Exempted Affiliate Transactions) (i)
involving consideration to either party in excess of $3.0 million, must be
evidenced by a resolution of a committee of non-employee directors of the
Company who are disinterested with respect to such transaction (an "Independent
Committee"), set forth in an Officers' Certificate addressed and delivered to
the Trustee, certifying that (a) the terms of such Affiliate Transaction are
fair and reasonable to the Company, such Guarantor or such Subsidiary, as the
case may be, and no less favorable to the Company, such Guarantor or such
Subsidiary, as the case may be, than could have been obtained in an arm's-length
transaction with a non-Affiliate and (b) such Affiliate Transaction has been
approved by a majority of the members of an Independent Committee, and (ii)
involving consideration to either party in excess of $10.0 million must be
evidenced by a resolution of an Independent Committee in accordance with the
foregoing clause (i) and, prior to the consummation thereof, a written favorable
opinion as to the fairness of such transaction to the Company, such Guarantor or
such Subsidiary, as the case may be, from a financial point of view from an
independent investment banking firm of national reputation having assets in
excess of $1.0 billion.
SECTION 11 Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock.
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The Company and the Guarantors shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur,
become directly or indirectly liable with respect to (including as a result of
an Acquisition), or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness or any Disqualified Capital Stock from and after the Issue Date
(including Acquired Indebtedness). Notwithstanding the foregoing:
(a) if (i) no Default or Event of Default shall have occurred and
be continuing at the time of, or would occur after giving effect on a pro
forma basis to, such incurrence of Indebtedness or Disqualified Capital
Stock and the application of the proceeds therefrom and (ii) on the date of
such incurrence (the "Incurrence Date"), the Consolidated Interest Coverage
Ratio of the Company for the Reference Period immediately preceding the
Incurrence Date, after giving effect on a pro forma basis to such
incurrence of such Indebtedness or Disqualified Capital Stock and, to the
extent set forth in the definition of Consolidated Interest Coverage Ratio,
the use of proceeds therefrom, would be at least 2.5 to 1.0, the Company
and the Guarantors may Incur such Indebtedness or Disqualified Capital
Stock;
(b) the Company and the Guarantors may incur Indebtedness
evidenced by the Securities and the Guarantees pursuant to the Indenture up
to the amounts specified therein as of the Issue Date;
(c) The Company and the Guarantors may incur Indebtedness pursuant
to the Credit Agreement up to an aggregate amount outstanding (including
any Indebtedness issued to refinance, refund or replace such Indebtedness
in whole or in part) at any time not to exceed the greater of (A) $75.0
million, minus the amount of any such Indebtedness retired with the Net
Cash Proceeds from any Asset Sale or assumed by a transferee in an Asset
Sale; provided that this reduction shall not apply to a reduction of any
Indebtedness under a revolving credit or similar facility to the extent
that such Net Cash Proceeds are used to finance working capital
requirements in the ordinary course of business or (B) the Borrowing Base;
(d) The Company and the Guarantors may incur Indebtedness (in
addition to Indebtedness permitted by
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any other clause of this paragraph) in an aggregate amount outstanding at
any time (including any Indebtedness issued to refinance, replace or refund
such Indebtedness in whole or in part) of up to $25.0 million, less the
aggregate amount of any Indebtedness incurred by the Foreign Subsidiaries
pursuant to clause (k) of this Section 4.11 and outstanding at such time;
(e) The Company and the Guarantors, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clauses (a), (b) and (g) of this
Section 4.11;
(f) The Company may incur Indebtedness to any Wholly-Owned
Guarantor, and any Guarantor may incur Indebtedness to any other
Wholly-Owned Guarantor or to the Company; provided, that such obligations
shall be unsecured and subordinated in all respects to the Company's or
such Guarantor's obligations pursuant to the Securities or the Guarantees,
respectively; and, provided, further, that if any Wholly-Owned Guarantor
ceases to be a Wholly-Owned Guarantor of the Company or if the Company or
any Wholly-Owned Guarantor transfers such Indebtedness to any Person (other
than to the Company or another Wholly-Owned Guarantor), such events, in
each case, shall constitute the incurrence of such Indebtedness by the
Company or such Wholly- Owned Guarantor, as the case may be, at the time of
such event;
(g) The Company and the Guarantors may incur Indebtedness existing
on the Issue Date;
(h) The Company and its Guarantors may incur Indebtedness solely
in respect of bankers acceptances, letters of credit, surety bonds and
performance bonds (in each case to the extent that such incurrence does not
result in the incurrence of any obligation for the payment of borrowed
money of others) issued in the ordinary course of business consistent with
past practice; provided, however, that the aggregate principal amount
outstanding of such Indebtedness (including any Indebtedness issued to
refinance, refund or replace such Indebtedness) shall at no time exceed
$5.0 million outstanding at any time;
(i) The Company and the Guarantors may incur Indebtedness
represented by Hedging and Interest Swap Obligations entered into in the
ordinary course of
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business related to Indebtedness of the Company and the Guarantors
otherwise permitted to be incurred pursuant to this Indenture not exceeding
the underlying obligations;
(j) The Foreign Subsidiaries may incur Non- Recourse Indebtedness
in an aggregate amount outstanding at any time (including any Non-Recourse
Indebtedness issued to refinance, replace or refund such Non-Recourse
Indebtedness in whole or in part) of up to $20.0 million, less the
aggregate amount of any indebtedness incurred by the Foreign Subsidiaries
pursuant to clause (k) of this Section 4.11 and outstanding at such time;
(k) The Foreign Subsidiaries may incur Indebtedness in an
aggregate amount outstanding at any time (including any Indebtedness issued
to refinance, replace or refund such Indebtedness in whole or in part) of
up to $5.0 million; and
(l) Any Foreign Subsidiary may incur Indebtedness up to an
aggregate amount outstanding (including any Indebtedness issued to
refinance, replace or refund such Indebtedness in whole or in part) at any
time not to exceed the Foreign Subsidiary Borrowing Base of such Foreign
Subsidiary.
Indebtedness of any Person which is outstanding at the time such Person
becomes a Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Subsidiary of the Company shall be deemed to have been
incurred at the time such Person becomes such a Subsidiary of the Company or is
merged with or into or consolidated with the Company or a Subsidiary of the
Company, as applicable.
SECTION 12 Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
The Company and the Guarantors shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, create, assume or suffer to exist
any consensual restriction on the ability of any Subsidiary of the Company to
pay dividends or make other distributions to or on behalf of, or otherwise to
transfer assets or property to, or make or pay loans or advances to or on behalf
of, the Company or any Subsidiary of the Company, except (a) restrictions
imposed by the Securities or this Indenture, (b) restrictions imposed by
applicable law, (c) existing restrictions under specified Indebtedness
outstanding on the Issue Date
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or under any Acquired Indebtedness not incurred in violation of this Indenture
or any agreement relating to any property, asset, or business acquired by the
Company or any of its Subsidiaries, which restrictions, in each case, existed at
the time of acquisition, were not put in place in connection with or in
anticipation of such acquisition and are not applicable to any Person, other
than to the Person acquired, or to any property, asset or business, other than
the property, assets and business so acquired, (d) any such restriction or
requirement imposed by Indebtedness incurred under paragraph (c) of Section 4.11
hereof, provided such restriction or requirement is no more restrictive than
that imposed by the Credit Agreement in effect as of the Issue Date, (e)
restrictions with respect solely to a Subsidiary of the Company imposed pursuant
to a binding agreement which has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such Subsidiary,
provided such restrictions apply solely to the Capital Stock or assets of such
Subsidiary which are being sold, (f) in connection with and pursuant to
permitted Refinancings, replacements of restrictions imposed pursuant to clause
(c) of this paragraph that are not more restrictive than those being replaced
and do not apply to any other Person or assets than those that would have been
covered by the restrictions in the Indebtedness so refinanced, (g) customary
provisions restricting subletting or assignment of any lease entered into in the
ordinary course of business, consistent with industry practice and (h) any Lien
permitted by Section 4.13 hereof.
SECTION 13 Limitation on Liens.
The Company and the Guarantors shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Lien (other than Permitted Liens) on any of their respective assets
or property, whether now owned or hereinafter acquired, or on any income or
profits therefrom or assign or convey any right to receive income therefrom
securing (i) any Indebtedness of the Company unless the Securities are equally
and ratably secured or (ii) any Indebtedness of a Guarantor unless the
Guarantees are equally and ratably secured; provided, however, that if such
Indebtedness is by its terms expressly subordinate to the Securities or the
Guarantees, the Lien securing such Indebtedness shall be subordinate and junior
to the Lien securing the Securities or the Guarantees, with the same relative
priority as such Subordinated Indebtedness shall have with respect to the
Securities or the Guarantees, as the case may be.
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SECTION 14 Limitation on Asset Sales.
(a) The Company and the Guarantors shall not, and shall not permit
any of their Subsidiaries to, directly or indirectly, consummate an Asset Sale
to any Person other than the Company or a Wholly-Owned Guarantor unless (i) the
Company (or the Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale which is at least equal to the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a Board Resolution set forth
in an Officers' Certificate delivered to the Trustee) of the assets sold or
otherwise subject to disposition and (ii) at least 80% of the consideration
therefor received by the Company or such Subsidiary is in the form of Cash or
Cash Equivalents; provided that the amount of (x) any liabilities (as shown on
the Company's or such Subsidiary's most recent balance sheet or in the notes
thereto) of the Company or any Subsidiary (other than liabilities that are by
their terms subordinated to the Securities) that are assumed by the transferee
of any such assets, and (y) any notes or other obligations received by the
Company or any such Subsidiary from such transferee that are immediately
converted by the Company or such Subsidiary into Cash or Cash Equivalents (to
the extent of the Cash or Cash Equivalents received) will be deemed to be Cash
for purposes of this provision.
(b) Within 270 days after the date of any Asset Sale, the Company
may apply the Net Cash Proceeds from such Asset Sale to either (i) permanently
reduce outstanding Indebtedness, other than Subordinated Indebtedness, of the
Company or the Subsidiary whose assets were sold in such Asset Sale, provided
that any such reduction of Indebtedness of such Subsidiary shall not exceed the
amount of Net Cash Proceeds received from the sale of assets of such Subsidiary
or (ii) acquire property or assets to be used in any Related Business; provided
that when any proceeds not in the form of Cash or Cash Equivalents become Net
Cash Proceeds, the requirements contained in this paragraph shall apply thereto.
Pending the final application of any such Net Cash Proceeds, the Company may
temporarily invest such Net Cash Proceeds in Cash Equivalents or reduce
outstanding Indebtedness under the Credit Agreement. Any Net Cash Proceeds from
an Asset Sale that are not applied or invested as provided in the second
sentence of this paragraph will be deemed to constitute "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall, within 30
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days of the occurrence of such event, make an offer to all Holders of Securities
(an "Asset Sale Offer") to purchase the maximum principal amount of Securities
that may be purchased out of the Excess Proceeds, at an offer price in cash (the
"Asset Sale Offer Price") in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, to the
date fixed for the closing of such Asset Sale Offer (which shall be 20 Business
Days (or such later date as may be required by applicable law, rule or
regulation) following the commencement of such Asset Sale Offer (the "Asset Sale
Offer Period")), in accordance with the procedures set forth herein.
(d) Within such 30-day period referred to in (c) above, the
Company shall mail a notice to each Holder stating: (1) that the Asset Sale
Offer is being made pursuant to this Section 4.14 and that the Company will
purchase the maximum principal amount of Securities that may be purchased out of
the Excess Proceeds; (2) the Asset Sale Offer Price and the purchase date, which
shall be no sooner than 30 nor later than 60 days from the date such notice is
mailed (the "Asset Sale Payment Date"); (3) that any Security, or portion
thereof, not tendered or accepted for payment will continue to accrue interest
and Liquidated Damages, if any; (4) that, unless the Company defaults in
depositing Cash with the Paying Agent in accordance with (e) below or such
payment is otherwise prohibited, any Security, or portion thereof, accepted for
payment pursuant to the Asset Sale Offer shall cease to accrue interest and
Liquidated Damages, if any, after the Asset Sale Payment Date; (5) that Holders
electing to have any Securities purchased pursuant to such Asset Sale Offer will
be required to surrender the Securities, and complete the section entitled
"Option of Holder to Elect Purchase" on the reverse of the Securities or
transfer beneficial ownership of such Securities by book-entry transfer, to the
Company, the Depository (if appointed by the Company), or the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Asset Sale Payment Date; (6) that Holders will be
entitled to withdraw their elections, in whole or in part, if the Company, the
Depository or the Paying Agent, as the case may be, receives, not later than the
close of business on the third Business Day preceding the Asset Sale Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Securities the Holder is withdrawing,
and a statement that such Holder is withdrawing his election to have such
principal amount of Securities purchased; (7) that Holders whose Securities are
being purchased only in part will be issued new Securities equal in
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principal amount to the unpurchased portion of the Securities surrendered (or
transferred by book-entry transfer), provided that the principal amount of such
unpurchased portion must be equal to $1,000 or an integral multiple thereof; and
(8) a brief description of the circumstances and relevant facts regarding such
Asset Sale. Any such Asset Sale Offer shall comply with all applicable
provisions of Federal and state laws, including those regulating tender offers,
if applicable, and any provisions of this Indenture which conflict with such
laws (A) shall be deemed to be superseded by the provisions of such laws and (B)
shall not be deemed to have been breached by virtue thereof.
(e) On or before an Asset Sale Payment Date, the Company shall, to
the extent lawful, (1) accept for purchase all Securities or portions thereof in
minimum denominations of $1,000 or integral multiples thereof properly tendered
pursuant to the Asset Sale Offer (subject to (f) below), (2) deposit with the
Paying Agent an amount equal to the Asset Sale Offer Price in respect of all
Securities or portions thereof so tendered (subject to (f) below) and (3)
deliver or cause to be delivered to the Trustee the Securities so accepted
together with an Officers' Certificate stating the aggregate principal amount of
Securities or portions thereof being purchased by the Company. The Company, the
Depositary or the Paying Agent, as the case may be, shall promptly mail to each
Holder of Securities so accepted payment in an amount equal to the Asset Sale
Offer Price for such Securities or portions thereof, and the Trustee shall
promptly authenticate and mail or deliver (or cause to be transferred by book
entry) to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered; provided, that each such new
Security shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Asset Sale Offer
on or as soon as practicable after the Asset Sale Payment Date.
(f) To the extent that the aggregate amount of Securities tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use the excess of such Excess Proceeds for general corporate purposes. If
the aggregate principal amount of Securities tendered by Holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the Securities or
portions thereof in minimum denominations of $1,000 to be purchased on a pro
rata basis. Upon completion of such Asset Sale Offer, the amount of Excess
Proceeds shall be reset to zero.
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(g) Notwithstanding the foregoing, $2.0 million of Net Cash
Proceeds received from Asset Sales in any fiscal year shall not constitute
Excess Proceeds and thus shall not be subject to the restrictions contained in
this Section 4.14.
(h) The Company and the Guarantors will not, and will not permit
any of their Subsidiaries to, directly or indirectly, make any Asset Sale of any
of the Capital Stock of any Subsidiary of the Company except pursuant to an
Asset Sale of all of the Capital Stock of such Subsidiary.
SECTION 15 Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company or any Guarantor from paying all or any portion of the principal of,
premium, if any, interest or Liquidated Damages, if any, on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) each of the Company and the Guarantors hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 16 Limitation on Sale and Leaseback Transactions.
The Company and the Guarantors shall not, and shall not permit any of
their Subsidiaries to, enter into any Sale and Leaseback Transaction unless
either (a) at the time such transaction is entered into, the Company or such
Guarantor, as the case may be, would be able to incur Indebtedness in an amount
equal to the Attributable Indebtedness, and Liens, if any, with respect to such
Sale and Leaseback Transaction pursuant to Sections 4.11 and 4.13 hereof or (b)
the Company or such Guarantor receives proceeds from such Sale and Leaseback
Transaction at least equal to the fair market value thereof (as determined in
good faith by the Company's Board of Directors, whose determination in good
faith, evidenced by a resolution of such Board, shall be conclusive) and such
proceeds are applied in
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the same manner and to the same extent as the Net Cash Proceeds and Excess
Proceeds from an Asset Sale pursuant to Section 4.14 hereof.
SECTION 17 Limitation on Lines of Business.
Neither the Company nor any of its Subsidiaries shall directly or
indirectly engage to any substantial extent in any line or lines of business
activity other than that which, in the reasonable good faith judgment of the
Board of Directors of the Company, is a Related Business.
SECTION 18 Future Guarantors.
All present and future Subsidiaries of the Company (other than any
Foreign Subsidiary) jointly and severally shall guarantee irrevocably and
unconditionally all principal, premium, interest and Liquidated Damages on the
Securities on a senior basis, all in accordance with Article XI hereof.
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ARTICLE V
SUCCESSOR CORPORATION
SECTION 1 Limitation on Merger, Sale or Consolidation.
(a) The Company shall not, directly or indirectly, consolidate
with or merge with or into another Person or sell, lease, convey or transfer all
or substantially all of its assets (computed on a consolidated basis), whether
in a single transaction or a series of related transactions, to another Person
or group of affiliated Persons, unless (i) either (a) the Company is the
continuing entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company in connection with the Securities and this
Indenture; (ii) no Default or Event of Default shall exist or shall occur
immediately before or after giving effect on a pro forma basis to such
transaction; (iii) immediately after giving effect to such transaction on a pro
forma basis, the Consolidated Net Worth of the consolidated resulting, surviving
or transferee entity is at least equal to the Consolidated Net Worth of the
Company immediately prior to such transaction; and (iv) immediately after giving
effect to such transaction on a pro forma basis, the consolidated resulting,
surviving or transferee entity would immediately thereafter be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Consolidated
Interest Coverage Ratio set forth in Section 4.11(a) hereof.
(b) For purposes of clause (a), the sale, lease, conveyance,
assignment, transfer or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
SECTION 2 Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.1
hereof, the successor corporation formed by such consolidation or into which the
Company
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is merged or to which such transfer is made, shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named herein as the Company, and when a successor corporation duly assumes all
of the obligations of the Company pursuant hereto and pursuant to the
Securities, the Company shall be released from such obligations (except with
respect to any obligations that arise from, or are related to, such
transaction).
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) failure to pay any installment of interest or Liquidated
Damages, if any, upon the Securities as and when the same becomes due and
payable, and the continuance of such default for a period of 30 days;
(2) failure to pay all or any part of the principal of, or
premium, if any, on the Securities when and as the same becomes due and
payable at maturity, upon redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control Purchase
Price in accordance with Article X or the Asset Sale Offer Price in
accordance with Section 4.14;
(3) failure by the Company to comply with the provisions of
Article V;
(4) failure by the Company to comply with the provisions of
Sections 4.3, 4.11, 4.14 (other than a failure to repurchase Securities
when required) and 10.1 (other than a failure to repurchase Securities when
required), and the continuance of such failure for a period of 10 days
after there has been given, by registered or certified mail, to the Company
by the Trust-
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ee, or to the Company and the Trustee by Holders of at least 25% in
aggregate principal amount of the outstanding Securities, a written notice
specifying such default or breach, requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder;
(5) failure by the Company or any Guarantor to observe or perform
any covenant or agreement contained in the Securities or this Indenture
(other than a default in the performance of any covenant or agreement which
is specifically dealt with elsewhere in this Section 6.1), and continuance
of such failure for a period of 30 days after there has been given, by
registered or certified mail, to the Company by the Trustee, or to the
Company and the Trustee by Holders of at least 25% in aggregate principal
amount of the outstanding Securities, a written notice specifying such
default or breach, requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder;
(6) a default under Indebtedness of the Company or any of its
Subsidiaries with an aggregate principal amount in excess of $5.0 million
(a) resulting from the failure to pay principal of, premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness or (b) as a result of which the maturity of
such Indebtedness has been accelerated prior to its stated maturity;
(7) the failure by the Company or any of its Subsidiaries to pay
final judgments aggregating in excess of $5.0 million if (A) any creditor
has commenced an enforcement proceeding with respect to such final
judgements or (B) such final judgments remain undischarged for a period
(during which execution shall not be effectively stayed) of 45 days after
their entry;
(8) a decree, judgment or order by a court of competent
jurisdiction shall have been entered adjudicating the Company or any of its
Significant Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of the Company or any of its
Significant Subsidiaries under any bankruptcy or similar law, and such
decree or order shall have continued undischarged and unstayed for a period
of 60 days; or a decree or order of a court of
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competent jurisdiction over the appointment of a Custodian of the Company
or any of its Significant Subsidiaries, or of the property of any such
Person, or for the winding up or liquidation of the affairs of any such
Person, shall have been entered, and such decree, judgment or order shall
have remained in force undischarged and unstayed for a period of 60 days;
or
(9) the Company or any of its Significant Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall
consent to the filing of a bankruptcy proceeding against it, or shall file
a petition or answer or consent seeking reorganization under any bankruptcy
or similar law or similar statute, or shall consent to the filing of any
such petition, or shall consent to the appointment of a Custodian of it or
any of its assets or property, or shall make a general assignment for the
benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due, or shall, within the meaning of any
Bankruptcy Law, become insolvent, fail generally to pay its debts as they
become due, or take any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing.
Notwithstanding the 10-day period and notice requirement contained in
Section 6.1(4) above, (i) with respect to a default under Article X the 10-day
period referred to in Section 6.1(4) shall be deemed to have begun as of the
date the Change of Control notice is required to be sent in the event that the
Company has not complied with the provisions of Section 10.1, and the Trustee or
Holders of at least 25% in principal amount of the outstanding Securities
thereafter give the Notice of Default referred to in Section 6.1(4) to the
Company and, if applicable, the Trustee; provided, however, that if the breach
or default is a result of a default in the payment when due of the Change of
Control Purchase Price, such default shall be deemed, for purposes of this
Section 6.1, to arise no later than on such due date; and (ii) with respect to a
default under Section 4.14, the 10-day period referred to in Section 6.1(4)
shall be deemed to have begun as of the date the notice of an Asset Sale Offer
is required to be sent in the event that the Company has not complied with the
provisions of Section 4.14 requiring the giving of such notice, and the Trustee
or Holders of at least 25% in principal amount of the outstanding Securities
thereafter give the Notice of Default referred to in Section 6.1(4) to the
Company and, if applicable, the Trustee; provided, however, that if the breach
or
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default is a result of a default in the payment when due of the Asset Sale Offer
Price, such default shall be deemed, for purposes of this Section 6.1, to arise
no later than on such due date.
If a Default occurs and is continuing, the Trustee must, within 90 days
after the occurrence of such default, give to the Holders notice of such
default.
SECTION 2 Acceleration of Maturity Date; Rescission and Annulment.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in Section 6.1(8) or (9) relating to the Company or any of its
Significant Subsidiaries), then, and in every such case, unless the principal of
all of the Securities shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of
then outstanding Securities, by notice in writing to the Company (and to the
Trustee if given by Holders) (an "Acceleration Notice"), may declare all
principal (and premium, if any) and accrued interest and Liquidated Damages, if
any, of the Securities (or the Change of Control Payment if the Event of Default
includes failure to pay the Change of Control Payment), determined as set forth
below, to be due and payable immediately. In the event a declaration of
acceleration (or a Default which, after the giving of notice, the lapse of time
or both) resulting from an Event of Default described in Section 6.1(6) or (7)
above has occurred and is continuing, such declaration of acceleration or such
Default, as the case may be, shall be automatically annulled if such default is
cured or waived or the holders of the Indebtedness which is the subject of such
default have rescinded their declaration of acceleration in respect of such
Indebtedness within 30 days thereof (in the case of an Event of Default under
Section 6.1(6) above) or 45 days thereof (in the case of an Event of Default
under Section 6.1(7) above) and the Trustee has received written notice of such
cure, waiver or rescission and no other Event of Default described in Section
6.1(6) or (7) as applicable, has occurred that has not been cured or waived, or
as to which the declaration has not been rescinded, within such specified number
of days of the declaration of such acceleration in respect of such Indebtedness.
If an Event of Default specified in Section 6.1(8) or (9) relating to the
Company or any Significant Subsidiary occurs, all principal (and premium, if
any) and accrued interest thereon will be immediately due and payable on all
outstanding Securities without any declaration or other act on the part of
Trustee or the Holders.
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At any time after such a declaration of acceleration being made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of a
majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee Cash
sufficient to pay
(A) all overdue interest and Liquidated Damages, if any, on
all Securities,
(B) the principal of, and premium, if any, payable with
respect to any Securities which would become due other than by reason
of such declaration of acceleration, and interest thereon at the rate
borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest and Liquidated Damages, if any, at the
rates set forth in the Securities,
(D) all sums paid or advanced by the Trustee hereunder and the
compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel and any other amounts due the Trustee under
Section 7.7, and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest and Liquidated Damages, if any,
on Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.12,
including, if applicable, any Event of Default relating to the covenants
contained in Section 10.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver
shall be effective against any Holder for any Event of Default or event which
with notice or lapse of time or both would be an Event of Default with respect
to any covenant or provision which cannot be modified or amended without the
consent of the Holder of each outstanding Security affected thereby, unless all
such affected Holders agree, in writing, to waive such Event of Default or other
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event. No such waiver shall cure or waive any subsequent default or impair any
right consequent thereon.
SECTION 3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if an Event of Default in payment of
principal, premium, interest or Liquidated Damages specified in clause (1) or
(2) of Section 6.1 occurs and is continuing, the Company shall, upon demand of
the Trustee, pay to it, for the benefit of the Holders of such Securities, the
whole amount then due and payable on such Securities for principal, premium, if
any, interest and Liquidated Damages, if any, and, to the extent that payment of
such interest shall be legally enforceable, interest on any overdue principal,
premium, if any, interest or Liquidated Damages, if any, at the rates set forth
in the Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including compensation
to, and expenses, disbursements and advances of the Trustee and its agents and
counsel and all other amounts due to the Trustee under Section 7.7.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such
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other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal,
premium, if any, interest or Liquidated Damages, if any) shall be entitled and
empowered, by intervention in such proceeding or otherwise to take any and all
actions under the TIA, including:
(1) to file and prove a claim for the whole amount of principal,
premium, if any, interest or Liquidated Damages, if any, owing and unpaid
in respect of the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel and all
other amounts due the Trustee under Section 7.7) and of the Holders allowed
in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian is hereby authorized by each Holder to make such payments to
the Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel, and any other amounts due the Trustee under
Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 5 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be
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brought in its own name as trustee of an express trust in favor of the Holders,
and any recovery of judgment shall, after provision for the payment of
compensation to, and expenses, disbursements and advances of the Trustee and its
agents and counsel and all other amounts due the Trustee under Section 7.7, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 6 Priorities.
Any money collected by the Trustee pursuant to this Article VI shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, premium, if
any, interest or Liquidated Damages, if any, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to Section
7.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium, if any, and interest and Liquidated Damages, if any,
on the Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal, premium, if
any, interest or Liquidated Damages, if any, respectively; and
THIRD: To the Company, the Guarantors or such other Person as may be
lawfully entitled thereto, the remainder, if any.
The Trustee may, but shall not be obligated to, fix a record date and
payment date for any payment to the Holders under this Section 6.6.
SECTION 7 Limitation on Suits.
No Holder or Holders of any Security or Securities shall have any right
to order or direct the Trustee to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless
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(A) such Holder or Holders have previously given written notice to
the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in aggregate principal amount
of then outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable to be incurred in compliance with such
request;
(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture or the Securities to affect, disturb or prejudice the rights of
any other Holders, or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture or the
Securities, except in the manner herein provided and for the equal and ratable
benefit of all the Holders.
SECTION 8 Unconditional Right of Holders to Receive Principal, Premium,
Interest and Liquidated Damages.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium, if any, interest and
Liquidated Damages, if any, on such Security on the dates such payments are
required to be made, as set forth in such Security (in the case of redemption,
the Redemption Price on the applicable Redemption Date, in the case of the
Change of Control Purchase Price, on the applicable Change of Control Payment
Date, and in the case of the Asset Sale Offer Price, on the Asset Sale Payment
Date) and to institute suit for the en-
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forcement of any such payment after such respective dates, and such rights shall
not be impaired without the consent of such Holder.
SECTION 9 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in Section 2.7, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 10 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any Security to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article VI or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 11 Control by Holders.
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, provided, that:
(1) such direction shall not be in conflict with any applicable
law (including the TIA) or with this Indenture,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction or may subject the Trustee to personal liability, and
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(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
The record date for purposes of determining the identity of the Holders
of the Securities entitled to vote or consent to any action pursuant to this
Section 6.11 shall be determined as provided for in TIA Section 3.16(c).
SECTION 12 Waiver of Past Default.
Subject to Section 6.8, prior to the declaration of acceleration of the
maturity of the Securities, the Holder or Holders of not less than a majority in
aggregate principal amount of the outstanding Securities may, on behalf of all
Holders, waive any past default hereunder and its consequences, except a
default:
(A) in the payment of the principal of, premium, if any, or
interest or Liquidated Damages, if any, on any Security as specified in
clauses (1) and (2) of Section 6.1 which has not yet been cured; or
(B) in respect of a covenant or provision hereof which, under
Article IX, cannot be modified or amended without the consent of the Holder
of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
SECTION 13 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted to be taken by it as
Trustee, any court may in its discretion require the filing by any party to such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party to such suit, having due regard to the merits and good faith
of the claims or defenses made by such party; but the provisions of this Section
6.13 shall not apply to any suit instituted by
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the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% of the
aggregate principal amount of the outstanding Securities, or to any suit
instituted by any Holder for enforcement of the payment of principal of,
premium, if any, interest or Liquidated Damages, if any, on any Security on or
after the respective Maturity Date set forth in such Security (including, in the
case of redemption, on or after the Redemption Date).
SECTION 14 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
SECTION 1 Duties of Trustee.
(a) If a Default or an Event of Default actually known to the
Trustee has occurred and is continuing, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no others, and no covenants or obligations
shall be
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implied in or read into this Indenture which are adverse to the Trustee,
and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1,
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts, and
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust
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by the Trustee need not be segregated from other assets except to the extent
required by law.
SECTION 2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 12.4 and 12.5. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent (other than any
agent who is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture, nor for any action
permitted to be taken or omitted hereunder by any Agent.
(e) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond, debenture
or other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture,
any demand, request, direction or notice from the Company or any Guarantor shall
be sufficient
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if signed by an Officer of the Company or such Guarantor, as applicable.
(h) The Trustee shall have no duty to inquire as to the
performance of the Company's or any Guarantor's covenants in Article IV hereof.
In addition, the Trustee shall not be deemed to have knowledge of any Default or
Event of Default except (i) any Event of Default occurring pursuant to Sections
5.1, 6.1(1), 6.1(2) or (ii) any Default or Event of Default of which the Trustee
shall have received written notification or obtained actual knowledge.
(i) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate.
SECTION 3 Individual Rights of Trustee.
The Trustee, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with the Company, any
Guarantor, any of their Subsidiaries, or their respective Affiliates with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. Notwithstanding the foregoing, the Trustee must comply with
Sections 7.10 and 7.11 at all times.
SECTION 4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication (if executed by the Trustee), or the use or
application of any funds received by a Paying Agent other than the Trustee.
SECTION 5 Notice of Default.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail at the Company's expense to each
Securityholder notice of the uncured Default or Event of Default within 90 days
after such Default or Event of Default occurs. Except
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in the case of a Default or an Event of Default in payment of, principal of or
premium, if any, interest or Liquidated Damages, if any, on any Security
(including the payment of the Change of Control Purchase Price on the Change of
Control Payment Date, the payment of the Redemption Price on the Redemption Date
and the payment of the Asset Sale Offer Price on the Asset Sale Payment Date),
the Trustee may withhold the notice if and so long as a Trust Officer in good
faith determines that withholding the notice is in the interest of the
Securityholders.
SECTION 6 Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall, if required by law, mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA
Section 313(a). The Trustee shall also comply with TIA Sections 313(b) and
313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Trustee and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
SECTION 7 Compensation and Indemnity.
The Company and the Guarantors jointly and severally agree to pay to
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law concerning the
compensation of a trustee of an express trust. The Company and the Guarantors
shall reimburse the Trustee upon request for all reasonable disbursements,
expenses and advances incurred or made by it in accordance with this Indenture.
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents, accountants, experts and counsel.
The Company and the Guarantors jointly and severally agree to indemnify
the Trustee (in its capacity as Trustee) and each of its officers, directors,
attorneys-in-fact and agents for, and hold it harmless against, any claim,
demand, expense (including but not limited to reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel), loss or
liability incurred by
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it without negligence or bad faith on the part of the Trustee, arising out of or
in connection with the administration of this trust and its rights or duties
hereunder, including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Trustee shall notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity. The Company and the Guarantors shall defend the claim and the Trustee
shall provide reasonable cooperation at the Company's and the Guarantors'
expense in the defense. The Trustee may have separate counsel and the Company
and the Guarantors shall pay the reasonable fees and expenses of such counsel;
provided, that the Company and the Guarantors will not be required to pay such
fees and expenses if they assume the Trustee's defense and there is no conflict
of interest between the Company and the Guarantors and the Trustee in connection
with such defense. The Company and the Guarantors need not pay for any
settlement made without their written consent. The Company and the Guarantors
need not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's and the Guarantors' payment obligations in this
Section 7.7, the Trustee shall have a claim prior to the Securities on all
assets held or collected by the Trustee in its capacity as Trustee, except
assets held in trust to pay principal of, premium, if any, interest or
Liquidated Damages, if any, on the Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's and the Guarantors' obligations under this Section 7.7
and any lien arising hereunder shall survive the resignation or removal of the
Trustee, the discharge of the Company's and the Guarantors' obligations pursuant
to Article VIII of this Indenture and any rejection or termination of this
Indenture under any Bankruptcy Law.
SECTION 8 Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing, to
become effective upon the appointment of a successor trustee. The Holder or
Holders of a majority in aggregate principal amount of the outstanding
Securities may
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remove the Trustee by so notifying the Company and the Trustee in writing and
may appoint a successor trustee with the Company's consent. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in aggregate principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the retiring Trustee provided for in Section
7.7 have been paid, the retiring Trustee shall transfer all property held by it
as trustee to the successor Trustee, subject to the lien provided in Section
7.7, the resignation or removal of the retiring Trustee shall become effective,
and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in aggregate principal amount of the
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company and the Guarantors'
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obligations under Section 7.7 shall continue for the benefit of the retiring
Trustee.
SECTION 9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
SECTION 10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus of
at least $25,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA Section 310(b).
SECTION 11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE; SATISFACTION AND DISCHARGE
SECTION 1 Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at its option and at any time, elect to have Section
8.2 or Section 8.3 applied to all outstanding Securities upon compliance with
the conditions set forth below in this Article VIII.
SECTION 2 Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.2, the Company and the Guarantors shall be deemed to have been
discharged from their respective obligations with respect to all outstanding
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Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of Section 8.5 and the other
Sections of this Indenture referred to in (a) and (b) below, and the Company and
the Guarantors shall be deemed to have satisfied all of their other respective
obligations under such Securities and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Securities to receive solely from the trust fund described in
Section 8.4, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, interest and Liquidated Damages, if any, on
such Securities when such payments are due, (b) the Company's obligations with
respect to such Securities under Sections 2.4, 2.6, 2.7, 2.10 and 4.2, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
obligations of the Company and the Guarantors in connection therewith and (d)
this Article VIII. Upon Legal Defeasance as provided herein, the Guarantee of
each Guarantor shall be fully released and discharged and the Trustee shall
promptly execute and deliver to the Company any documents reasonably requested
by the Company to evidence or effect the foregoing. Subject to compliance with
this Article VIII, the Company may exercise its option under this Section 8.2
notwithstanding the prior exercise of its option under Section 8.3 with respect
to the Securities.
SECTION 3 Covenant Defeasance.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.3, the Company and the Guarantors shall be released from their
respective obligations under the covenants contained in Sections 4.3, 4.5, 4.6,
4.7, 4.8(a), 4.10, 4.11, 4.12, 4.13, 4.14, 4.16 and 4.17 and Article V with
respect to the outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the
Securities shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with
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respect to the outstanding Securities, neither the Company nor any Guarantor
need comply with and shall have any liability in respect of any term, condition
or limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document (and Sections 6.1(3), (4) and (5) shall not apply to any such
covenant), but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.1 of the option applicable to this Section 8.3,
Sections 6.1(6) and 6.1(7) shall not constitute Events of Default.
SECTION 4 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article VIII
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (i) Cash in an amount, or
(ii) U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, Cash in an
amount, or (iii) a combination thereof, in such amounts, as in each case will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, the principal of, premium, if
any, interest and Liquidated Damages, if any, on the outstanding Securities on
the stated maturity or on the applicable Redemption Date, as the case may be, of
such principal or installment of principal, premium, interest or Liquidated
Damages; provided that the Trustee shall have been irrevocably instructed to
apply such Cash and the proceeds of such U.S. Government Obligations to said
payments with respect to the Securities and the Holders of Securities must have
a
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valid, perfected, first priority security interest in such trust.
(b) In the case of an election under Section 8.2, the Company
shall have delivered to the Trustee an Opinion of Counsel confirming that (i)
the Company has received from, or there has been published by, the Internal
Revenue Service, a ruling or (ii) since the date hereof, there has been a change
in the applicable Federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of the outstanding
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such Legal Defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.3, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the outstanding Securities will not recognize income, gain or loss
for Federal income tax purposes as a result of such Covenant Defeasance and will
be subject to Federal income tax in the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance had not
occurred;
(d) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or, insofar as
Section 6.1(8) or 6.1(9) is concerned, at any time in the period ending on the
91st day after the date of such deposit (it being understood that this condition
is a condition subsequent which shall not be deemed satisfied until the
expiration of such period, but in the case of Covenant Defeasance, the covenants
which are defeased under Section 8.3 will cease to be in effect unless an Event
of Default under Section 6.1(8) or 6.1(9) occurs during such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company, the Guarantors
or any of their Subsidiaries is a party or by which any of them is bound;
(f) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to its
election under Section
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8.2 or 8.3 was not made by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in, in the case of the Officers' Certificate, (a) through
(f) and, in the case of the Opinion of Counsel, clauses (a) (with respect to the
validity and perfection of the security interest), (b) (if applicable), (c) and
(e) of this Section 8.4 have been complied with.
SECTION 5 Deposited Cash and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.6, all Cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant
to Section 8.4 in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through any Paying Agent
as the Trustee may determine, to the Holders of such Securities of all sums due
and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
SECTION 6 Repayment to the Company.
(a) Anything in this Article VIII to the contrary notwithstanding,
the Trustee or the Paying Agent, as applicable, shall deliver or pay to the
Company from time to time, upon the request of the Company, any Cash or U.S.
Government Obligations held by it as provided in Section 8.4 hereof which in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.4(a) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
(b) Any Cash and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust
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for the payment of the principal of, premium, if any, interest or Liquidated
Damages, if any, on any Security and remaining unclaimed for two years after
such principal, premium, interest or Liquidated Damages have become due and
payable shall be paid to the Company on its request; and the Holder of such
Security shall thereafter look only to the Company and the Guarantors for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in The New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 7 Reinstatement.
If the Trustee or Paying Agent is unable to apply any Cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
obligations of the Company and the Guarantors under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.2 or 8.3 until such time as the Trustee or Paying Agent is
permitted to apply such money in accordance with Section 8.2 and 8.3, as the
case may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, interest or Liquidated Damages, if any, on any
Security following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the Cash or U.S. Government Obligations held by the Trustee or
Paying Agent.
SECTION 8 Satisfaction and Discharge.
In addition to the Company's rights under Section 8.1, the Company may
terminate all of its obligations and the obligations of the Guarantors under
this Indenture when:
(1) all Securities theretofore authenticated and delivered (other
than Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.7) have been delivered to
the Trustee for cancellation;
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(2) the Company or the Guarantors have paid or caused to be paid
all other sums payable hereunder and under the Securities by the Company
and the Guarantors; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the satisfaction and discharge of
this Indenture have been complied with.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Company (when authorized by
Board Resolutions), any Guarantor (when authorized by Board Resolutions) and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to cure any ambiguity, defect or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture, provided such action pursuant to this clause (1) shall not
adversely affect the interests of any Holder in any respect;
(2) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(3) to add to the covenants of the Company or the Guarantors for
the benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or the Guarantors or to make any other change
that does not adversely affect the legal rights of any Holder under the
Indenture, provided, that the Company or the Guarantors have delivered to
the Trustee an Opinion of Counsel stating that such change does not
adversely affect the rights of any Holder;
(4) to provide collateral for the Securities or additional
Guarantors of the Securities;
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(5) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the obligations of the Company
herein and in the Securities in accordance with Article V;
(6) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(7) to provide for the issuance and authorization of the Exchange
Securities;
(8) to release any Guarantor that ceases to be a Subsidiary of
the Company pursuant to Section 11.4 from its Guarantee;
(9) in any other case where a supplemental indenture is required
or permitted to be entered into pursuant to the provisions of Article XI
without the consent of any Holder; or
(10) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities.
SECTION 2 Amendments, Supplemental Indentures and Waivers with Consent
of Holders.
Subject to Section 6.8, with the consent of the Holders of not less
than a majority in aggregate principal amount of then outstanding Securities
(including consents obtained in connection with a tender offer or exchange offer
for Securities), by written act of said Holders delivered to the Company and the
Trustee, the Company (when authorized by a Board Resolution), the Guarantors
(when authorized by a Board Resolution) and the Trustee may amend or supplement
this Indenture or the Securities or enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or the
Securities or of modifying in any manner the rights of the Holders under this
Indenture or the Securities. Subject to Section 6.8, the Holder or Holders of
not less than a majority in aggregate principal amount of then outstanding
Securities may waive compliance by the Company or any Guarantor with any
provision of this Indenture or the Securities. Notwithstanding any of the above,
however, no such amendment, supplemental indenture or waiver shall, without the
consent of the Holder of each outstanding Security affected thereby:
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(1) reduce the percentage of principal amount of the
outstanding Securities whose Holders must consent to an amendment,
supplement or waiver of any provision of this Indenture or the
Securities;
(2) reduce the rate or extend the time for payment
of interest on any Security;
(3) reduce the principal amount of any Security, or
reduce the Change of Control Purchase Price, the Asset Sale Offer Price
or the Redemption Price;
(4) change the Stated Maturity or the Change of
Control Purchase Date or the Asset Sale Offer Period of any Security;
(5) alter the redemption provisions of Article III
or the provisions of Section 4.14 or Article XI in a manner adverse to
any Holder;
(6) make any changes in the provisions concerning
waivers of Defaults or Events of Default by Holders of the Securities
or the rights of Holders to recover the principal of, premium, if any,
interest or Liquidated Damages, if any, on, or redemption payment with
respect to, any Security, including without limitation any changes in
Section 6.8, 6.12 or this third sentence of this Section 9.2;
(7) reduce the principal of, premium, if any,
interest or Liquidated Damages, if any, on any Security payable as
provided for in this Indenture and the Securities (or change the place
of payment where, or the coin, currency or manner in which, any
Security or any principal, premium, interest or Liquidated Damages is
payable); or
(8) make any change to this Indenture that would
adversely affect the contractual ranking of the Securities.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the
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amendment, supplement or waiver. Any failure of the Company to mail such notice,
or any defect therein, shall not in any way impair or affect the validity of any
such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section
9.2 or Section 9.4 becomes effective, it shall bind each Holder.
The Company and the Guarantors shall not, and shall not permit
any of their Subsidiaries to, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
of any outstanding Securities for or as an inducement to any consent, waiver or
amendment of any terms or provisions of the outstanding Securities unless such
consideration is offered to be paid or agreed to be paid to all Holders of the
Securities which so consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.
SECTION 3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by written notice to
the Company or the Person designated by the Company as the Person to whom
consents should be sent if such revocation is received by the Company or such
Person before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and have not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be the date so fixed by
the Company
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notwithstanding the provisions of the TIA. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date, and only those Persons (or their
duly designated proxies), shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (8) of Section 9.2, in which case, the amendment, supplement
or waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal of, premium, if any, interest and Liquidated Damages, if any, on a
Security, on or after the respective dates set for such amounts to become due
and payable expressed in such Security, or to bring suit for the enforcement of
any such payment on or after such respective dates.
SECTION 5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security briefly
describing the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company, in exchange for the Security,
shall issue and the Trustee shall authenticate a new Security that reflects the
changed terms. Any failure to make the appropriate notation or to issue a new
Security shall not affect the validity of such amendment, supplement or waiver.
SECTION 6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of
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Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article IX is authorized or permitted by this
Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 1 Repurchase of Securities at Option of the Holder
Upon a Change of Control.
(a) In the event that a Change of Control occurs,
each Holder shall have the right, at such Holder's option, pursuant to an
irrevocable and unconditional offer by the Company (the "Change of Control
Offer") subject to the terms and conditions of this Indenture, to require the
Company to repurchase all or any part of such Holder's Securities (provided,
that the principal amount of such Securities at maturity must be $1,000 or an
integral multiple thereof) on a date selected by the Company that is no later
than 45 Business Days after the occurrence of such Change of Control (the
"Change of Control Purchase Date"), at a cash price (the "Change of Control
Purchase Price") equal to 101% of the principal amount thereof, plus (subject to
the right of Holders of record on a Record Date to receive interest and
Liquidated Damages, if any, due on an Interest Payment Date that is on or prior
to such repurchase date and subject to clause (b)(4) below) accrued and unpaid
interest and Liquidated Damages, if any, to and including the Change of Control
Purchase Date.
(b) In the event of a Change of Control, the Company
shall be required to commence an offer to purchase Securities (a "Change of
Control Offer") as follows:
(1) the Change of Control Offer shall commence within
15 Business Days following the occurrence of the Change of Control;
(2) the Change of Control Offer shall remain open for
20 Business Days, except to the extent that a longer period is required
by applicable law, rule or regulation (the "Change of Control Offer
Period");
(3) upon the expiration of a Change of Control Offer,
the Company shall purchase all of the properly tendered Securities at
the Change of Control Purchase Price;
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(4) if the Change of Control Purchase Date is on or
after a Record Date and on or before the related interest payment date,
any accrued interest and Liquidated Damages, if any, will be paid to
the Person in whose name a Security is registered at the close of
business on such Record Date, and no additional interest will be
payable to Securityholders who tender Securities pursuant to the Change
of Control Offer;
(5) the Company shall provide the Trustee and the
Paying Agent with notice of the Change of Control Offer at least three
Business Days before the commencement of any Change of Control Offer;
and
(6) on or before the commencement of any Change of
Control Offer, the Company or the Registrar (upon the request and at
the expense of the Company) shall send, by first-class mail, a notice
to each of the Securityholders, which (to the extent consistent with
this Indenture) shall govern the terms of the Change of Control Offer
and shall state:
(i) that the Change of Control Offer is being
made pursuant to such notice and this Section 10.1 and that
all Securities, or portions thereof, tendered will be accepted
for payment;
(ii) the Change of Control Purchase Price
(including the amount of accrued and unpaid interest, subject
to clause (b)(4) above), the Change of Control Purchase Date
and the Change of Control Put Date (as defined below);
(iii) that any Security, or portion thereof,
not tendered or accepted for payment will continue to accrue
interest and Liquidated Damages, if any;
(iv) that, unless the Company defaults in
depositing Cash with the Paying Agent in accordance with the
last paragraph of this Article X or such payment is prevented,
any Security, or portion thereof, accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest and Liquidated Damages, if any, after the Change of
Control Purchase Date;
(v) that Holders electing to have a Security,
or portion thereof, purchased pursuant to a Change of Control
Offer will be required to
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surrender the Security, with the section entitled "Option of
Holder to Elect Purchase" on the reverse of the Security
completed, to the Paying Agent (which may not for purposes of
this Section 10.1, notwithstanding anything in this Indenture
to the contrary, be the Company or any Affiliate of the
Company) at the address specified in the notice prior to the
close of business on the earlier of (a) the third Business Day
prior to the Change of Control Purchase Date and (b) the third
Business Day following the expiration of the Change of Control
Offer (such earlier date being the "Change of Control Put
Date");
(vi) that Holders will be entitled to withdraw
their election, in whole or in part, if the Paying Agent
(which may not for purposes of this Section 10.1,
notwithstanding anything in this Indenture to the contrary, be
the Company or any Affiliate of the Company) receives, up to
the close of business on the Change of Control Put Date, a
telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the
Securities the Holder is withdrawing and a statement that such
Holder is withdrawing his election to have such principal
amount of Securities purchased; and
(vii) a brief description of the events
resulting in such Change of Control.
Any such Change of Control Offer shall comply with all
applicable provisions of Federal and state laws, including those regulating
tender offers, if applicable, and any provisions of this Indenture which
conflict with such laws (A) shall be deemed to be superseded by the provisions
of such laws and (B) shall not be deemed to have been breached by virtue
thereof.
On or before the Change of Control Purchase Date, the Company
shall (i) accept for payment Securities or portions thereof properly tendered
pursuant to the Change of Control Offer and (ii) deposit with the Paying Agent
Cash sufficient to pay the Change of Control Purchase Price (together with
accrued and unpaid interest and Liquidated Damages, if any, subject to clause
(b)(4) above) for all Securities or portions thereof so tendered. Promptly
following the Change of Control Purchase Date the Company shall deliver to the
Registrar Securities so accepted, together with an Officers' Certificate listing
the Securities or por-
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tions thereof being purchased by the Company. The Paying Agent shall on the
Change of Control Purchase Date or promptly thereafter mail to Holders of
Securities so accepted payment in an amount equal to the Change of Control
Purchase Price (together with accrued and unpaid interest and Liquidated
Damages, if any, subject to clause (b)(4) above), for such Securities (subject
to clause (b)(4) above), and the Trustee or its authenticating agent shall
promptly authenticate and the Registrar shall mail or deliver (or cause to be
transferred by book entry) to such Holders a new Security equal in principal
amount to any unpurchased portion of the Security surrendered; provided,
however, that each such new Security will be in a principal amount of $1,000 or
an integral multiple thereof. Any Securities not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date.
ARTICLE XI
GUARANTEE
SECTION 1 Guarantee.
(a) In consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, to
the fullest extent permitted by applicable law, each of the Guarantors hereby
irrevocably and unconditionally guarantees (the "Guarantee"), jointly and
severally, on a senior basis, to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities or the obligations of the Company under this Indenture or the
Securities, that: (w) the principal of, premium, if any, interest and Liquidated
Damages, if any, on the Securities will be paid in full when due, whether on the
Maturity Date or on the applicable Interest Payment Date, by acceleration, call
for redemption, upon a Change of Control, an Asset Sale Offer or otherwise; (x)
all other obligations of the Company to the Holders or the Trustee under this
Indenture or the Securities will be promptly paid in full or performed, all in
accordance with the terms of this Indenture and the Securities; and (y) in case
of any extension of time of payment or renewal of any Securities or any of such
other obligations, they will be paid in full when due or performed in accordance
with the terms of the extension or renewal,
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whether at maturity, by acceleration, call for redemption, upon a Change of
Control, upon an Asset Sale Offer or otherwise. Failing payment when due of any
amount so guaranteed for whatever reason, each Guarantor shall be jointly and
severally obligated, to pay the same before failure so to pay becomes an Event
of Default. If the Company or a Guarantor defaults in the payment of the
principal of, premium, if any, interest or Liquidated Damages, if any, on, the
Securities when and as the same shall become due, whether upon maturity,
acceleration, call for redemption, upon a Change of Control Offer, Asset Sale
Offer or otherwise, without the necessity of action by the Trustee or any
Holder, each Guarantor shall be required, jointly and severally, to promptly
make such payment in full.
(b) Each Guarantor hereby agrees, to the fullest
extent permitted by applicable law, that its obligations with regard to this
Guarantee shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any delay in obtaining or realizing upon or failure to obtain
or realize upon collateral, the recovery of any judgment against the Company,
any action to enforce the same or any other circumstances that might otherwise
constitute a legal or equitable discharge or defense of a guarantor. Each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company or right to require the
prior disposition of the assets of the Company to meet its obligations, protest,
notice and all demands whatsoever and covenants that this Guarantee will not be
discharged (except to the extent released pursuant to Section 11.4) except by
complete performance of the obligations contained in the Securities and this
Indenture.
(c) If any Holder or the Trustee is required by any
court or otherwise to return to either the Company or any Guarantor, or any
Custodian or similar official acting in relation to either the Company or such
Guarantor, any amount paid by either the Company or such Guarantor to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect (except to the extent released
pursuant to Section 11.4). Each Guarantor agrees that it will not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor further agrees that, as between such
Guarantor, on the
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one hand, and the Holders and the Trustee, on the other hand, (i) the maturity
of the obligations guaranteed hereby may be accelerated as provided in Section
6.2 for the purposes of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration as to the Company of the
obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of those obligations as provided in Section 6.2, those obligations
(whether or not due and payable) will forthwith become due and payable by each
of the Guarantors for the purpose of this Guarantee.
(d) Each Guarantor, and by its acceptance of a
Security issued hereunder, each Holder, hereby confirms that it is the intention
of all such parties that the guarantee by such Guarantor set forth in Section
11.1(a) not constitute a fraudulent transfer or conveyance for purposes of any
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar Federal or state law. To effectuate the foregoing
intention, the Holders and such Guarantor hereby irrevocably agree that the
obligations of such Guarantor under its Guarantee set forth in Section 11.1(a)
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to the following paragraph of this Section 11.1(d), result in the
obligations of such Guarantor under such Guarantee not constituting such a
fraudulent transfer or conveyance.
Each Guarantor that makes any payment or distribution under
Section 11.1(a) shall be entitled to a contribution from each other Guarantor
equal to its Pro Rata Portion of such payment or distribution. For purposes of
the foregoing, the "Pro Rata Portion" of any Guarantor means the percentage of
the net assets of all Guarantors held by such Guarantor, determined in
accordance with GAAP.
(e) It is the intention of each Guarantor and the
Company that the obligations of each Guarantor hereunder shall be in, but not in
excess of, the maximum amount permitted by applicable law. Accordingly, if the
obligations in respect of the Guarantee would be annulled, avoided or
subordinated to the creditors of any Guarantor by a court of competent
jurisdiction in a proceeding actually pending before such court as a result of a
determination both that such Guarantee was made by such Guarantor without
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fair consideration and, immediately after giving effect thereto, such Guarantor
was insolvent or unable to pay its debts as they mature or left with an
unreasonably small capital, then the obligations of such Guarantor under such
Guarantee shall be reduced by such court if and to the extent such reduction
would result in the avoidance of such annulment, avoidance or subordination;
provided, however, that any reduction pursuant to this paragraph shall be made
in the smallest amount as is strictly necessary to reach such result. For
purposes of this paragraph, "fair consideration," "insolvency," "unable to pay
its debts as they mature," "unreasonably small capital" and the effective times
of reductions, if any, required by this paragraph shall be determined in
accordance with applicable law.
SECTION 2 Execution and Delivery of Guarantee.
Each Guarantor shall, by virtue of such Guarantor's execution
and delivery of this Indenture or such Guarantor's execution and delivery of a
supplemental indenture pursuant to Section 11.3 hereof, be deemed to have signed
on each Security issued hereunder the notation of guarantee set forth on the
form of the Securities attached hereto as Exhibit A to the same extent as if the
signature of such Guarantor appeared on such Security.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in Section 11.1 on behalf of each Guarantor. The notation of a
Guarantee set forth on any Security shall be null and void and of no further
effect with respect to the Guarantee of any Guarantor which, pursuant to Section
11.4, is released from such Guarantee.
SECTION 3 Future Guarantors.
The Company and the Guarantors covenant and agree that they
shall cause each Person that is or becomes a Subsidiary of the Company or any
Guarantor (other than any Foreign Subsidiary) to execute and deliver to the
Trustee a supplemental indenture in order to become a Guarantor hereunder.
SECTION 4 Release of a Guarantor.
In the event of a sale or other disposition, by way of merger,
consolidation, foreclosure or otherwise, of all or substantially all of the
assets of any Guarantor or of all of the Capital Stock of such Guarantor, then
such
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Guarantor (in the event of a sale or other disposition of all of the Capital
Stock of such Guarantor) or the corporation acquiring the property (but not such
Guarantor) (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) shall, without further action on the part
of the Trustee, the Company, a Guarantor or any other Person, be unconditionally
released and relieved of any obligations under the applicable Guarantee;
provided that the Net Cash Proceeds from such sale or other disposition shall be
applied in accordance with Section 4.14 hereof and the Trustee shall have
received the Officers' Certificate referred to therein; and provided further,
that the guarantee of such Guarantor with respect to the Credit Agreement and
any renewals, extensions, replacements, refinancings, amendments and
modifications thereof, if any, has been or is simultaneously released. In the
event that the Board of Directors of the Company designates any of the
Guarantors an Unrestricted Subsidiary, such Guarantor shall, subject to the
limitations set forth in the definition of "Unrestricted Subsidiary" herein, and
without further action on the part of the Trustee, the Company, such Guarantor
or any other Person, be unconditionally released and relieved of any obligations
under the Guarantee of such Guarantor. The Trustee shall deliver an appropriate
instrument evidencing such release upon receipt of a request by the Company or
the Guarantor accompanied by an Officers' Certificate certifying as to the
compliance with this Section 11.4. Any Guarantor not so released shall remain
liable for the full amount of principal of, premium, if any, interest and
Liquidated Damages, if any, on the Securities as provided in this Article XI.
SECTION 5 Certain Bankruptcy Events.
Each Guarantor hereby covenants and agrees, to the fullest
extent that it may do so under applicable law, that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Guarantor shall not file (or join in any filing of), or otherwise
seek to participate in the filing of, any motion or request seeking to stay or
to prohibit (even temporarily) execution on the Guarantee and hereby waives and
agrees not to take the benefit of any such stay of execution, whether the
Bankruptcy Law or otherwise.
SECTION 6 Ranking of Guarantee.
The obligations of each Guarantor under its Guarantee pursuant
to this Article XI shall rank pari passu with the Senior Indebtedness of such
Guarantor on the same basis
101
<PAGE> 110
as the Securities rank pari passu with Senior Indebtedness of the Company.
ARTICLE XII
MISCELLANEOUS
SECTION 1 TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the TIA, the imposed duties,
upon qualification of this Indenture under the TIA, shall control.
SECTION 2 Notices.
Any notices or other communications to the Company or any
Guarantor or the Trustee required or permitted hereunder shall be in writing,
and shall be sufficiently given if made by hand delivery, by telex, by
telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Company or any Guarantor:
Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: Chief Financial Officer
Telecopy: (603) 888-1427
(with a copy to the General Counsel)
if to the Trustee:
Fleet National Bank of Connecticut
777 Main Street
Hartford, Connecticut 06115
Attention: Michael Hopkins
Telecopy: (860) 986-7920
Any party by notice to each other party may designate
additional or different addresses as shall be furnished in writing by such
party. Any notice or communication to any party shall be deemed to have been
given or made as of the date so delivered, if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and five
Business Days after mailing if sent by registered or certified mail, postage
prepaid (except that a
102
<PAGE> 111
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall
be mailed to him or her by first class mail or other equivalent means at his or
her address as it appears on the registration books of the Registrar and shall
be sufficiently given to him or her if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and any other Person
shall have the protection of TIA Section 312(c).
SECTION 4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any
Guarantor to the Trustee to take any action under this Indenture, such Person
shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been met; and
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
such counsel, all such conditions precedent have been met;
provided, however, that in the case of any such request or application as to
which the furnishing of particular documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished under this Section.
103
<PAGE> 112
SECTION 5 Statements Required in Certificate or Opinion.
Each Officers' Certificate or Opinion of Counsel with respect
to compliance with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the Person making such Officers'
Certificate or Opinion of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such Officers' Certificate or Opinion of Counsel are
based;
(3) a statement that, in the opinion of such Person,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been met; and
(4) a statement as to whether or not, in the opinion
of each such Person, such condition or covenant has been met; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may make reasonable
rules for its functions.
SECTION 7 Non-Business Days.
If a payment date is not a Business Day, any payment required
to be paid to Holders may be made on the next succeeding day that is a Business
Day, and no interest shall accrue for the intervening period.
SECTION 8 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. EACH OF THE COMPANY
AND THE GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURIS-
104
<PAGE> 113
DICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE
CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE
CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. EACH OF THE COMPANY AND THE GUARANTORS
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT
OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY AND THE GUARANTORS IN ANY OTHER JURISDICTION.
SECTION 9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any Guarantor or any of their
respective Subsidiaries. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.
SECTION 10 No Recourse Against Others.
No direct or indirect partner, incorporator, stockholder,
director, officer or employee, as such, past, present or future, of the Company
or any Guarantor, or any successor entity, shall have any personal liability in
respect of the obligations of the Company or the Guarantors under the Securities
or this Indenture by reason of his, her or its status as such partner,
incorporator, stockholder, director, officer or employee. Each Securityholder by
accepting a Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Securities.
SECTION 11 Successors.
All agreements of the Company and the Guarantors in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
105
<PAGE> 114
SECTION 12 Duplicate Originals.
All parties may sign any number of copies or counterparts of
this Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 13 Severability.
In case any one or more of the provisions in this Indenture or
in the Securities shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
SECTION 14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of
the Articles and the Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms or provisions hereof.
SECTION 15 Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all costs and expenses (including attorneys' fees for the Company
and the Trustee) incurred in connection therewith, including, but not limited
to, costs and expenses of qualification of the Indenture and the Securities and
printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel or
other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 16 Registration Rights.
Holders of the Securities shall be entitled to the
registration rights with respect to such Securities pursuant to, and subject to
the terms of, the Registration Rights Agreement.
106
<PAGE> 115
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
EKCO GROUP, INC.,
[Seal]
By: /S/ JOHN T. HARAN
---------------------------
Name: John T. Haran
Title: Vice President &
Treasurer
Attest: /S/ JEFFREY A. WEINSTEIN
-------------------------
Secretary
FLEET NATIONAL BANK
OF CONNECTICUT,
as Trustee
By: /S/ MICHAEL M. HOPKINS
---------------------------
Name: Michael M. Hopkins
Title: Vice President
<PAGE> 116
GUARANTORS:
<TABLE>
<S> <C>
B. VIA INTERNATIONAL CLEANING SPECIALTY COMPANY
HOUSEWARES, INC.
By: /S/ JOHN T. HARAN By: /S/ JOHN T. HARAN
------------------------- -------------------------
Name: John T. Haran Name: John T. Haran
Title: Vice President Title: Vice President
& Treasurer & Treasurer
EKCO DISTRIBUTION EKCO HOUSEWARES, INC.
OF ILLINOIS, INC.
By: /S/ JOHN T. HARAN By: /S/ JOHN T. HARAN
------------------------- -------------------------
Name: John T. Haran Name: John T. Haran
Title: Vice President Title: Vice President
& Treasurer & Treasurer
EKCO MANUFACTURING OF FREM CORPORATION
OF OHIO, INC.
By: /S/ JOHN T. HARAN By: /S/ JOHN T. HARAN
------------------------- -------------------------
Name: John T. Haran Name: John T. Haran
Title: Vice President Title: Vice President
& Treasurer & Treasurer
KELLOGG BRUSH MANUFACTURING WOODSTREAM CORPORATION
CO.
By: /S/ JOHN T. HARAN By: /S/ JOHN T. HARAN
------------------------- -------------------------
Name: John T. Haran Name: John T. Haran
Title: Vice President Title: Vice President
& Treasurer & Treasurer
WRIGHT-BERNET, INC.
By: /S/ JOHN T. HARAN
-------------------------
Name: John T. Haran
Title: Vice President &
Treasurer
</TABLE>
<PAGE> 117
Exhibit A
[FORM OF SECURITY]
EKCO GROUP, INC.
9 1/4% SENIOR NOTE DUE 2006
CUSIP No. _______
No. $ _________
Ekco Group, Inc., a Delaware corporation (hereinafter called
the "Company", which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________, or registered assigns, the principal sum of _____ Dollars, on April
1, 2006.
Interest Payment Dates: April 1 and October 1, commencing
October 1, 1996.
Record Dates: March 15 and September 15.
Reference is made to the further provisions of this Security
on the reverse side, which will, for all purposes, have the same effect as if
set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
duly executed under its corporate seal.
Dated: ___________ ___, 199_.
EKCO GROUP, INC.,
[Seal]
By: ______________________________
Name:
Title:
Attest: ____________________
Name:
Title: Secretary
<PAGE> 118
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the
within-mentioned Indenture.
FLEET NATIONAL BANK OF CONNECTICUT,
as Trustee
By: ___________________________________
Authorized Signatory
Dated: ___________ ___, ____.
A-2
<PAGE> 119
EKCO GROUP, INC.
9 1/4% Senior Note due 2006
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.(1)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD TO, OR FOR THE ACCOUNT OR BENEFIT
OF, ANY PERSON EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT) WHICH IS AN INSTITUTION (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), (2) AGREES THAT IT WILL NOT PRIOR TO
THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE DATE OF
ORIGINAL ISSUANCE OF THIS SECURITY AND THE LAST DATE ON WHICH
THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (THE "RESALE RESTRICTION TERMINATION DATE")
RESELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A)
TO THE COMPANY, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS
OWN ACCOUNT
- ------------------------
(1) This paragraph should only be added if the Security is issued
in global form.
A-3
<PAGE> 120
OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH THE RESALE PROVISIONS OF RULE 144A UNDER THE
SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
WRITTEN CERTIFICATION CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (D) PURSUANT TO THE RESALE LIMITATIONS PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT IN
EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE
DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH ACCOUNT BE
AT ALL TIMES WITHIN ITS CONTROL AND TO COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE FOREGOING
RESTRICTIONS ON RESALE WILL NOT APPLY SUBSEQUENT TO THE RESALE
RESTRICTION TERMINATION DATE.(2)
- ------------------------
(2) This paragraph should be included only for the Initial
Securities.
A-4
<PAGE> 121
(Back of Security)
1. Interest.
Ekco Group, Inc., a Delaware corporation (hereinafter called
the "Company," which term includes any successors of the Company under the
Indenture hereinafter referred to), promises to pay interest on the principal
amount of this Security at the rate of 9 1/4% per annum [and Liquidated Damages,
if any, payable pursuant to Section 5 of the Registration Rights Agreement
referred to below].(3) To the extent it is lawful, the Company promises to pay
interest on overdue installments of interest [and Liquidated Damages, if any]
(without regard to applicable grace periods) at the rate of 9 1/4% per annum [,
plus the rate of Liquidated Damages accruing on the Securities pursuant to the
Registration Rights Agreement,] compounded semi-annually.
The Company will pay interest semi-annually on April 1 and
October 1 of each year (each, an "Interest Payment Date"), commencing October 1,
1996. Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid on the Securities, from
March 25, 1996. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Notwithstanding any other provision of the
Indenture or this Security: (i) accrued and unpaid interest [and Liquidated
Damages], if any, on the Initial Securities being exchanged in the Exchange
Offer shall be due and payable on the next Interest Payment Date for the
Exchange Securities following the Exchange Offer, (ii) interest on the Exchange
Securities to be issued in the Exchange Offer shall accrue from the date the
Exchange Offer is consummated and (iii) the Exchange Securities shall have no
provisions for Liquidated Damages.
2. Method of Payment.
The Company shall pay interest [and Liquidated Damages, if
any] on the Securities (except defaulted interest [and Liquidated Damages, if
any,]) to the Persons who are the registered Holders at the close of business on
the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal, premium, if any, interest [and
- ------------------------
(3) References to Liquidated Damages shall appear only in the Initial
Securities.
A-5
<PAGE> 122
Liquidated Damages], if any, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for payment of public
and private debts ("U.S. Legal Tender"). The Securities will be payable as to
principal, premium, if any, interest, [and Liquidated Damages, if any,] and the
Securities may be presented for registration of transfer or exchange, at the
office or agency of the Company maintained for such purpose within or without
the Borough of Manhattan, the City and State of New York or, at the option of
the Company, such payments may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that payment by
wire transfer of immediately available funds will be required with respect to
principal of, premium, if any, interest [and Liquidated Damages], if any, on all
Global Securities and all other Securities the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Until
otherwise designated by the Company, the Company's office or agency will be the
corporate trust office of the Trustee.
3. Paying Agent and Registrar.
Initially, Fleet National Bank of Connecticut (the "Trustee"),
will act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co- Registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as
of March 25, 1996 (the "Indenture"), among the Company, the Guarantors named
therein and the Trustee. Capitalized terms herein have the meanings set forth in
the Indenture unless otherwise defined herein. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the TIA, as in effect on the date of the Indenture. The Securities
are subject to all such terms, and Holders of Securities are referred to the
Indenture and the TIA for a statement of them. The Securities are general
unsecured obligations of the Company limited in aggregate principal amount to
$125,000,000. The Securities are guaranteed on a senior basis by all of the
Company's present and future Subsidiaries (other than Foreign Subsidiaries).
A-6
<PAGE> 123
5. Redemption.
The Securities may be redeemed in whole or from time to time
in part at any time on and after April 1, 2001, at the option of the Company, at
the Redemption Price (expressed as a percentage of principal amount) set forth
below with respect to the indicated Redemption Date, in each case, plus any
accrued but unpaid interest [and Liquidated Damages], if any, to the Redemption
Date. The Securities may not be so redeemed prior to April 1, 2001.
<TABLE>
<CAPTION>
If redeemed during
the 12-month period
beginning Redemption Price
------------------- ----------------
<S> <C>
2001 ..................... 104.6250%
2002 ..................... 103.0834%
2003 ..................... 101.5417%
2004 and thereafter ...... 100.0000%
</TABLE>
Any such redemption will comply with Article III of the
Indenture.
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, at
least 30 days and not more than 60 days prior to the Redemption Date to the
Holder of each Security to be redeemed at such Holder's last address as then
shown upon the registry books of the Registrar. Securities may be redeemed in
part in integral multiples of $1,000 only.
Except as set forth in the Indenture, from and after any
Redemption Date, if monies for the redemption of the Securities called for
redemption shall have been deposited with the Paying Agent on such Redemption
Date and payment of the Securities called for redemption is not prohibited under
the Indenture, the Securities called for redemption will cease to bear interest
or Liquidated Damages and the only right of the Holders of such Securities will
be to receive payment of the Redemption Price, plus any accrued and unpaid
interest [and Liquidated Damages], if any, to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples thereof. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. No
service
A-7
<PAGE> 124
charge will be made for any registration of transfer or exchange of the
Securities, but the Company may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the
owner of it for all purposes.
9. Unclaimed Money.
If money for the payment of principal, premium, if any,
interest [and Liquidated Damages], if any, remains unclaimed for two years, the
Trustee and the Paying Agent(s) will pay the money back to the Company at its
written request. After that, all liability of the Trustee and such Paying
Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
Except as set forth in the Indenture, if the Company
irrevocably deposits with the Trustee, in trust, for the benefit of the Holders,
Cash, U.S. Government Obligations or a combination thereof, in such amounts as
will be sufficient in the opinion of a nationally recognized firm of independent
public accountants selected by the Trustee, to pay the principal of, premium, if
any, interest [and Liquidated Damages], if any, on the Securities to redemption
or maturity and complies with the other provisions of the Indenture relating
thereto, the Company and the Guarantors will be discharged from certain
provisions of the Indenture and the Securities (including the restrictive
covenants described below, but excluding their obligation to pay the principal
of, premium, if any, interest [and Liquidated Damages], if any, on the
Securities). Upon satisfaction of certain additional conditions set forth in the
Indenture, the Company may elect to have its and the Guarantors' obligations
discharged with respect to outstanding Securities.
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the written consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding, and any existing Default or Event of Default or compliance
A-8
<PAGE> 125
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may under certain circumstances
amend or supplement the Indenture or the Securities to, among other things, cure
any ambiguity, defect or inconsistency, or make any other change that does not
adversely affect the rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of
the Company, the Guarantors and their respective Subsidiaries to, among other
things, incur additional Indebtedness and Disqualified Capital Stock, pay
dividends or make certain other Restricted Payments, enter into certain
transactions with Affiliates, incur Liens, engage in Sale and Leaseback
Transactions, sell assets, merge or consolidate with any other Person or
transfer (by lease, assignment or otherwise) substantially all of the properties
and assets of the Company. The limitations are subject to a number of important
qualifications and exceptions. The Company must periodically report to the
Trustee on compliance with such limitations.
13. Ranking.
Payment of principal of, premium, if any, interest [and
Liquidated Damages], if any, on the Securities will rank pari passu in right of
payment with all existing and future Senior Indebtedness of the Company and
senior in right of payment to all existing and future Subordinated Indebtedness
of the Company.
14. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be
required to offer to purchase on the Change of Control Payment Date all
outstanding Securities at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest [and Liquidated Damages], if any, to
the Change of Control Payment Date. Holders of Securities will receive a Change
of Control Offer from the Company prior to any related Change of Control Payment
Date and may elect to have such Securities purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below.
(b) The Indenture imposes certain limitations on the ability
of the Company, the Guarantors or any of their
A-9
<PAGE> 126
respective Subsidiaries to sell assets. In the event the proceeds from a
permitted Asset Sale exceed certain amounts, as specified in the Indenture, the
Company will be required either to reinvest the proceeds of such Asset Sale in
its business or to make an offer to purchase a certain amount of each Holder's
Securities at 100% of the principal amount thereof, plus accrued and unpaid
interest [and Liquidated Damages], if any, to the Asset Sale Payment Date.
15. Notation of Guarantee.
As set forth more fully in the Indenture, the Persons,
constituting Guarantors from time to time, in accordance with the provisions of
the Indenture, fully and unconditionally, and jointly and severally, guarantee,
in accordance with Section 11.1 of the Indenture, to the Holder and to the
Trustee and its successors and assigns, that (i) the principal of, premium, if
any, interest [and Liquidated Damages], if any, on the Security will be paid,
whether at the Maturity Date or the appropriate Interest Payment Dates, as
applicable, by acceleration, call for redemption or otherwise, and all other
obligations of the Company to the Holders or the Trustee under the Indenture of
this Security will be promptly paid in full or performed, all in accordance with
the terms of the Indenture and this Security, and (ii) in the case of any
extension of payment or renewal of this Security or any of such other
obligations, they will be paid in full when due or performed in accordance with
the terms of such extension or renewal, whether at the Maturity Date, as so
extended, by acceleration or otherwise. Such Guarantees shall cease to apply,
and shall be null and void, with respect to any Guarantor who, pursuant to
Article XI of the Indenture, is released from its Guarantees, or whose
Guarantees otherwise cease to be applicable pursuant to the terms of the
Indenture.
16. Successors.
When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
17. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of
A-10
<PAGE> 127
Securities then outstanding may declare all the Securities to be due and payable
immediately in the manner and with the effect provided in the Indenture. Holders
of Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing Default
or Event of Default (except a Default in payment of principal, premium, if any,
[or] interest [or Liquidated Damages], if any), if it determines in good faith
that withholding notice is in their interest.
18. Trustee or Agent Dealings with Company.
Subject to certain limitations, the Trustee and each Agent
under the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates as if it were not the
Trustee or such Agent.
19. No Recourse Against Others.
No direct or indirect partner, incorporator, stockholder,
director, officer or employee, as such, past, present or future, of the Company
or any Guarantor, or any successor entity, shall have any personal liability in
respect of the obligations of the Company or the Guarantors under the Securities
or the Indenture by reason of his, her or its status as such partner,
incorporator, stockholder, director, officer or employee. Each Holder of a
Security by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities.
20. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of
a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties),
A-11
<PAGE> 128
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
[23. Additional Rights of Holders of Transfer Restricted Securities.
In addition to the rights provided to Holders of Securities
under the Indenture, Holders of Transfer Restricted Securities shall have all
the rights set forth in the Registration Rights Agreement.](4)
- ------------------------
(4) This paragraph should only be added to the Initial Securities.
A-12
<PAGE> 129
[FORM OF] ASSIGNMENT
I or we assign this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of
assignee
- -------------------------
and irrevocably appoint agent to transfer this
-------------------------
Security on the books of the Company. The agent may substitute another to act
for him .
Dated: Signed:
---------- ------------------------------
(Sign exactly as name appears on
the other side of this Security)
A-13
<PAGE> 130
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.14 or Article X of the Indenture, check the
appropriate box: / / Section 4.14 / /Article X
--- ---
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.14 or Article X of the Indenture,
as the case may be, state the amount you want to be purchased (in an amount
which must be $1,000 or an integral multiple thereof): $
--------
Date: Signature:
---------------- ---------------------------------------------
(Sign exactly as name appears
on the other side of this
Security)
A-14
<PAGE> 131
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(5)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized officer
Principal Amount Principal Amount Security following of Trustee or
Date of of this Global of this Global such decrease (or Securities
Exchange Security Security increase) Custodian
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ------------------------
(5) This schedule should only be added if the Security is issued in global
form.
A-15
<PAGE> 132
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES(6)
Re: 9 1/4% SENIOR NOTES DUE 2006 OF EKCO GROUP, INC.
This Certificate relates to $____________ principal amount of
Securities held in (check applicable space) _____ book-entry or ______
definitive form by __________________ (the "Transferor").
The Transferor (check applicable box):
/ / has requested the Trustee by written order to deliver in
exchange for its beneficial interest in the Global Security held by the
Depository a Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or
register the transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above-captioned Securities and as provided in
Section 2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because:
/ / Such Security is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
/ / Such Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) in reliance on Rule 144A (in satisfaction of
Section 2.6(a)(ii)(B), Section 2.6(b)(i) or Section 2.6(d)(i)(B) of the
Indenture).
/ / Such Security is being transferred in accordance with Rule 144
under the Securities Act, or pursuant to an effective registration statement
under the Securities Act
- ------------------------
(6) The following should be included only for Initial Securities.
A-16
<PAGE> 133
(in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B) of the
Indenture).
/ / Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than as provided in the immediately preceding paragraph. An Opinion of
Counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
-------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
----------------------------------------
Date:
------------------------
A-17
<PAGE> 1
EXHIBIT 4.2 (c)
EXECUTION COPY
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of March 25, 1996
by and among
EKCO GROUP, INC.
THE GUARANTORS (as defined herein),
and
BEAR, STEARNS & CO. INC.
and
SMITH BARNEY INC.
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of March 25, 1996, by and among Ekco Group, Inc., a Delaware
corporation (the "COMPANY"), the Guarantors (as defined herein) and Bear,
Stearns & Co. Inc. ("Bear Stearns") and Smith Barney Inc. ("Smith Barney" and,
together with Bear Stearns, the "PURCHASERS"), who have agreed to purchase the
Company's 9 1/4% Senior Notes due 2006 (the "INITIAL SECURITIES") pursuant to
the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement,
dated March 20, 1996 (the "PURCHASE AGREEMENT"), by and among the Company, the
Guarantors and the Purchasers. In order to induce the Purchasers to purchase the
Initial Securities, the Company and the Guarantors have agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Purchasers set forth in
Section 2 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
ACT: The Securities Act of 1933, as amended.
BUSINESS DAY: Any day except a Saturday, Sunday or other day
in the City of New York, or in the city of the corporate trust office of the
Trustee, on which banks are authorized to close.
BROKER-DEALER: Any broker or dealer registered
under the Exchange Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Exchange
Securities that are acquired by a Broker-Dealer in the Exchange Offer in
exchange for Initial Securities that such Broker-Dealer acquired for its own
account as a result of market making activities or other trading activities
(other than Initial Securities acquired directly from the Company or any of its
affiliates).
2
<PAGE> 3
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Exchange Securities to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company and
the Guarantors to the Trustee under the Indenture of Exchange Securities in the
same aggregate principal amount as the aggregate principal amount of Initial
Securities tendered by Holders thereof pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Initial Securities,
each Interest Payment Date.
EFFECTIVENESS TARGET DATE: As defined in Section 5.
EXCHANGE ACT: The Securities Exchange Act of 1934, as
amended.
EXCHANGE OFFER: The registration by the Company and the
Guarantors under the Act of the Exchange Securities pursuant to the Exchange
Offer Registration Statement pursuant to which the Company and the Guarantors
shall offer the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities for
Exchange Securities in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Securities tendered in such exchange
offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.
3
<PAGE> 4
EXCHANGE SECURITIES: The Company's 9 1/4% Senior Notes due
2006 to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii)
upon the request of any Holder of Initial Securities covered by a Shelf
Registration Statement, in exchange for such Initial Securities.
EXEMPT RESALES: The transactions in which the Purchasers
propose to sell the Initial Securities to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and to certain
"accredited investors," as such term is defined in Rule 501(a)(1), (2), (3), (5)
and (7) of Regulation D under the Act.
GUARANTORS: means (i) the Initial Guarantors identified in the
following sentence and (ii) any future Guarantors that become Guarantors
pursuant to the terms of the Indenture, but excluding any Person whose Guarantee
has been released pursuant to the terms of the Indenture and excluding any
Unrestricted Subsidiary (as such terms are defined in the Indenture). The
Initial Guarantors consist of: B. Via International Housewares, Inc., a Delaware
corporation, Cleaning Specialty Company, a Tennessee corporation, Ekco
Distribution of Illinois, Inc., a Delaware corporation, Ekco Housewares, Inc., a
Delaware corporation, Ekco Manufacturing of Ohio, Inc., a Delaware corporation,
Frem Corporation, a Massachusetts corporation, Kellogg Brush Manufacturing
Company, a Massachusetts corporation, Woodstream Corporation, a Pennsylvania
corporation, and Wright-Bernet Incorporated, an Ohio corporation.
HOLDERS: As defined in Section 2(b) hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated as of the Closing Date, among
the Company, the Guarantors and Fleet National Bank of Connecticut, N.A., as
trustee (the "TRUSTEE"), pursuant to which the Securities are to be issued, as
such Indenture is amended or supplemented from time to time in accordance with
the terms thereof.
INITIAL SECURITIES: The Company's 9 1/4% Senior Notes due
2006 issued pursuant to the Indenture on the Closing Date.
4
<PAGE> 5
INTEREST PAYMENT DATE: As defined in the Indenture and the
Securities.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, corporation, limited
liability company, joint venture, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
PROSPECTUS: The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
RECORD HOLDER: With respect to any Damages Payment Date, each
Person who is a Holder of Securities on the record date with respect to the
Interest Payment Date on which such Damages Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the
Company and the Guarantors relating to (a) an offering of Exchange Securities
pursuant to an Exchange Offer or (b) the registration for resale of Transfer
Restricted Securities pursuant to the Shelf Registration Statement, in each
case, (i) which is filed pursuant to the provisions of this Agreement and (ii)
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds
Broker-Dealer Transfer Restricted Securities.
SECURITIES: The Initial Securities and the Exchange
Securities.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
5
<PAGE> 6
TIA: The Trust Indenture Act of 1939, as amended, as in
effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each of the Initial
Securities, until the earliest to occur, with respect to a particular Security,
of (a) the date on which such Initial Security is exchanged for an Exchange
Security in the Exchange Offer, (b) the date on which such Initial Security has
been effectively registered under the Act and has been disposed of in accordance
with a Shelf Registration Statement or (c) the date on which such Security is
distributed to the public pursuant to Rule 144 under the Act or is salable
pursuant to Rule 144(k) under the Act.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) TRANSFER RESTRICTED SECURITIES. The Securities entitled
to the benefit of this Agreement are the Transfer Restricted Securities.
(b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is
deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER")
whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by
applicable federal law or Commission policy (after the procedures set forth in
Section 6(a)(i) below have been complied with), the Company and the Guarantors
shall (i) cause to be filed with the Commission as soon as practicable after the
Closing Date, but in no event later than 30 days after the Closing Date, the
Exchange Offer Registration Statement, (ii) use their best efforts to cause such
Exchange Offer Registration Statement to become effective at the earliest
practicable time, but in no event later than 120 days after the Closing Date,
(iii) in connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
such
6
<PAGE> 7
Exchange Offer Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
Exchange Securities to be made under the state securities or "Blue Sky" laws of
such jurisdictions as are necessary to permit Consummation of the Exchange
Offer, except as otherwise provided in Section 6(c)(xi) below, and (iv) upon the
effectiveness of such Exchange Offer Registration Statement, commence the
Exchange Offer. The Exchange Offer shall be on an appropriate form permitting
registration of the Exchange Securities to be offered in exchange for the
Initial Securities that are Transfer Restricted Securities and to permit resales
of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as
contemplated by Section 3(c) below. If, after such Exchange Offer Registration
Statement initially is declared effective by the Commission, the Exchange Offer
or the issuance of Exchange Securities thereunder or the sale of Transfer
Restricted Securities pursuant thereto as contemplated by Section 3(c) below is
interfered with by any stop order, injunction or other order or requirement of
the Commission or any other governmental agency or court, such Exchange Offer
Registration Statement shall be deemed not to have become effective for purposes
of this Agreement during the period that such stop order, injunction or other
similar order or requirement remain in effect.
(b) The Company and the Guarantors shall use their best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event shall
such period be less than 20 Business Days. The Company and the Guarantors shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Exchange Securities shall be
included in the Exchange Offer Registration Statement. The Company and the
Guarantors shall use their best efforts to cause the Exchange Offer to be
Consummated on or prior to 45 days after the date on which the Exchange Offer
Registration Statement is declared effective, but in no event later than 150
days after the Closing Date.
7
<PAGE> 8
(c) The Company and the Guarantors shall include a "Plan of
Distribution" section in the Prospectus contained in the Exchange Offer
Registration Statement and indicate therein that any Restricted Broker-Dealer
who holds Initial Securities that are Transfer Restricted Securities and that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities, may exchange such Initial Securities
(other than Transfer Restricted Securities acquired directly from the Company
and the Guarantors) pursuant to the Exchange Offer; provided, however, such
Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act
and the rules and regulations of the Commission promulgated thereunder and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the Exchange Securities received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers that
the Commission may require in order to permit such resales pursuant thereto, but
such "Plan of Distribution" shall not name any such Broker-Dealer or disclose
the amount of Securities held by any such Broker-Dealer except to the extent
required by the Commission as a result of a change in policy after the date of
this Agreement.
The Company and the Guarantors shall use their best efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for resales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers, and to ensure that
such Registration Statement conforms with the requirements of this Agreement,
the Act and the policies, rules and regulations of the Commission as announced
from time to time, for a period of 180 days from the date on which the Exchange
Offer is Consummated.
The Company and the Guarantors shall promptly provide
sufficient copies of the latest version of such Prospectus to such Restricted
Broker-Dealers promptly
8
<PAGE> 9
upon request, and in no event later than two days after such request, at any
time during such 180-day period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company and the Guarantors
are not required to file an Exchange Offer Registration Statement or Consummate
the Exchange Offer because the Exchange Offer is not permitted by applicable law
or Commission policy (after the procedures set forth in Section 6(a)(i) below
have been complied with), (ii) any Holder of Transfer Restricted Securities
shall notify the Company in writing within 10 Business Days following the
Consummation of the Exchange Offer that (A) such Holder is prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Exchange Securities acquired by it in the Exchange Offer to
the public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder (other than due solely to the status of such Holder as an
affiliate of the Company) or (C) such Holder is a Broker-Dealer and holds
Initial Securities acquired directly from the Company or one of its affiliates,
or (iii) the Exchange Offer is not Consummated or the Company and the Guarantors
determine in good faith, based on the advice of counsel, that the Commission is
unlikely to permit Consummation of the Exchange Offer within the time period set
forth in Section 3(a) (so long as, in either case, the procedures set forth in
Section 6(a) below are being or have been complied with) then the Company and
the Guarantors shall (x) cause to be filed a shelf registration statement
pursuant to Rule 415 under the Act, (which, if the Commission so allows, may be
an amendment to the Exchange Offer Registration Statement (in either event, the
"SHELF REGISTRATION STATEMENT")), on or prior to 30 days after the obligation to
file such Shelf Registration Statement arises, which Shelf Registration
Statement shall provide for resales of (I) all Transfer Restricted Securities in
the case of clause (a)(i) or (a)(iii) above and (II) all Transfer Restricted
Securities the Holders of which are prohibited from participating in the
Exchange Offer or reselling Exchange Securities under clauses (A), (B) or (C) of
clause (a)(ii) above, the Holders of which shall have provided the
9
<PAGE> 10
information required pursuant to Section 4(b) hereof, and (y) use their best
efforts to cause such Shelf Registration Statement to be declared effective on
or prior to 120 days after the date on which the Company becomes obligated to
file such Shelf Registration Statement. The Company and the Guarantors shall use
their best efforts to keep the Shelf Registration Statement continuously
effective, supplemented and amended as required by and subject to the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least three years (as extended pursuant to Section 6(c)(i)) after the Closing
Date, or such shorter period ending when (i) all Transfer Restricted Securities
covered by such Shelf Registration Statement have been sold in the manner set
forth and as contemplated by such Shelf Registration Statement or (ii) a
subsequent Shelf Registration Statement covering all Transfer Restricted
Securities has been declared effective by the Commission.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION
WITH THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 10 Business Days after receipt of a
request therefor, such information specified in item 507 or 508 of Regulation
S-K under the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. Each Holder as to which
any Shelf Registration Statement is being effected agrees to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading. No Holder of Transfer Restricted Securities shall be entitled to
Liquidated Damages pursuant to Section 5 hereof unless and until such Holder
shall have provided all such reasonably requested information to the Company.
10
<PAGE> 11
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement
is not filed with the Commission on or prior to the date specified for such
filing in this Agreement, (ii) any such Registration Statement is not declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "EFFECTIVENESS TARGET DATE"), (iii) the
Exchange Offer has not been Consummated on or prior to the date specified for
such Consummation in this Agreement or (iv) the Shelf Registration Statement is
filed and declared effective but shall thereafter cease to be effective or fail
to be usable for its intended purpose without being succeeded promptly by a
post-effective amendment to such Registration Statement that cures such failure
(each such event referred to in clauses (i) through (iv), a "REGISTRATION
DEFAULT"), then the Company will pay to each Holder of Transfer Restricted
Securities, for the first 90-day period immediately following the occurrence of
such Registration Default, liquidated Damages ("Liquidated Damages") in an
amount equal to one-half of one percent (0.5%) per annum of the principal amount
of the Securities constituting Transfer Restricted Securities held by such
Holder for so long as the Registration Default continues. The amount of
liquidated damages payable to each Holder of Transfer Restricted Securities
shall increase by an additional one-half of one percent (0.5%) per annum of the
principal amount of Securities constituting Transfer Restricted Securities held
by such Holder for each subsequent 90-day period up to a maximum amount of
Liquidated Damages equal to two percent (2.0%) per annum of the principal amount
of Securities constituting Transfer Restricted Securities held by such Holder,
and ceasing to accrue on the date such Registration Default has been cured by,
as applicable, the filing, declaration of effectiveness or withdrawal of
suspension of effectiveness of the applicable Registration Statement. The
obligation of the Company to pay Liquidated Damages pursuant to this Section 5
shall be fully and unconditionally guaranteed, jointly and severally, on a
senior unsecured basis by the Guarantors as set forth in Section 11.1 of the
Indenture.
The Company shall notify the Trustee within two Business Days
after (i) each and every Registration De-
11
<PAGE> 12
fault and (ii) the date the Registration Default has been so cured. Until the
Trustee and the Paying Agent have received an Officers' Certificate from the
Company to the effect that all Liquidated Damages then due have been paid in
full, the Company (in respect of any Interest Payment Date) shall pay Liquidated
Damages then due by depositing with the Trustee, in trust, for the benefit of
the affected Holders of Transfer Restricted Securities, on or before the
applicable semi-annual Interest Payment Date, immediately available funds in
sums sufficient to pay the Liquidated Damages then due and provide to the
Trustee and the Paying Agent a list of Holders entitled to Liquidated Damages
together with the amount of cash such Holder is due. The Liquidated Damages
amount due shall be payable as additional interest (from funds received pursuant
to such deposit) on each Interest Payment Date to the record holder of Transfer
Restricted Securities entitled to receive the interest payment to be made on
such date as set forth in the Indenture.
All obligations of the Company and the Guarantors set forth in
the preceding paragraphs that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations with respect to
such Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection
with the Exchange Offer, the Company and the Guarantors shall comply with all
applicable provisions of Section 6(c) below, shall use their best efforts to
effect such exchange to permit the sale of Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been
published a change in Commission policy with respect to exchange offers
such as the Exchange Offer, such that in the reasonable opinion of
counsel to the Company and the Guarantors there is a question as to
whether the Exchange Offer is permitted by applicable federal law or
Commission policy, the Company and the Guarantors hereby agree to seek
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<PAGE> 13
a no-action letter or other favorable decision from the Commission
allowing the Company and the Guarantors to Consummate an Exchange Offer
for the Initial Securities. The Company and the Guarantors hereby agree
to pursue the issuance of such a decision to the Commission staff
level. In connection with the foregoing, the Company and the Guarantors
hereby agree to take all such other actions as are requested by the
Commission or otherwise required in connection with the issuance of
such decision, including without limitation (A) participating in
telephonic conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded
that such an Exchange Offer should be permitted and (C) diligently
pursuing a resolution (which need not be favorable) by the Commission
staff of such submission.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement and to its
entitlement to Liquidated Damages pursuant to Section 5 of this
Agreement, each Holder of Transfer Restricted Securities shall furnish,
upon the request of the Company and the Guarantors, prior to the
Consummation of the Exchange Offer, a written representation to the
Company and the Guarantors (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an affiliate of the Company or any
Guarantor, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate
in, a distribution of the Exchange Securities to be issued in the
Exchange Offer, and (C) it is acquiring the Exchange Securities in its
ordinary course of business. Each Holder hereby acknowledges and agrees
that any Broker-Dealer and any such Holder intending to use the
Exchange Offer to participate in a distribution of the securities to be
acquired in the Exchange Offer (1) could not under Commission policy as
in effect on the date of this Agreement rely on the position of the
Commission enunciated in MORGAN STANLEY AND CO., INC. (available June
5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13,
1988), as
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<PAGE> 14
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including, if applicable,
any no-action letter obtained pursuant to clause (i) above), and (2)
must comply with the registration and prospectus delivery requirements
of the Act in connection with a secondary resale transaction and that
such a secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Exchange Securities obtained by such Holder
in exchange for Initial Securities acquired by such Holder directly
from the Company or an affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors shall provide a
supplemental letter to the Commission (A) stating that the Company and
the Guarantors are registering the Exchange Offer in reliance on the
position of the Commission enunciated in EXXON CAPITAL HOLDINGS
CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO., INC.
(available June 5, 1991) and, if applicable, any no-action letter
obtained pursuant to clause (i) above, (B) including a representation
that neither the Company nor the Guarantors have entered into any
arrangement or understanding with any Person to distribute the Exchange
Securities to be received in the Exchange Offer and that, to the best
of each of the Company's and the Guarantors' information and belief,
each Holder participating in the Exchange Offer is acquiring the
Exchange Securities in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Exchange Securities received in the Exchange Offer
and (C) including any other undertaking or representation required by
the Commission as set forth in any no-action letter pursuant to clause
(i) above.
(b) SHELF REGISTRATION STATEMENT. In connection with the
Shelf Registration Statement, the Company and the Guarantors shall comply with
all the provisions of Section 6(c) below and shall use their best efforts to
effect such registration to permit the sale of the Trans-
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<PAGE> 15
fer Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
and the Guarantors will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Exchange Offer Registration Statement and the related Prospectus, to the
extent that the same are required to be available to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the
Company and the Guarantors shall:
(i) use their best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this
Agreement, as applicable; upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not
to be effective and usable for resale of Transfer Restricted Securities
during the period required by this Agreement, the Company and the
Guarantors shall file promptly an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any
such misstatement or omission, and (2) in the case of either clause (A)
or (B), use their best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter. Notwithstanding the foregoing, if (A) the Board of
Directors of the Company determines in good faith that it is in the
best interests of the Company not to disclose the existence of or facts
surrounding any proposed or pending material corporate
15
<PAGE> 16
transaction involving the Company or any of the Guarantors and (B) the
Company notifies the Holders within two Business Days after the Board
of Directors makes such determination, the Company and the Guarantors
may allow the Shelf Registration Statement to fail to be effective and
usable as a result of such nondisclosure for up to 60 days during the
three year period of effectiveness required by Section 4 hereof, but in
no event for any period in excess of 30 consecutive days; provided,
however, that the three year period referred to in Section 4 hereof
during which the Shelf Registration Statement is required to be
effective and usable shall be extended by the number of days during
which such registration statement was not effective or usable pursuant
to the foregoing provisions;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration Statement
as may be necessary to keep the Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, or such
shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been, as
applicable, exchanged or sold; cause the Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Act, and to comply fully with
Rules 424 and 430A, as applicable, under the Act in a timely manner;
and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, confirm such advice
in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or
16
<PAGE> 17
amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement under the Act or of the suspension by any state securities
commission of the qualification of the Transfer Restricted Securities
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any additions
to or changes in the Registration Statement in order to make the
statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading or (E) of the Company's or any Guarantors'
determination that, based on the advice of counsel, a post-effective
amendment to a Registration Statement would be appropriate. If at any
time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or "Blue Sky"
laws, the Company and the Guarantors shall use their best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) furnish to the Purchasers, each selling Holder
named in any Registration Statement or Prospectus and each of the
underwriter(s) in connection with such sale, if any, before filing with
the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review and comment
of such Holders and underwriter(s) in connection with such
17
<PAGE> 18
sale, if any, for a period of at least five Business Days, and none of
the Company nor the Guarantors will file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which the selling Holders of the Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s) in connection with such sale, if any, shall reasonably
object within five Business Days after the written receipt thereof. A
selling Holder or underwriter, if any, shall be deemed to have
reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission or fails to comply
with the applicable requirements of the Act;
(v) promptly prior to the filing of any document that
is to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to the selling Holders and
to the underwriter(s) in connection with such sale, if any, make the
Company's representatives available for discussion of such document and
other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably request;
(vi) subject to the execution of confidentiality
agreements that are reasonably satisfactory to the Company as to the
disclosure of any non-public information obtained pursuant to this
Section 6(c)(vi), make available at reasonable times for inspection by
the selling Holders, any underwriter participating in any disposition
pursuant to such Registration Statement and any attorney or accountant
retained by such selling Holders or any of such underwriter(s), all
financial and other records, pertinent corporate documents and
properties of the Company and the Guarantors and cause the Company's
and the Guarantors' officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration Statement
or any post-effective amendment thereto subsequent
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<PAGE> 19
to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s) in connection with such sale, if any, promptly include
in any Registration Statement or Prospectus, pursuant to a supplement
or post-effective amendment if necessary, such information as such
selling Holders and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering
of the Transfer Restricted Securities to be sold in such offering; and
make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Company or
the Guarantors are notified of the matters to be included in such
Prospectus supplement or post-effective amendment;
(viii) furnish to each selling Holder named in any
Registration Statement or Prospectus and each of the underwriter(s) in
connection with such sale, if any, without charge, at least one copy of
the Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(ix) deliver to each selling Holder named in any
Registration Statement or Prospectus and each of the underwriter(s) in
connection with such sale, if any, without charge, as many copies of
the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons reasonably may request;
the Company and the Guarantors hereby consent to the use (in accordance
with law) of the Prospectus and any amendment or supplement thereto by
each of the selling Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer Restricted
19
<PAGE> 20
Securities covered by the Prospectus or any amendment or supplement
thereto;
(x) enter into such agreements (including an
underwriting agreement) and make such representations and warranties
and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement contemplated by this
Agreement as may be reasonably requested by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or
resale pursuant to any Registration Statement contemplated by this
Agreement, and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
Underwritten Registration, the Company and the Guarantors shall:
(A) furnish to each underwriter, if any, upon the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of
effectiveness of the Shelf Registration Statement,
signed on behalf of the Company by (x) the President
or any Executive Vice President and (y) a principal
financial or accounting officer of the Company,
confirming, as of the date thereof, the matters set
forth in paragraph (d) of Section 6 of the Purchase
Agreement and such other similar matters as the
underwriter(s) may reasonably request;
(2) an opinion, dated the date of
effectiveness of the Shelf Registration Statement, of
counsel for the Company and the Guarantor, covering
matters similar to those set forth in paragraphs (a)
and (b) of Section 6 of the Purchase Agreement and
such other matters as the underwriter(s) may
reasonably request, and in any event including a
statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company and the Guarantors,
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<PAGE> 21
representatives of the independent public
accountants for the Company and the Guarantor and
have considered the matters required to be stated
therein and the statements contained therein,
although such counsel has not independently verified
the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on
the basis of the foregoing (relying as to materiality
to a large extent upon facts provided to such counsel
by officers and other representatives of the
Company and without independent check or
verification), no facts came to such counsel's
attention that caused such counsel to believe that
the applicable Registration Statement, at the time
such Registration Statement or any post-effective
amendment thereto became effective, contained an
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date contained an
untrue statement of a material fact or omitted to
state a material fact necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading. Without
limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility
for, and has not independently verified, the
accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial
data included in any Registration Statement
contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated as of
the date of effectiveness of the Shelf Registration
Statement from the Company's independent public
accountants, in the customary form and covering
matters of the type customarily covered in comfort
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<PAGE> 22
letters to underwriters in connection with primary
underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to
Section 6(e) of the Purchase Agreement, without
exception;
(B) furnish to each selling Holder named in any Shelf
Registration Statement or Prospectus, upon the effectiveness
of such Shelf Registration Statement, one copy of each of the
certificates, opinions and comfort letters delivered to the
underwriters pursuant to clauses (A)(1),(2) and (3) above;
(C) set forth in full or incorporate by reference in
the underwriting agreement in connection with any sale or
resale pursuant to such Shelf Registration Statement the
indemnification provisions and procedures of Section 8 hereof
with respect to all parties to be indemnified pursuant to said
Section; and
(D) deliver such other documents and certificates as
may be reasonably requested by the underwriter(s) to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreements entered into by the Company and any Guarantor
pursuant to this clause (x).
The above shall be done at each closing under such
underwriting or similar agreement, as and to the extent required
thereunder, and if at any time the representations and warranties of
the Company contemplated in (A)(1) above cease to be true and correct,
the Company shall so advise the underwriter(s) promptly and if
requested by such Persons, shall confirm such advice in writing;
(xi) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in connection with
the registration and qualification of the Transfer Restricted
Securities under the state securities or "Blue Sky" laws of such
jurisdictions as the selling
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<PAGE> 23
Holders or underwriter(s), if any, may request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided that, in connection
therewith or as a condition thereof, neither the Company nor any
Guarantor shall be required to (i) qualify or register as a foreign
corporation in any such jurisdiction, (ii) execute a general or limited
consent to service of process in any such jurisdiction, (iii) make any
undertaking with respect to the conduct of its business, (iv) subject
itself to taxation as a foreign corporation in any such jurisdiction or
(v) enter into any agreement with any state securities or "Blue Sky"
commission or agency, including, without limitation, any agreement to
escrow shares of its capital stock;
(xii) issue, upon the request of any Holder of
Initial Securities covered by any Shelf Registration Statement
contemplated by this Agreement, Exchange Securities, having an
aggregate principal amount equal to the aggregate principal amount of
Initial Securities surrendered to the Company by such Holder in
exchange therefor or being sold by such Holder; such Exchange
Securities to be registered in the name of such Holder or in the name
of the purchaser(s) of such Securities, as the case may be; in return,
the Initial Securities held by such Holder shall be surrendered to the
Company for cancellation;
(xiii) in connection with any sale of Transfer
Restricted Securities that will result in such securities no longer
being Transfer Restricted Securities, cooperate with the selling
Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive
legends; and to register such Transfer Restricted Securities in such
denominations and such names as the Holders or the underwriter(s), if
any may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
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<PAGE> 24
(xiv) use their best efforts to cause the disposition
of the Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Transfer Restricted Securities, subject to the
proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer
Restricted Securities not later than the effective date of a
Registration Statement covering such Transfer Restricted Securities and
provide the Trustee under the Indenture with printed certificates for
the Transfer Restricted Securities which are in a form eligible for
deposit with the Depository Trust Company;
(xvii) cooperate and assist in any filings required
to be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD;
(xviii) otherwise use their best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to Holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule
24
<PAGE> 25
158 under the Act (which need not be audited) covering a twelve-month
period beginning after the effective date of the Registration Statement
(as such term is defined in paragraph (c) of Rule 158 under the Act);
(xix) cause the Indenture to be qualified under the
TIA not later than the effective date of the first Registration
Statement required by this Agreement and, in connection therewith,
cooperate with the Trustee and the Holders of Securities to effect such
changes to the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use
their best efforts to cause the Trustee to execute, all documents that
may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner; and
(xx) provide promptly to each Holder upon request
each document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition
of a Transfer Restricted Security that, upon receipt of the notice referred to
in Section 6(c)(i) or any notice from the Company and the Guarantors of the
existence of any fact of the kind described in Section 6(c)(iii) (B), (C), (D)
or (E) hereof, such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xv) hereof, or until it is advised in writing (the
"ADVICE") by the Company and the Guarantors that the use of the Prospectus may
be resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus. If so directed by the
Company and the Guarantors, each Holder will deliver to the Company and the
Guarantors (at the Company's expense) all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of
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<PAGE> 26
either such notice. In the event the Company and the Guarantors shall give any
such notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(B), (C),
(D) and (E) hereof to and including the date when each selling Holder covered by
such Registration Statement shall have received the copies of the supplemented
or amended Prospectus contemplated by Section 6(c)(xv) hereof or shall have
received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company
and the Guarantors, as applicable, regardless of whether a Registration
Statement becomes effective, including without limitation: (i) all registration
and filing fees and expenses (including filings made with the NASD and counsel
fees in connection therewith); (ii) all fees and expenses of compliance with
federal securities and state securities or "Blue Sky" laws; (iii) all printing
expenses of printing (including printing certificates for the Exchange
Securities and printing of Prospectuses); (iv) all fees and disbursements of
counsel for the Company, the Guarantors, and, in accordance with Section 7(b)
below, the Holders of Transfer Restricted Securities; and (v) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance). Notwithstanding anything in this Section 7 to the
contrary, the Company shall not be required to pay, in the case of an
Underwritten Offering, underwriting discounts and selling commissions, which
discounts and commissions shall be borne pro rata by the Holders of Transfer
Restricted Securities.
The Company and each of the Guarantors will, in any event,
bear their respective internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any Person, including special experts, retained by the Company and the
Guarantors.
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<PAGE> 27
(b) In connection with any Registration Statement required by
this Agreement, the Company and the Guarantors will reimburse the Purchasers and
the Holders of Transfer Restricted Securities the distribution of which is being
registered pursuant to the Shelf Registration Statement for the reasonable fees
and disbursements, not to exceed $25,000, of not more than one counsel chosen by
the Holders of a majority of the principal amount of such Transfer Restricted
Securities.
SECTION 8. INDEMNIFICATION
(a) Each of the Company and the Guarantors, jointly and
severally agrees to indemnify and hold harmless, to the fullest extent permitted
by law, each Holder and each Person, if any, who controls such Holder within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and each
of their respective directors, officers, employees and agents (any Person
referred to above being sometimes hereinafter referred to as an "INDEMNIFIED
HOLDER"), against any and all losses, liabilities, claim, damages and expenses
whatsoever (including but not limited to reasonable attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or Prospectus, or in any
supplement thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company and the Guarantors will not be liable in any
such case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein (i) in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Indemnified Holder expressly for
use therein or (ii)
27
<PAGE> 28
in a preliminary prospectus if (x) a copy of the Prospectus (as then amended or
supplemented) was previously furnished to the Holder but was not sent or given
by or on behalf of such Holder to the Person asserting any such loss, claim,
damage, liability or expense, if required by law so to have been delivered, at
or prior to the written confirmation of the sale of the Initial Securities and
(y) the Prospectus (as then amended or supplemented) would have completely
corrected such untrue or alleged untrue statement or omission or alleged
omission. This indemnity agreement will be in addition to any liability which
the Company may otherwise have, including, under this Agreement.
(b) Each of the Holders severally, and not jointly, agrees to
indemnify and hold harmless each of the Company and the Guarantors and each
Person, if any, who controls the Company or any Guarantor within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, and each of their
respective directors, officers, employees and agents, against any and all
losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement, preliminary
prospectus or Prospectus, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly for use therein;
provided, however, that in no event shall any Holder be liable or responsible
for any amount in excess of the amount by which the total
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<PAGE> 29
amount of the proceeds received by such Holder with respect to its sale of
Initial Securities exceeds (i) the amount paid by such Holder for such Initial
Securities and (ii) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. This indemnity will be in addition to any
liability which such Holder may otherwise have, including, under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have concluded that there may be defenses
available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expens-
29
<PAGE> 30
es of counsel shall be borne by the indemnifying parties; provided, however,
that the indemnifying party under subsection (a) or (b) above, shall only be
liable for the legal expenses of one counsel for all indemnified parties in each
jurisdiction in which any claim or action is brought. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in
which the indemnification provided for in this Section 8 is for any reason held
to be unavailable from the Company, any Guarantor or any Holder or is
insufficient to hold harmless a party indemnified thereunder, the Company, the
Guarantors and each Holder shall contribute to the aggregate losses, claims,
damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company, any
contribution received by the Company from persons, other than any Indemnified
Holders, who may also be liable for contribution, including persons who control
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) to which the Company, any Guarantor and any Holder may be subject,
in such proportion as is appropriate to reflect the relative benefits received
by (i) the Company and the Guarantors, on the one hand, from the offering of the
Initial Securities and (ii) any such Holder (and its related Indemnified
Holder), on the other hand, from its sale of Initial Securities or, if such
allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in this Section 8, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Company and the Guarantors, on the one hand, and such Holder, on the other hand,
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the
30
<PAGE> 31
Company and the Guarantors, on the one hand, and any Holder, on the other hand,
shall be deemed to be in the same proportion as (x) the total proceeds from the
offering of Initial Securities (net of discounts but before deducting expenses)
received by the Company and the Guarantors and (y) the total proceeds received
by such Holder upon its sale of Initial Securities which otherwise would give
rise to the indemnification obligation, respectively. The relative fault of the
Company and the Guarantors, on the one hand, and of any Holder, on the other
hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Guarantors or such Holder or its related Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Guarantors and
each Holder agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this Section
8, (1) no Holder or its related Indemnified Holders shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total proceeds received by such Holder with respect to the sale of its Initial
Securities exceeds the sum of (A) the amount paid by such Holder for such
Initial Securities plus (B) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleges omission and (2) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls any Holder within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act shall have the same rights to contribution as such Holder,
and each person, if any, who controls the Company or any Guarantor within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have
the same rights to contribution as the Company or such Guarantor, subject in
each case to clauses (1) and (2) of this Section 8(d). Any party entitled to
contribution will, promptly after receipt of notice of
31
<PAGE> 32
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 8, notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its written
consent; provided, however, that such written consent was not unreasonably
withheld.
SECTION 9. RULE 144A
The Company and the Guarantors hereby agree with each Holder,
for so long as any Transfer Restricted Securities remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act, to make available, upon request of any Holder of
Transfer Restricted Securities, to any Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and any prospective
purchaser of such Transfer Restricted Securities designated by such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
Anything herein to the contrary notwithstanding, no Holder may
participate in any Underwritten Registration hereunder unless such Holder (a)
agrees to sell such Holder's Transfer Restricted Securities on the basis
provided in customary underwriting arrangements entered into in connection
therewith and (b) completes and executes all reasonable questionnaires, powers
of attorney, lock-up letters and other documents required under the terms of
such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
Subject to the Company's consent, for any Underwritten
Offering, the investment banker or investment bankers and manager or managers
for any Underwritten Offering that will administer such offering will be
32
<PAGE> 33
selected by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities included in such offering; provided, however,
that (i) the Company's consent shall not be unreasonably withheld and (ii) the
Company shall be deemed to have consented to Bear, Stearns & Co. Inc. and Smith
Barney Inc. acting as such investment bankers or managers with respect to such
Underwritten Offering. Such investment bankers and managers are referred to
herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) REMEDIES. Each Holder, in addition to being entitled to
exercise all rights provided herein, in the Indenture, the Purchase Agreement or
granted by law, including recovery of liquidated or other damages, will be
entitled to specific performance of its rights under this Agreement. The Company
and the Guarantors agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. None of the Company nor any of
the Guarantors will on or after the date of this Agreement enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's or any of the Guarantors' securities under any agreement in effect
on the date hereof.
(c) ADJUSTMENTS AFFECTING THE SENIOR NOTES. Neither the
Company nor any of the Guarantors will take any action, or voluntarily permit
any change to occur, with respect to the Securities that would materially and
adversely affect the ability of the Holders to Consummate any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
33
<PAGE> 34
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer or registered pursuant to the Shelf Registration
Statement and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
or registered pursuant to the Shelf Registration Statement may be given by the
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities being tendered or registered, as applicable.
(e) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
(ii) if to the Company or the Guarantors:
Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Telecopier No.: (603) 888-1427
Attention: Chief Financial Officer
with a copy to:
Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Telecopier No.: (603) 888-1427
Attention: General Counsel
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
34
<PAGE> 35
when receipt acknowledged, if telecopied; and on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities directly from such Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement
are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF. THE COMPANY AND EACH OF THE GUARANTORS
HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA SITTING
IN THE BOROUGH OF MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD IN ANY SUCH NEW YORK STATE OR FEDERAL
COURT. NOTHING HEREIN SHALL BE CONSTRUED TO PREVENT OR IMPAIR THE RIGHT OF ANY
INITIAL PURCHASER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER JURISDICTION.
35
<PAGE> 36
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement together with the other
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
36
<PAGE> 37
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
EKCO GROUP, INC.
By: /s/ John T. Haran
----------------------------
Name: John T. Haran
Title: Vice-President
and Treasurer
GUARANTORS:
B. VIA INTERNATIONAL CLEANING SPECIALTY COMPANY
HOUSEWARES, INC.
By: /s/ John T. Haran By: /s/ John T. Haran
------------------------------ ----------------------------
Name: John T. Haran Name: John T. Haran
Title: Vice-President Title: Vice-President
and Treasurer and Treasurer
EKCO DISTRIBUTION EKCO HOUSEWARES, INC.
OF ILLINOIS, INC.
By: /s/ John T. Haran By: /s/ John T. Haran
------------------------------ ----------------------------
Name: John T. Haran Name: John T. Haran
Title: Vice-President Title: Vice-President
and Treasurer and Treasurer
EKCO MANUFACTURING OF FREM CORPORATION
OF OHIO, INC.
By: /s/ John T. Haran By: /s/ John T. Haran
------------------------------ ----------------------------
Name: John T. Haran Name: John T. Haran
Title: Vice-President Title: Vice-President
and Treasurer and Treasurer
37
<PAGE> 38
KELLOGG BRUSH MANUFACTURING WOODSTREAM CORPORATION
CO.
By: /s/ John T. Haran By: /s/ John T. Haran
------------------------------ ----------------------------
Name: John T. Haran Name: John T. Haran
Title: Vice-President Title: Vice-President
and Treasurer and Treasurer
WRIGHT-BERNET INC.
By: /s/ John T. Haran
------------------------------
Name: John T. Haran
Title: Vice-President
and Treasurer
BEAR, STEARNS & CO. INC. SMITH BARNEY INC.
By: /s/ J. Andrew Bugas By: /s/ John B. Phillips, Jr.
------------------------------ ----------------------------
Name: J. Andrew Bugas Name: John B. Phillips, Jr.
Title: Senior Managing Director Title: Director
<PAGE> 1
EXHIBIT 4.3
-----------
THE PLAN
The text of the Plan consists of the following questions and answers:
PURPOSE
- -------
1. What is the purpose of the Plan?
The purpose of the Plan is to provide stockholders with a convenient
and simple method of investing in additional shares of Common Stock without fees
of any kind. The shares acquired under the Plan will be purchased by the Agent
(as hereinafter defined) either from the Corporation, in the market or from
private sources. To the extent shares are sold by the Corporation, the Plan will
provide additional funds to the Corporation. The Corporation intends to add the
proceeds of such sales to the general funds of the Corporation for general
corporate purposes.
ADVANTAGES
- ----------
2. What are the advantages of the Plan?
A participant in the Plan may have cash dividends on all or less than
all shares of Common Stock automatically reinvested, or may invest in additional
shares of Common Stock by making optional cash purchases ("optional payments")
of a minimum of $10 per payment and up to $10,000 per calendar quarter.
Participants in the Plan pay no brokerage fee or service charge in connection
with purchases under the Plan. Funds are fully invested through the purchase of
fractions of shares, as well as full shares, and proportionate cash dividends on
fractions of shares will be used to purchase additional shares. Participants may
avoid the necessity of safekeeping their certificates for shares credited to
their accounts by leaving the shares with the Agent. A statement of account will
be provided to you after each quarterly investment and each optional cash
investment.
ADMINISTRATION
- --------------
3. Who will administer the Plan?
American Stock Transfer & Trust Company (the "Agent"), will administer
the Plan, keep records, send statements of account activity to participants and
perform other duties related to the Plan. Certificates for shares purchased
under the Plan will be held in safekeeping by the Agent in the Agent's name or
in the Agent's nominee's name unless a participant requests delivery of
certificates for some or all of his or her shares. Participants may contact the
Agent by writing to American Stock Transfer & Trust Company, 40 Wall Street,
46th Floor, New York, New York 10005, Attention: Dividend Reinvestment, or by
telephoning the Agent at 1-800-278-4353.
PARTICIPATION
- -------------
4. Who is eligible to participate?
You are an eligible holder of Common Stock ("Eligible Stockholder") and
may therefore participate in the Plan if you qualify as either one of the
following: (a) you are a stockholder whose shares of Common Stock are registered
on the stock transfer books of the Corporation in your name (a "Registered
Owner") or (b) you are a stockholder who has beneficial ownership of shares of
Common Stock (a "Beneficial Owner") that are registered in a name other than
your own, such as in the name of a broker, a bank nominee or trustee. While a
Registered Owner may participate in the Plan directly, a
1
<PAGE> 2
Beneficial Owner must either become a Registered Owner, by having such shares
transferred into his or her own name, or must make arrangements with his or her
broker, bank nominee or trustee to participate in the Plan on his or her behalf.
Your right to participate in the Plan is not transferable apart from a
transfer of your underlying Common Stock to another person.
You or, if appropriate, your broker, bank nominee or trustee must
supply the Agent with your valid social security number or taxpayer
identification number in order to be eligible to participate.
5. How does an Eligible Stockholder participate and when is participation
effective?
A holder of record may join the Plan at any time by signing the
Authorization Card which accompanies this Prospectus and returning it to the
Agent. An additional Authorization Card may be obtained at any time by written
request to the Agent. A shareholder electing to join the Plan may participate
with respect to any number of shares owned of record.
Reinvestment of dividends commences with the first dividend paid after
such stockholder joins the Plan, provided that an Authorization Card is received
from such stockholder by the Agent before the record date for such dividend.
Participation will begin with the next relevant Investment Date (see answer to
Question 8 below) following receipt by the Agent of the Authorization Card for
optional payments.
6. When and in what amounts may optional payments be made?
A participant may at any time make optional payments of a minimum of
$10 per payment and up to a maximum of $10,000 per calendar quarter. Since no
interest is paid, participants may wish to send optional payments so as to reach
the Agent shortly before an Investment Date for optional payments (see answer to
Question 8 below). A participant may make an optional payment upon joining the
Plan by enclosing a check or money order (payable in United States dollars to
"American Stock Transfer & Trust Company, Agent") with the Authorization Card.
Thereafter, optional payments may be made by such a participant through the use
of a cash payment form which will be attached to each statement of account.
PURCHASES AND PRICE OF SHARES
- -----------------------------
7. How will the price of shares purchased under the Plan be determined?
The Agent will purchase the shares from the Corporation to the extent
the Corporation makes shares available. The Agent will purchase any other shares
required for the Plan in the market or from private sources. The price of shares
purchased from the Corporation will be the average of the high and low sales
prices of the Common Stock on the relevant Investment Date as reported on the
New York Stock Exchange consolidated tape. The price of shares purchased in the
market or from private sources will be the average cost of all shares so
purchased with respect to the relevant Investment Date (see answers to Questions
8 and 9 below).
8. When is the Investment Date?
In any calendar month in which a cash dividend is payable, the
Investment Date will be the dividend payment date if a business day; if not a
business day, the Investment Date will be the next succeeding business day.
In all other calendar months, the Investment Date will be the tenth day
of that month if a business day; if not a business day, the Investment Date will
be the next succeeding business day. The first Investment Date will be May 10,
1995.
No shares will be purchased with optional payments in the thirty (30)
day period preceding any dividend payment date until the Common Stock is traded
ex-dividend.
2
<PAGE> 3
9. How many shares will be purchased for participants?
The number of shares to be purchased for a participant will depend on
the amount of the participant's dividend or optional payment or both and the
price of the shares. Each participant's account will be credited with the number
of shares, including fractions to three decimal places, equal to the total of a
participant's funds available for investment, divided by the purchase price
described in the answer to Question 7 above.
10. When will the shares be purchased?
Shares acquired from the Corporation will be purchased for the accounts
of the participants as of the close of business on the relevant Investment Date.
Shares acquired in the market or from private sources will be purchased promptly
by the Agent and in no event later than thirty days after a relevant Investment
Date. Except where necessary under any applicable federal securities law, these
purchases may be made on any securities exchange where such shares are traded,
in the over-the-counter market or by negotiated transactions, and are subject to
such terms and conditions, including price and delivery, to which the Agent may
agree. Dividends and voting rights will commence upon settlement, which will
normally be three business days after the purchase, whether from the Corporation
or any other source. For the purpose of making purchases, the Agent will
commingle each participant's funds with those of all other participants.
REPORTS TO PARTICIPANTS
- -----------------------
11. What kind of reports will be sent to participants in the Plan?
After each purchase, each participant will receive a statement of
cumulative investments for the year, including share price for tax purposes. In
addition, each participant will receive, from time to time, copies of all
communications sent to every other stockholder.
CERTIFICATES FOR SHARES
- -----------------------
12. Will certificates be issued for shares purchased?
Certificates for shares purchased under the Plan will be held in
safekeeping by the Agent in its name or the Agent's nominee's name. The number
of shares (including fractional interests) held for each participant will be
shown on each statement of account. No fractional share certificates will be
issued. Certificates for any number of whole shares credited to any account will
be delivered to a participant upon written request to the Agent. Any remaining
full or fractional shares will continue to be credited to the account.
WITHDRAWALS
- -----------
13. How does a participant withdraw from the Plan and how are shares
distributed upon withdrawal?
A participant may withdraw from the Plan at any time by written notice
to the Agent. Upon withdrawal from the Plan, certificates for whole shares held
for a participant will be sent to the participant with a cash payment for any
fraction of a share being held. Fractions of shares will be valued at the
closing market price of the Common Stock as reported on the New York Stock
Exchange consolidated tape on the date the withdrawal is effective, less any
applicable stock transfer tax.
14. When does a withdrawal from the Plan become effective?
Withdrawal is normally effective when notice is received by the Agent.
However, if the notice of withdrawal is received after a dividend record date
and before the related dividend payment date, the withdrawal will be effective
after that dividend payment date. The dividend paid on that date and any
optional payment will be invested under the Plan. The
3
<PAGE> 4
withdrawal will be processed after the participant's account has been credited
with the shares purchased. When a participant withdraws from the Plan, or upon
termination of the Plan by the Corporation, certificates for whole shares
credited to the participant's account under the Plan will be issued to the
participant and a cash payment will be made for any fraction of a share based on
the valuation as described in the answer to Question 13 above.
15. May a participant request return of an optional payment?
Any optional payment not already invested will be refunded upon the
participant's written request received by the Agent at least 48 hours prior to
the relevant Investment Date.
RESALE RESTRICTIONS
- -------------------
16. Are employees restricted in any way from reselling Common Stock
acquired under the Plan?
Some employees are so restricted. Employees who are "affiliates" of the
Corporation, as that term is defined in Rule 405 promulgated by the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), may not publicly re-offer shares acquired under
the Plan except pursuant to Rule 144 of the Securities Act or pursuant to an
effective registration statement. Rule 405 defines an "affiliate" as a person
who, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or under common control with the Corporation. Directors and
certain officers of the Corporation may be "affiliates" of the Corporation under
this definition. The Corporation has no present intention of filing a
registration statement which would permit the Corporation's "affiliates" to
re-offer Common Stock acquired under the Plan other than pursuant to Rule 144 of
the Securities Act.
Provided that employees who are not affiliates of the Corporation
comply with all relevant federal and state securities laws and regulations, they
are free to sell, at any time, the Common Stock acquired under the Plan.
Directors and certain executive officers of the Corporation
participating in the Plan are subject to the reporting obligations of Section
16(a) and the short-swing profit recovery provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, (the "Exchange Act"), with respect
to purchases of Common Stock made under the Plan with optional cash payments.
While such directors and officers are not subject to the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act with respect to
purchases of Common Stock made under the Plan with reinvested dividends, such
purchases must be disclosed on annual reports filed pursuant to Section 16(a) of
the Exchange Act.
LIMITATIONS ON PARTICIPATION
- ----------------------------
17. Are there limitations on participation in the Plan other than those
described above?
The Corporation reserves the right to limit participation in the Plan
for any reason, even if a stockholder is otherwise eligible to participate. Some
stockholders may be residents of jurisdictions in which the Corporation
determines that it may not legally or economically offer its shares under the
Plan, and accordingly residents of such jurisdictions may be precluded from
participating in the Plan. The Corporation has no present plans to limit
participation in the Plan by any stockholder of record for reasons other than
those set forth above, but it reserves such right in the event that it
determines in its sole discretion that such limitation may be in the best
interests of the Corporation.
TAX CONSEQUENCES
- ----------------
18. What are the federal income tax consequences of participation in the
Plan?
The amount of cash dividends paid by the Corporation must be included
in income even though reinvested under the Plan. The cost basis for federal
income tax purposes of any shares acquired through the Plan will be the price at
which the shares are purchased by the Agent for the account of the participant.
That is, (a) for shares purchased from the Corporation, the average of the high
and low sales prices for the shares on the relevant Investment Date as reported
on the
4
<PAGE> 5
New York Stock Exchange consolidated tape, or (b) for shares purchased in the
market or from private sources, the average cost of all shares so purchased with
respect to the relevant Investment Date. In connection with market purchases,
brokerage commissions paid by the Corporation on a participant's behalf are to
be treated as distributions subject to income tax in the same manner as
dividends, and such amounts will be included in the cost basis of shares
purchased. The information return sent to participants and the IRS at year-end
will show such amounts paid on behalf of participants.
A participant will realize gain or loss when shares are sold or
exchanged after withdrawal from, or termination of, the Plan and, in the case of
a fractional share, when the participant receives a cash payment for a fraction
of a share credited to his or her account. The amount of such gain or loss will
be the difference between the amount that the participant receives for the
shares or fraction of a share and the tax basis therein. Gain will be long term
if the participant's holding period for the shares exceeds one year. The holding
period for shares acquired pursuant to the Plan will begin on the day following
the Investment Date.
The Corporation believes the foregoing is an accurate summary of the
tax consequences of participation in the Plan as of the date of this Prospectus,
but participants should consult with their own advisers for advice applicable to
their particular situations.
SALE OF PLAN SHARES
- -------------------
19. When and how may a participant sell shares held in this Plan?
Any participant, including a participant who is withdrawing from the
Plan, may sell some or all of his or her shares in the Plan in the market
through the participant's broker. If a participant elects to sell through a
broker, he or she must first request the Agent to send the participant a
certificate or certificates representing the requested number of shares in the
Plan credited to the participant's account. As soon as practicable after receipt
of such request, the Agent will issue a certificate or certificates representing
such number of shares to the participant in his or her name as it appears in the
participant's Plan account, unless other instructions are provided in writing.
A participant who wishes to sell some or all of his or her shares in
the Plan should be aware of the risk that the price of the Common Stock may
decrease between the time that the participant determines to sell shares in the
Plan and the time that the sale is completed. This risk is borne solely by the
participant.
MISCELLANEOUS
- -------------
20. What happens if a participant sells or transfers all the shares held of
record in the participant's name?
A participant may continue to reinvest cash dividends on shares held
under the Plan even though all shares held of record in the participant's name
have been sold or transferred.
21. What happens if the Corporation declares a stock split, stock dividend
or makes a rights offering?
Any stock dividends or split shares distributed by the Corporation on
shares credited to a participant's Plan account will be added to the account.
Stock dividends or split shares distributed on shares registered in a
participant's name will be mailed directly to the participant in the same manner
as to shareholders who are not participating in the Plan.
In the event of a rights offering, the participant will receive rights
based upon the total number of whole shares owned (that is, the total number of
shares registered in the participant's name and the total number of whole shares
held in the account).
22. How will shares be voted at shareholders' meetings?
5
<PAGE> 6
Shares held in a dividend reinvestment account may be voted in person
or by the same proxy sent for the shares registered in the participant's own
name. If no shares are registered in a participant's name, a proxy will be sent
for any whole shares held under the Plan. Shares held pursuant to the Plan for
which no proxy is received will not be voted.
23. Are there limitations on the liabilities of the Corporation and the
Agent under the Plan?
Neither the Corporation nor the Agent will be liable in administering
the Plan for any act done in good faith nor for any good faith omission to act,
including, without limitation, any claim of liability arising from failure to
terminate a participant's account upon such a participant's death or with
respect to the prices, or times at which, or sources from which, shares are
purchased for participants.
24. May the Plan be changed or terminated?
The Corporation may suspend, modify or terminate the Plan at any time.
Notice of such suspension, modification or termination will be sent to all
participants. No such event will affect any shares then credited to a
participant's account.
25. Who bears the risk of market price fluctuations in the Common Stock?
A participant's investment in shares acquired under the Plan is no
different from an investment in any equity security purchased and held directly.
The participant bears the risk of loss and realizes the benefits of any gain
from market price changes with respect to all such shares held by him or her in
the Plan or otherwise. However, because purchase prices for shares purchased
under the Plan are established on an Investment Date, a participant loses any
advantage otherwise available from being able to select the timing of share
purchases. A participant should also note that the timing of distributions and
processing of distributions and requests for issuance of certificates for Plan
shares may affect the availability of the shares to the participant for resale.
6
<PAGE> 1
EXHIBIT 10.1(c)(2)
-----------------
<TABLE>
EKCO GROUP, INC.
SCHEDULE TO
FORM OF RESTRICTED STOCK PURCHASE AGREEMENT
Each of the following employees of the Company has a Restricted Stock Purchase Agreement with the Company which covers the
following blocks of restricted shares pursuant to the Company's 1984 Restricted Stock Plan and/or 1985 Restricted Stock Plan which
is identical in form to the foregoing Form of Restricted Stock Purchase Agreement except as to the date of the Agreement and the
number of shares in each such Performance Block:
<CAPTION>
Date of
Name and Job Title(s) Agreement No. of Shares in Performance Block for Each Year Noted
- --------------------- --------- ----------------------------------------------------------------------
1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Robert Stein 01/01/95 1984 Plan: 13,300 -0- -0- -0- -0-
President & Chief 1985 Plan: 5,916 19,216 19,216 19,216 19,216
Executive Officer
Jeffrey A. Weinstein 01/01/95 1984 Plan: 3,723 -0- -0- -0- -0-
Executive Vice Presi- 1985 Plan: 1,657 5,380 5,380 5,380 5,380
dent, Secretary &
General Counsel
Donato A. DeNovellis 01/01/95 1984 Plan: 3,016 1,840 -0- -0- -0-
Executive Vice Presi- 1985 Plan: -0- 6,176 8,016 8,016 8,016
dent, Finance & Admi-
nistration, & Chief
Financial Officer
Brian R. McQuesten 01/01/95 1984 Plan: 1,675 -0- -0- -0- -0-
Vice President & 1985 Plan: 741 2,416 2,416 2,416 2,416
Controller
Stuart W. Cohen 06/12/95 1985 Plan: 1,998 3,592 3,592 3,592 3,592
Vice President,
Strategic Planning
& Business Development
Dennis P. Wittekind 08/28/95 1985 Plan: 4,167 8,333 8,333 8,333 8,333
President, Ekco House-
wares, Inc.
John T. Haran 02/06/96 1984 Plan: -0- 3,333 3,333 3,333 3,333
Vice President and
Treasurer
</TABLE>
<PAGE> 1
EXHIBIT 10.1(c)(3)
FORM OF AMENDMENT TO
RESTRICTED STOCK PURCHASE AGREEMENT
AMENDMENT AGREEMENT dated as of August 22, 1995 by and between Ekco
Group, Inc., a Delaware corporation (the "Company") and [NAME OF EMPLOYEE], an
employee of the Company, residing at [ADDRESS OF EMPLOYEE] (the "Employee").
W I T N E S S E T H
WHEREAS, the Company granted the Employee the right to purchase
restricted stock under the Company's 1984 and 1985 Restricted Stock Purchase
Plans and the terms of those certain Restricted Stock Purchase Agreements by and
between the Company and the Employee (the "Restricted Stock Agreements") dated
[Dates of Agreements]; and
WHEREAS, the Employee and the Company desire to amend each of the
Restricted Stock Agreements to add a certain provision to insure compliance with
new Rule 16b(3) promulgated pursuant to Section 16 of the Securities Exchange
Act of 1934, as amended, and to make a reference change.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Each of the Restricted Stock Agreements is hereby amended as
follows:
a. In paragraph 3(d) (except in the January 1, 1995
Restricted Stock Agreement that paragraph is numbered as Paragraph
3(e)), the following is hereby added after "the Securities Exchange
Act of 1934, as amended": "(the "1934 Act")".
b. A new Section 10 is hereby added to read as follows:
"10. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION
-------------------------------------------------------
16 OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------------
If the Purchaser is subject to Section 16 of the Securities
Exchange Act of 1934, Section 16 requires that at least six (6)
months must elapse from the date of purchase of the Shares to the
date of disposition."
c. All sections which follow the new Section 10 shall be
renumbered accordingly.
2. This Amendment Agreement constitutes the entire Agreement between
the parties with respect to the subject matter hereof.
3. Except as expressly provided for herein, each of the Restricted
Stock Agreements is hereby ratified and confirmed and shall continue in full
force and effect.
4. This Amendment Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have caused this Amendment Agreement to
1
<PAGE> 2
be executed as of the date first above written.
EKCO GROUP, INC.
By:
-----------------------
Title:
--------------------
--------------------------
EMPLOYEE
2
<PAGE> 1
EXHIBIT 10.1(d)
---------------
FORM OF
RESTRICTED STOCK PURCHASE AGREEMENT
[FOR THE QUARTERLY PURCHASE OF RESTRICTED STOCK
IN LIEU OF SALARY INCREASES PURSUANT TO ELECTION BY PURCHASER]
AGREEMENT made as of the [DATE] by and between Ekco Group, Inc., a
Delaware corporation with a principal place of business at 98 Spit Brook Road,
Nashua, New Hampshire 03062 (hereinafter the "Corporation") and [NAME AND
ADDRESS OF PURCHASER], (hereinafter the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Corporation has adopted and amended the 1985 Restricted
Stock Plan (hereinafter the "1985 Plan") to promote the interests of the
Corporation by providing an incentive for employees, officers and directors of
the Corporation;
WHEREAS, pursuant to the provisions of the 1985 Plan, the Corporation
is offering to sell to the Purchaser shares of the Corporation's Common Stock,
par value $.01 per share, in accordance with the provisions of the 1985 Plan,
all on the terms and conditions hereinafter set forth; and
WHEREAS, Purchaser wishes to accept said offer.
NOW THEREFORE, in consideration of the premises and mutual interests to
be served hereby and the mutual covenants and promises contained herein, the
Corporation and Purchaser hereby agree as follows:
1. TERMS OF PURCHASE. The Purchaser hereby accepts the offer of the
Corporation to sell to the Purchaser, in accordance with the terms of the 1985
Plan and this Agreement, [NO. OF SHARES] (_____) shares of the Corporation's
Common Stock, par value $.01 per share (hereinafter collectively the "Plan
Shares") at a purchase price of $[PURCHASE PRICE], receipt of which is hereby
acknowledged by the Corporation.
2. PROVISIONS OF AGREEMENT CONTROLLING. The Purchaser specifically
understands and agrees that the Plan Shares issued under the 1985 Plan are being
sold to the Purchaser pursuant to the 1985 Plan, copies of which Plan Purchaser
acknowledges he or she has read, understands and by which he or she agrees to be
bound. The provisions of the 1985 Plan is incorporated herein by reference. In
the event of a conflict between the terms and conditions of the 1985 Plan and
this Agreement, the provisions of this Agreement will control.
3. RESTRICTIONS ON DISPOSITION. In accordance with Paragraph 5(b) of
the 1985 Plan, the Purchaser may not, and hereby specifically agrees that he or
she shall not pledge, encumber, hypothecate, assign, sell, transfer, give or
otherwise dispose of the Plan Shares, provided, however, that all of the
aforesaid restrictions shall lapse and shall no longer apply to:
(a) Any Plan Shares owned by the Purchaser upon the Purchaser's death.
(b) Any Plan Shares owned by the Purchaser upon the Purchaser's
"Disability" (as that term is specifically defined in Paragraph 9 hereof).
(c) As to twenty percent (20%) of the Plan Shares on each of the first,
second, third, fourth and fifth anniversary of the Closing Date for such Plan
Shares, provided that the Purchaser is at each such date an employee or
<PAGE> 2
director of the Corporation.
(d) Any Plan Shares owned by the Purchaser upon the occurrence of a
Change of Control unless such Change of Control shall have been approved by a
resolution adopted by the Board of Directors of the Corporation with at least
two-thirds (2/3) of the then serving Corporation directors who were Corporation
directors as of November 6, 1991 voting in favor. As used herein, a "Change of
Control" shall be deemed to have occurred (i) if any "person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended [the "1934 Act"]), other than the Corporation or any employee stock plan
of the Corporation, is or becomes the beneficial owner, directly or indirectly,
of securities of the Corporation representing fifteen percent (15%) or more of
the outstanding Common Stock of the Corporation; or (ii) ten (10) days following
the commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by any "person" of fifteen percent (15%) or more of the Common Stock
of the Corporation, provided, however, that at the conclusion of such ten (10)
day period such person has not discontinued or rescinded his intention to make
such a tender or exchange offer, or (iii) if during any consecutive twelve (12)
month period beginning on or after November 6, 1991 individuals who at the
beginning of such period were directors of the Corporation cease, for any
reason, to constitute at least a majority of the Board of Directors of the
Corporation; or (iv) if a merger of, or consolidation involving, the Corporation
in which the Corporation's stock is converted into securities of another
corporation or into cash shall be consummated, or a plan of complete liquidation
of the Corporation (whether or not in connection with a sale of all or
substantially all of the Corporation's assets) shall be adopted and consummated,
or substantially all of the Corporation's operating assets are sold (whether or
not a plan of liquidation shall be adopted or a liquidation occurs), excluding
in each case a transaction solely for the purpose of reincorporating the
Corporation in a different jurisdiction or recapitalizing the Corporation's
stock.
(e) The occurrence of the events described in the aforementioned
Subsections (a), (b), (c) and (d) shall each be deemed a ("Lapsing Event").
(f) Plan Shares as to which the restrictions on disposition have not
lapsed are hereinafter referred to as "Restricted Shares."
(g) Any disposition or encumbrance of any Restricted Shares contrary to
the provisions hereof shall be null and void, and the Corporation shall have no
obligation to recognize or give effect to such disposition or encumbrance on its
books and records or otherwise.
4. ADDITIONAL SHARES. As used in this Agreement, the term "Restricted
Shares" shall be deemed to include any securities issued in respect of the
Restricted Shares as a result of a stock split, stock dividend, combination of
shares or an exchange for other securities by reclassification, redesignation,
merger, consolidation, recapitalization or otherwise.
5. ESCROW OF SHARE CERTIFICATES. Certificates representing Plan Shares
shall be delivered to Devine, Millimet & Branch, P.A., of Manchester, New
Hampshire, as Escrow Agent. The Escrow Agent will deliver any Plan Shares as to
which restrictions have lapsed pursuant to Section 3 above to the Purchaser as
soon as practicable after receipt of written notice signed by either the
President, Secretary or Treasurer of the Corporation that a Lapsing Event has
occurred. Such notice shall identify the Lapsing Event, and shall instruct the
Escrow Agent to deliver such Plan Shares as to which restrictions have
2
<PAGE> 3
lapsed.
The Escrow Agent will deliver all Plan Shares then held in escrow to
the Purchaser as to which restrictions have lapsed pursuant to Section 3(e) upon
receipt of written notice signed by Purchaser that a Lapsing Event pursuant to
Section 3(e) has occurred.
6. TAX LIABILITY OF THE PURCHASER AND PAYMENT OF TAXES. The Purchaser
agrees that, to the extent that the lapsing of restrictions on disposition of
any of the Restricted Shares or the declaration of dividends on any such shares
before the lapse of such restrictions on disposition results in the Purchaser's
being deemed to be in receipt of earned income under the provisions of the
Internal Revenue Code of 1986, as amended, the Corporation shall be entitled to
immediate payment from the Purchaser of the amount of any tax required to be
withheld by the Corporation with respect to such earned income as follows:
(i) in cash to the extent of the greater of two thousand, five hundred
dollars ($2,500.00) or ten percent (10%) of such withholding tax, and
(ii) by the Purchaser's issuing a promissory note (the "Promissory
Note") to the Corporation in principal amount equal to the full amount of the
balance of such withholding tax, which Promissory Note shall be due and payable
with interest at the annual rate of the prime rate of Fleet Bank of
Massachusetts, N.A. in effect at the date of the note plus one percent (1%),
ninety (90) days after the date on which the taxable event has occurred. The
Promissory Note shall also provide for mandatory prepayments equal to (a)
twenty-five percent (25%) of any net cash compensation, payable to the Purchaser
by the Corporation after the date of the Promissory Note, and (b) one hundred
percent (100%) of the proceeds from the sale by Purchaser of any of the Plan
Shares then owned. The Promissory Note shall be secured by a pledge of all the
Plan Shares which caused the tax liability to occur. Said Promissory Note and
pledge shall each be in form and substance reasonably satisfactory to the
Corporation. In the event Purchaser does not comply with the foregoing within
three (3) days after the due date for payment and presentation of documentation
indicating the tax required to be withheld by the Corporation, the Corporation,
in addition to its other remedies, will be entitled to the entire amount due
hereunder from any salary or any other payments due to the Purchaser from the
Corporation.
7. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION 16 OF THE
1934 ACT. If the Purchaser is subject to Section 16 of the 1934 Act, Section 16
requires that at least six (6) months must elapse from the date of purchase of
the Shares to the date of disposition.
8. SECURITIES LAW COMPLIANCE. The Purchaser represents that any sales
of Plan Shares at a time when the Purchaser may be deemed an "affiliate" of the
Corporation for purposes of the Securities Act of 1933, as amended (the "Act"),
shall be made in accordance with the requirements of Rule 144 under the Act (or
any successor rule) applicable to sales by an "affiliate" of shares registered
under the Act or in a transaction otherwise exempt from the registration
requirements of the Act and as to which the Corporation shall have received an
opinion of counsel satisfactory to it confirming such exemption.
9. CORPORATION'S DUTY ON OCCURRENCE OF LAPSING EVENT. Upon the
occurrence of a Lapsing Event described in Section 3(c) or 3(d), the
Corporation shall give notice of such event to the Escrow Agent immediately,
3
<PAGE> 4
but in no event, later than fifteen days after such event. Upon the occurrence
of a Lapsing Event described in Section 3(a) or 3(b) and upon receipt of written
request of a duly appointed executor or administrator of the estate of the
Purchaser, in the case of death of the Purchaser or the duly authorized
representative of the Purchaser or the Purchaser, in the case of Disability of
the Purchaser, and of documentation reasonably satisfactory to the Corporation
which substantiates the fact of death or Disability, the Corporation shall
notify the Escrow Agent as soon as practicable, but in no event, later than
fifteen (15) days after receipt of such request.
The term "Disability" shall mean permanent and total disability as
defined in the Corporations's Wage Continuation Plan in effect at the time such
Disability is being determined.
10. Sale of Restricted Shares to Corporation Upon Termination of
------------------------------------------------------------
Service.
- -------
(a) In the event that the Purchaser's employment with, or position as a
director of, the Corporation terminates for any reason (hereinafter
"Termination") other than death, Disability or Change of Control as defined in
Section 3(e) above, then, the Corporation shall send written notice to the
Escrow Agent of such Termination no later than thirty (30) days after the
effective date thereof. Such notice shall contain instructions to the Escrow
Agent of either (i) the Corporation's intention to repurchase the Restricted
Shares from Purchaser, or (ii) the Corporation's determination not to purchase
all or any portion of the Restricted Shares.
(b) If the Corporation elects to purchase the Restricted Shares from
the Purchaser, the Escrow Agent shall deliver such Restricted Shares immediately
to the Secretary of the Corporation and the Corporation shall contemporaneously
with the receipt thereof make payment to the Purchaser at the price specified in
Section 1 above.
(c) If the Corporation elects not to purchase all or any portion of the
Restricted Shares, the Escrow Agent shall forthwith deliver one or more
certificates representing the Restricted Shares the Corporation has determined
not to purchase to the Purchaser and the Purchaser shall be restored to all
rights as a stockholder with respect to those shares as of the effective date of
Termination. The Corporation may impose such restrictions as it deems
appropriate on the transfer of the Restricted Shares which it does not purchase
hereunder, subject to the limitations set forth in Paragraph 7 of the 1985 Plan.
(d) If the Corporation does not within sixty (60) days after the
effective date of Termination give written instructions to the Escrow Agent,
then the Corporation will be deemed to have instructed the Escrow Agent to
purchase the Restricted Shares from the Purchaser and the terms of Subsection
(b) above shall apply.
11. EQUITABLE RELIEF, CONSENT TO JURISDICTION AND APPOINTMENT OF AGENT
FOR SERVICE OF PROCESS. The Purchaser specifically acknowledges and agrees that
in the event of a breach or threatened breach of the provisions of this
Agreement or the 1985 Plan, including the attempted transfer of the Restricted
Shares by the Purchaser, monetary damages may not be adequate to compensate the
Corporation, and, therefore, in the event of such a breach or threatened breach,
in addition to any right to damages, the Corporation shall be entitled to
equitable relief in any court having competent jurisdiction. Nothing herein
shall be construed as prohibiting the Corporation from pursuing any
4
<PAGE> 5
other remedies available to it for any such breach or threatened breach.
The Purchaser specifically consents to the jurisdiction of the courts
of the State of New Hampshire and to the appointment of the Secretary of the
Corporation as his or her agent for the service of process in any action,
whether at law or in equity, brought by the Corporation to protect any of its
rights hereunder or under the 1985 Plan.
12. NO IMPLIED AGREEMENT. Nothing herein contained shall be deemed to
give the Purchaser the right to be retained in the employ of the Corporation.
13. NOTICES. All notices required by this Agreement shall be in
writing signed by the party giving such notice and shall be delivered by
registered or certified mail, postage prepaid, to the addresses set forth
below:
To the Corporation: Ekco Group, Inc.
98 Spit Brook Road, Suite 102
Nashua, New Hampshire 03062
Attention: Corporate Secretary
To the Purchaser: Purchaser's last address in the records of
the Corporation
14. BINDING EFFECT. This Agreement shall be binding upon the
parties hereto and upon their respective successors and assigns and upon
Purchaser's heirs, executors and administrators.
15. GOVERNING LAW. This Agreement shall be interpreted and
construed in accordance with the laws of the State of New Hampshire.
16. SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, then such
provision or provisions shall be modified to the extent necessary to make such
provision valid and enforceable, and to the extent that this is impossible, then
such provision shall be deemed to be excised from this Agreement, and the
validity, legality and enforceability of the rest of this Agreement shall not be
affected thereby.
17. ENTIRE AGREEMENT. This Agreement and the 1985 Plan constitute
the entire agreement among the parties with respect to the subject matter
hereof, and may not be modified, amended, renewed, or terminated, nor may any
term, condition or breach of any term or condition be waived, except by a
writing signed by the person or persons sought to be bound by such modification,
amendment, renewal, termination or waiver. Any waiver of any term, condition or
breach hereof shall not be a waiver of any other term or condition or of the
same term or condition for the future, or of any subsequent breach.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
EKCO GROUP, INC.
By:
---------------------------
Title:
------------------------
5
<PAGE> 6
PURCHASER:
--------------------------------
6
<PAGE> 7
<TABLE>
EKCO GROUP, INC.
SCHEDULE TO
FORM OF RESTRICTED STOCK PURCHASE AGREEMENT, AS AMENDED
FOR THE QUARTERLY PURCHASE OF RESTRICTED STOCK
Each of the following employees of the Company has the following
Restricted Stock Purchase Agreements with the Company pursuant to the Company's
1985 Restricted Stock Plan which are identical in form to the foregoing Form of
Restricted Stock Purchase Agreement, as amended, except as to the number of
shares:
<CAPTION>
Name and Job Title(s) Date No. of Shares
- --------------------- ---- -------------
<S> <C> <C>
Robert Stein 04/02/95 490
President & Chief 07/02/95 491
Executive Officer 10/01/95 490
12/31/95 491
Jeffrey A. Weinstein 04/02/95 264
Executive Vice Presi- 07/02/95 265
dent, Secretary & 10/01/95 265
General Counsel 12/31/95 265
Donato A. DeNovellis 04/02/95 245
Executive Vice Presi- 07/02/95 245
dent, Finance & Admi- 10/01/95 245
nistration, & Chief 12/31/95 246
Financial Officer
Brian R. McQuesten 04/02/95 309
Vice President & 07/02/95 309
Controller 10/01/95 309
12/31/95 309
</TABLE>
7
<PAGE> 1
EXHIBIT 10.2(b)(1)
------------------
FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT, AS AMENDED
-----------------------------------------------------------------------
CENTRONICS CORPORATION
----------------------
AGREEMENT made as of the 8th day of September 1987 between
Centronics Corporation (the "Company"), a Delaware corporation having a
principal place of business in Nashua, New Hampshire, and [NAME OF EMPLOYEE], of
[ADDRESS OF EMPLOYEE], an employee of the Company (the "Employee");
WHEREAS, the Company desires to grant to the Employee an
Option to purchase shares of its common stock of a par value of $.01 a share
(the "Shares") under and for the purposes of the Company's 1987 Stock Option
Plan of the Company, (the "Plan") pursuant to Article XII thereof;
WHEREAS, the Company and the Employee understand and agree
that any terms used herein have the same meanings as in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the parties
hereto agree as follows:
1. GRANT OF OPTION
---------------
The Company hereby irrevocably grants to the Employee the
right and option to purchase at one time or from time to time all or any part of
an aggregate of [NUMBER OF SHARES GRANTED] ( ) Shares, subject to adjustment as
provided in the Plan (the "Option"), on the terms and conditions and subject to
all the limitations set forth herein and in the Plan, which is incorporated
herein by reference. The Employee acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE
--------------
The purchase price of the Shares covered by this Option shall
be Three and Eleven Sixteenths Dollars ($3.6875) per Share, subject to
adjustment as provided in the Plan (the "Purchase Price").
3. EXERCISE OF OPTION
------------------
(a) The Option granted hereby shall be exercisable as of the date first
above written (the "Grant Date").
(b) Notwithstanding the provisions of the foregoing Subsection (a) and
except as otherwise provided herein or in the Plan, if the Employee ceases to be
an employee of the Company or of an Affiliate for any reason, then if such
termination occurs:
(i) during the period on or after the Grant Date and before the date
which is twelve months thereafter (the "First Anniversary Date") and
the Employee has theretofore exercised the Option for any Shares, then
the Company may purchase any or all of those Shares from the Employee
at the price paid by the Employee upon exercise;
(ii) if such termination occurs on or after the First Anniversary
Date and before the date which is twelve months thereafter (the "Second
Anniversary Date") and the Employee has theretofore exercised the
Option
1
<PAGE> 2
for more than [ONE THIRD OF THE NUMBER OF SHARES GRANTED] ( ) Shares,
the Company may purchase any excess over [ONE THIRD OF THE NUMBER OF
SHARES GRANTED] ( ) Shares purchased by the Employee at the price paid
by the Employee upon exercise; or
(iii) if such termination occurs on or after the Second Anniversary
Date and before the date which is twelve months thereafter and the
Employee has theretofore exercised the Option for more than [TWO THIRDS
OF THE NUMBER OF SHARES GRANTED] ( ) Shares, the Company may purchase
any excess over [TWO THIRDS OF THE NUMBER OF SHARES GRANTED] ( ) Shares
purchased by the Employee at the price paid by the Employee upon
exercise.
Notwithstanding the foregoing, in the event the Employee's
employment shall terminate as a result of death or Disability, the Purchase
Option (as hereinbelow defined) shall cease and terminate.
The right of the Company to purchase Shares pursuant to this
Subsection 3(b) is hereinafter referred to as the "Purchase Option" and such
Shares are hereinafter referred to as the "Purchase Stock."
(c) Notwithstanding the foregoing Subsection (b), but not subject to
the other provisions hereof, the Purchase Option shall cease and terminate in
the event of, and immediately upon, a Change of Control that occurs at any time
before the Employee has ceased to be an employee of the Company or of an
Affiliate. As used herein, a "Change of Control" shall be deemed to have
occurred (i) if any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "1934 Act")),
other than the Company or any employee stock plan of the Company, is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing fifteen percent (15%) or more of the outstanding Common Stock of
the Company; or (ii) ten (10) days following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by any "person"
of fifteen percent (15%) or more of the outstanding Common Stock of the Company,
provided, however, that at the conclusion of such ten (10) day period such
person has not discontinued or rescinded his intention to make such a tender or
exchange offer, or (iii) if during any consecutive twelve (12) month period
beginning on or after the date on or after November 6, 1991 individuals who at
the beginning of such period were directors of the Company cease, for any
reason, to constitute at least a majority of the Board of Directors of the
Company; or (iv) if a merger of, or consolidation involving, the Company in
which the Company's stock is converted into securities of another corporation or
into cash shall be consummated, or a plan of complete liquidation of the Company
(whether or not in connection with a sale of all or substantially all of the
Company's assets) shall be adopted and consummated, or substantially all of the
Company's operating assets are sold (whether or not a plan of liquidation shall
be adopted or a liquidation occurs), excluding in each case a transaction solely
for the purpose of reincorporating the Company in a different jurisdiction or
recapitalizing the Company's stock.
4. TERM OF OPTION
--------------
The Option shall terminate eleven (11) years from the date of
this Agreement, but shall be subject to earlier termination as provided herein
or in the Plan.
If the Employee ceases to be an employee of the Company or of
an
2
<PAGE> 3
Affiliate (for any reason other than death or Disability or termination by the
Employee's employment [sic] for cause), the Option may be exercised within six
(6) months and one (1) day after the date the Employee ceases to be an employee,
or within eleven (11) years from the granting of the Option, whichever is
earlier, but may not be exercised thereafter.
In the event of the Disability of the Employee (as determined
by the Company pursuant to the provisions of the Employment Agreement, and as to
the fact and date of which the Employee is notified in writing), the Option
shall be exercisable within one (1) year after the date of such Disability or,
if earlier, the term originally prescribed by this Agreement.
In the event of the death of the Employee while an employee of
the Company or of an Affiliate, the Option may be exercised by the Employee's
legal representatives and/or any person or persons who acquired the Employee's
rights to the Option by will or by the laws of descent and distribution. The
Company shall give a notice to the Employee's legal representative, if known, or
his next of kin or other persons likely to know his legal representative, within
three (3) months of the date of death. In such event, the Option must be
exercised, if at all, prior to the happening of the later to occur of one (1)
year after the date of death of the Employee or nine (9) months from the date of
notice by the Company, but in no event later than the expiration of the
originally prescribed term of the Option.
5. NON-ASSIGNABILITY
-----------------
The Option shall not be transferable by the Employee otherwise
than by will or by the laws of descent and distribution and shall be
exercisable, during the Employee's lifetime, only by the Employee or by the
Employee's duly appointed legal representative. The Option shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
Any attempted transfer, assignment, pledge, hypothecation or other disposition
of the Option or of any rights granted hereunder contrary to the provisions of
this Section 5, or the levy of any attachment or similar process upon the Option
or such rights, shall be null and void.
6. EXERCISE OF OPTION AND ISSUE OF SHARES
--------------------------------------
The Option may be exercised, in whole or in part, at one time
or from time to time (to the extent that it is exercisable in accordance with
its terms) by giving written notice to the Company. Such written notice shall be
signed by the person exercising the Option, shall state the number of Shares
with respect to which the Option is being exercised, shall contain any warranty
required by Section 7 below, and shall otherwise comply with the terms and
conditions of this Agreement and the Plan. The Company shall pay all original
issue taxes with respect to the issue of the Shares pursuant hereto and all
other fees and expenses necessarily incurred by the Company in connection
herewith. Except as specifically set forth herein, the holder acknowledges that
any income or other taxes due from him with respect to the Option or the shares
issuable pursuant to the Option shall be the responsibility of the holder. The
holder of the Option shall have rights as a shareholder only with respect to any
Shares covered by the Option after due exercise of the Option and tender of the
full exercise price for the shares being purchased pursuant to such exercise.
Pursuant to the Plan, the Company shall make delivery of the Shares against
payment of the Option price therefor.
3
<PAGE> 4
7. PURCHASE FOR INVESTMENT
-----------------------
Unless the offering and sale of the Shares to be issued upon
the particular exercise of the Option shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended, or any
successor legislation (the "Act"), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the Company,
at the time of such exercise, that such person(s) are acquiring such
Shares for his or her own account, for investment and not with a view
to, or for sale in connection with, the distribution of any such
Shares, in which event the person(s) acquiring such Shares shall be
bound by the provisions of the following legend which shall be endorsed
upon the certificate(s) evidencing their option Shares issued pursuant
to such exercise:
"The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, in the absence
of an effective registration statement for the shares under
the Securities Act of 1933 or an opinion of counsel
satisfactory to the Company that an exemption from
registration is then available."
(b) The Company shall have received an opinion of its counsel that the
Shares may be issued upon such particular exercise in compliance with
the Act without registration thereunder.
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any reasonable action or obtaining of any
consent, which the Company deems reasonably necessary under any applicable law
(including without limitation state securities or "blue sky" laws).
8. RESTRICTIONS ON TRANSFER OF SHARES; DETAILS OF THE PURCHASE
-----------------------------------------------------------
OPTION
- ------
(a) Any Shares which are subject to the Purchase Option shall not be
transferred by the Employee except as permitted herein. Until the termination of
this Agreement, the Shares which are subject to the Purchase Option may not be
transferred by the Employee unless and until the transferee agrees, in a form
satisfactory to the Company, to be bound by this Agreement and to sell any
transferred Shares to the Company as herein provided.
(b) In the event the Company shall be entitled to elect to exercise the
Purchase Option, the Company shall be deemed to have made such election unless
it shall give to the Employee notice of its non-election to exercise the
Purchase Option, in whole or in part, within ninety (90) days of the date of the
event entitling the Company to exercise the Purchase Option.
(c) In the event the Company shall be entitled to and shall have
determined to elect to exercise the Purchase Option, it shall give to the
Employee a written notice specifying a date for the Closing, which date shall be
not more than ten (10) business days after the giving of such notice. The
Closing shall take place at the Company's principal offices in New Hampshire, or
such other location as the Company may reasonably designate in such notice. If
the Company shall be deemed to have elected to exercise the Purchase Option by
virtue of the provisions of Subsection (b) above, the Closing will take
4
<PAGE> 5
place on the tenth business day after the Company will be deemed to have so
elected under said Subsection (b).
(d) At the Closing, the Employee shall deliver the Purchase Stock being
purchased by the Company against the simultaneous delivery to the Employee of
the purchase price (by certified or bank cashier's check or in such other form
as mutually agreed to) for the number of shares of the Purchase Stock then being
purchased. In the event that the Employee fails so to deliver the shares of
Purchase Stock to be purchased, the Company may elect (a) to establish a
segregated account in the amount of the Purchase Price, such account to be
turned over to the Employee upon delivery of such shares of Purchase Stock, and
(b) immediately to take such action as is appropriate to transfer record title
of such of the Purchase Stock from the Employee to the Company and to treat the
Employee and such shares of the Purchase Stock in all respects as if delivery of
such shares of the Purchase Stock had been made as required by this Agreement.
The Employee hereby irrevocably grants the Company a power of attorney for the
purpose of effectuating the preceding sentence.
(e) If the Company shall pay a stock dividend or declare a stock split
on or with respect to any of the Company's Common Stock, or otherwise distribute
securities of the Company to the holders of its Common Stock, whether before or
after the exercise of the Option, the number of shares of stock or other
securities of the Company issued with respect to the Purchase Stock then subject
to the Purchase Option shall be added to the Purchase Stock then subject to the
Purchase Option without any change in the aggregate purchase price. If the
Company shall distribute to its stockholders shares of stock of another
corporation, the shares of stock of such other corporation distributed with
respect to the Purchase Stock then subject to the Purchase Option shall be added
to the Purchase Stock covered by the Purchase Option without any change in the
aggregate purchase price. Without limiting the generality of the foregoing, the
Employee shall be entitled to retain any and all cash dividends paid by the
Company on the Shares.
(f) If the outstanding shares of Common Stock of the Company shall be
subdivided into a greater number of shares or combined into a smaller number of
shares, or in the event of a reclassification of the outstanding shares of
Common Stock of the Company, or if the Company shall be a party to any capital
reorganization, whether before or after the exercise of the Option, there shall
be substituted for the Purchase Stock then covered by the Purchase Option such
amount and kind of securities as are issued in such subdivision, combination,
reclassification, or capital reorganization in respect of the Purchase Stock
subject to the Purchase Option immediately prior thereto, without any change in
the aggregate purchase price.
(g) If the Company shall be completely liquidated, then the Purchase
Option shall cease and terminate as of the date of such liquidation and the
Employee shall hold the Shares free of the Purchase Option.
(h) The Company shall not be required to transfer any Shares on its
books which shall have been sold, assigned or otherwise transferred in violation
of this Agreement, or to treat as owner of such Shares, or to accord the right
to vote as such owner or to pay dividends to, any person or organization to
which any such Shares shall have been sold, assigned or otherwise transferred,
from and after any sale, assignment or transfer of any Shares made in violation
of this Agreement.
(i) All certificates representing any Shares to be issued to the
5
<PAGE> 6
Employee pursuant to the exercise of the Option which are subject to the
Purchase Option shall have endorsed thereon a legend substantially as follows:
"The shares represented by this certificate are subject to a Stock Option and
Repurchase Agreement dated as of September 8, 1987 between the Corporation and
[NAME OF EMPLOYEE], a copy of which Agreement is available for inspection at the
principal offices of the Company or will be made available upon request."
(j) This Agreement shall not restrict the transfer by the Employee of
shares, if any, which are not acquired pursuant to the exercise of the Option or
which are not, or cease to be, subject to the Purchase Option in accordance with
the terms hereof.
9. REGISTRATION RIGHTS
-------------------
The Employee acknowledges that simultaneously with the
execution of the Option Agreement, comparable option agreements have been
executed by the Company with [NO. OF HOLDERS] other employees ("Other Holders"),
each containing a section identical to this Section 9. Subject to the terms
hereinafter set forth, at any time after the Grant Date, the holder shall have
the right, by written notice to the Company, to require the Company to file and
use its best efforts to cause to become effective a registration statement under
the Securities Act of 1933, as amended (the "Act") on Form S-2 or Form S-3 or
other like form, if available, covering such number of Shares acquired or to be
acquired prior to the effective date of such registration statement, subject to
the limitations that (i) the Company shall be required to file no more than an
aggregate of two (2) registration statements pursuant to such notices and/or
pursuant to notices received from Other Holders, and (ii) if, in the opinion of
counsel to the Company, the holder can then sell, subject to such limitations as
to the number of Shares which may be sold as may be imposed by Rule 144 under
the Act or any successor rule, Shares requested to be included in any such
registration statement, without such registration, the Company need not so
register such Shares. In no event will the Company be required to register
Shares which are subject to the Purchase Option. The Company agrees to promptly
notify a holder in the event that it receives a notice from any of the Other
Holders requiring it to file a registration statement and to permit the holder
to require the Company to include Shares owned by the holder in such
registration statement, subject to the limitations set forth above.
(a) In connection with any registration statement pursuant to this
Section 9 [sic]:
(i) the holder will furnish to the Company in writing such appropriate
information as the Company, or the Securities and Exchange Commission
(the "Commission") or any other regulatory authority may request;
(ii) the holder agrees to execute, deliver and/or file with or supply
to the Company, the Commission, any underwriters and/or any state or
other regulatory authority such information, documents,
representations, undertakings and/or agreements necessary to carry out
the provisions of the registration agreements contained in this
Agreement and/or to effect the registration or qualification of the
Shares under the Act and/or any of the laws and regulations of any
state or governmental instrumentality;
(iii) the Company will furnish to the holder of Shares included in the
registration statement such number of copies of such prospectus
(including each preliminary, amended or supplemental prospectus) as the
6
<PAGE> 7
holder may reasonably request;
(iv) in the event an offering of securities by the Company is pending,
the Company shall have the right to require that the holder delay any
offering of Shares for a period of ninety (90) days after the effective
date of such pending offering (upon the Company's having first
delivered to the holder the written opinion of its principal
underwriter, or if there be none, then from an officer of the Company
based upon a good faith resolution of the Board of Directors to the
effect that the offering of such Shares will have an adverse effect on
the marketing of such pending offering).
(b) The Company will pay all its out-of-pocket expenses and
disbursements in connection with any registration statement filed under this
Section 9 [sic], including, without limitation, printing expenses, fees of the
Company's counsel and auditors, registration fees, Blue Sky fees and similar
costs.
(c) The Company will be obligated to keep any Demand Registration
Statement filed by it under this Section 9 [sic] effective under the Act for a
period of ninety (90) days after the actual effective date of such registration
statement and to prepare and file such supplements and amendments necessary to
maintain an effective registration statement for such period. As a condition to
the Company's obligation under this Section (c), the holder will execute and
deliver to the Company such written undertakings as the Company and its counsel
may reasonably require in order to assure full compliance with relevant
provisions of the Act.
(d) The Company will use its best efforts to register or qualify the
Shares covered by a registration statement filed pursuant hereto under such
securities or Blue Sky laws in such jurisdictions within the United States as
the holder may reasonably request, provided, however, that the Company reserves
the right, in its sole discretion, not to register or qualify such stock in any
jurisdiction where such stock does not meet with the requirements of such
jurisdiction or where the Company is required to qualify as a foreign
corporation to do business in such jurisdiction and is not so qualified therein
or is required to file any general consent to service of process.
(e) In the event that a holder has not sold all of his Shares on or
prior to the expiration of the period specified in Subsection (d) above, the
holder hereby agrees that the Company may deregister by post-effective amendment
any of his Shares covered by the registration statement or notification but not
sold on or prior to such date. The Company agrees that it will notify the holder
of the filing and effective date of such post-effective amendment.
(f) The holder agrees that upon notification by the Company that the
prospectus in respect to any public offering covered by the provisions hereof is
in need of revision, the holder will immediately upon receipt of such
notification (i) cease to offer or sell any securities of the Company which must
be accompanied by such prospectus; (ii) return to the Company all such
prospectuses in the hands of the holder; and (iii) not offer or sell any
securities of the Company until the holder has been provided with a current
prospectus and the Company has given the holder notification permitting the
holder to resume offers and sales.
10. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO
-----------------------------------------------
SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
- -------------------------------------------------
7
<PAGE> 8
If the Participant to whom the Option has been granted
pursuant to this Agreement is subject to Section 16 of the Securities Exchange
Act of 1934, as amended, Section 16 requires that at least six (6) months must
elapse from the date of grant of the Option to the date of disposition of the
Shares.
11. NOTICES
-------
Any notices required or permitted by the terms of this
Agreement or the Plan shall be given by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
To the Company: Centronics Corporation
Ten Tara Boulevard
Nashua, New Hampshire 03062
Attention: General Counsel
To the Employee: [NAME AND ADDRESS OF EMPLOYEE]
or to such other address as either party furnishes to the other by like notice.
Any such notice shall be deemed to have been given when mailed in accordance
with the foregoing provisions.
12. GOVERNING LAW
-------------
This Agreement shall be construed and enforced in accordance
with the law of the State of New Hampshire.
13. BENEFIT OF AGREEMENT
--------------------
This Agreement shall be for the benefit of and shall be
binding upon the heirs, executors, administrators, legal representatives and
successors of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed and delivered by its duly authorized officer and its corporate seal
to be hereunto affixed and the Employee has hereunto set his or her hand and
seal as of the day and year first above written in duplicate originals.
CENTRONICS CORPORATION
[SEAL]
By
---------------------------
---------------------------
EMPLOYEE
8
<PAGE> 9
<TABLE>
EKCO GROUP, INC.
SCHEDULE TO
FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT
DATED SEPTEMBER 8, 1987, AS AMENDED
Each of the following employees and former employees of the Company has
a Non-Qualified Stock Option and Repurchase Agreement, as amended, with the
Company dated September 8, 1987 which covers the following number of shares of
the Company's Common Stock pursuant to the Company's 1987 Stock Option Plan
which is identical in form to the foregoing Form of Non-Qualified Stock Option
and Repurchase Agreement, as amended, except as to the number of shares:
<CAPTION>
No. of
Shares
Name and Position Granted
- ----------------- -------
<S> <C>
Robert Stein 200,000
President & Chief
Executive Officer
Jeffrey A. Weinstein 120,000
Executive Vice Presid-
dent, Secretary &
General Counsel
Brian R. McQuesten 30,000
Vice President &
Controller
Linda R. Millman 30,000
Associate General
Counsel & Asst.
Secretary
Neil R. Gordon 30,000
Former Executive
Officer
</TABLE>
<PAGE> 1
EXHIBIT 10.2(b)(2)
-----------------
FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT, AS AMENDED
-----------------------------------------------------------------------
EKCO GROUP, INC.
----------------
AGREEMENT made as of the [DATE] (the "Grant Date"), between Ekco
Group, Inc. (the "Company"), a Delaware corporation having a principal place of
business in Nashua, New Hampshire, and [NAME AND ADDRESS OF EMPLOYEE], an
employee of the Company (the "Employee");
WHEREAS, the Company desires to grant to the Employee an Option to
purchase shares of its common stock of a par value of $.01 a share (the
"Shares") under and for the purposes of the Company's 1987 Stock Option Plan,
as amended (the "Plan") pursuant to Article XII thereof as a non-qualified
stock option;
WHEREAS, the Company and the Employee understand and agree that any
terms used herein have the same meanings as in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION
---------------
The Company hereby grants to the Employee the right and option to
purchase at one time or from time to time all or any part of an aggregate of
[NUMBER OF SHARES GRANTED] (______) Shares, subject to adjustment as provided in
the Plan, on the terms and conditions and subject to all the limitations set
forth herein and in the Plan, which is incorporated herein by reference. The
Employee acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE
--------------
The purchase price of the Shares covered by this Option shall be
[PURCHASE PRICE] ($____) per Share, subject to adjustment as provided in the
Plan (the "Purchase Price").
3. EXERCISE OF OPTION
------------------
(a) The Option granted hereby shall be exercisable immediately,
within the term set forth in Section 4 below, subject to the provisions of this
Agreement.
(b) Notwithstanding the provisions of the foregoing Subsection (a)
and except as otherwise provided herein or in the Plan, if the Employee ceases
to be an employee of the Company or of an Affiliate for any reason, then if such
termination occurs:
(i) during the period on or after the Grant Date and
before the date which is twelve months thereafter (the "First
Anniversary Date") and the Employee has theretofore exercised this
Option for any Shares, then the Company may purchase any or all of
those Shares from the Employee at the price paid by the Employee
upon exercise;
(ii) during the period on or after the First Anniversary Date
and before the date which is twelve months thereafter (the "Second
Anniversary Date") and the Employee has theretofore exercised this
Option for more than [ONE THIRD OF THE NUMBER OF SHARES GRANTED]
(___)
<PAGE> 2
Shares, then the Company may purchase from the Employee up to
that number of Shares equal to the amount by which the number of
Shares purchased by the Employee pursuant to this Option exceeds
[ONE THIRD OF THE NUMBER OF SHARES GRANTED] (____) Shares at the
price paid by the Employee upon exercise; or
(iii) during the period on or after the Second Anniversary Date
and before the date which is twelve months thereafter (the "Third
Anniversary Date") and the Employee has theretofore exercised this
Option for more than [TWO THIRDS OF THE NUMBER OF SHARES GRANTED]
(____) Shares, then the Company may purchase from the Employee up
to that number of Shares equal to the amount by which the number of
Shares purchased by the Employee pursuant to this Option exceeds
[TWO THIRDS OF THE NUMBER OF SHARES GRANTED] (____) Shares at the
price paid by the Employee upon exercise.
Notwithstanding the foregoing, in the event the Employee's
employment shall terminate as a result of death or Disability, the Purchase
Option (as hereinbelow defined) shall cease and terminate.
The right of the Company to purchase Shares pursuant to this
Subsection 3(b) is hereinafter referred to as the "Purchase Option" and such
Shares are hereinafter referred to as the "Purchase Stock."
(c) Notwithstanding the foregoing Subsection (b), but subject to the
other provisions hereof, the Purchase Option shall cease and terminate in the
event of, and immediately upon, a Change of Control that occurs at any time
before the Employee has ceased to be an employee of the Company or of an
Affiliate UNLESS SUCH CHANGE OF CONTROL SHALL HAVE BEEN APPROVED BY A
RESOLUTION ADOPTED BY THE BOARD OF DIRECTORS OF THE COMPANY WITH AT LEAST
TWO-THIRDS (2/3) OF THE THEN SERVING COMPANY DIRECTORS WHO ARE COMPANY
DIRECTORS AS OF THE DATE HEREOF VOTING IN FAVOR. As used herein, a "Change of
Control" shall be deemed to have occurred (i) if any "person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended [THE "1934 ACT"]), other than the Company or any employee stock plan of
the Company, is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing fifteen percent (15%) or more of
outstanding Shares of the Company; or (ii) ten (10) days following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by any "person" of fifteen percent (15%) or more of the Shares of the
Company, provided, however, that at the conclusion of such ten (10) day period
such person has not discontinued or rescinded his intention to make such a
tender or exchange offer, or (iii) if during any consecutive twelve (12) month
period beginning on or after the date on which this Agreement is executed
individuals who at the beginning of such period were directors of the Company
cease, for any reason, to constitute at least a majority of the Board of
Directors of the Company; or (iv) if a merger of, or consolidation involving,
the Company in which the Company's stock is converted into securities of
another corporation or into cash shall be consummated, or a plan of complete
liquidation of the Company (whether or not in connection with a sale of all or
substantially all of the Company's assets) shall be adopted and consummated, or
substantially all of the Company's operating assets are sold (whether or not a
plan of liquidation shall be adopted or a liquidation occurs), excluding in
each case a transaction solely for the purpose of reincorporating the Company
in a different jurisdiction or recapitalizing the Company's stock.
2
<PAGE> 3
4. TERM OF OPTION
--------------
(a) This Option shall terminate ten (10) years and one (1) month from
the Grant Date of this Option, but shall be subject to earlier termination as
provided herein or in the Plan.
(b) If the Employee ceases to be an employee of the Company or of an
Affiliate (for any reason other than death or Disability or termination by the
Employee's employer for cause), then this Option may be exercised (subject to
the provisions herein and in the Plan regarding exercise of the Option) but
only within six (6) months and one (1) day after the date on which the Employee
ceases to be an employee, or within ten (10) years from the granting of this
Option, whichever is earlier, and may not be exercised thereafter. Immediately
upon the Employee's ceasing to be an employee as aforesaid, this Option shall
cease to be exercisable by the Employee as to those Shares, if any, which if
purchased immediately following such termination would be subject to the
Company's Purchase Option.
The provisions of this Subsection (b), and not the provisions of
Subsection (c) and (d) below, shall apply to the Employee if the Employee
subsequently becomes Disabled or dies after the Employee's termination of
employment; however, in the case of the Employee's death which occurs within
the six (6) months and one (1) day following the termination of employment, the
Employee's Survivors may exercise this Option within six (6) months after the
date of the Employee's death, but in no event beyond the originally prescribed
term hereof.
(c) In the event of the Disability of the Employee (as determined by
the 1987 Stock Option Plan Committee of the Company, and as to the fact and
date of which the Employee is notified by that Committee in writing), this
Option shall be exercisable within (1) year after the date of such Disability
or, if earlier, the term originally prescribed by this Agreement.
(d) In the event of the death of the Employee while an employee of the
Company or of an Affiliate, this Option may be exercised only by the Employee's
legal representatives and/or any person or persons who acquired the Employee's
rights to this Option by will or by the laws of descent and distribution.
The Company shall use reasonable efforts to notify the Employee's
legal representative, if known, or his or her next of kin or other persons
likely to know his or her legal representative, promptly after the date of
death of the existence of this Option. Any failure by the Company to give
such notice will not extend the period of time during which this Option may be
exercised or otherwise entitle the holder to any greater rights than stated in
this Agreement or in the Plan. This Option must be exercised, if at all, within
one (1) year after the date of death of the Employee, or, if earlier, within the
originally prescribed term of this Option.
(e) In the event the Employee's employment is terminated by the
Employee's employer for "cause" (as defined in the Plan), the Employee's right
to exercise any unexercised portion of this Option shall cease forthwith, and
this Option shall thereupon terminate.
5. NON-ASSIGNABILITY
-----------------
This Option shall not be transferable by the Employee otherwise than
by will or by the laws of descent and distribution and shall be
3
<PAGE> 4
exercisable, during the Employee's lifetime, only by the Employee (or
by the Employee's duly appointed legal representative). This Option shall not
be assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar
process. Any attempted transfer, assignment, pledge, hypothecation or other
disposition of this Option or of any rights granted hereunder contrary to the
provisions of this Section 5, or the levy of any attachment or similar process
upon this Option or such rights, shall be null and void.
6. EXERCISE OF OPTION AND ISSUE OF SHARES
--------------------------------------
This Option may be exercised, in whole or in part, at one time
or from time to time (to the extent that it is exercisable in accordance with
its terms) by giving written notice to the Company. Such written notice shall be
signed by the person exercising this Option, shall state the number of Shares
with respect to which this Option is being exercised, shall contain any warranty
required by Section 7 below, and shall otherwise comply with the terms and
conditions of this Agreement and the Plan. Such notice must be received by the
Company within the relevant exercise period specified in Section 4 of this
Agreement. Such notice shall either: (i) be accompanied by payment of the full
purchase price of such Shares, in which event the Company, subject to the
provisions of Section 7, shall deliver a certificate or certificates
representing such Shares as soon as practicable after the notice shall be
received, or (ii) fix a date (not less than five nor more than ten business days
after such notice shall be received by the Company, which date must be within
the relevant exercise period specified in Section 4 of this Agreement) for the
payment of the full purchase price of such Shares against delivery subject to
the provisions of Section 7, of a certificate or certificates representing such
Shares. Payment of such purchase price shall, in either case, be made by check
payable to the order of the Company, or in such other manner as the Committee
shall permit. The certificate or certificates for the Shares as to which this
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising this Option and shall be delivered as provided
above to the person or persons exercising this Option. All Shares that shall be
purchased upon the exercise of this Option as provided herein shall be fully
paid and non-assessable.
The Employee agrees to pay to the Company upon exercise of this
Option that amount which is equal to the amount the Company is required to
withhold as a result of such exercise.
The Company shall pay all original issue taxes with respect to the
issue of the Shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection herewith. Except as specifically set
forth herein, the holder acknowledges that any income or other taxes due from
him or her with respect to this Option or the shares issuable pursuant to this
Option shall be the responsibility of the holder. The holder of this Option
shall have rights as a shareholder only with respect to any Shares covered by
this Option after due exercise of this Option and tender of the full exercise
price for the Shares being purchased pursuant to such exercise. Pursuant to the
Plan, the Company shall make deliver of the Shares against payment of the
Option price therefor.
7. PURCHASE FOR INVESTMENT
-----------------------
Unless the offering and sale of the Shares to be issued upon the
particular exercise of this Option shall have been effectively registered
4
<PAGE> 5
under the Securities Act of 1933, as now in force or hereafter amended,
or any successor legislation (the "Act"), the Company shall be under no
obligation to issue the Shares covered by such exercise unless and until the
following conditions have been fulfilled:
(i) The person(s) who exercise this Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for his or her own account, for investment and
not with a view to, or for sale in connection with, the distribution of
any such Shares, in which event the person(s) acquiring such Shares
shall be bound by the provisions of the following legend which shall in
substantially the following form be endorsed upon the certificate(s)
evidencing the option Shares issued pursuant to such exercise:
"The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, in the absence
of an effective registration statement for the shares under
the Securities Act of 1933 or an opinion of counsel
satisfactory to the Company that an exemption from
registration is then available."
(ii) The Company shall have received an opinion of its counsel that the
Shares may be issued upon such particular exercise in compliance with
the Act without registration thereunder.
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any reasonable action or obtaining of any
consent, which the Company deems reasonably necessary under any applicable law
(including without limitation state securities or "blue sky" laws).
8. RESTRICTIONS ON TRANSFER OF SHARES; DETAILS OF THE PURCHASE OPTION
------------------------------------------------------------------
(a) Any Shares which are subject to the Purchase Option shall not be
transferred by the Employee except as permitted herein. Until the termination of
this Agreement, the Shares which are subject to the Purchase Option may not be
transferred by the Employee unless and until the transferee agrees, in a form
satisfactory to the Company, to be bound by this Agreement and to sell any
transferred Shares to the Company as herein provided.
(b) In the event the Company shall be entitled to elect to exercise the
Purchase Option, the Company shall be deemed to have made such election with
respect to all Shares which are Purchase Stock, unless it shall have given to
the Employee written notice of its non-election to exercise the Purchase Option,
in whole or in part, within ninety (90) days of the date of the event entitling
the Company to exercise the Purchase Option. If the Company shall have given the
Employee written notice of its election to exercise the Purchase Option in part,
any remaining Shares subject to the Purchase Option hereunder shall thenceforth
no longer be subject to the Purchase Option, except as such notice may otherwise
provide.
(c) In the event the Company shall be entitled to and shall have
determined to elect to exercise the Purchase Option, it shall give to the
Employee a written notice specifying a date for the Closing, which date shall be
not more than ten (10) business days after the giving of such notice. The
Closing shall take place at the Company's principal offices in New Hampshire, or
such other location as the Company may reasonably designate in such notice. If
the Company shall be deemed to have elected to exercise the Purchase Option
5
<PAGE> 6
by virtue of the provisions of Subsection (b) above, the Closing will take
place on the tenth business day after the ninety (90) day period described in
Subsection (b) above.
(d) At the Closing, the Employee shall deliver the Purchase Stock being
purchased by the Company against the simultaneous delivery to the Employee of
the purchase price (by certified or bank cashier's check or in such other form
as mutually agreed to) for the number of shares of the Purchase Stock then being
purchased. In the event that the Employee fails so to deliver the shares of
Purchase Stock to be purchased, the Company may elect (a) to establish a
segregated account in the amount of the Purchase Price, such account to be
turned over to the Employee upon delivery of such shares of Purchase Stock, and
(b) immediately to take such action as is appropriate to transfer record title
of such of the Purchase Stock from the Employee to the Company and to treat the
Employee and such shares of the Purchase Stock in all respects as if delivery of
such shares of the Purchase Stock had been made as required by this Agreement.
The Employee hereby irrevocably grants the Company a power of attorney for the
purpose of effectuating the preceding sentence.
(e) If the Company shall pay a stock dividend or declare a stock split
on or with respect to any of the Company's common stock, $.01 par value (the
"Common Stock"), or otherwise distribute securities of the Company to the
holders of its Common Stock, whether before or after the exercise of this
Option, the number of shares of stock or other securities of the Company issued
with respect to the Purchase Stock then subject to the Purchase Option shall be
added to the Purchase Stock then subject to the Purchase Option without any
change in the aggregate purchase price. If the Company shall distribute to its
stockholders shares of stock of another corporation, the shares of stock of such
other corporation distributed with respect to the Purchase Stock then subject to
the Purchase Option shall be added to the Purchase Stock covered by the Purchase
Option without any change in the aggregate purchase price. Without limiting the
generality of the foregoing, the Employee shall be entitled to retain any and
all cash dividends paid by the Company on the Shares.
(f) If the outstanding shares of Common Stock of the Company shall be
subdivided into a greater number of shares or combined into a smaller number of
shares, or in the event of a reclassification of the outstanding shares of
Common Stock of the Company, or if the Company shall be a party to any capital
reorganization, whether before or after the exercise of this Option, there shall
be substituted for the Purchase Stock then covered by the Purchase Option such
amount and kind of securities as are issued in such subdivision, combination,
reclassification, or capital reorganization in respect of the Purchase Stock
subject to the Purchase Option immediately prior thereto, without any change in
the aggregate purchase price.
(g) If the Company shall be completely liquidated, then the Purchase
Option shall cease and terminate as of the date of such liquidation and the
Employee shall hold the Shares free of the Purchase Option.
(h) The Company shall not be required to transfer any Shares on its
books which shall have been sold, assigned or otherwise transferred in violation
of this Agreement, or to treat as owner of such Shares, or to accord the right
to vote as such owner or to pay dividends to, any person or organization to
which any such Shares shall have been sold, assigned or otherwise transferred,
from and after any sale, assignment or transfer of any Shares made in violation
of this Agreement.
6
<PAGE> 7
(i) All certificates representing any Shares to be issued to the
Employee pursuant to the exercise of this Option which are subject to the
Purchase Option shall have endorsed thereon a legend substantially as follows:
"The shares represented by this certificate are subject to a Stock
Option and Repurchase Agreement dated as of February 6, 1996 between
the Corporation and [NAME OF EMPLOYEE], a copy of which Agreement is
available for inspection at the principal offices of the Company or
will be made available without charge upon request."
(j) This Agreement shall not restrict the transfer by the Employee of
shares, if any, which are not acquired pursuant to the exercise of this Option
or which are not, or cease to be, subject to the Purchase Option in accordance
with the terms hereof, except as otherwise provided in Section 7 hereof.
9. REGISTRATION RIGHTS
-------------------
(a) In the event that the Company has an effective registration
statement covering the sale and resale of securities issued pursuant to the
Plan, then the Employee agrees to sign a waiver in substantially the following
form:
"For so long as a registration statement under the Securities Act of
1933, as amended, is in effect covering the sale and resale of
securities issued pursuant to the 1987 Stock Option Plan of Ekco Group,
Inc. (the "Company"), the undersigned Employee waives his/her rights to
require the Company to file a registration statement pursuant to
Section 9 of the Non-Qualified Stock Option and Repurchase Agreement
dated as of [DATE], between the undersigned Employee and the Company."
(b) The Employee acknowledges that option agreements have been executed
by the Company with [NO. OF EMPLOYEES] (____) other employees of the Company and
its Affiliates and [NO. OF OUTSIDE DIRECTORS] (____) Outside Directors of the
Company and may be executed with other employees and Directors (collectively
"Other Holders"), each containing or to contain a section substantially
identical to this Section 9. Subject to the terms hereinafter set forth, at any
time after the Grant Date, the holder shall have the right, by written notice to
the Company, to require the Company to file and use its best efforts to cause to
become effective a registration statement under the Securities Act of 1933, as
amended (the "Act") on Form S-8, Form S-2 or Form S-3 or other like form, if
available, covering such number of Shares acquired or to be acquired prior to
the effective date of such registration statement, subject to the limitations
that (i) the Company shall be required to file no more than an aggregate of two
(2) registration statements pursuant to such notices and/or pursuant to notices
received from Other Holders, and (ii) if, in the opinion of counsel to the
Company, the holder can then sell, subject to such limitations as to the number
of Shares which may be sold as may be imposed by Rule 144 under the Act or any
successor rule, Shares requested to be included in any such registration
statement, without such registration, the Company need not so register such
Shares. In no event will the Company be required to register Shares which are
subject to the Purchase Option. The Company agrees to promptly notify a holder
in the event that it receives a notice from any of the Other Holders requiring
it to file a registration statement and to permit the holder to require the
Company to include Shares owned by the holder in such registration statement,
subject to the limitations set forth above.
(c) In connection with any registration statement pursuant to this
7
<PAGE> 8
Section 9:
(i) the holder will furnish to the Company in writing such appropriate
information as the Company, or the Securities and Exchange Commission
(the "Commission") or any other regulatory authority may request;
(ii) the holder agrees to execute, deliver and/or file with or supply
to the Company, the Commission, any underwriters and/or any state or
other regulatory authority such information, documents,
representations, undertakings and/or agreements necessary to carry out
the provisions of the registration agreements contained in this
Agreement and/or to effect the registration or qualification of the
Shares under the Act and/or any of the laws and regulations of any
state or governmental instrumentality;
(iii) the Company will furnish to the holder of Shares included in the
registration statement such number of copies of such prospectus
(including each preliminary, amended or supplemental prospectus) as the
holder may reasonably request; and
(iv) in the event an offering of securities by the Company is pending,
the Company shall have the right to require that the holder delay any
offering of Shares for a period of ninety (90) days after the effective
date of such pending offering (upon the Company's having first
delivered to the holder the written opinion of its principal
underwriter, or if there be none, then from an officer of the Company
based upon a good faith resolution of the Board of Directors to the
effect that the offering of such Shares will have an adverse effect on
the marketing of such pending offering).
(d) The Company will pay all its out-of-pocket expenses and
disbursements in connection with any registration statement filed under this
Section 9, including, without limitation, printing expenses, fees of the
Company's counsel and auditors, registration fees, Blue Sky fees and similar
costs to the extent permitted by state and regulatory authorities.
(e) The Company will be obligated to keep any registration statement
filed by it under this Section 9 effective under the Act for a period of ninety
(90) days after the actual effective date of such registration statement and to
prepare and file such supplements and amendments necessary to maintain an
effective registration statement for such period. As a condition to the
Company's obligation under this Subsection (e), the holder will execute and
deliver to the Company such written undertakings as the Company and its counsel
may reasonably require in order to assure full compliance with relevant
provisions of the Act.
(f) The Company will use its best efforts to register or qualify the
Shares covered by a registration statement filed pursuant hereto under such
securities or Blue Sky laws in such jurisdictions within the United States as
the holder may reasonably request, provided, however, that the Company reserves
the right, in its sole discretion, not to register or qualify such stock in any
jurisdiction where such stock does not meet with the requirements of such
jurisdiction or where the Company is required to qualify as a foreign
corporation to do business in such jurisdiction and is not so qualified therein
or is required to file any general consent to service of process.
(g) In the event that a holder has not sold all of his or her Shares on
or prior to the expiration of the period specified in Subsection (e) above,
8
<PAGE> 9
the holder hereby agrees that the Company may deregister by post-effective
amendment any of his or her Shares covered by the registration statement or
notification but not sold on or prior to such date. The Company agrees that it
will notify the holder of the filing and effective date of such post-effective
amendment.
(h) The holder agrees that upon notification by the Company that the
prospectus in respect to any public offering covered by the provisions hereof is
in need of revision, the holder will immediately upon receipt of such
notification (i) cease to offer or sell any securities of the Company which must
be accompanied by such prospectus; (ii) return to the Company all such
prospectuses in the hands of the holder; and (iii) not offer or sell any
securities of the Company until the holder has been provided with a current
prospectus and the Company has given the holder notification permitting the
holder to resume offers and sales.
10. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION 16 OF THE
-----------------------------------------------------------------
SECURITIES EXCHANGE ACT OF 1934
- -------------------------------
IF THE PARTICIPANT TO WHOM THE OPTION HAS BEEN GRANTED
PURSUANT TO THIS AGREEMENT IS SUBJECT TO SECTION 16 OF THE 1934 ACT, SECTION 16
REQUIRES THAT AT LEAST SIX (6) MONTHS MUST ELAPSE FROM THE DATE OF GRANT OF THE
OPTION TO THE DATE OF DISPOSITION OF THE SHARES.
11. NOTICES
-------
Any notices required or permitted by the terms of this Agreement
or the Plan shall be given by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
To the Company: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: Associate General Counsel
To the Employee: To Employee's last address in the records of the
Company
or to such other address as either party furnishes to the other by like notice.
Any such notice shall be deemed to have been given when mailed in accordance
with the foregoing provisions.
12. GOVERNING LAW
-------------
This Agreement shall be construed and enforced in accordance
with the law of the State of New Hampshire, except to the extent the law of the
State of Delaware may be applicable.
13. BENEFIT OF AGREEMENT
--------------------
This Agreement shall be for the benefit of and shall be
binding upon the heirs, executors, administrators, legal representatives and
successors of the parties hereto, subject to the provisions of Section 5 above.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed and delivered by its duly authorized officer and its corporate seal
9
<PAGE> 10
to be hereunto affixed and the Employee has hereunto set his or her hand and
seal all as of the day and year first above written in duplicate originals.
EKCO GROUP, INC.
[SEAL]
By
------------------------------
Title
----------------------------
---------------------------------
EMPLOYEE
10
<PAGE> 11
<TABLE>
EKCO GROUP, INC.
SCHEDULE TO
FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT, AS AMENDED
Each of the following employees and former employees of the Company has
the following Non-Qualified Stock Option and Repurchase Agreements with the
Company which cover the following shares of the Company's Common Stock pursuant
to the Company's 1987 Stock Option Plan which agreements are identical in form
to the foregoing Form of Non-Qualified Stock Option and Repurchase Agreement, as
amended:
<CAPTION>
No. of
Shares Exercise
Name and Position Grant Date Granted Price
- ----------------- ---------- ------- --------
<S> <C> <C> <C>
Robert Stein 06/22/88 134,000 $ 2.1250
President & Chief 01/18/90 69,000 $ 2.5625
Executive Officer 01/13/92 77,000 $10.0625
01/19/93 120,000 $11.3125
01/24/94 75,000 $ 7.4375
01/03/95 66,359 $ 6.5000
02/06/98 66,359 $ 5.9375
Jeffrey A. Weinstein 06/22/88 80,000 $ 2.1250
Executive Vice Presid- 01/18/90 22,000 $ 2.5625
dent, Secretary & 01/03/95 16,491 $ 6.5000
General Counsel 02/06/96 16,491 $ 5.9375
Donato A. DeNovellis 07/14/93 30,000 $10.0625
Executive Vice Presi- 01/24/94 20,000 $ 7.4375
dent, Finance & Admi- 01/03/95 24,538 $ 6.5000
nistration, & Chief 02/06/96 24,538 $ 5.9375
Financial Officer
Brian R. McQuesten 06/22/88 50,000 $ 2.1250
Vice President & 01/18/90 8,500 $ 2.5625
Controller 01/13/92 9,500 $10.0625
01/19/93 10,000 $11.3125
01/24/94 8,500 $ 7.4375
01/03/95 6,992 $ 6.5000
02/06/96 8,401 $ 5.9375
Stuart B. Cohen 06/13/95 7,161 $ 6.0625
Vice President, Strate- 02/06/96 12,847 $ 5.9375
gic Planning & Busines
Development
John T. Haran 02/06/96 9,295 $ 5.9375
Vice President &
Treasurer
Linda R. Millman 02/06/96 3,000 $ 5.9375
Associate General
Counsel & Asst.
Secretary
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Neil R. Gordon 06/22/88 40,000 $ 2.1250
Former Executive 01/18/90 8,500 $ 2.5625
Officer 01/13/92 9,500 $10.0625
01/19/93 9,000 $11.3125
01/24/94 8,500 $ 7.4375
01/03/95 5,937 $ 6.5000
Richard J. Corbin 01/03/95 29,288 $ 6.5000
Former Executive
Officer
Ronald N. Fox 01/13/92 27,500 $10.0625
Former Executive 01/19/93 60,000 $11.3125
Officer 01/24/94 16,000 $ 7.4375
</TABLE>
12
<PAGE> 1
EXHIBIT 10.3(b)
---------------
<TABLE>
EKCO GROUP, INC.
INDEMNITY AGREEMENT
SCHEDULE
--------
Each of the following persons has an Indemnity Agreement with Ekco
Group, Inc. which is identical in form to the foregoing Form of Indemnity
Agreement except that agreements executed between February 17, 1987 and April
29, 1988 bear the former company name of Centronics Corporation and agreements
executed before February 17, 1987 bear the former company name of Centronics
Data Computer Corp.:
<CAPTION>
Present Position Date of
Name With the Company Agreement
- ---- ---------------- ---------
<S> <C> <C>
Stuart W. Cohen Vice President, Strategic 06-12-95
Planning & Business Develop-
ment
Edmond M. Coller Former Director 02-12-87
Richard J. Corbin Former Officer 10-26-94
Donato A. DeNovellis Executive Vice President, 10-26-94
Finance & Administration,
and Chief Financial Officer
Andrew D. Dunn Director 08-03-87
Ronald N. Fox Former Officer 06-30-87
Neil R. Gordon Former Officer 07-30-86
John T. Haran Vice President & Treasurer 02-06-96
Thomas G. Kamp Former Director & Officer 07-30-86
Michael D. Kaufman Former Director 01-04-87
Robert W. Kilcullen, Jr. Former Director & Officer 07-30-86
Milton C. Lauenstein Former Director 08-18-87
T. Michael Long Director 05-18-93
Brian R. McQuesten Vice President & Controller 07-30-86
Linda R. Millman Associate General Counsel 01-01-92
& Assistant Secretary
Kenneth J. Novack Former Director 08-10-87
Stuart B. Ross Director 02-14-89
Harold J. Seigle Former Director 08-03-87
Malcolm L. Sherman Director 05-25-95
Bill W. Sorenson Director 03-15-88
Herbert M. Stein Director 08-03-87
Robert Stein President & Chief 07-30-86
Executive Officer
Jeffrey A. Weinstein Executive Vice President, 07-30-86
Secretary & General Counsel
</TABLE>
<PAGE> 1
EXHIBIT 10.4
------------
EKCO GROUP, INC.
1988 DIRECTORS' STOCK OPTION PLAN, AS AMENDED
I. DEFINITIONS AND PURPOSES
------------------------
A. Definitions
Unless otherwise specified or unless the context otherwise
requires, the following terms, as used in this 1988 Directors'
Stock Option Plan, have the following meanings:
(1) "COMPANY" means Ekco Group, Inc.
(2) "PLAN" means this 1988 Directors' Stock Option Plan.
(3) "BOARD OF DIRECTORS" means the Board of Directors of
the Company.
(4) "AFFILIATE" means a corporation which owns at least
fifty percent (50%) of the outstanding capital stock
of the Company, directly or indirectly, or a
corporation in which the Company or an Affiliate,
directly or indirectly, owns at least fifty (50%) of
the outstanding capital stock of such corporation.
(5) "OUTSIDE DIRECTOR" means any Director of the Company
who is not an employee of the Company or of an
Affiliate at the time of the grant of the Option, who
has not been an employee of the Company or of an
Affiliate at any time within one (1) year prior to
such time of grant and who has been elected to serve
as a Director by the Company's stockholders.
(6) "OPTION" means a right or option granted under the
Plan.
(7) "OPTION AGREEMENT" means an agreement between the
Company and a Participant executed and delivered
pursuant to the Plan.
(8) "PARTICIPANT" means an Outside Director to whom an
Option is granted under the Plan, or, where the
context requires, his or her legal representative.
(9) "PARTICIPANT'S SURVIVORS" means a deceased
Participant's legal representatives and/or any person
or persons who acquired the Participant's rights to
an Option by will or by the laws of descent and
distribution.
(10) "SHARES" means the following shares of the capital
stock of the Company as to which Options have been or
may be granted under the Plan: Common Stock, $0.01
par value, or any shares
(08-22-95)
<PAGE> 2
of capital stock into which the Shares are changed or
for which they are exchanged within the provisions of
Article VII of the Plan. The shares issued upon
exercise of Options granted under the Plan may be
authorized and unissued shares or shares held by the
Company in its treasury, or both.
B. Purposes of the Plan:
---------------------
The Plan is intended to encourage ownership of shares
by Outside Directors in order to attract such Outside
Directors, to induce such Outside Directors to remain
as Directors of the Company and to provide additional
incentive for such Outside Directors to promote the
success of the Company. The Plan is intended to
comply in all respects with Rule 16b-3 or its
successors, promulgated pursuant to Section 16 of the
Securities Exchange Act of 1934, as amended (the
"1934 Act"), with respect to Participants who are
subject to Section 16 of the 1934 Act, and any
provision in this Plan with respect to such persons
contrary to Rule 16b-3 shall be deemed null and void
to the extent permissible by law.
II. SHARES SUBJECT TO THE PLAN
--------------------------
The aggregate number of Shares as to which Options may be granted from
time to time shall be 600,000 Shares as of the date of adoption of this
Plan (and the equivalent of stock-split, stock dividend, combination,
recapitalization or similar transaction effected after such date).
If an Option ceases to be "outstanding", in whole or in part, the
Shares which were subject to such Option shall be available for the
granting of other Options under the Plan. Any Option shall be treated
as "outstanding" until such Option is exercised in full or terminates
or expires under the provisions of the Plan or by agreement of the
parties to the pertinent Option Agreement. The aggregate number of
Shares as to which Options may be granted shall be subject to change
only by means of an amendment of the Plan duly adopted by the Company
and approved by the stockholders of the Company within twelve (12)
months before or after the date of the adoption of any such amendment,
subject to the provisions of Article VII.
III. ELIGIBILITY FOR PARTICIPATION
-----------------------------
Each Participant must be an Outside Director of the Company at the time
an Option is granted. Upon the later of the approval of this Plan by
the Board of Directors of the Company or the date on which he or she
becomes an Outside Director (the "Grant Date"), each Outside Director
shall be automatically granted an Option with an exercise price equal
to the fair market value of a Share determined as set forth in
subparagraph A(2) of Article IV below and for that number of Shares as
is determined by dividing (i) $100,000 by (ii) the fair market value of
a Share determined as set forth in subparagraph A(2) of Article IV,
rounded to the nearest whole Share, but in no event to be greater than
50,000 Shares. No Outside Director shall be entitled to be granted more
than one Option pursuant to this Plan.
IV. TERMS AND CONDITIONS OF OPTIONS
-------------------------------
2
<PAGE> 3
Each Option shall be set forth in an Option Agreement substantially in
the form hereto annexed and marked Exhibit A, duly executed on behalf
of the Company and by the Participant to whom such Option is granted.
No Option shall be exercisable unless an Option Agreement shall have
been duly executed on behalf of the Company and by the Participant.
Each such Option Agreement shall be subject to at least the following
terms and conditions:
A. Exercise Price:
--------------
(1) The exercise price (per share) of the Shares covered by each
Option shall be the "fair market value" as hereinafter defined
(per share) of the Shares, determined as of the Grant Date.
(2) For purpose of the forgoing subparagraph (1), fair market
value shall be determined as follows. If such Shares are then
listed on any national securities exchange, the fair market
value shall be the mean between the high and low sales prices,
if any, on the largest such exchange on which such prices were
reported for the Grant Date, or, if none, on the most recent
trade date thirty (30) days or less prior to the Grant Date
for which such prices are reported. If the Shares are not then
listed on any such exchange, the fair market value of such
shares shall be the mean between the closing "Bid" and the
closing "Ask" prices, if any, as reported in the National
Association of Securities Dealers Automated Quotation System
("NASDAQ") for the Grant Date, or if none, on the most recent
trade date thirty (30) days or less prior to the Grant Date
for which such quotations are reported. If the Shares are not
then either listed on any such exchange or quoted in NASDAQ,
the fair market Value shall be the mean between the average of
the "Bid" and the average of the "Ask" prices, if any, as
reported in the National Daily Quotation Service for the Grant
Date, or if none, for the most recent trade date thirty (30)
days or less prior to the Grant Date for which such quotations
are reported. If the fair market value cannot be determined
under the preceding three sentences, it shall be determined in
good faith by the Board of Directors.
B. Number of Shares:
----------------
Each Option shall be for that number of Shares as is
determined by dividing (i) $100,000 by (ii) the fair market
value determined as set forth in subparagraph A(2) of Article
IV above, rounded to the nearest whole Share, but in no event
to be greater than 50,000 Shares.
C. Term of Option:
--------------
Each Option shall terminate ten (10) years from the Grant Date
thereof, and shall be subject to earlier termination as herein
provided.
D. Date of Exercise:
----------------
Each Option shall become exercisable immediately upon grant,
within its prescribed term subject to the provisions of
Paragraphs G, H and I below.
3
<PAGE> 4
E. Repurchase Rights:
-----------------
(1) Notwithstanding the provisions of the forgoing Paragraph D and
except as otherwise provided herein or in the Option
Agreement, if a Participant ceases to be a Director of the
Company for any reason, then the provisions set forth below in
this Paragraph E shall apply to the Shares purchased by the
Participant pursuant to his or her Option. If such termination
occurs:
(i) during the period on or after the Grant Date for
such Option and before the date which is twelve
months thereafter (the "First Anniversary Date") and
the Participant has theretofore exercised the Option
for any Shares, then the Company shall purchase those
Shares from the Participant at the price by him or
her upon exercise;
(ii) during the period on or after the First
Anniversary Date and before the Date which is twelve
months thereafter (the "Second Anniversary Date") and
the Participant has theretofore exercised the Option
for more than one-third (1/3) of the number of Shares
which may be purchased pursuant to such Option, the
Company shall purchase any excess over such amount of
Shares so determined from the Participant at the
price paid by him or her upon exercise; and
(iii) during the period on or after the Second
Anniversary Date and before the date which is twelve
months thereafter (the "Third Anniversary Date") and
the Participant has heretofore exercised the Option
for more than two-thirds (2/3) of the number of
Shares which may be purchased pursuant to such
Option, the Company shall purchase any excess over
such amount of Shares so determined from the
Participant at the price paid by him or her upon
exercise.
(2) Notwithstanding the foregoing, in the event the
Participant ceases to be a Director of the Company as
a result of death, the Purchase Obligation (as
hereinbelow defined) shall cease and terminate.
(3) Notwithstanding the foregoing provisions of this
Paragraph E, but subject to the other provisions of
this Plan, the Purchase Obligation shall cease and
terminate in the event of, and immediately upon, a
Change of Control that occurs at any time before the
Participant has ceased to be a director of the
Company. As used herein, a "Change of Control" shall
be deemed to have occurred (i) if any "person" (as
such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended)
becomes the beneficial owner (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) of securities of the Company representing
fifteen percent (15%) or more of the combined voting
power of the Company's then outstanding securities;
or (ii) if the stockholders of the company approve
any merger of, or consolidation involving, the
Company in which the Company's stock is converted
into securities of another corporation or into cash
and such merger or consolidation shall be
consummated, or the
4
<PAGE> 5
stockholders of the Company approve any plan of
complete liquidation of the Company (whether or not
in connection with a sale of all or substantially all
of the Company's assets) and such liquidation is
consummated, excluding in each case a transaction
solely for the purpose of reincorporating the Company
in a different jurisdiction or recapitalizing the
Company's stock or a merger of the Company in which
the holders of the voting stock of the Company
immediately prior to the merger have the same
proportionate ownership of voting stock of surviving
corporation immediately after the merger.
(4) The obligation of the Company to purchase Shares
pursuant to this Paragraph E is hereinafter referred
to as the "Purchase Obligation" and such Shares are
hereinafter referred to as the "Purchase Stock."
F. Medium of Payment:
-----------------
The Option price shall be payable upon the exercise
of the Option by check payable to the Company or by
cash.
G. Termination of Directorship:
---------------------------
A Participant who ceases to be a Director of the
Company (for any reason other than death) may
exercise any Option granted to such Participant, but
only within six (6) months and one (1) day after the
date on which the Participant ceased to be a
Director, provided, however, (i) in no event may the
Option be exercised any later than the prescribed
term of the Option, and (ii) immediately upon such
Participant ceasing to be a Director such
Participant's Option shall cease to be exercisable
for any number of Shares which if purchased
immediately following such termination would be
subject to the Company's Purchase Obligation. The
provisions of this Paragraph G, and not the
provisions of Paragraph H of this Article IV, shall
apply to a Participant who subsequently dies after
the termination of his or her Directorship; however,
in the case of a Participant's death, the
Participant's Survivors may exercise the Option
within six (6) months after the date of the
Participant's death, but in no event beyond the
prescribed term of the Option.
H. Death:
-----
In the event of the death of a Participant to whom an
Option has been granted while the Participant is a
Director of the Company, such Option, to the extent
not exercised by the Participant's Survivor's, if at
all, within one (1) year after the date of death of
such Participant or, if earlier, within the
prescribed term of the Option, notwithstanding that
the decedent might have been able to exercise the
Option as to some or all of the Shares on a later
date if the Participant were alive and had continued
to be a Director of the Company.
5
<PAGE> 6
I. Exercise of Option and Issue of Shares:
--------------------------------------
An Option may be exercised by giving written notice
to the Company. Such written notice shall be signed
by the person exercising the Option, shall state the
number of shares with respect to which the Option is
being exercised and shall contain any warranty
required by Article VI. Reasonably promptly following
receipt by the Company of such written notice, the
Company shall give notice to the person exercising
the Option of a date for delivery of the Option
Shares to such person, against payment of the Option
price. In determining what constitutes "reasonably
promptly", it is expressly understood that the
delivery of the Option Shares may be delayed by the
Company in order to comply with any law or regulation
which requires the Company to take any action with
respect to the Option Shares prior to the issuance
thereof, whether pursuant to the provisions of
Article VI or otherwise. The option Shares shall,
upon delivery, be evidenced by an appropriate
certificate or certificates for paid-up
non-assessable Shares.
J. Rights as a Stockholder:
-----------------------
No Participant to whom an Option has been granted nor
any of Participant's Survivors shall have rights as a
stockholder with respect to any Shares covered by
such Option except after due exercise of the
Option and tender of the full exercise price for the
Shares being purchased pursuant to such exercise.
K. Assignability and Transferability of Option:
-------------------------------------------
By its terms, an Option granted to a Participant
shall not be transferable by the Participant
otherwise than by will or by the laws of descent and
distribution in accordance with the foregoing
Paragraphs G and H of this Article IV and shall be
exercisable, during the Participant's lifetime, only
by such Participant (or his or her legal
representative). No Option shall be assigned, pledged
or hypothecated in any way (whether by operation of
law or otherwise and no Option shall be subject to
execution, attachment or similar process. Any
attempted transfer, assignment, pledge, hypothecation
or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this
Paragraph K, or the levy of any attachment or similar
process upon an Option or such rights, shall be null
and void.
V. RESTRICTIONS ON TRANSFER OF SHARES; DETAILS OF THE PURCHASE OBLIGATION
----------------------------------------------------------------------
(1) Any Shares which are subject to a Purchase Obligation
shall not be transferred by the Participant except as
permitted herein. Until the termination of the Option
Agreement, the Shares which are subject to a Purchase
Obligation may not be transferred by the Participant
unless and until the transferee agrees, in a form
satisfactory to the Company, to be bound by the
Option Agreement and to sell any transferred Shares
to the Company as provided herein and in the Option
6
<PAGE> 7
Agreement.
(2) If a Participant ceases to be a Director and such
Participant holds any Purchase Stock, then within
sixty (60) days following the date a Participant
ceases to be a Director, the Company shall give to
each Participant a written notice specifying a date
for the Closing for the purchase by the Company of
the Purchase Stock, which date shall not be more than
ten (10) business days after the giving of such
notice. The Closing shall take place at the Company's
principal offices in New Hampshire, or such other
location as the Company may reasonably designate in
such notice. If the Company shall fail to give the
notice provided for above within the specified period
of time, then the Closing shall be on the ninetieth
(90th) day following the date the Participant ceased
to be a director or if not a business day, the next
business day.
(3) At the Closing, the Participant shall deliver the
Purchase Stock being purchased by the Company against
the simultaneous delivery to the Participant of the
purchase price (by certified or bank cashier's check
or in such other form as mutually agreed to) for the
number of shares of the Purchase Stock then being
purchased. In the event that the Participant fails so
to deliver the shares of Purchase Stock to be
purchased, the Company may elect (a) to establish a
segregated account in the amount of the purchase
price, such account to be turned over to the
Participant upon delivery of such shares of Purchase
Stock, and (b) immediately to take such action as is
appropriate to transfer record title of such of the
Purchase Stock from the Participant to the Company
and to treat the Participant and such shares of the
Purchase Stock in all respects as if delivery of such
shares of the Purchase Stock had been made as
required by this Plan and the Option Agreement. The
Participant shall be entering into the Option
Agreement irrevocably grant the Company a power of
attorney for the purpose of effectuating the terms of
the preceding sentence.
(4) If the Company shall pay a stock dividend or declare
a stock split on or with respect to any of the
Company's Shares, or otherwise distribute securities
of the Company to the holders of its Shares, whether
before or after the exercise of an Option, the number
of shares of stock or other securities of the Company
issued with respect to the Purchase Stock then
subject to the Purchase Obligation shall be added to
the Purchase Stock then subject to the Purchase
Obligation without any change in the aggregate
purchase price. If the Company shall distribute to
its stockholders shares of stock of another
corporation, the shares of stock of such other
corporation distributed with respect to the Purchase
Stock then subject to the Purchase Obligation shall
be added to the Purchase Stock covered by the
Purchase Obligation without any change in the
aggregate purchase price. Without limiting the
generality of the foregoing, a Participant shall be
entitled to retain any and all cash dividends paid by
the Company on the Shares.
7
<PAGE> 8
(5) If the Company's Shares shall be subdivided into a
greater number of shares or combined into a smaller
number of shares, or in the event of a
reclassification of the Company's Shares, or if the
Company shall be a party to any capital
reorganization, whether before or after the exercise
of an Option, there shall be substituted for the
Purchase Stock then covered by the Purchase
Obligation such amount and kind of securities as are
issued in such subdivision, combination,
reclassification, or capital reorganization in
respect of the Purchase Stock subject to the Purchase
Obligation immediately prior thereto, without any
change in the aggregate purchase price.
(6) If the Company shall be completely liquidated, then
the Purchase Obligation shall cease and terminate as
of the date of such liquidation and the Participant
shall hold the shares free of the Purchase
Obligation.
(7) The Company shall not be required to transfer any
Shares on its books which shall have been sold,
assigned or otherwise transferred in violation of
this Plan or an Option Agreement, or to treat as
owner of such Shares, or to accord the right to vote
as such owner or to pay dividends to, any person or
organization to which any such Shares shall have been
sold, assigned or otherwise transferred, from and
after any sale, assignment or transfer of any Shares
made in violation of this Plan or an Option
Agreement.
(8) All certificates representing any Shares to be issued
to a Participant pursuant to the exercise of an
Option which are subject to a Purchase Obligation
shall have endorsed thereon a legend substantially as
follows: "The shares represented by this certificate
are subject to a Director's Stock Option and
Repurchase Agreement dated between the
Corporation and , a copy of which Agreement
is available for inspection at the principal offices
of the Company or will be made available without
charge upon request."
(9) This Article V shall not restrict the transfer by a
Participant of shares, if any, which are not acquired
pursuant to the exercise of an Option or which are
not, or cease to be, subject to the Purchase
Obligation in accordance with the terms hereof and
the terms of the Option Agreement.
VI. PURCHASE FOR INVESTMENT
-----------------------
Unless the offering and sale of the Shares to be issued upon the
particular exercise of an Option shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended,
or any successor legislation (the "Act"), the Company shall be under no
obligation to issue the Shares covered by such exercise unless and
until the following conditions have been fulfilled:
(1) The person(s) who exercise such Option shall warrant
to the Company, at the time of such exercise, that
such person(s) are acquiring such Shares for his or
her own account, for
8
<PAGE> 9
investment and not with a view to, or for sale in
connection with, the distribution of any such Shares,
in which event the person(s) acquiring such Shares
shall be bound by the provisions of the following
legend which shall be endorsed in substantially the
following form upon the certificate(s) evidencing
their Option Shares issued pursuant to such exercise:
"The shares represented by this certificate
have been taken for investment and they may
not be sold or otherwise transferred by any
person, including a pledgee, in the absence
of an effective registration statement for
the shares under the Securities Act of 1933
or an opinion of counsel satisfactory to the
Company that an exemption from registration
is then available."
(2) The Company shall have received an opinion of its
counsel that the Shares may be issued upon such
particular exercise in compliance with the Act
without registration thereunder.
Without limiting the generality of the foregoing, the Company may delay
issuance of the Shares until completion of any reasonable action or
obtaining of any consent, which the Company deems reasonably necessary
under any applicable law including (including without limitation state
securities or "blue sky" laws).
VII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
------------------------------------------
To prevent dilution or enlargement of rights, in the event that the
outstanding Shares of the Company are changed into or exchanged for a
different number or kind of shares or other securities of the Company
or of another corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, change in par value,
stock split-up, combination of shares or dividend payable in capital
stock, or the like, appropriate adjustment shall be made in the number
and kind of shares for the purchase of which Options may be granted
under the Plan and, in addition, appropriate adjustment to prevent
dilution or enlargement of the rights granted to or available for
Participants, shall be made in the number and kind of shares and in the
option price per share subject to outstanding Options. In addition, the
Board of Directors may make other adjustments in outstanding Options if
such adjustment is appropriate to prevent dilution or enlargement of
rights.
VIII. DISSOLUTION OR LIQUIDATION OF THE COMPANY
-----------------------------------------
Upon the dissolution or liquidation of the Company other than in
connection with a transaction to which the preceding Article VII is
applicable, all Options granted hereunder shall terminate and become
null and void; provided, however, that if the rights of a Participant
or a Participant's Survivors hereunder have not otherwise terminated
and expired, the Participant (or his or her legal representatives) or
the Participant's Survivors shall have the right immediately prior to
such dissolution or liquidation to exercise any Option granted
hereunder to the extent that the right to purchase shares thereunder
has accrued as of the date immediately prior to such dissolution or
liquidation.
9
<PAGE> 10
IX. TERMINATION OF THE PLAN
-----------------------
The Plan shall terminate ten (10) years from the earlier of the date of
its adoption by the Board of Directors or the date of its approval by
the stockholders of the Company. The Plan may be terminated at an
earlier date by vote of the stockholders of the Company; provided,
however, that any such earlier termination shall not affect any Options
granted or Option Agreements executed prior to the effective date of
such termination.
X. AMENDMENT OF THE PLAN
---------------------
The Plan may be amended by the stockholders of the Company. The Plan
may also be amended by the Board of Directors, including, without
limitation, to the extent necessary to ensure the qualification of the
Plan under Rule 16b-3, and to the extent necessary to qualify the
shares issuable upon exercise of any outstanding Options granted, or
Options to be granted, under the Plan for listing on any national
securities exchange or quotation in any national automated quotation
system of securities dealers. Any amendment approved by the Board of
Directors which is of a scope that requires shareholder approval in
order to ensure the compliance of the Plan with Rule 16b-3, or requires
approval for listing of the shares, shall be subject to obtaining such
shareholder approval. No amendment shall affect any Options theretofore
granted or any Option Agreements theretofore executed by the Company
and a Participant, unless such amendment shall expressly so provide and
unless any Participant to whom an Option has been granted who would be
adversely affected by such amendment consents in writing thereto.
Notwithstanding the foregoing concerning amendment of the Plan, the
provisions of Article III and Paragraphs A, B, C and D of Article IV
above shall not be amended more than once every six (6) months, other
than to comport with changes in the United States Internal Revenue Code
of 1986, as amended, the Employee Retirement Income Security Act, or
the rules thereunder.
XI. RELATIONSHIP WITH THE COMPANY
-----------------------------
Nothing herein contained shall be deemed to prevent the Company from
terminating the Directorship of a Participant, nor to prevent a
Participant from terminating the Participant's Directorship with the
Company.
XII. EFFECTIVE DATE
--------------
This Plan shall become effective upon adoption by the Board of
Directors; provided, however, that the effectiveness of the Plan and
the effectiveness of grants of any Options pursuant to the Plan shall
be subject to approval to the holders of at least a majority of the
issued and outstanding shares of capital stock of the Company entitling
such holders to a right to vote and be present or represented or by
written consent of the holders to a right to vote and be present or
represented at a meeting of the stockholders duly convened or by the
written consent of the holders of at least a majority of the issued and
outstanding shares of capital stock entitling holders to a right to
vote, within twelve (12) months either before or after the adoption by
the Board of Directors for such a resolution. Until such time as this
Plan is effective, no Option may be granted pursuant hereto, unless a
resolution
10
<PAGE> 11
to the effect of the immediately preceding sentence shall have been
adopted by the Board of Directors. If any Options are so granted, then
such Option may not be exercised until all conditions to the
effectiveness for this Plan shall have been satisfied.
11
<PAGE> 12
EXHIBIT A
---------
DIRECTORS' STOCK OPTION AND REPURCHASE AGREEMENT, AS AMENDED
EKCO GROUP, INC.
----------------
AGREEMENT made as of the [DATE] (the "Grant Date") between Ekco Group,
Inc. (the "Company"), a Delaware corporation having a principal place of
business in Nashua, New Hampshire, and [NAME AND ADDRESS OF OUTSIDE DIRECTOR],
an Outside Director of the Company (the "Director"). The term the "Director" as
used in this Agreement shall include, where the context so requires, the legal
representatives of the Director, and/or any person or persons who acquired the
Director's rights hereunder by will or by the laws of descent and distribution.
WHEREAS, the Company desires to grant to the Director an Option to
purchase shares of its common stock of a par value of $.01 a share (the
"Shares") under and for the purposes of the 1988 Directors' Stock Option Plan of
the Company (the "Plan"); and
WHEREAS, the Company and the Director understand and agree that any
terms used herein have the same meanings as in the Plan.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION
---------------
The Company hereby irrevocably grants to the Director the
right and option to purchase at one time or from time to time all or any part of
an aggregate of [NO. OF SHARES]( ) Shares, subject to adjustment as provided in
the Plan, on the terms and conditions and subject to all the limitations set
forth herein and in the Plan, which is incorporated herein by reference. The
Director acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE
--------------
The purchase price of the Shares covered by this Option shall
be [PURCHASE PRICE]($ ) per share, subject to adjustment as provided in
the Plan.
3. EXERCISE OF OPTION
------------------
3.1 The Option granted hereby shall be exercisable
immediately, within the term set forth in Section 4 below, subject to the
provisions of this Agreement.
3.2 Notwithstanding the provisions of the foregoing Subsection
3.1 and except as otherwise provided herein or in the Plan, if the Director
ceases to be a director of the Company for any reason, then if such termination
occurs:
(i) during the period on or after the Grant Date and before
the date which is twelve months thereafter (the "First Anniversary
Date") and the Director has theretofore exercised the Option for any
Shares,
12
<PAGE> 13
then the Director shall sell to the Company and the Company shall
purchase from the Director those Shares from the Director at the price
paid by the Director upon exercise;
(ii) during the period on or after the First Anniversary Date
and before the date which is twelve months thereafter (the "Second
Anniversary Date") and the Director has theretofore exercised the
Option for more than [ONE-THIRD THE NO. OF SHARES]( ) Shares, then the
Director shall sell to the Company and the Company shall purchase from
the Director that number of Shares equal to the amount by which the
number of Shares purchased by the Director pursuant to this Option
exceeds [ONE-THIRD THE NO. OF SHARES]( ) Shares at the price paid by
the Director upon exercise; and
(iii) during the period on or after the Second Anniversary
Date and before the date which is twelve months thereafter (the "Third
Anniversary Date") and the Director has theretofore exercised the
Option for more than [TWO-THIRDS THE NO. OF SHARES]( ) Shares, then the
Director shall sell to the Company and the Company shall purchase from
the Director that number of Shares equal to the amount by which the
number of Shares purchased by the Director pursuant to this Option
exceeds [TWO-THIRDS THE NO. OF SHARES]( ) Shares at the price paid by
the Director upon exercise.
3.3 Notwithstanding the foregoing, in the event the Director
ceases to be a director of the Company as a result of death, the Purchase
Obligation (as hereinbelow defined) shall cease and terminate.
3.4 Notwithstanding the foregoing provisions of this Section
3, but subject to the other provisions of this Agreement and the Plan, the
Purchase Obligation shall cease and terminate in the event of, and immediately
upon, a Change of Control that occurs at any time before the Director has ceased
to be a director of the Company. As used herein, a "Change of Control" shall be
deemed to have occurred (i) if any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended [the "1934
Act"]) becomes the beneficial owner (within the meaning of Rule 13d-3 under the
1934 Act) of securities of the Company representing thirty percent (30%) or more
of the combined voting power of the Company's then outstanding securities; or
(ii) if the stockholders of the Company approve any merger of, or consolidation
involving, the Company in which the Company's stock is converted into securities
of another corporation or into cash and such merger or consolidation shall be
consummated, or the stockholders of the Company approve any plan of complete
liquidation of the Company (whether or not in connection with a sale of all or
substantially all of the Company's assets) and such liquidation is consummated,
excluding in each case a transaction solely for the purpose of reincorporating
the Company in a different jurisdiction or recapitalizing the Company's stock or
a merger of the Company in which the holders of the voting stock of the Company
immediately prior to the merger have the same proportionate ownership of voting
stock of the surviving corporation immediately after the merger.
3.5 The obligation of the Company to purchase Shares pursuant
to this Section 3 is hereinafter referred to as the "Purchase Obligation" and
such Shares are hereinafter referred to as the "Purchase Stock."
3.6 The Director acknowledges that if he or she exercises this
Option and any of the Shares so purchased are subject to the Purchase
Obligation, then such Shares will be restricted shares and that the difference
13
<PAGE> 14
between the fair market value of such Shares on the date the Purchase Obligation
lapses as to such Shares and the aggregate purchase price for such Shares will
be classified as compensation income, unless the Director files an election
under Section 83(b) of the Internal Revenue Code of 1986, as amended, with the
Internal Revenue Service within thirty (30) days of the acquisition of such
Shares. If such election is filed, the difference between the fair market value
of such Shares and the aggregate purchase price of such Shares will be treated
as compensation income as of the date of purchase. This acknowledgment should
not be understood as a substitute for the Director consulting with his or her
own tax advisors and the Director is urged to do so prior to any exercise of
this Option.
3.7 Notwithstanding the foregoing, this Option may not be
exercised until and unless all conditions to the effectiveness of the Plan, as
set forth in Article XI thereof, have been satisfied, including, without
limitation, approval by the Company's shareholders.
4. TERM OF OPTION
--------------
4.1 This Option shall terminate ten (10) years from the Grant
Date of this Option, but shall be subject to earlier termination as provided
herein or in the Plan.
4.2 If the Director ceases to be a director of the Company
(for any reason other than death or termination for cause), then the Director
may exercise this Option, but only within six (6) months and one (1) day after
the date on which the Director ceased to be a Director, provided, however, (i)
in no event may this Option be exercised any later than ten (10) years after the
Grant Date of this Option, and (ii) immediately upon the Director's ceasing to
be a director, this Option shall cease to be exercisable for any number of
Shares which if purchased immediately following such termination would be
subject to the Company's Purchase Obligation. The provisions of this paragraph,
and not the provisions of Subsection 4.3, shall apply to the Director if the
Director subsequently dies after the termination of the directorship; however,
in such case of the Director's death, the Director's Survivors may exercise this
Option within six (6) months after the date of the Director's death, but in no
event beyond ten (10) years after the Grant Date of this Option.
If the Director's directorship is terminated for "cause," the Director
shall forthwith upon such termination cease to have any right to exercise this
Option. For purposes of this Subsection 4.2, "cause" shall be deemed to include
(but shall not be limited to) dishonesty with respect to the Company or any
Affiliate, substantial malfeasance or non-feasance of duty, unauthorized
disclosure of confidential information, or conduct substantially prejudicial to
the business or reputation of the Company or any Affiliate.
4.3 In the event of the death of the Director while the
Director is a director of the Company, this Option, to the extent not exercised
as of the date of death, may be exercised by the Director's Survivors. Such
Option must be exercised by the Director's Survivors, if at all, within one (1)
year after the date of death of the Director or, if earlier, within the ten (10)
years after the Grant Date of this Option, notwithstanding that the decedent
might have been able to exercise this Option as to some or all of the Shares on
a later date if the Director were alive and had continued to be a director of
the Company.
5. NON-ASSIGNABILITY
-----------------
14
<PAGE> 15
This Option shall not be transferable by the Director
otherwise than by will or by the laws of descent and distribution and shall be
exercisable, during the Director's lifetime, only by the Director (or his or her
legal representative). This Option shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of this Option or of any
rights granted hereunder contrary to the provisions of this Section 5, or the
levy of any attachment or similar process upon this Option or such rights, shall
be null and void.
6. EXERCISE OF OPTION AND ISSUE OF SHARES
--------------------------------------
This Option may be exercised, in whole or in part, at one time
or from time to time, (to the extent that it is exercisable in accordance with
its terms) by giving written notice to the Company. Such written notice shall be
signed by the person exercising this Option, shall state the number of Shares
with respect to which this Option is being exercised, shall contain any warranty
required by Section 8 below and shall otherwise comply with the terms and
conditions of this Agreement and the Plan. Such notice must be received by the
Company within the relevant exercise period specified in Section 4 of this
Agreement. Such notice shall either: (i) be accompanied by payment of the full
purchase price of such Shares, in which event the Company, subject to the
provisions of Section 8, shall deliver a certificate or certificates
representing such Shares as soon as practicable after the notice shall be
received, or (ii) fix a date (not less than five nor more than ten business days
after such notice shall be received by the Company, which date must be within
the relevant exercise period specified in Section 4 of this Agreement) for the
payment of the full purchase price of such Shares against delivery subject to
the provisions of Section 8, of a certificate or certificates representing such
Shares. Payment of such purchase price shall, in either case, be made by check
payable to the order of the Company. The certificate or certificates for the
Shares as to which this Option shall have been so exercised shall be registered
in the name of the person or persons so exercising this Option and shall be
delivered as provided above to the person or persons exercising this Option. All
Shares that shall be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
The Company shall pay all original issue taxes with respect to the
issue of the Shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection herewith. Except as specifically set forth
herein, the holder acknowledges that any income or other taxes due from him or
her with respect to this Option or the shares issuable pursuant to this Option
shall be the responsibility of the holder. The holder of this Option shall have
rights as a shareholder only with respect to any Shares covered by this Option
after due exercise of this Option and tender of the full exercise price for the
shares being purchased pursuant to such exercise. Pursuant to the Plan, the
Company shall make delivery of the Shares against payment of the Option price
therefor.
7. RESTRICTIONS ON TRANSFER OF SHARES; DETAILS OF THE PURCHASE
-----------------------------------------------------------
OBLIGATION
- ----------
7.1 Any Shares which are subject to the Purchase Obligation
shall not be transferred by the Director except as permitted herein. Until the
termination of this Agreement, the Shares which are subject to the Purchase
Obligation may not be transferred by the Director unless and until
15
<PAGE> 16
the transferee agrees, in a form satisfactory to the Company, to be bound by
this Agreement and to sell any transferred Shares to the Company as herein
provided.
7.2 Within sixty (60) days following the date Director ceases
to be a director and if the Director holds any Purchase Stock, then, the Company
shall give to the Director a written notice specifying a date for the Closing
for the sale by the Director and the purchase by the Company of the Purchase
Stock, which date shall be not more than ten (10) business days after the giving
of such notice. The Closing shall take place at the Company's principal offices
in New Hampshire, or such other location as the Company may reasonably designate
in such notice. If the Company shall fail to give the notice provided for above,
within the specified period of time, then the Closing shall be on the ninetieth
(90th) day following the date Director ceased to be a director or if not a
business day, the next business day.
7.3 At the Closing, the Director shall deliver the Purchase
Stock being purchased by the Company against the simultaneous delivery to the
Director of the purchase price (by certified or bank cashier's check or in such
other form as mutually agreed to) for the number of shares of the Purchase Stock
then being purchased. In the event that the Director fails so to deliver the
shares of Purchase Stock to be purchased, the Company may elect (a) to establish
a segregated account in the amount of the Purchase Price, such account to be
turned over to the Director upon delivery of such shares of Purchase Stock, and
(b) immediately to take such action as is appropriate to transfer record title
of such of the Purchase Stock from the Director to the Company and to treat the
Director and such shares of the Purchase Stock in all respects as if delivery of
such shares of the Purchase Stock had been made as required by this Agreement.
The Director hereby irrevocably grants to the Company a power of attorney for
the purpose of effectuating the terms of the preceding sentence.
7.4 If the Company shall pay a stock dividend or declare a
stock split on or with respect to any of the Company's Common Stock, or
otherwise distribute securities of the Company to the holders of its Common
Stock, whether before or after the exercise of this Option, the number of shares
of stock or other securities of the Company issued with respect to the Purchase
Stock then subject to the Purchase Obligation shall be added to the Purchase
Stock then subject to the Purchase Obligation without any change in the
aggregate purchase price. If the Company shall distribute to its stockholders
shares of stock of another corporation, the shares of stock of such other
corporation distributed with respect to the Purchase Stock then subject to the
Purchase Obligation shall be added to the Purchase Stock covered by the Purchase
Obligation without any change in the aggregate purchase price. Without limiting
the generality of the foregoing, the Director shall be entitled to retain any
and all cash dividends paid by the Company on the Shares.
7.5 If the outstanding shares of Common Stock of the Company
shall be subdivided into a greater number of shares or combined into a smaller
number of shares, or in the event of a reclassification of the outstanding
shares of Common Stock of the Company, or if the Company shall be a party to any
capital reorganization, whether before or after the exercise of this Option,
there shall be substituted for the Purchase Stock then covered by the Purchase
Obligation such amount and kind of securities as are issued in such subdivision,
combination, reclassification, or capital reorganization in respect of the
Purchase Stock subject to the Purchase Obligation immediately prior thereto,
without any change in the aggregate purchase price.
16
<PAGE> 17
7.6 If the Company shall be completely liquidated, then the
Purchase Obligation shall cease and terminate as of the date of such liquidation
and the Director shall hold the Shares free of the Purchase Obligation.
7.7 The Company shall not be required to transfer any Shares
on its books which shall have been sold, assigned or otherwise transferred in
violation of this Agreement, or to treat as owner of such Shares, or to accord
the right to vote as such owner or to pay dividends to, any person or
organization to which any such Shares shall have been sold, assigned or
otherwise transferred, from and after any sale, assignment or transfer of any
Shares made in violation of this Agreement.
7.8 All certificates representing any Shares to be issued to
the Director pursuant to the exercise of the Option which are subject to the
Purchase Obligation shall have endorsed thereon a legend substantially as
follows:
"The shares represented by this certificate are subject to a Director's
Stock Option and Repurchase Agreement dated as of [DATE] between the
Corporation and [NAME OF DIRECTOR], a copy of which Agreement is
available for inspection at the principal offices of the Company or
will be made available without charge upon request."
7.9 This Article 7 shall not restrict the transfer by the
Director of shares, if any, which are not acquired pursuant to the exercise of
this Option or which are not, or cease to be, subject to the Purchase Obligation
in accordance with the terms hereof.
8. PURCHASE FOR INVESTMENT
-----------------------
Unless the offering and sale of the Shares to be issued upon
the particular exercise of this Option shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended, or any
successor legislation (the "Act"), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
(a) The person(s) who exercise this Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for his or her own account, for
investment and not with a view to, or for sale in connection
with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall in
substantially the following form be endorsed upon the
certificate(s) evidencing the option Shares issued pursuant to
such exercise:
"The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, in the absence
of an effective registration statement for the shares under
the Securities Act of 1933 or an opinion of counsel
satisfactory to the Company that an exemption from
registration is then available."
(b) The Company shall have received an opinion of its counsel that
the Shares may be issued upon such particular exercise in
compliance
17
<PAGE> 18
with the Act without registration thereunder.
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any action or obtaining of any consent, which
the Company deems necessary under any applicable law (including without
limitation state securities or "blue sky" laws).
9. REGISTRATION RIGHTS
-------------------
(a) In the event that the Company has an effective
registration statement covering the sale and resale of securities issued
pursuant to the Plan, then the Director agrees to sign a waiver in substantially
the following form:
"For so long as a registration statement under the Securities Act of
1933, as amended, is in effect covering the sale and resale of
securities issued pursuant to the 1988 Directors' Stock Option Plan of
Ekco Group. Inc. (the "Company"), the undersigned waives his/her rights
to require the Company to file a registration statement pursuant to
Section 9 of the Directors' Stock Option and Repurchase Agreement dated
[DATE OF AGREEMENT], between the undersigned and the Company."
(b) The Director acknowledges that option agreements have been
executed by the Company with [NO. OF EMPLOYEE-OPTIONEES] employees, [NO. OF
EMPLOYEE-DIRECTORS] employee-directors, [NO. OF DIRECTORS] Directors and may be
executed with other employees and Directors (collectively, "Other Holders"),
each containing or to contain a section substantially identical to this Section
9. Subject to the terms hereinafter set forth, at any time after the Grant Date,
the holder shall have the right, by written notice to the Company, to require
the Company to file and use its best efforts to cause to become effective a
registration statement under the Securities Act of 1933, as amended (the "Act")
on Form S-8, Form S-2 and Form S-3 or other like form, if available, covering
such number of Shares acquired or to be acquired prior to the effective date of
such registration statement, subject to the limitations that (i) the Company
shall be required to file no more than an aggregate of two (2) registration
statements pursuant to such notices and/or pursuant to notices received from
Other Holders, and (ii) if, in the opinion of counsel to the Company, the holder
can then sell, subject to such limitations as to the number of Shares which may
be sold as may be imposed by Rule 144 under the Act or any successor rule,
Shares requested to be included in any such registration statement, without such
registration, the Company need not so register such Shares. In no event will the
Company be required to register Shares which are subject to the Purchase Option.
The Company agrees to promptly notify a holder in the event that it receives a
notice from any of the Other Holders requiring it to file a registration
statement and to permit the holder to require the Company to include Shares
owned by the holder in such registration statement, subject to the limitations
set forth above.
(c) In connection with any registration statement pursuant to
this Section 9:
(i) the holder will furnish to the Company in writing
such appropriate information as the Company, or the Securities
and Exchange Commission (the "Commission") or any other
regulatory authority may request;
(ii) the holder agrees to execute, deliver and/or
file with or supply to the Company, the Commission, any
underwriters and/or
18
<PAGE> 19
any state or other regulatory authority such information,
documents, representations, undertakings and/or agreements
necessary to carry out the provisions of the registration
agreements contained in this Agreement and/or to effect the
registration or qualification of the Shares under the Act
and/or any of the laws and regulations of any state or
governmental instrumentality;
(iii) the Company will furnish to the holder of
Shares included in the registration statement such number of
copies of such prospectus (including each preliminary, amended
or supplemental prospectus) as the holder may reasonably
request; and
(iv) in the event an offering of securities by the
Company is pending, the Company shall have the right to
require that the holder delay any offering of Shares for a
period of ninety (90) days after the effective date of such
pending offering (upon the Company's having first delivered to
the holder the written opinion of its principal underwriter,
or if there be none, then from an officer of the Company based
upon a good faith resolution of the Board of Directors to the
effect that the offering of such Shares will have an adverse
effect on the marketing of such pending offering).
(d) The Company will pay all of its out-of-pocket expenses and
disbursements in connection with any registration statements filed under this
Section 9, including, without limitation, printing expenses, fees of the
Company's counsel and auditors, registration fees, blue sky fees and similar
costs to the extent permitted by state and regulatory authorities.
(e) The Company will be obligated to keep any Registration
Statement filed by it under this Section 9 effective under the Act for a period
of ninety (90) days after the actual effective date of such registration
statement and to prepare and file such supplements and amendments necessary to
maintain an effective registration statement for such period. As a condition to
the Company's obligation under this Subsection (e), the holder will execute and
deliver to the Company such written undertakings as the Company and its counsel
may reasonably require in order to assure full compliance with relevant
provisions of the Act.
(f) The Company will use its best efforts to register or
qualify the Shares covered by a registration statement filed pursuant hereto
under such securities or Blue Sky laws in such jurisdictions within the United
States as the holder may reasonably request, provided, however, that the Company
reserves the right, in its sole discretion, not to register or qualify such
stock in any jurisdiction where such stock does not meet with the requirements
of such jurisdiction or where the Company is required to qualify as a foreign
corporation to do business in such jurisdiction and is not so qualified therein
or is required to file any general consent to service of process.
(g) In the event that a holder has not sold all of his or her
Shares on or prior to the expiration of the period specified in Subsection (d)
above, the holder hereby agrees that the Company may deregister by
post-effective amendment any of his or her Shares covered by the registration
statement or notification but not sold on or prior to such date. The Company
agrees that it will notify the holder of the filing and effective date of such
post-effective amendment.
19
<PAGE> 20
(h) The holder agrees that upon notification by the Company
that the prospectus in respect to any public offering covered by the provisions
hereof is in need of revision, the holder will immediately upon receipt of such
notification (i) cease to offer or sell any securities of the Company which must
be accompanied by such prospectus; (ii) return to the Company all such
prospectuses in the hands of the holder; and (iii) not offer or sell any
securities of the Company until the holder has been provided with a current
prospectus and the Company has given the holder notification permitting the
holder to resume offers and sales.
10. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION 16 OF THE
-----------------------------------------------------------------
1934 ACT
--------
If the Director to whom the Option has been granted pursuant
to this Agreement is subject to Section 16 of the 1934 Act, Section 16 requires
that at least six (6) months must elapse from the date of grant of the Option to
the date of disposition of the Shares.
11. NOTICES
-------
Any notices required or permitted by the terms of this
Agreement or the Plan shall be given by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
To the Company: Ekco Group, Inc.
98 Spit Brook Road
Nashua, NH 03062
Attn: General Counsel
To the Director: [ADDRESS OF DIRECTOR]
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given when
mailed in accordance with the foregoing provisions.
12. GOVERNING LAW
-------------
This Agreement shall be construed and enforced in
accordance with the law of the State of New Hampshire, except to the extent
the law of the State of Delaware may be applicable.
13. BENEFIT OF AGREEMENT
--------------------
This Agreement shall be for the benefit of and shall
be binding upon the heirs, executors, administrators and successors of the
parties hereto, except as otherwise provided herein.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed and its corporate seal to be hereto affixed by Robert Stein, its
duly authorized officer, and the Director has hereunto set his hand and
seal, all as of the day and year first above written in duplicate originals.
20
<PAGE> 21
EKCO GROUP, INC.
By:
-------------------------
President and Chief
Executive Officer
----------------------------
DIRECTOR
Form dated: 08/22/95
21
<PAGE> 22
Schedule of Exercises
<TABLE>
<CAPTION>
Number of Shares
Purchased Pursuant Consideration Date of Notation
to this Option Received Purchase Made By
- ------------------ ------------- -------- --------
<S> <C> <C> <C>
</TABLE>
22
<PAGE> 23
<TABLE>
EKCO GROUP, INC.
SCHEDULE TO
1988 DIRECTORS' STOCK OPTION PLAN
Each of the following Outside Directors of the Company has a Directors'
Stock Option and Repurchase Agreement, as amended, with the Company which is
identical in form to the foregoing Form of Directors' Stock Option and
Repurchase Agreement, as amended, except as to the date, the number of shares
and the exercise price:
<CAPTION>
No. of
Date of Shares Exercise
Name Agreement Granted Price
- ---- --------- ------- --------
<S> <C> <C> <C>
T. Michael Long 05/18/93 9,040 $11.0625
Stuart B. Ross 05/19/89 31,373 $ 3.1875
Malcolm L. Sherman 05/25/95 16,162 $ 6.1875
Bill W. Sorenson 10/13/88 45,714 $ 2.1875
Herbert M. Stein 10/13/88 45,714 $ 2.1875
</TABLE>
23
<PAGE> 1
EXHIBIT 10.5(b)
---------------
LOAN AGREEMENT
--------------
THIS AGREEMENT made as of the 1st day of October, 1990 by and between
Ekco Group, Inc. (the "Company") and Neil R. Gordon ("Trustee") as Trustee of
the Ekco Group, Inc. Employee Stock Ownership Plan (the "Plan").
WHEREAS, the Board of Directors of the Company (the "Board") has
authorized the Trustee to acquire up to one million (1,000,000) shares of the
Company's common stock ("Shares") for the Plan, and has further authorized the
Company to lend funds to the Trustee to make purchases of Shares on the open
market or from the Company, as he deems appropriate,
WHEREAS, the Company and the Trustee wish to set forth their respective
rights and duties with respect to this extension of credit;
NOW THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt and sufficiency of which are mutually acknowledged by
the parties hereto, the Company and the Trustee hereby agree as follows:
1. AUTHORIZED LOAN AMOUNT. The Company agrees to loan an amount not to
exceed three million, five hundred thousand ($3,500,000) dollars (the
"Obligations") to the Trustee. The Trustee agrees to execute a promissory note
in the form attached hereto with respect to all funds advanced in 1990 and to
execute a similar note with respect to funds advanced in each future calendar
year in the event all of the one million (1,000,000) Shares are not purchased in
1990.
2. PAYMENT: ADVANCES FOR EACH CALENDAR YEAR TO BE SEPARATE LOANS. The
amounts advanced in each calendar year will be aggregated, so that all amounts
loaned to the Trustee in calendar year 1990 will be considered one loan, and
amounts advanced in any following calendar year(s) will be treated as one or
more separate loan(s).
The Trustee agrees to repay the Obligations incurred in each calendar year as
follows: interest, at the rate of ten (10%) per cent per annum, will be paid on
the Obligations incurred in that calendar year from the date of the advance(s)
to the last day of said calendar year. Commencing on or about March 31 of the
following calendar year, and on the last day of each of the following calendar
quarter, the Trustee will repay said Obligations in eighty (80) substantially
equal quarterly installments of principal and interest, so that the full amount
of said Obligations will be repaid within twenty (20) years following the end of
the calendar year in which they were advanced. The Trustee will have the right
to prepay the Obligation, in full or in part, at any time and from time to time,
without penalty.
3. PLEDGE. As security for the Obligations, the Trustee does hereby
pledge and grant to the Company a security interest in the Shares which it
purchases (the "Financed Shares") with the Obligations. All Financed Shares
purchased in a calendar year will be pledged as security only for the
Obligations incurred to purchase them, and said Financed Shares will not serve
as security for any other loan to the Trustee. Financed Shares serving as
security for the loans will be separately accounted for by the Trustee in one or
more escrow "pools", so that, for example, all Financed Shares acquired in 1990
will be in a 1990 escrow pool to serve as security for the 1990 Obligations, all
Financed Shares acquired in 1991 will be in a 1991 escrow pool to serve as
security for the 1991 Obligations, etc. The Company agrees to a release of the
Financed Shares from the escrow pools, as provided in
1
<PAGE> 2
Section 10. The Trustee agrees to transfer to the Company, upon its request,
separate stock powers or other instruments of assignment, endorsed in blank, to
be held by the Company in accordance with the terms hereof.
4. TITLE TO THE FINANCED SHARES. The Trustee represents and warrants:
(i) that upon the purchase of the Financed Shares or upon the issuance
of the Financed Shares by the Company he will be the legal and beneficial owner
of the Financed Shares free and clear of all liens, encumbrances, security
interests and other charges except as created hereby; and
(ii) that he has all necessary right, power and authority to enter into
this Agreement and to grant the security interest and make the assignment
provided herein; and that he will defend the Company's right, title, special
property and security interest in and to the Financed Shares against the claims
or demands of any person, firm, corporation or other legal entity or any
governmental agency or authority.
5. RIGHTS AND DUTIES WITH RESPECT TO FINANCED SHARES. Beyond the
exercise of reasonable care to assure the safe custody of securities
constituting Financed Shares while in the Company's possession, the Company
shall not be under any duty to collect or protect the Financed Shares or income
thereon or to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Financed Shares upon surrendering them to the Trustee.
6. REGISTRATION, INCOME AND VOTING RIGHTS. The right is expressly
granted to the Company, at any time after an Event of Default (as hereinafter
defined) has occurred hereunder, at its option, to transfer any securities
constituting the number of Financed Shares which is necessary to meet the
payment schedule of this Agreement in accordance with Section 7 hereof (the
"Default Shares") into its own name or the name of any nominee acting on the
Company's behalf. Until there is an Event of Default, as herein defined, the
Trustee shall be entitled to receive and retain any dividends or interest paid
in cash with respect to securities constituting Financed Shares and shall retain
all voting rights incident to ownership. After the occurrence of an Event of
Default, (a) the Company shall have the sole right to receive any dividends,
interest or distribution with respect to securities constituting Default Shares
which stand in its name or the name of the Company's nominee, and (b) the
Company shall be expressly empowered to exercise all powers of voting and
consent with respect to any securities constituting Default Shares which have
been transferred into its name or the name of the Company's nominee and the
Company is authorized to provide a copy of this Agreement to the transfer agent
for the common stock of any issuer of securities constituting Financed Shares as
conclusive evidence of the registration, voting and other rights herein granted.
7. EVENTS OF DEFAULT; REMEDIES. If there is an event of default (each
an "Event of Default") whereby there is a default in the payment of any of the
Obligations under the terms of this Agreement, then thereupon or at any time
thereafter (unless all existing Events of Defaults have been cured to this
Company's satisfaction), the Company may declare this Agreement to be in default
and shall thereafter have as its sole remedy with respect to any default, the
right to dispose of an amount of Financed Shares in the Plan escrow account that
is necessary to provide to the Company sufficient funds to bring the Trustee
current with his Obligations hereunder and under the Promissory Note. The
Trustee will not be considered to have committed any default, notwithstanding
any other provision of this agreement, if his non-payment is due to the failure
of the Company to have contributed sufficient amounts to the Plan to enable him
to meet his obligations hereunder or under
2
<PAGE> 3
the terms of any other ESOP financing arrangement.
8. FURTHER ASSURANCES. The Trustee will at any time and from time to
time upon the written request of the Company, join in the execution and filing
of appropriate Uniform Commercial Code financing statements and will also do,
make, execute and deliver all such additional and further acts, things, deeds,
instruments, documents and assurances (including without limitation, Federal
Reserve Form U-1) as the Company may reasonably request in order to perfect and
protect more completely the Company's rights hereunder and its security interest
in the Financed Shares and to carry out the terms of this Agreement. The
Company, in its own name or in the name of the Trustee, may likewise take such
steps in case the Trustee shall fail to do so. All costs and expenses incurred
by the Company or the Trustee in connection with anything contemplated
hereunder, including without limitation, legal fees and other costs and expenses
relating to any judicial proceedings, shall be borne by the Trustee, and to the
extent they are paid or incurred by the Company, shall be reimbursed, with
interest, by the Trustee upon demand.
9. WAIVER OF DEMANDS, NOTICES, DILIGENCE, ETC. The Trustee hereby
assents to all the terms and conditions of the Obligations and waives (a) demand
for the payment of the principal of any Obligation or of any claim for interest
or any part of any thereof; (b) notice of the occurrence of an Event of Default
under any Obligation; (c) protest of the nonpayment of the principal of any
Obligation or of any claim for interest or any part of any thereof; (d) notice
of presentment, demand or protest; (e) notice of any indulgences or extensions
granted to the Trustee or to any other person or entity which shall have
succeeded to or assumed the obligation of the Trustee; (f) any requirement of
diligence or promptness on the part of the Company in the enforcement of any of
its rights under the provisions of any Obligation or of this Pledge Agreement;
(g) any enforcement of any Obligation; (h) any right which the Trustee might
have to require the Company to proceed against any guarantor of the Obligations
or to realize on any collateral security thereof; and (i) any and all notices of
every kind and description which may be required to be given by any statute or
rule of law in any jurisdiction except as provided herein.
10. RELEASE OF SHARES FROM ESCROW POOLS. The Trustee agrees to hold the
Financed Shares purchased in each calendar year in a separate escrow pool (as
described in Section 3). Shares in each escrow pool will be released for
allocation to participant accounts as follows:
A-- Escrow pool established in 1990
i) For the year ending December 31, 1990, twelve
thousand, five hundred (12,500) shares; and
ii) For each following year, a number of Shares from
the 1990 escrow pool equal to five (5%) percent of
the number of Shares originally purchased for the
1990 escrow pool.
B-- Escrow pools established in 1991 (and later years, if
any)
For each year, a number of Shares equal to five (5%)
percent of the number of Shares originally purchased
in the escrow pool.
C-- Commencing on December 31, 1991, at least fifty
thousand (50,000) shares shall be released each year
from all pools under this agreement. To the extent
that the amounts under A and B for any such year
total less than fifty thousand
3
<PAGE> 4
(50,000) additional shares shall be released from the
oldest pool under this agreement.
In all events, the number of shares released from each escrow pool must
be at least equal to the number of Shares in the escrow pool immediately prior
to the release multiplied by a fraction, the numerator of which is the amount of
principal and interest paid on the loan for the year and the denominator of
which is the sum of the numerator plus the principal and interest to be paid for
all future years, in accordance with Internal Revenue Code Regulation Sec.
54.4975-7(b)(8)(i), and as provided in Section 2(c) of Article 6 of the Plan.
The release of Shares from the pools will not be prevented or suspended
if the reason for the Trustee's non-payment of obligations owed to the Company
is due to the failure of the Company to have contributed sufficient amounts to
the Plan to enable the Trustee to meet his obligations hereunder or under the
terms of any other ESOP financing arrangement.
11. ALTERNATIVE. If the Trustee is unable to repay his obligations
under this Agreement, the Trustee may pursue any of the following alternatives
which he deems prudent at the time and which shall discharge his obligations
under this Agreement in full:
A) He may return the remaining Financed Shares in the
escrow account to the Company, properly endorsed to
the Company which will discharge the Obligations in
full;
B) He may continue to make payments to or for the
benefit of the Company by tendering to the Company
the number of shares necessary to keep the
Obligations current;
C) He may obtain a loan from another lender to pay off
remaining obligations to the Company and the Company
agrees to release the Financed Shares from the
restrictions of this Agreement for that purpose; or
D) If non-payment is due to the Company having failed to
contribute sufficient amounts for him to meet his
ESOP financing arrangements, he may continue to
release Shares from the escrow pools without taking
further action; or
E) He may utilize any combination of the above
alternatives.
12. MISCELLANEOUS.
(a) No course of dealing between the Trustee and the Company,
and no failure to exercise nor any delay in exercising on the part of the
Company, any right, power or privilege hereunder or under any other instrument
or agreement, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further privilege.
(b) This Agreement is subject to amendment or modification
only by a writing signed by the Trustee and the Company. The Financed Shares
shall secure all Obligations.
(c) In case any provision of this Agreement shall be
determined to be invalid or unenforceable under applicable law, applied in such
manner as will permit enforcement; otherwise this Agreement shall be construed
as though such provision had never been made a part hereof.
4
<PAGE> 5
(d) This Agreement is intended to take effect as a sealed
instrument governed by the laws of the State of Delaware and shall inure to the
benefit of the Company and its successors and assigns of the Trustee. If a
non-individual serves as trustee of the Plan, then this Agreement shall be
effective notwithstanding the fact that such trustee ceases to exist by reason
of its liquidation, merger, consolidation or otherwise.
13. TERMINATION. This Agreement shall terminate upon the payment
and satisfaction in full of all Obligations.
14. ERISA COMPLIANCE. The loan of funds to the Trustee that he may
purchase Shares is meant to comply fully with the terms of ERISA and its
requirements for "leveraged ESOP's." Any provision herein which does not comply
with ERISA is null and void and of no effect.
IN WITNESS WHEREOF, the Trustee and the Company have caused this
Agreement to be duly executed as of the day and year first above written.
EKCO GROUP, INC.
By /S/ ROBERT STEIN
--------------------------
President
/S/ NEIL R. GORDON
----------------------------
Neil R. Gordon, as
Trustee and not individually
5
<PAGE> 6
Exhibit A
---------
PROMISSORY NOTE
---------------
$_______________________ December 31, 19____
Nashua, New Hampshire
The Trustee of the Ekco Group, Inc. Employees' Stock Ownership Plan ("Trustee")
hereby acknowledges that it has received a series of cash advances from Ekco
Group, Inc. ("Employer") during the calendar year ending on the above referenced
date, and that the advances total the principal amount of $________ (the
"Loan Amount").
The Trustee agrees to repay the Loan Amount, with 10% interest, in 80 equal
quarterly installments of $ ________ each, with the first installment due on
March 31, 19__ and the last installment due on December 31, 20__.
For the calendar year in which the Loan Amount was advanced, interest at the 10%
rate will be calculated for each advance through the end of the calendar year,
but no principal payments will be required. This payment of interest will be due
at the same time as the first quarterly installment.
A grace period of 30 days is permitted for any payment owed by the Trustee
hereunder.
This Note is issued under the Loan Agreement between the Employer and the
Trustee dated as of October 1, 1990 and it is subject to and entitled to the
benefit of all of the terms and conditions thereof. It may be prepaid in whole
or in part without premium as therein provided, and upon the occurrence of any
default specified therein, the principal may become forthwith due and payable in
the manner, upon conditions and with the effect provided thereby; provided,
however, that in no event shall the Employer have any additional remedies other
than the right to dispose of an amount of Financed Shares (as such term is
defined in the Loan Agreement) that is necessary to provide to the Company
sufficient funds to bring the Trustee current with his obligations under the
Loan Agreement and hereunder.
The Trustee hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension or postponement of
the time of payment or any other indulgence to any substitution, exchange or
release of collateral and the addition or release of any other party or person
primarily or secondarily liable.
--------------------------------
Neil R. Gordon, as Trustee
and not individually
<PAGE> 1
EXHIBIT 10.5(c)
---------------
LOAN AGREEMENT
--------------
$3,604,646.37
THIS AGREEMENT is made as of the 30th day of March, 1995 (the "Closing Date") by
and between Ekco Group, Inc. (the "Company") and Neil R. Gordon ("Trustee"), as
Trustee and not individually, of the Ekco Group, Inc.
Employees' Stock Ownership Plan (the "ESOP").
A. The ESOP is the borrower pursuant to a term loan agreement dated May
22, 1989 in the initial principal amount of Six Million Four Hundred Twenty Six
Thousand and 00/l00 ($6,426,000.00) Dollars in which Shawmut Bank, N.A.
("Shawmut") is the lender, and Ekco Group, Inc. ("the "Company") is the
guarantor.
B. The Shawmut loan provides that it may be prepaid at any time without
penalty and the Trustee of the ESOP wishes to refinance the loan on terms which
are no less favorable to the ESOP.
C. The Company has agreed to lend the Trustee three million, six hundred
and four thousand, six hundred and forty six dollars and thirty seven cents
($3,604,646.37) so that the ESOP may pay in full its remaining obligations to
Shawmut Bank, N.A. under said loan agreement dated May 22, 1989.
D. The Shawmut loan is collateralized with cash and other liquid
investments of the Company and the Company, as guarantor of the Shawmut loan,
retains a collateral interest in certain Company securities which are in an ESOP
"suspense account" and which have not been allocated to Participant accounts.
E. The Company agrees that it will require as collateral for the ESOP loan
only a continued interest in those suspense account securities which
collateralized its guaranty of the Shawmut loan and only to the extent permitted
by ERISA.
Effective as of the "Closing Date", Ekco and the Trustee of the ESOP agree to
the following terms.
1. LOAN. The Company agrees to lend three million, six hundred
and four thousand, six hundred and forty six dollars and thirty seven cents
($3,604,646.37) (the "Obligation") to the Trustee. The Trustee agrees to pay the
Obligation by executing a promissory note attached hereto as Exhibit A.
2. PAYMENT. The Trustee agrees to repay the Obligation in sixty
(60) substantially equal quarterly installments of one hundred thousand, five
hundred and eighty three dollars and eighty five cents ($100,583.85) on the
1
<PAGE> 2
last day of each calendar quarter, with the first payment due on June 30, 1995
and with a last payment of one hundred thousand, five hundred and eighty four
dollars and thirty seven cents ($100,584.37) due on March 31, 2010. Interest
will accrue on the unpaid balance at the rate of seven and one half percent
(7+1/2%) per annum. The Trustee shall have the right to prepay the Obligation in
whole or in part without premium at any time.
3. PLEDGE. As security for the Obligation, the Trustee does
hereby reaffirm its pledge to the Company of a security interest in the
remaining unallocated portion of 1,800,000 shares of Series B ESOP Convertible
Preferred Stock (the "Financed Shares") which were acquired on February 28, 1989
pursuant to a Company loan and which were the subject of continued
collateralization under the Shawmut loan. The Trustee agrees to continue to hold
the shares in a suspense account, as provided in section 10.
4. TITLE TO THE FINANCED SHARES. The Trustee represents and
warrants:
(i) he is the legal and beneficial owner of the Financed Shares
free and clear of all liens, encumbrances, security interests and other charges
except as created hereby; and
(ii) that he has all necessary right, power and authority to enter
into this Agreement and to grant the security interest and make the assignment
provided herein; and that he will defend the Company's right, title, special
property and security interest in and to the Financed Shares against the claims
or demands of any person, firm, corporation or other legal entity or any
governmental agency or authority.
5. RIGHTS AND DUTIES WITH RESPECT TO FINANCED SHARES. Beyond the
exercise of reasonable care to assure the safe custody of securities
constituting Financed Shares while in the Company's possession, the Company
shall not be under any duty to collect or protect the Financed Shares or income
thereon or to preserve rights pertaining thereto.
6. REGISTRATION, INCOME AND VOTING RIGHTS. The right is expressly
granted to the Company, at any time after an Event of Default (as hereinafter
defined) has occurred hereunder, at its option, to transfer any securities
constituting the number of Financed Shares which is necessary to meet the
payment schedule of this Agreement in accordance with Section 7 hereof (the
"Default Shares") into its own name or the name of any nominee acting on the
Company's behalf. Until there is an Event of Default hereunder, as herein
defined, the Trustee shall be entitled to receive and retain any dividends or
interest paid in cash with respect to securities constituting Financed Shares
and shall retain all voting rights incident to ownership. After the occurrence
of an Event of Default, (a) the Company shall have the sole right to receive any
dividends, interest or distribution with respect to securities constituting
Default Shares which stand in its name or the name of the Company's nominee, and
(b) the Company shall be expressly empowered to exercise all powers of voting
and consent with respect to any securities
2
<PAGE> 3
constituting Default Shares which have been transferred into its name or the
name of the Company's nominee and the Company is authorized to provide a copy of
this Agreement to the transfer agent for the common stock of any issuer of
securities constituting Financed Shares as conclusive evidence of the
registration, voting and other rights herein granted. In order to permit the
Trustee to exercise powers of voting and consent and to receive cash dividends
prior to an Event of Default, the Company shall, from time to time, upon written
request of the Trustee, execute and deliver to the Trustee appropriate proxies
and dividend or payment orders.
7. EVENTS OF DEFAULT; REMEDIES. If there is an event of default
(each an "Event of Default") whereby there is a default in the payment of any of
the Obligation under the terms of this Agreement, then thereupon or at any time
thereafter (unless all existing Events of Defaults have been cured to the
Company's satisfaction), the Company may declare this Agreement to be in default
and shall thereafter have as its sole remedy with respect to any default, the
right to dispose of an amount of Financed Shares in the Plan escrow account that
is necessary to provide to the Company sufficient funds to bring the Trustee
current with his Obligation hereunder and under the Promissory Note.
IN NO EVENT WILL AN EVENT OF DEFAULT BE DEEMED TO HAVE OCCURRED IF THE COMPANY
HAS NOT CONTRIBUTED SUFFICIENT FUNDS TO THE ESOP TO ENABLE IT TO MEET THE DEBT
SERVICE OF THE PROMISSORY NOTE ATTACHED AS SCHEDULE A.
8. FURTHER ASSURANCES. The Trustee will at any time and from time
to time upon the written request of the Company, join in the execution and
filing of appropriate Uniform Commercial Code financing statements and will also
do, make, execute and deliver all such additional and further acts, things,
deeds, instruments, documents and assurances (including without limitation,
Federal Reserve Form U-1) as the Company may reasonably request in order to
perfect and protect more completely the Company's rights hereunder and its
security interest in the Financed Shares and to carry out the terms of this
Agreement. The Company, in its own name or in the name of the Trustee, may
likewise take such steps in case the Trustee shall fail to do so. All costs and
expenses incurred by the Company or the Trustee in connection with anything
contemplated hereunder, including without limitation, legal fees and other costs
and expenses relating to any judicial proceedings, shall be borne by the
Trustee, and to the extent they are paid or incurred by the Company, shall be
reimbursed, with interest, by the Trustee upon demand.
9. NO WAIVER OF DEMANDS, NOTICES, DILIGENCE, ETC. The Trustee
hereby assents to all the terms and conditions of the Obligation but does not
waive any of the formal protections afforded a debtor under the laws of the
State of Delaware or otherwise available to an ESOP trustee under federal law.
10. RELEASE. The Trustee agrees to hold the Financed Shares in a
Plan suspense account for the benefit of the Company. Shares will be released
from the account ratably as the Trustee makes each monthly payment of principal
and
3
<PAGE> 4
interest hereunder for allocation to participant accounts, as provided in the
Plan and in accordance with Internal Revenue Code Regulation Sec. 54.4975-
7(b)(8)(i).
11. ALTERNATIVE. If the Trustee is unable to repay his obligations
under this Agreement, the Trustee may pursue any of the following alternatives
which he deems prudent at the time and which shall discharge his obligations
under this Agreement in full:
A) He may return the remaining Financed Shares in the
escrow account to the Company, properly endorsed to
the Company which will discharge the Obligation in
full;
B) He may continue to make payments to or for the
benefit of the Company by tendering to the Company
the number of shares necessary to keep the Obligation
current;
C) He may obtain a loan from another lender to pay off
remaining obligations to the Company and the Company
agrees to release the Financed Shares from the
restrictions of this Agreement for that purpose; or
D) He may utilize any combination of the above
alternatives.
12. Miscellaneous.
(a) No course of dealing between the Trustee and the
Company, and no failure to exercise nor any delay in exercising on the part of
the Company, any right, power or privilege hereunder or under any other
instrument or agreement, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder
preclude any other or further privilege.
(b) This Agreement is subject to amendment or
modification only by a writing signed by the Trustee and the Company. The
Financed Shares shall secure all of the Obligation.
(c) In case any provision of this Agreement shall be
determined to be invalid or unenforceable under applicable law, such provision
shall, insofar as possible, be construed or applied in such manner as will
permit enforcement; otherwise this Agreement shall be construed as though such
provision had never been made a part hereof.
(d) It is the intent of this agreement that it in all
events comply with ERISA. Any provision which is ambiguous or in conflict shall
be interpreted by the Trustee in his sole discretion so that it does not
contravene that statute, including specifically rules related to "leveraged
ESOPs."
4
<PAGE> 5
(d) This Agreement is intended to take effect as a sealed
instrument governed by the laws of the State of Delaware and shall inure to the
benefit of the Company and its successors and assigns and shall be binding upon
the Trustee and successors and assigns of the Trustee. If a non-individual
serves as trustee of the Plan, then this Agreement shall be effective
notwithstanding the fact that such trustee ceases to exist by reason of its
liquidation, merger, consolidation or otherwise.
13. TERMINATION. This Agreement shall terminate upon the payment
and satisfaction in full of all of the Obligation.
<TABLE>
IN WITNESS WHEREOF, the Trustee and the Company have caused this
Agreement to be duly executed and delivered under seal as of the day and year
first above written.
<S> <C>
EKCO GROUP, INC. EKCO GROUP, INC.EMPLOYEES' STOCK OWNERSHIP
PLAN
By: /S/DONATO A. DENOVELLIS By: /S/NEIL R. GORDON
----------------------- ------------------------
Title: Executive Vice President, Neil R. Gordon, as
Finance & Administration Trustee and not
and Chief Financial Officer individually
</TABLE>
5
<PAGE> 6
PROMISSORY NOTE EXHIBIT A
$3,604,646.37
FOR VALUE RECEIVED, Neil R. Gordon, as Trustee of the Ekco Group, Inc.
Employees' Stock Ownership Plan ("Trustee") and not individually, hereby
promises to pay to the order of Ekco Group, Inc. ("Company") the principal
amount of three million, six hundred and four thousand, six hundred and forty
six dollars and thirty seven cents ($3,604,646.37). Interest will accrue on the
unpaid balance at the rate of seven and one half percent (7+1/2%) per annum.
Payments will be made in sixty (60) substantially equal quarterly installments
of one hundred thousand, five hundred and eighty three dollars and eighty five
cents ($100,583.85) on the last day of each calendar quarter, with the first
payment due on June 30, 1995 and with a last payment of one hundred thousand,
five hundred and eighty four dollars and thirty seven cents ($100,584.37) due on
March 31, 2010.
This Note is issued under the Loan Agreement between the Company and
the Trustee of even date and it is subject to and entitled to the benefit of all
of the terms and conditions thereof. It may be prepaid in whole or in part
without premium, and upon the occurrence of any default specified therein, the
principal may become forthwith due and payable in the manner, upon conditions
and with the effect provided in said loan agreement; provided, however, that in
no event shall the Company have any additional remedies other than the right to
dispose of an amount of Financed Shares (as such term is defined in the Loan
Agreement) that is necessary to provide to the Company sufficient funds to bring
the Trustee current with his obligations under the Loan Agreement and hereunder.
EKCO GROUP, INC.
EMPLOYEES' STOCK OWNERSHIP PLAN
--------------------------
Neil R. Gordon, as Trustee
and not individually
<PAGE> 1
EXHIBIT 10.14(b)
---------------
<TABLE>
EKCO GROUP, INC.
SCHEDULE TO
FORM OF SPLIT DOLLAR AGREEMENTS
Each of the following employees of the Company has a Split Dollar
Agreement with the Company which is identical in form to the foregoing Form of
Split Dollar Agreement, except as to the date and the face amount of the policy
of life insurance:
<CAPTION>
Date of Face Amount
Name and Position Agreement of Policy
- ----------------- --------- -----------
<S> <C> <C>
Robert Stein 10/01/92 $1,895,038
President & Chief
Executive Officer
Jeffrey A. Weinstein 10/01/92 $ 527,352
Executive Vice Presid-
dent, Secretary &
General Counsel
Donato A. DeNovellis 10/01/93 $ 471,381
Executive Vice Presid-
ent, Finance & Adminis-
tration, & Chief
Financial Officer
Brian R. McQuesten 10/01/92 $ 279,742
Vice President &
Controller
</TABLE>
<PAGE> 1
EXHIBIT 10.15
-------------
[EKCO GROUP, INC. LETTERHEAD]
September 28, 1995
Mr. Richard Corbin
6 Acorn Drive
Andover, Massachusetts 01810
Dear Dick:
This letter will serve to confirm the agreement which you and Ekco Group, Inc.
including all of of its subsidiaries and affiliates (together they are
hereinafter referred to as "EKCO"), reached with respect to the severance
arrangement occasioned by your voluntary resignation as an employee and officer
of EKCO and the termination of the employment agreement between you and EKCO
dated as of May 20, 1994 (together with all amendments are hereinafter referred
to as the "Employment Agreement").
The following constitutes the agreement:
1. You hereby voluntarily resign from your positions as Executive Vice
President Marketing and Sales of EKCO as well as any and all other
positions you now hold either as an officer or director of EKCO and any
of its subsidiaries and affiliates. Your resignation will be effective
as of August 31, 1995.
2. The severance arrangements recited herein shall be in lieu of and take
the place of any and all rights which you may have pursuant to the
Employment Agreement, EKCO severance, vacation accrual and other types
of employment policies, and any rights you may have pursuant to any
federal, state or local laws, statutes, or ordinances and the
regulations promulgated thereunder, relating in any way to your
employment with EKCO, the termination of such employment or severance
or compensation benefits incident to either.
3. EKCO shall pay you from and after September 1, 1995, on a bi-weekly
basis, a gross amount equal to $9730.77, through February 2, 1996. On
March 1, 1996 EKCO shall pay you in a lump sum $181,096.15 less
$3,744.60 paid by EKCO on your behalf to the Royal Maccabees Life
Insurance Company for your disability policy for a total of
$177,351.55. These payments are based upon a one year severance of
salary at $253,000 plus a bonus of $40,000. Furthermore, EKCO shall pay
you the amount accrued and not theretofore paid to you for vacation
time properly accrued but not used by you prior to August 31, 1995 in
the amount of 133.29 hours for a gross amount of $16,212.06. EKCO will
also pay you $1,087.69, the amount attributable to your election to
exchange your 1995 salary increase for the period July 1, 1995 through
August 31, 1995 for shares of restricted stock. All such amounts shall
be paid to you with all required deductions and withholdings made,
except as may otherwise be provided herein. Furthermore, through the
earlier of August 31, 1996 or when you secure employment either as an
employee or as an independent contractor (hereinafter the "Reemploymnet
Date), EKCO shall provide you with continuation of the medical, dental
and life insurance benefits currently in effect (but not disability
insurance of any kind). Currently you are required to contribute under
your individual policy $7.00 on a bi-weekly basis. It is your
responsibility to continue to make those payments to EKCO. Should any
changes be effected on this coverage such that the benefits are limited
Page 1
<PAGE> 2
or the contribution cost to you increases you agree to accept such
changes provided that they are being applied to you on a
non-discriminatory basis.
4. From August 31, 1995 forward, you will not be eligible to participate
in the Ekco Group, Inc. Employee Stock Purchase Program, the EKCO
Corporation 401(K) Plan and the Ekco Group, Inc. disability insurance
policy and benefits.
5. The restrictions on exercising the options detailed below to acquire
Ekco Group, Inc. common stock shall lapse as of August 31, 1996. Please
contact Linda Millman, Esq. if you desire to exercise any of the
options detailed below prior to that date.
OPTIONS:
29,288 shares at an option price of $6.50 per share (January 3, 1995
issue date)
30,000 shares at an option price of $7.00 per share (May 5, 1994 issue
date)
6. You have purchased 48,255 shares of EKCO common stock pursuant to
EKCO'S restricted stock purchase plans. Of this amount EKCO agrees not
to repurchase from you 9,602 shares of EKCO common stock. The
remainder, totalling 38,653 shares of EKCO common stock will be
repurchased by EKCO from you for the original purchase price of $.10
per share or a total of $3,865.30 on the following schedule:
A. 29,051 shares on or about September 11, 1995 at a
price of $2,905.10, and
B. 9,602 shares on the Reemployment Date at a price of
$960.20. However, if you do not secure employment as
an employee or independent contractor on or before
August 31, 1996 EKCO shall not repurchase such shares
from you.
Pursuant to Federal tax regulations EKCO is required to withhold no
less than 28%, for Federal tax purposes, of the value as of September
1, 1995 of the restricted stock which is not being repurchased. That
amount is $17,206.78. You agree to make such tax withholding payment to
EKCO no later than October 10, 1995. In lieu of receiving the purchase
price defined immediately above and the payment of vacation accrual
defined in paragraph 3 above, such amounts may be used as an offset
against the monies which will be owed by you to EKCO for Federal tax
withholding due to the lapsing of restrictions on the restricted stock.
Please confirm to EKCO, prior to October 10, 1995, in writing, the
manner in which you will satisfy this obligation.
7. You will return to EKCO on or before the Reemployment Date, in
substantially the same condition as it is in today, normal wear and
tear excepted, the Cadillac Seville automobile owned by EKCO which you
are currently utilizing. In lieu of returning the automobile you may
purchase it at any time prior to August 31, 1996 by tendering to EKCO
80% of the then wholesale ("Blue Book") value of the automobile. Please
give us 10 business days notice of your intention to purchase the
automobile.
8. You shall return to EKCO on or before August 31, 1996, in the condition
that they are in now, reasonable wear and tear excepted, the Panasonic
facsimile machine and AST Power Executive personal lap top computer
which are owned by EKCO and are currently in your possession. You
represent that on or before August 31, 1995 you returned to EKCO all
business records and documents and all copies thereof relating to any
of
Page 2
<PAGE> 3
EKCO's activities which were in your possession and which were not
otherwise public documents.
9. You represent that you have returned to EKCO on or before August 31,
1995, any and all credit cards, travel cards, travel letters, telephone
credit cards, and the like then currently in your possession which
belong to EKCO. You are further directed and agree not to use any of
the above-mentioned cards or credit devices from that day forward.
Effective August 31, 1995 any charges to the telephone numbers (508)
989-3457 (mobile phone) and (508) 470-4744 (fax phone) shall be on your
account and not for the account of EKCO. Please make arrangements with
the appropriate telephone companies to receive their billings directly.
Any charges you make to any of the above, on or after August 31, 1995,
will be your personal obligation and may be deducted by EKCO from the
amounts owed to you hereunder.
10. EKCO shall make available to you the services of a secretary to assist
you in obtaining employment. On a reasonable and non-interfering basis
secretarial services will include telephone answering, typing and
assistance in preparing and mailing related business correspondence in
your efforts to secure employment.
11. Reference is made to "Section 8, Confidentiality and Non Competition",
in the Employment Agreement. You hereby reaffirm and agree to the
obligations you assumed pursuant thereto for the period running to and
through August 31, 1996.
12. You, on the one hand, and EKCO, on the other hand, acknowledge to one
another the obligation to continue the relationship between the two in
a fair and responsible manner. As a result, you and EKCO agree not to
intentionally disparage or damage the other. EKCO acknowledges your
voluntary resignation and agrees, to the extent inquiries are made with
respect to your termination, to confirm such fact.
13. You hereby represent that, except for the continuing obligations of
EKCO specifically described in this letter, there are no claims which
may or will be made against EKCO, their employees, officers, directors
and stockholders and any and all of their subsidiaries and affiliates
arising out of any events which occurred prior to today's date.
14. You irrevocably and unconditionally release, remise, and forever
discharge EKCO, their affiliates and their officers, directors,
employees, agents, owners and attorneys on account of any claim which
you may have on the date of this agreement, including, without
limitation, any claim arising from or related to your employment
relationship with EKCO or the termination thereof including, without
limitation, claims for discrimination under the Massachusetts Fair
Employment Practices Statute, M.G.L. c. 151B (as amended) (including,
but not limited to, claims for discrimination based upon age), the Age
Discrimination in Employment Act (as amended), 29 U.S.C. section 621
et seq., the Employee Retirement Income Security Act (as amended), the
Americans with Disabilities Act, wrongful discharge, breach of express
or implied contract, breach of a covenant of good faith and fair
dealing, violation of public policy, defamation, interference with
contractual relations, intentional or negligent infliction of emotional
distress, misrepresentation, deceit, fraud, negligence, or any other
statutory or common law claim under any state or federal law.
15. The parties agree that you shall have until October 21, 1995 to accept
the terms of this agreement by signing below, and you are advised to
consult an attorney before signing. In addition, should you accept the
terms of this agreement, you may rescind your assent to this agreement
if, within seven (7) days from the date you sign this agreement, you
Page 3
<PAGE> 4
deliver in writing to Jeffrey A. Weinstein at Ekco Group, Inc., 98 Spit
Brook Road, Nashua, NH, a written notice of recision. To be effective,
such recision must be: (1) postmarked within the seven-day period; (2)
properly addressed to Ekco Group, Inc. 98 Spit Brook Road, Suite 102,
Nashua, New Hampshire 03062, Attention Jeffrey A. Weinstein; and (3)
sent by certified mail, return receipt requested. You and EKCO, will
execute a mutual, general release in the form attached hereto as
Exhibit A.
16. This agreement constitutes the entire agreement between you and EKCO
with respect to your separation. No variations or modifications hereof
shall be deemed valid unless reduced to writing and signed by the
parties hereto.
17. This Agreement is made pursuant to the laws of the State of New
Hampshire, and questions as to its validity and effect shall be
governed thereby. Any provision of this Agreement which is prohibited
or unenforceable in accordance with such laws shall be ineffective as
to the extent of such prohibition and unenforceability without
invalidating the remaining provisions hereof.
If the above accurately represents our agreement, please indicate your
acknowledgement thereof by signing your name below where indicated.
<TABLE>
<S> <C>
ACCEPTED AND AGREED: EKCO GROUP, INC.
ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES AND AFFILIATES
/S/RICHARD CORBIN By: /S/DONATO A. DENOVELLIS
- ------------------------- ------------------------
Richard Corbin
Title: EVP/CFO
--------------------
</TABLE>
Page 4
<PAGE> 1
EXHIBIT 10.16
-------------
[EKCO GROUP, INC. LETTERHEAD]
September 21, 1995
Mr. Ronald Fox
100 Commons Drive Apartment #7
Shrewsbury, Ma. 01545
HAND DELIVERY BY JEFFREY A. WEINSTEIN
Dear Ron:
This letter will serve to confirm the agreement which you and Ekco Group, Inc.
including all of of its subsidiaries and affiliates, including Frem Corporation
("Frem"), (together they are all hereinafter referred to as "EKCO"), reached
with respect to the severance arrangement occasioned by your voluntary
resignation as an employee and officer of Frem Corporation and EKCO and the
termination of the employment agreement between you on the one hand and Frem and
EKCO Group, Inc. on the other, dated as of February 12, 1995 (together with any
and all amendments, including the amendment of April 4, 1995, are hereinafter
referred to as the "Employment Agreement").
The following constitutes the agreement:
1. You hereby voluntarily resign from your positions as Corporate Director
of Manufacturing as well as any and all other positions you now hold
either as an officer or director of EKCO and any of its subsidiaries
and affiliates. Your resignation will be effective as of September 15,
1995.
2. The severance arrangements recited herein shall be in lieu of and take
the place of any and all rights which you may have pursuant to the
Employment Agreement, EKCO and Frem severance, vacation accrual and
other types of employment policies, and any rights you may have
pursuant to any federal, state or local laws, statutes, or ordinances
and the regulations promulgated thereunder, relating in any way to your
employment with Frem and EKCO, the termination of such employment or
severance or compensation benefits incident to either.
3. Upon the execution of this letter agreement EKCO shall pay you in a
lump sum the gross amount of $192,088 as detailed specifically on
Exhibit A attached hereto less amounts required to be withheld for
Federal and State tax purposes also detailed on Exhibit A. Furthermore,
through the earlier of September 14, 1997 or when you secure employment
either as an employee or as an independent contractor (hereinafter the
"Reemploymnet Date), EKCO shall provide you with continuation of the
medical, dental and life insurance benefits currently in effect (but
not disability insurance of any kind). Should any changes be effected
on this coverage such that the benefits are limited or the cost to you
increases you agree to accept such changes provided that they are being
applied to you on a non-discriminatory basis.
4. From September 15, 1995, you will not be eligible to participate in the
Ekco Group, Inc. Employee Stock Purchase Program, the EKCO 401(K) Plan
and the Ekco Group, Inc. disability insurance policy and benefits.
<PAGE> 2
5. The options detailed below to acquire Ekco Group, Inc. common stock are
exercisable up to the dates indicated below in accordance with the
terms of the Ekco Group, Inc. 1987 Stock Option Plan and the respective
plan agreements. Please contact Linda Millman, Esq. if you desire to
exercise any of the options detailed below prior to the date applicable
to each such option.
<TABLE>
OPTIONS: LAST DAY TO EXERCISE
<S> <C>
20,000 shares at an option price of $2.25 per share (10/28/88 grant date) 12/14/95
25,000 shares at an option price of $2.5625 per share (1/18/90 grant date) 03/16/96
27,500 shares at an option price of $10.0625 per share (1/13/92 grant date) 03/13/96
60,000 shares at an option price of $11.3125 per share (1/19/93 grant date) 03/16/96
20,000 shares at an option price of $7.5625 per share (1/25/94 grant date) 03/16/96
</TABLE>
6. You have purchased 2,540 shares of EKCO common stock pursuant to EKCO's
restricted stock purchase plans. As of September 15, 1995 the
restrictions against transfer will lapse. Pursuant to Federal income
tax regulations EKCO is required to withhold no less than 28% of the
value as of September 15, 1995 of such restricted stock (less the
initial purchase price paid by you). You have asked and we have
withheld Federal income taxes at the rate of 35%.
7. You have returned to EKCO on September 18, 1995 the Cadillac Seville
automobile owned by EKCO which you had been utilizing as your company
vehicle. EKCO accepts the condition of the automobile as returned by
you.
8. You have returned to EKCO on or September 18, 1995, in a condition
acceptable to EKCO, the facsimile machine and AST personal lap top
computer which are owned by EKCO and were in your possession. You also
returned to EKCO on September 18, 1995 all business records and
documents and all copies thereof relating to any of EKCO's activities
which are not otherwise public documents.
9. You returned to EKCO on September 18, 1995, any and all credit cards,
travel cards, travel letters, telephone credit cards, and the like
which were in your possession which belong to EKCO. You are further
directed and agree not to use any of the above-mentioned cards or
credit devices. Effective September 15, 1995 any charges by you to the
telephone numbers (508) 979-0542 shall be on your account and not for
the account of EKCO.
10. Reference is made to "Section 8, Confidentiality and Non Competition",
in the Employment Agreement . You hereby reaffirm and agree to the
obligations you assumed pursuant thereto for the period running to and
through September 14, 1997.
11. You, on the one hand, and EKCO, on the other hand, acknowledge to one
another the obligation to continue the relationship between the two in
a fair and responsible manner. As a result, you and EKCO agree not to
intentionally disparage or damage the other.
2
<PAGE> 3
12. You hereby represent that, except for the continuing obligations of
EKCO specifically described in this letter, there are no claims which
may or will be made against EKCO, their employees, officers, directors
and stockholders and any and all of their subsidiaries and affiliates
arising out of any events which occurred prior to today's date.
13. You irrevocably and unconditionally release, remise, and forever
discharge EKCO, their affiliates and their officers, directors,
employees, agents, owners and attorneys on account of any claim which
you may have on the date of this agreement, including, without
limitation, any claim arising from or related to your employment
relationship with EKCO or the termination thereof including, without
limitation, claims for discrimination under the Massachusetts Fair
Employment Practices Statute, M.G.L. c. 151B (as amended) (including,
but not limited to, claims for discrimination based upon age), the Age
Discrimination in Employment Act (as amended), 29 U.S.C.Sections 621 et
seq., the Employee Retirement Income Security Act (as amended), the
Americans with Disabilities Act, wrongful discharge, breach of express
or implied contract, breach of a covenant of good faith and fair
dealing, violation of public policy, defamation, interference with
contractual relations, intentional or negligent infliction of emotional
distress, misrepresentation, deceit, fraud, negligence, or any other
statutory or common law claim under any state or federal law.
14. The parties agree that you shall have until October 12, 1995 to accept
the terms of this agreement by signing below, and you are advised to
consult an attorney before signing. In addition, should you accept the
terms of this agreement, you may rescind your assent to this agreement
if, within seven (7) days from the date you sign this agreement, you
deliver in writing to Jeffrey A. Weinstein at Ekco Group, Inc., 98 Spit
Brook Road, Nashua, NH, a written notice of recision. To be effective,
such recision must be: (1) postmarked within the seven-day period; (2)
properly addressed to Ekco Group, Inc. 98 Spit Brook Road, Suite 102,
Nashua, New Hampshire 03062, Attention Jeffrey A. Weinstein; and (3)
sent by certified mail, return receipt requested and include the check
presented to you by EKCO on September 22, 1995 in the amount of $110,
204. If you cash the aforementioned check you will have waived your
right to rescind this Agreement. You and EKCO and FREM, will execute a
mutual, general release in the form attached hereto as Exhibit B.
15. This agreement constitutes the entire agreement between you and EKCO
with respect to your separation. No variations or modifications hereof
shall be deemed valid unless reduced to writing and signed by the
parties hereto.
16. This Agreement is made pursuant to the laws of the State of New
Hampshire, and questions as to its validity and effect shall be
governed thereby. Any provision of this Agreement which is prohibited
or unenforceable in accordance with such laws shall be ineffective as
to the extent of such prohibition and unenforceability without
invalidating the remaining provisions hereof.
3
<PAGE> 4
If the above accurately represents our agreement, please indicate your
acknowledgement thereof by signing your name below where indicated.
<TABLE>
<S> <C>
ACCEPTED AND AGREED: EKCO GROUP, INC. ON BEHALF
OF ITSELF AND ITS SUBSIDIARIES
AND AFFILIATES
/S/RONALD N. FOX By: /S/DONATO A. DENOVELLIS
- ----------------------- ----------------------------
Ronald N. Fox
Title: EVP/CFO
-------------------------
</TABLE>
4
<PAGE> 1
EXHIBIT 10.17(a)
----------------
EKCO GROUP, INC.
98 Spit Brook Road
Nashua, NH 03062
December 28, 1995
Mr. Neil R. Gordon
16 Belknap Drive
Andover, MA 01810
RE: SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT
------------------------------------------
Dear Neil:
This letter sets forth the terms of your agreement with Ekco Group,
Inc. and its subsidiaries and affiliates ("Ekco") regarding the termination of
your employment with Ekco. We have agreed as follows:
1. TERMINATION OF EMPLOYMENT: The effective date of the
termination of your employment will be January 3, 1996 (the "Separation Date").
You hereby resign from your positions as an employee of and the Treasurer of
Ekco Group, Inc, as the Trustee of the Ekco Group, Inc. Employee Stock Ownership
Plan ("ESOP"), and from all other offices, directorships and other positions
which you hold with Ekco, in each case effective as of the Separation Date. You
agree to execute such documents as Ekco may reasonably request to evidence the
foregoing and to facilitate the transfer of property held by the ESOP to a
successor trustee. From and after the Separation Date you shall have no
authority to and shall not represent yourself as an officer, director, trustee,
employee or agent of Ekco or the ESOP.
2. SEVERANCE PAY: On the later of the Separation Date and the
eighth day following your execution of this Agreement, provided you have not
exercised your right of rescission described in Section 11 below, Ekco will pay
you by wire transfer a lump sum of Two Hundred Fifty Three Thousand Dollars
($253,000) less such amounts as Ekco customarily deducts and withholds from
compensation payments. In addition, Ekco shall also reimburse you for expenses
incurred by you in connection with your employment with Ekco in accordance with
past practice through the Separation Date, provided that you submit such expense
reimbursement request to the President, Chief Financial Officer or Controller of
Ekco Group, Inc. prior to January 15, 1996.
3. SEVERANCE BENEFITS: Until the earlier of (i) January 3, 1998
and (ii) the commencement of your full-time employment with an employer who
offers you at least comparable benefits in the particular benefit category at
the same or at a lower cost than is then being provided by Ekco, Ekco will
provide you with medical, dental and group life insurance coverage, in the same
amounts and on the same terms and conditions as it now provides such coverage to
you to the extent Ekco is able to continue the applicable coverage. You agree to
continue to pay Ekco for your share of the cost of such benefits by paying Ekco,
within thirty (30) days of the invoice thereof, for such amounts. In the event
that an employer offers you comparable benefits in a particular benefit category
at a greater cost than that which you are then paying to Ekco, at Ekco's option,
you will accept such benefit(s) in lieu of those provided by Ekco, and Ekco will
reimburse you for the difference in the cost. If Ekco changes its insurance
provider or the amount or terms of such coverage
<PAGE> 2
Mr. Neil R. Gordon
December 28, 1995
Page 2
for its senior executives, including changes in contribution percentages or
cost, it may provide such substitute or changed coverage to you in full
satisfaction of its obligations under this Agreement, provided, however, that
following a Change of Control (as defined below), Ekco shall have not have the
right to change the amount or terms of such coverage from that existing
immediately prior to such Change of Control. In the event Ekco cannot continue
your coverage under the terms of the applicable policies, Ekco shall cooperate
with you in actions which may be reasonably necessary to allow you, to the
extent possible, either (i) to buy such insurance policies, or (ii) to continue
insurance coverage with the insurer writing Ekco's applicable group policy
outside of Ekco's group plan. In the event that Ekco does not or cannot provide
you with coverage under its group policies, it shall pay to you 140% of your
cost of obtaining comparable coverage, but in no event more than twice the cost
which Ekco paid for your coverage under its group policies prior to the
Separation Date. For purposes of calculating Ekco's costs of coverage, as to
which Ekco self insures, the costs shall be the amount that Ekco then charges
individuals who elect to purchase COBRA continuation coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), 42 USCS ss.1396a, et.
seq., following termination of their employment with Ekco.
For purposes of this Agreement "Change of Control" shall mean and shall
be deemed to have occurred (i) if any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), other
than Ekco Group, Inc. ("Group") or any employee stock plan of Group, is or
becomes the beneficial owner, directly or indirectly, of securities of Group
representing fifteen percent (15%) or more of the outstanding Common Stock of
Group, or (ii) ten (10) days following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by any "person" of fifteen percent
(15%) or more of the outstanding Common Stock of Group, provided, however, that
at the conclusion of such ten (10) day period such person has not discontinued
or rescinded his intention to make such a tender or exchange offer or (iii) if
during any consecutive twelve (12) month period beginning on or after the date
on which this Agreement is executed individuals who at the beginning of such
period were directors of Group cease, for any reason, to constitute at least a
majority of the Board of Directors of Group; or (iv) if a merger of, or
consolidation involving, Group in which Group's stock is converted into
securities of another corporation or into cash shall be consummated, or a plan
of complete liquidation of Group (whether or not in connection with a sale of
all or substantially all of Group's assets) shall be adopted and consummated, or
substantially all of Group's operating assets are sold (whether or not a plan of
liquidation shall be adopted or a liquidation occurs), excluding in each case a
transaction solely for the purpose of reincorporating Group in a different
jurisdiction or recapitalizing Group's stock, PROVIDED, however, that any of the
transactions described above which shall have been approved by a resolution
adopted by the Board of Directors of Group with at least two-thirds (2/3) of the
then serving Group directors who are Group directors as of the date hereof
voting in favor, shall not constitute a Change of Control.
4. PERSONAL PROPERTY: On or before the Separation Date, Ekco will
transfer to you or your designee, free of all liens and claims other than any
incurred by you, the title to the Jeep automobile you are currently using and
the laptop computer, excluding any information stored thereon which belongs to
Ekco, and facsimile machine currently in your possession. Such transfers
<PAGE> 3
Mr. Neil R. Gordon
December 28, 1995
Page 3
shall be "as is" and with no warranties.
On or before January 3, 1996, you will return to Ekco and not use all
property, except as set forth above, which belongs to it or which otherwise
pertains to its business, including without limitation any and all documents and
copies thereof, compilations of information in any form (including computer
storage), software, keys, security access cards, credit cards, and travel
letters. From this date forward, you shall not use any such credit card or
credit devices except in the ordinary course of business consistent with past
practice, and will reimburse Ekco promptly for any personal charges made to date
in accordance with the Company's practice.
On or before January 3, 1996, you will transfer the account for your
cellular phone (508-989-6104) from Ekco to you or your designee. From this date
forward, you shall not incur any charges with respect to such account except in
the ordinary course of business consistent with past practice.
5. ACKNOWLEDGEMENT/OTHER AGREEMENTS: The terms of this Agreement
shall replace any and all rights which you otherwise may have had pursuant to
the Employment Agreement dated November 6, 1991, as amended ("Employment
Agreement") between you and Ekco, which agreement is hereby terminated except as
specified below; Ekco severance, vacation accrual or other type of employment
policy; and any rights you may have pursuant to any federal, state or local law,
statute, ordinance or regulations, relating in any way to your employment with
Ekco, the termination of such employment, or severance or compensation benefits
incident to either.
Except for any monies and stock in which you are 100% vested pursuant
to the terms of the applicable plans due to you pursuant to Ekco's Supplemental
Employee Retirement Program (the "SERP"), 401(k) plan, Employee Stock Purchase
Plan ("ESPP"), and the ESOP, salary and expense reimbursement with respect to
the period through the Separation Date and except as expressly set forth in this
Agreement, you acknowledge that you have been paid all wages, commissions,
bonuses, vacation pay and any and all other forms of compensation or benefit
that may be due you now or in the future in connection with your employment or
the termination of your employment with Ekco, including, without limitation, any
rights you may have had to outplacement services, or reimbursement therefor,
pursuant to your existing Employment Agreement.
6. CONSULTATION/COOPERATION: You shall make yourself available,
upon reasonable notice, through January 3, 1998 either by telephone or, in
Ekco's discretion, in person, to assist Ekco in any matter relating to the
services performed by you during your employment or later consulting with Ekco.
You also shall cooperate fully with Ekco in the defense or prosecution of any
claims or actions now in existence or which may be brought or threatened in the
future against or on behalf of Ekco, including without limitation any claims or
actions against its officers, directors and employees. Your cooperation in
connection with such actions or claims shall include, without limitation, your
being available to meet with Ekco or its designees in connection with any
regulatory matters, to prepare for any proceeding (including, without
limitation, depositions, consultation, discovery or trial), to provide
affidavits, to assist with any audit, inspection, proceeding or other inquiry,
or to act as a witness in connection with any litigation or other legal
proceeding affecting Ekco. Should you be contacted (directly or indirectly) by
any person known by you to be adverse to Ekco with respect to any dispute with
Ekco, you shall promptly (within 48 hours) notify
<PAGE> 4
Mr. Neil R. Gordon
December 28, 1995
Page 4
the President of Ekco Group, Inc. Ekco shall promptly reimburse you for
reasonable out of pocket expenses incurred by you at Ekco's request in complying
with your obligations hereunder. In the event that you provide more than twenty
(20) hours of service to Ekco, at Ekco's request pursuant to the terms of this
paragraph, Ekco will compensate you for your time for such excess services at
the rate of One Hundred Fifty Dollars ($150.00) per hour. Ekco agrees to
indemnify, defend and hold you harmless from damages incurred by you in
connection with providing such services to the same extent as Ekco indemnifies
its officers pursuant to the terms of Ekco Group, Inc.'s bylaws.
7. RESTRICTED STOCK AND OPTIONS: We mutually acknowledge that as
of the date hereof you are the holder of 10,022 shares of Ekco Group, Inc.
Common Stock, $.01 par value ("Shares") which are subject to Restricted Stock
Purchase Agreements (the "Restricted Shares") and Options to purchase 111,437
Shares pursuant to Stock Option Agreements (the "Option Agreements"). Effective
as of the later of the eighth day following your execution of this Agreement and
the Separation Date, Ekco Group, Inc.: (i) waives its rights to repurchase the
Restricted Shares and waives all restrictions on transfer with respect to such
shares other than those imposed by applicable federal and state securities laws
and (ii) amends each of the Option Agreements to provide that all options which
have not been exercised prior to the date hereof shall be exercisable from and
after the date hereof and shall remain exercisable until January 3, 1997.
Promptly upon payment of the full purchase price in accordance with the terms of
such Option Agreements, Ekco will deliver you the certificates representing such
Shares in accordance with the terms of the Option Agreements. You acknowledge
that upon waiver of the right of repurchase you will be deemed to have
compensation income for federal income tax purposes equal to the fair market
value of the Shares less the purchase price you paid for the Shares, and that
Ekco is required to withhold no less than 28% of the amount of such income.
Further, you acknowledge that upon exercise of the Options you will also be
deemed to have income for federal income tax purposes equal to the fair market
value of the Shares as of the date of exercise, less the purchase price paid
upon such exercise, and that similarly Ekco will be required to withhold on such
date in accordance with applicable federal regulations. You hereby agree to
cooperate with Ekco in such withholding, and to pay to Ekco amounts which are
required under applicable federal and state tax laws, and hereby agree that Ekco
may set-off from any amount it owes to you, or your affiliates, any amounts
which you have not paid to Ekco as so required.
8. NON-COMPETITION/NON-DISPARAGEMENT/CONFIDENTIALITY: The
obligations set forth in "Section 8, Confidentiality and Non-Competition" of
your Employment Agreement are reaffirmed and incorporated herein by reference,
except that such obligations shall continue until January 3, 1998, and except
that (i) the terms thereof shall not prohibit you from performing services for
N.R. Gordon and Company, Inc. in connection with its services to Ekco, (ii) a
business shall only be deemed competitive if Ekco is now engaged in such
business, or has engaged in such business since October, 1987, and (iii) the
phrase "the Board of Directors" in the sixteenth line of page 16 of such
agreement is replaced with the phrase "an executive officer of Group".
Neither you nor Ekco shall make any statements that are disparaging
about or adverse to the business interests of the other (including Ekco's
officers, directors and employees) or which are intended to harm the reputation
of the other including, but not limited to, any statements that disparage any
product, service, finances, capability or any other aspect of
<PAGE> 5
Mr. Neil R. Gordon
December 28, 1995
Page 5
the business of Ekco.
All information relating in any way to the subject matter of this
Agreement, including the terms and amount of this Agreement, shall be held in
confidence by you and Ekco and shall not be publicized or disclosed to any
person or entity (other than an immediate family member, legal counsel,
accountant or financial advisor, provided that any such individual to whom
disclosure is made agrees to be bound by these confidentiality obligations),
except as required by applicable law, or as may be required in connection with
disputes under this Agreement.
You acknowledge that the covenants set forth in this section are
reasonable and necessary to protect Ekco's confidential and proprietary
information and trade secrets, and that the specific time and scope provisions
set forth in this paragraph are reasonable and necessary to protect Ekco's
business interests. You further expressly acknowledge and agree that in the
event of your breach or threatened breach of the covenants set forth in this
paragraph, Ekco would suffer substantial irreparable harm and that Ekco would
not have an adequate remedy at law for such breach or threatened breach. You
therefore agree that in the event of a breach or threatened breach of any of
these covenants, in addition to such other remedies as Ekco may have at law,
Ekco, without posting any bond, shall be entitled to obtain, and you agree not
to oppose, a request for equitable relief in the form of specific performance,
or temporary, preliminary or permanent injunctive relief, or any other equitable
remedy which then may be available. The seeking of such injunction or order
shall not affect Ekco's right to seek and obtain damages or other relief at law
or in equity on account of any such actual or threatened breach. The breach of
any portion of this paragraph number 8 shall constitute a material breach of
this Agreement and, in addition to any other remedy available to Ekco, shall
entitle Ekco to recover all of its costs and expenses, including reasonable
attorneys' fees, in enforcing its rights and your obligations under this
Agreement.
9. RELEASE OF CLAIMS: You agree and acknowledge that by signing
this Agreement and accepting the Severance Payments and Benefits to be provided
to you, and other good and valuable consideration provided for in this
Agreement, you are waiving your right to assert any form of legal claim against
Ekco of any kind whatsoever for any matter occurring from the beginning of time
through the Separation Date. Your waiver and release herein is intended to and
shall bar any form of legal claim, charge, complaint or any other form of action
(jointly referred to as "Claims") against Ekco seeking any form of relief
including, without limitation, equitable relief (whether declaratory, injunctive
or otherwise), the recovery of any damages or any other form of monetary
recovery whatsoever (including, without limitation, back pay, front pay,
outplacement benefits or compensation, compensatory damages, emotional distress
damages, punitive damages, attorneys fees and any other costs) against Ekco
through the Separation Date.
Without limiting the foregoing general waiver and release, you
specifically waive and release Ekco from any Claim arising from or related to
your employment relationship with Ekco or the termination thereof, including,
without limitation:
** Claims under any state or federal discrimination, fair employment
practices or other employment related statute, regulation or executive
order (as they may have been amended through the date of this
Agreement)
<PAGE> 6
Mr. Neil R. Gordon
December 28, 1995
Page 6
prohibiting discrimination or harassment based upon any protected
status including, without limitation, race, national origin, age,
gender, marital status, disability, veteran status or sexual
orientation. Without limitation, specifically included in this
paragraph are any Claims arising under the New Hampshire
anti-discrimination statute, the Federal Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act, the Civil
Rights Acts of 1866 and 1871, Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Equal Pay Act and the Americans
With Disabilities Act.
** Claims under any other state or federal employment related statute,
regulation or executive order (as they may have been amended through
the date of this Agreement) relating to wages, hours or any other terms
and conditions of employment. Without limitation, specifically included
in this paragraph are any Claims arising under the Fair Labor Standards
Act, the Family and Medical Leave Act of 1993, the National Labor
Relations Act, the Employee Retirement Income Security Act and any
similar state statute.
** Claims under any state or federal common law theory including, without
limitation, wrongful discharge, breach of express or implied contract,
promissory estoppel, unjust enrichment, breach of a covenant of good
faith and fair dealing, violation of public policy, defamation,
interference with contractual relations, intentional or negligent
infliction of emotional distress, invasion of privacy,
misrepresentation, deceit, fraud or negligence.
** Any other Claim arising under state or federal law.
Notwithstanding the foregoing, this Section shall not release Ekco from
the obligations expressly set forth in this Agreement, any ongoing
indemnification obligation set forth in the Certificate of Incorporation or
ByLaws of Ekco Group, Inc. or any of its subsidiaries, or with respect to the
Indemnification Agreement dated as of July 30, 1986 between you and Ekco Group,
Inc. (the "Indemnification Agreement"), Option Agreements, or distributions not
yet made to you under the terms of the SERP, the ESOP, 401(k) or the ESPP.
While Ekco is not releasing you from any claims it may have against
you, and Ekco has made no specific investigation of the basis for any such
claims, Ekco represents to you that its executive officers do not as of the date
of this Agreement have actual knowledge of actions or omissions by you which
constitute the basis for any claims against you.
10. OLDER WORKERS BENEFITS PROTECTION ACT: Because you are over 40
years of age, you have specific rights under the Older Worker Benefits
Protection Act ("OWBPA") which prohibits discrimination on the basis of age. The
release set forth in this Agreement is intended to release any right you may
have against Ekco alleging discrimination on the basis of age.
11. RECISION RIGHTS: Consistent with the provisions of OWBPA, you
shall have twenty-one (21) days to consider and accept the terms of this
Agreement by signing below. In addition, you may rescind your assent to this
Agreement if, within seven (7) days after the date you sign this Agreement,
<PAGE> 7
Mr. Neil R. Gordon
December 28, 1995
Page 7
you deliver a notice of rescission to the President of Ekco Group, Inc. To be
effective, such rescission must be postmarked or delivered in-hand within the
seven (7) day period to the President of Ekco Group, Inc.
12. SPLIT DOLLAR LIFE INSURANCE/LETTER OF CREDIT: On the
Separation Date you will return to Ekco that certain letter of credit issued by
Fleet Bank of Massachusetts, N.A. in accordance with your existing Employment
Agreement. Effective as of the Separation Date, you relinquish all right
(including your right to acquire), title and interest, if any, you may have
pursuant to that certain life insurance policy issued by The Guardian Life
Insurance Company of America, and hereby assign to Ekco Group, Inc. all of your
right, title and interest in and to such policy.
13. ENTIRE AGREEMENT: Except as expressly provided for herein,
this Agreement supersedes any and all prior oral and/or written agreements,
including without limitation your Employment Agreement, and sets forth the
entire agreement between Ekco and you, other than the terms of the Stock Option
and Restricted Stock Purchase Agreements referred to in paragraph 7, and the
terms of Article VII, Section 7 of Ekco's Bylaws and the Indemnification
Agreement which shall remain enforceable in accordance with their terms. No
variations or modifications hereof shall be deemed valid unless reduced to
writing and signed by the parties hereto. This Agreement shall take effect as an
instrument under seal and shall be governed and construed in accordance with the
laws of the State of New Hampshire. The terms of this Agreement are severable,
and if for any reason any part hereof shall be found to be unenforceable, the
remaining terms and conditions shall be enforced in full.
You are advised to consult an attorney before accepting this Agreement
and acknowledge that you have had an opportunity to do so.
This Agreement is executed and shall take effect as an instrument under
seal.
Very truly yours,
Ekco Group, Inc.
By: /S/DONATO A. DENOVELLIS
--------------------------
Donato A. DeNovellis
Executive Vice-President
and chief Financial
Oficer
Agreed:
/S/NEIL R. GORDON
- -----------------
Neil R. Gordon
Date: 12/28/95
--------
<PAGE> 1
EXHIBIT 10.17(b)
----------------
EKCO GROUP, INC.
98 Spit Brook Road
Nashua, New Hampshire 03062
December 28, 1995
Neil R. Gordon, President
N.R. Gordon & Company, Inc.
16 Belknap Drive
Andover, MA 01810
Dear Neil:
We are pleased that N.R. Gordon & Company, Inc. ("N.R. Gordon") has
agreed to become a consultant to Ekco Group, Inc. and its subsidiaries and
affiliates (the "Company").
This letter will set forth the terms of our agreement ("the Agreement")
with respect to (i) N.R. Gordon's services as a consultant to the Company, (ii)
N.R. Gordon's agreement not to compete with the Company and (iii) N.R. Gordon's
agreement to protect information and property which is confidential and
proprietary to the Company or other parties with whom the Company does business.
1. SERVICES OF CONSULTANT. N.R. Gordon shall provide consulting
services and advice to the Company in the areas of corporate finance, treasury
services, investor relations, mergers and acquisitions, and such other areas as
N.R. Gordon and the Company may agree from time to time. N.R. Gordon's services
to the Company shall include service as a consultant to the Company, providing
services at such times and locations as are mutually agreeable to the Company
and N.R. Gordon. Such services shall be performed on behalf of N.R. Gordon by
Neil R. Gordon, personally and to the best of his ability, unless otherwise
agreed by the Company. During the term of this Agreement, Mr. Gordon shall
provide at least one thousand six hundred (1600) hours of services (the "Minimum
Commitment"), provided, however, that Mr. Gordon shall not be required to
provide more than one hundred and fifty (150) hours of services in any calendar
month or more than four hundred (400) hours of services during any three (3)
consecutive calendar month period. While such services shall be performed at
such times as are mutually agreeable to the Company and N.R. Gordon, N.R. Gordon
shall submit an accounting to the Company on a monthly basis indicating the
dates of service, and the nature of the services and time incurred performing
such services. It is understood and agreed that N.R. Gordon shall provide
services only at the request of the Company, and subject to the limits set forth
in this Section 1, and that if N.R. Gordon is not requested to perform services,
it shall be under no obligation to do so, but shall still be entitled to receive
the compensation set forth in Section 3 of this Agreement. In addition, N.R.
Gordon shall have the right to reduce the remaining portion of the Minimum
Commitment during the remaining term of this Agreement by providing thirty (30)
days advance written notice to the Company, in which case, the compensation set
forth in Section 3(a) shall be reduced, on a pro rata basis, by the reduction of
the Minimum
1
<PAGE> 2
Commitment set forth in N.R. Gordon's notice, and if any such amount has been
prepaid, you shall promptly reimburse such amount to the Company.
N.R. Gordon will be an independent contractor for all purposes
including, but not limited to, payroll and tax purposes, and neither it nor its
employees shall represent itself or himself to be an employee or officer of the
Company, and neither shall have any right to bind the Company in any manner.
2. TERM OF CONSULTING ARRANGEMENT.
(a) N.R. Gordon's services as a consultant to the Company
shall commence during the week of January 3, 1996 and shall continue through
July 3, 1997 (the "Initial Term") and may be extended by mutual agreement;
provided, however, that this Agreement shall be terminated earlier upon the
first to occur of the following:
(i) immediately upon the death of Neil R. Gordon; or
(ii) by the Company:
(A) following N.R. Gordon's failure, due to
illness, accident or any other physical or mental
incapacity of Neil R. Gordon, to perform the services
provided for hereunder for an aggregate of seventy
(70) business days within any period of one hundred
(100) consecutive business days during the term
hereof; or
(B) for Cause, as defined herein; or
(C) subject to Section 3(b) hereof, without
Cause.
or
(iii) by N.R. Gordon, upon not less than 60 days written
notice to the Company.
The right of the Company to terminate its consulting arrangement
hereunder shall be exercisable by written notice sent to N.R. Gordon and shall
be effective as of the date specified in such notice.
(b) For purposes of this Agreement, "Cause" shall mean
and be limited to a material breach of any of N.R. Gordon's obligations under
this Agreement or any action by N.R. Gordon or any of its agents or employees
involving willful malfeasance or gross (but not simple) negligence on the part
of N.R. Gordon or any of its agents or employees in a material respect.
Notwithstanding the foregoing, following a Change of Control (as defined below),
"cause" shall not be deemed to have occurred unless (i) the conduct which is the
basis for such material breach is either willful or intentionally unlawful and
(ii) N.R. Gordon shall not have ceased such conduct or cured the effect thereof,
if curable, so that the breach shall no longer be material within thirty (30)
days after N.R. Gordon shall have received written notice from the Company of
the Company's intention to terminate this Agreement for Cause, which notice
shall specify in detail the basis therefor.
2
<PAGE> 3
3. Compensation for Services.
-------------------------
(a) The Company shall pay you for your services and
agreements hereunder $8,333.00 per month on the first day of each month with
respect to services to be performed in the upcoming month for a total of
$149,994 during the Initial Term. If the Company requests that you perform in
excess of one hundred and fifty (150) hours of services in any calendar month,
or four hundred (400) hours of services in any consecutive three (3) calendar
month period, or sixteen hundred (1600) hours of services during the Initial
Term, and you perform such additional services, the Company will compensate you
at an hourly rate to be negotiated between you and the Company for each such
excess hour. In addition, if, at the Company's request, employees or consultants
to N.R. Gordon other than Neil R. Gordon perform services pursuant to this
Agreement, the Company will compensate N.R. Gordon in a manner agreed to by the
Company and N.R. Gordon. The Company will also reimburse you for reasonable
out-of-pocket expenses incurred by you in performing services for the Company.
(b) In the event this consulting arrangement shall be
terminated by the Company without Cause during the term of this Agreement, the
Company shall continue to pay you the compensation specified in Section 3(a) for
the remainder of such term. All payments made under this Section 3(b) shall be
made at the times and at the rate specified in Section 3(a) hereof.
(c) In the event of a Change of Control (as defined
below), the Company shall, immediately upon such Change of Control, prepay the
amount specified in paragraph 3(a) for the remainder of the Initial Term,
provided that you shall remain obligated to provide services in accordance with
this Agreement for the remainder of such term.
For purposes of this Agreement "Change of Control" shall mean and shall
be deemed to have occurred (i) if any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), other
than Ekco Group, Inc. ("Group") or any employee stock plan of Group, is or
becomes the beneficial owner, directly or indirectly, of securities of Group
representing fifteen percent (15%) or more of the outstanding Common Stock of
Group, or (ii) ten (10) days following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by any "person" of fifteen percent
(15%) or more of the outstanding Common Stock of Group, provided, however, that
at the conclusion of such ten (10) day period such person has not discontinued
or rescinded his intention to make such a tender or exchange offer or (iii) if
during any consecutive twelve (12) month period beginning on or after the date
on which this Agreement is executed individuals who at the beginning of such
period were directors of Group cease, for any reason, to constitute at least a
majority of the Board of Directors of Group; or (iv) if a merger of, or
consolidation involving, Group in which Group's stock is converted into
securities of another corporation or into cash shall be consummated, or a plan
of complete liquidation of Group (whether or not in connection with a sale of
all or substantially all of Group's assets) shall be adopted and consummated, or
substantially all of Group's operating assets are sold (whether or not a plan of
liquidation shall be adopted or a liquidation occurs), excluding in each case a
transaction solely for the purpose of reincorporating Group in a different
jurisdiction or recapitalizing Group's stock, PROVIDED, however, that any of the
transactions
3
<PAGE> 4
described above which shall have been approved by a resolution adopted by the
Board of Directors of Group with at least two-thirds (2/3) of the then serving
Group directors who are Group directors as of the date hereof voting in favor,
shall not constitute a Change of Control.
(d) In the event this consulting arrangement shall be
terminated either as a result of the death of Neil R. Gordon or by the Company
pursuant to Section 2(a)(ii)(A) or (B), no further compensation or benefits of
any kind shall be payable to you hereunder.
(e) In the event this consulting arrangement shall be
terminated by you pursuant to Section 2(a)(iii), no further compensation or
benefits of any kind shall be payable to you hereunder, and if the Company shall
have prepaid any amounts due to you, you shall reimburse such amounts to the
Company.
4. CONTINUING OBLIGATIONS. Your obligations under this Agreement
other than the provisions of Section 1 shall not be affected by any termination
of this Agreement.
5. PROHIBITED COMPETITION.
(a) CERTAIN ACKNOWLEDGEMENTS AND AGREEMENTS.
(i) You recognize and acknowledge the
competitive and proprietary nature of the Company's business
operations. You further acknowledge and agree that, during the course
of performing services for the Company as a consultant, the Company
will furnish, disclose or make available to you confidential and
proprietary information related to the Company's business. You also
acknowledge that such confidential information has been developed and
will be developed by the Company through the expenditure by the Company
of substantial time, effort and money and that all such confidential
information could be used by you to compete with the Company.
(ii) You acknowledge receipt of a copy of that
certain Employment Agreement between Ekco Group, Inc. and Neil R.
Gordon dated as of November 6, 1991, and a copy of that certain
Severance Agreement of even date (the "Severance Agreement"), pursuant
to which Neil R. Gordon, individually, has agreed to be bound by the
proprietary information and non competition provisions set forth
therein.
(b) COVENANTS NOT TO COMPETE. During the term of this
Agreement (the "Term") and for a period of two (2) years following the
expiration or termination of the Term, whether such termination is
voluntary or involuntary, N.R. Gordon shall be bound by the provisions
set forth in "Section 8, Confidentiality and Non-Competition" of the
Employment Agreement between Neil R. Gordon and the Company, as amended
by the Severance Agreement, incorporated herein by reference, except
that such obligations shall continue for two years following
termination of the Term.
(c) REASONABLENESS OF RESTRICTIONS. You further recognize
and acknowledge that (i) the types of employment which are prohibited
by this Section 5 are narrow and reasonable in relation to the skills
which
4
<PAGE> 5
represent your principal salable asset both to the Company and to your
other prospective employers and the consideration to be paid hereby,
and (ii) the specific but broad geographical scope of the provisions of
this Section 5 is reasonable, legitimate and fair to you in light of
the Company's need to market its services and sell its products in a
large geographic area in order to have a sufficient customer base to
make the Company's business profitable and in light of the limited
restrictions on the type of employment prohibited herein compared to
the types of employment for which you are qualified to earn your
livelihood.
(d) SURVIVAL OF ACKNOWLEDGEMENTS AND AGREEMENTS. Your
acknowledgements and agreements set forth in this Section 5 shall
survive the expiration or termination of this Agreement.
6. PROTECTED INFORMATION. You shall and shall cause your
employees and agents to, at all times, both during and after any termination of
the consulting arrangement by either the Company or you, maintain in confidence
and shall not, without the prior written consent of the Company, use, except in
the course of performance of your duties for the Company, disclose or give to
others any fact or information which was disclosed to you by the Company of any
of its agents, employees or consultants or developed by you during the course of
performing services for the Company, and is not generally available to the
public including, but not limited to, information and facts concerning business
plans, customers, future customers, suppliers, licensors, licensees, partners,
investors, affiliates or others, training methods and materials, financial
information, sales prospects, client lists, inventions, or any other scientific,
technical, trade or business secret or confidential or proprietary information
of the Company or of any third party provided to you in the course of your
consultancy to the Company. You agree not to make any copies of such
confidential or proprietary information of the Company (except when appropriate
for the furtherance of the business of the Company or duly and specifically
authorized to do so) and promptly upon request, whether during or after the
period of the consulting arrangement, to return to the Company any and all
documentary, machine-readable or other elements or evidence of such confidential
or proprietary information, and any copies that may be in your possession or
under your control.
7. RECORDS. Upon termination of your relationship with the
Company, you shall deliver to the Company any property of the Company which may
be in your possession including products, materials, memoranda, notes, records,
reports, computer programs or other documents or information in writing or
machine readable form or copies of the same.
8. NO CONFLICTING AGREEMENTS. N.R. Gordon hereby represents and
warrants that neither it nor its employees have any commitments or obligations
inconsistent with this Agreement. N.R. Gordon agrees to indemnify and hold the
Company harmless against any loss, damage, liability or expense arising from any
claim based upon circumstances alleged to be inconsistent with such
representation and warranty. During the term of this Agreement, N.R. Gordon will
not enter into any agreement, either written or oral, which may be in conflict
with this Agreement, and will arrange to provide its services to all other
persons and entities in such a manner and at such times so as not to conflict
with its responsibilities under this Agreement.
5
<PAGE> 6
9. NO EMPLOYMENT/AGENCY RELATIONSHIP CREATED. This Agreement does
not constitute, and shall not be construed as constituting, an undertaking by
the Company to establish an employment or agency relationship between N.R.
Gordon or any of its employees and the Company. Neil R. Gordon will be working
as an employee of N.R. Gordon, which is acting as an independent contractor to
the Company, and not as an employee of the Company, in providing services to the
Company hereunder. Neil R. Gordon will not be entitled to receive any of the
benefits provided by the Company to its employees and N.R. Gordon and he will be
solely responsible for the payment of all federal, state and local taxes,
withholdings and contributions imposed or required on income, unemployment
insurance, social security and any other law or regulation.
10. General.
-------
(a) NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by certified or registered mail, return receipt requested,
postage prepaid.
If to N.R. Gordon to:
Neil R. Gordon, President
N.R. Gordon & Company, Inc.
16 Belknap Drive
Andover, MA 01810
If to the Company to:
Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attn: President
and with a copy to Jeffrey A. Weinstein, its General Counsel
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by certified or
registered mail, on the fifth business day following the day such mailing is
made.
(b) ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Agreement shall affect, or be used to interpret, change or
6
<PAGE> 7
restrict, the express terms and provisions of this Agreement.
(c) MODIFICATIONS AND AMENDMENTS. The terms and
provisions of this Agreement may be modified or amended only by written
agreement executed by the parties hereto.
(d) WAIVERS AND CONSENTS. The terms and provisions of
this Agreement may be waived, or consent for the departure therefrom granted,
only by written document executed by the party entitled to the benefits of such
terms or provisions. No such waiver or consent shall be deemed to be or shall
constitute a waiver or consent with respect to any other terms or provisions of
this Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
(e) ASSIGNMENT. The Company may assign its rights and
obligations hereunder to any person or entity who succeeds to all or
substantially all of the Company's business. N.R. Gordon's rights and
obligations under this Agreement may not be assigned by it without the prior
written consent of the Company.
(f) BENEFIT. All statements, representations, warranties,
covenants and agreements in this Agreement shall be binding on the parties
hereto and on their parents, subsidiaries and other affiliates and shall inure
to the benefit of the respective successors and permitted assigns of each party
hereto. Nothing in this Agreement shall be construed to create any rights or
obligations except among the parties hereto, and no person or entity shall be
regarded as a third-party beneficiary of this Agreement.
(g) GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the law of the State of New Hampshire, without giving effect to the
conflict of law principles thereof.
(h) ARBITRATION. Except with respect to the provisions of
Sections 5, 6 and 7 hereof, any controversy, dispute or claim arising out of or
in connection with this Agreement, or the breach, termination or validity
hereof, shall be settled by final and binding arbitration to be conducted by an
arbitration tribunal in Nashua, New Hampshire, pursuant to the rules of the
American Arbitration Association. The arbitration tribunal shall consist of
three arbitrators. The party initiating arbitration shall nominate one
arbitrator in the request for arbitration and the other party shall nominate a
second in the answer thereto within thirty (30) days of receipt of the request.
The two arbitrators so named will then jointly appoint the third arbitrator. If
the answering party fails to nominate its arbitrator within the thirty (30) day
period, or if the arbitrators named by the parties fail to agree on the third
arbitrator within thirty (30) days, the office of the American Arbitration
Association in Nashua, New Hampshire shall make the necessary appointments of
such arbitrator(s). The decision or award of the arbitration tribunal (by a
majority determination, or if there is no majority, then by the determination of
the third arbitrator, if any) shall be final, and judgment upon such decision or
award may be entered in any competent court or application may be made to any
competent court for judicial acceptance of such decision or award and an order
of enforcement. In the event of any procedural matter not covered by the
aforesaid rules, the procedural law of the New
7
<PAGE> 8
Hampshire shall govern.
(i) JURISDICTION AND SERVICE OF PROCESS. Any legal action
or proceeding with respect to this Agreement may be brought in the courts of the
State of New Hampshire or of the United States of America for the District of
New Hampshire. By execution and delivery of this Agreement, each of the parties
hereto accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the parties
hereto irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the party at its address set
forth in Section 10(a) hereof.
(j) SEVERABILITY. The parties intend this Agreement to be
enforced as written. However, (i) if any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a duly authorized
court or arbitration panel having jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law; and (ii) if any
provision, or part thereof, is held to be unenforceable because of the duration
of such provision or the geographic area covered thereby, the Company and you
agree that the court or arbitration panel making such determination shall have
the power to reduce the duration and/or geographic area of such provision,
and/or to delete specific words and phrases ("blue-pencilling"), and in its
reduced or blue-pencilled form such provision shall then be enforceable and
shall be enforced.
(k) HEADINGS AND CAPTIONS. The headings and captions of
the various subdivisions of this Agreement are for convenience of reference only
and shall in no way modify, or affect the meaning or construction of any of the
terms or provisions hereof.
(l) INJUNCTIVE RELIEF. You hereby expressly acknowledge
that any breach or threatened breach of any of the terms and/or conditions set
forth in Sections 5, 6 or 7 of this Agreement will result in substantial,
continuing and irreparable injury to the Company. Therefore, you hereby agree
that, in addition to any other remedy that may be available to the Company, the
Company shall be entitled to injunctive or other equitable relief by a court of
appropriate jurisdiction in the event of any breach or threatened breach of the
terms of Sections 5, 6 or 7 of this Agreement.
(m) NO WAIVER OF RIGHTS, POWERS AND REMEDIES. No failure
or delay by a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, shall operate as
a waiver of any such right, power or remedy of the party. No single or partial
exercise of any right, power or remedy under this Agreement by a party hereto,
nor any abandonment or discontinuance of steps to enforce any such right, power
or remedy, shall preclude such party from any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The election of
any remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or
8
<PAGE> 9
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the party giving such notice or demand to any other or
further action in any circumstances without such notice or demand.
(n) EXPENSES. Should any party breach this Agreement, in
addition to all other remedies available at law or in equity, such party shall
pay all of any other party's costs and expenses resulting therefrom and/or
incurred in enforcing this Agreement, including reasonable legal fees and
expenses.
(o) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
If the foregoing accurately sets forth our agreement, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
Ekco Group, Inc.
By:/S/DONATO A. DENOVELLIS
------------------------
Donato A. DeNovellis,
Executive Vice President
Accepted and Approved by
N.R. Gordon & Company, Inc.
By: /S/NEIL R. GORDON
-------------------------
Neil R. Gordon, President
Dated: 12/28/95
--------
9
<PAGE> 1
EXHIBIT 10.23(c)
SECOND AMENDMENT TO CREDIT AGREEMENT
This Amendment is made as of March 25, 1996 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"
and collectively with Group and Housewares, the "Borrowers"); FLEET BANK OF
MASSACHUSETTS, N.A., a national banking association as agent (the "Agent") and
the Lenders set forth below under a Credit Agreement dated as of April 11, 1995
(the "Credit Agreement").
WHEREAS, Group proposes to issue $125,000,000 in principal amount of
Senior Notes (as defined below) on or about the date of this Second Amendment;
WHEREAS, Group will use approximately $66,600,000 of the proceeds of
the Senior Notes to repurchase the 12.70% Notes and approximately $18,800,000 of
such proceeds to repurchase the 1818 Notes;
WHEREAS, the Borrowers and the Lenders have agreed to certain
modifications of the Credit Agreement in connection with an issuance of the
Senior Notes;
NOW, THEREFORE, the parties agree as follows:
1. Section 1.1. Definitions shall be amended as follows:
(a) Each of the following definitions shall replace the
pre-existing definitions in their entirety:
"Applicable Margin - LIBOR Rate" and "Applicable Margin - Base
Rate" shall mean the percentage set forth below opposite the Consolidated Total
Leverage Ratio in effect as of the last day of the immediately preceding fiscal
quarter:
<TABLE>
<CAPTION>
Applicable Margin -
Consolidated Total Leverage Ratio Base Rate LIBOR Rate
--------------------------------- --------- ----------
<S> <C> <C>
Greater than 2.25:1.0 0 1.50%
Equal to or less than
2.25:1.0 0 1.25%
</TABLE>
1
<PAGE> 2
"Borrowers" or "Borrower" shall mean Group. Effective the date
of this Second Amendment, Housewares and Frem shall no longer be Borrowers,
although they shall remain Guarantors pursuant to Section 10.
"Guarantors" shall mean individually each of Cleaning, Ekco
Distribution, Frem, Housewares, Kellogg, Manufacturing, Via, Woodstream,
Wright-Bernet and any other Person that shall become a guarantor of any Lender
Obligations, and collectively all of them; provided, however, that for the
purposes of Article 10 of this Agreement, the term "Guarantor" shall be limited
to Frem and Housewares.
"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 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 (ii) 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 the Revolving Credit Termination Date shall end on the Revolving Credit
Termination Date; 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.
"Maximum Revolving Credit Amount" shall mean $75,000,000.
"Obligor" shall mean any Person that is a Borrower under this
Agreement or a Guarantor of any Lender Obligations.
"Pledge Agreements" shall mean each of the pledge agreements
now or hereafter executed by any Person in connection with this Agreement, as
the same may be amended, modified or supplemented from time to time.
"Revolving Credit Facility" shall mean the secured revolving
credit facility in favor of Group.
(b) The following definitions shall be deleted:
Frem Revolving Credit, Housewares Revolving Credit, Maximum
Frem Revolving Credit Amount, Maximum Group Revolving Credit Amount and Maximum
Housewares' Revolving Credit Amount.
(c) The following definitions shall be added:
2
<PAGE> 3
"Ekco Distribution" shall mean Ekco Distribution of Illinois,
Inc., a Delaware corporation, and its successors and assigns.
"Manufacturing" shall mean Ekco Manufacturing of Ohio, Inc., a
Delaware corporation, and its successors and assigns.
"Senior Notes" shall mean the senior unsecured notes due 2006
in the principal amount of $125,000,000 issued by Group pursuant to an Indenture
among Group, the guarantors named therein and Fleet National Bank of
Connecticut, N.A. as Trustee (the "Indenture") on or about the date of this
Second Amendment."
(d) The definition of "Mortgages" shall be amended by the
addition of the following:
"Mortgages shall also include (vii) the Mortgage and Security
Agreement executed by Housewares with respect to the real property in Chicago,
Illinois, and (viii) the Open-End Mortgage and Security Agreement executed by
Manufacturing with respect to the real property in Massillon, Ohio."
2. Article 2. The Credits. The introduction shall be amended in
its entirety to read as follows:
"Subject to the terms and conditions hereof, and in reliance on the
representations and warranties contained herein, each of the Lenders hereby
establish as a secured Revolving Credit Facility in favor of Group in the
respective principal amounts of each Lender's Revolving Credit Commitment. The
aggregate principal amount of the Lenders' Revolving Credit Commitments is
$75,000,000. All references hereinafter made to Borrowers or Borrower shall mean
Group."
3. Section 2.3. Interest; Duration of Interest Periods.
Subsection (b) shall be amended in its entirety to read as follows:
"(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
through February 29, 1996 and on the last day of each calendar quarter
commencing March 31, 1996 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 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."
4. Section 5.27. 12.70% Notes is amended in its entirety to read
as follows:
"12.70% Notes and 1818 Notes. As of the effective date of this Second
Amendment, Group has repurchased and retired the 12.70% Notes and the 1818
Notes.
3
<PAGE> 4
5. Section 6.1. Quarterly Financial Statements. Clause (ii) is
amended in its entirety to read as follows: "deleted."
6. Section 6.2. Annual Financial Statements. Clause (iii) is
amended in its entirety to read as follows: "deleted." Clause (vii) is amended
in its entirety to read as follows:
"the compliance certificate required by Section 4.7(a) of the Indenture
governing the Senior Notes; provided, however that the Borrower may defer
delivery of such certificate until 120 days after the end of its fiscal year,
and such other information with respect to the Senior Notes as the Agent may
reasonably request."
7. Section 7.1. Minimum Consolidated EBITDA is restated in its
entirety to read as follows:
"The Consolidated EBITDA of Group and its Subsidiaries shall not be
less than the amount set forth below as measured at the end of each fiscal
quarter during the periods indicated, on the basis of the fiscal quarter ending
on such date and the three immediately preceding fiscal quarters:
<TABLE>
<CAPTION>
Period Consolidated EBITDA (Group)
------ ---------------------------
<S> <C>
Fiscal Year End 1995 $43,000,000
First Quarter Fiscal Year 1996 through
Third Quarter Fiscal Year 1996 40,000,000
Fiscal Year End 1996 through Third Quarter
Fiscal Year 1997 45,000,000
Fiscal Year End 1997 and thereafter 50,000,000"
</TABLE>
8. Section 7.2. Ratio of Consolidated EBITA to Consolidated
Interest Expense is restated in its entirety to read as follows:
"The ratio of Group's Consolidated EBITA to Consolidated Interest
Expense shall not be less than the ratios set for below 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>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Fiscal Year End 1995 2:45:1.0
First Quarter Fiscal Year 1996 through
Third Quarter Fiscal Year 1996 2:25:1.0
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Fiscal Year End 1996 and thereafter 2:75:1.0"
</TABLE>
9. Section 7.3. Consolidated Fixed Charge Coverage Ratio is
restated in its entirety to read as follows:
"The ratio of Group's Consolidated Cash Flow to Consolidated Fixed
Charges shall not be less than the ratios set forth below as measured at the end
of each fiscal quarter during the periods indicated, on the basis of the fiscal
quarter ending on such date and the three immediately preceding fiscal quarters:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Fiscal Year End 1995 1:40:1.0
First Quarter Fiscal Year 1996 through
Third Quarter Fiscal Year 1996 1:40:1.0
Fiscal Year End 1996 through
Third Quarter Fiscal Year 1997 1:75:1.0
Fiscal Year End 1997 and thereafter 2:00:1.0"
</TABLE>
10. Section 7.4. Ratio of Consolidated Senior Funded Indebtedness
to Consolidated EBITDA is restated to read as follows:
"The ratio of Group's Consolidated Senior Funded Indebtedness to
Consolidated EBITDA shall not exceed the ratios set forth below as measured at
the end of each fiscal quarter during the periods indicated, on the basis of the
fiscal quarter ending on such date and the three immediately preceding fiscal
quarters:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Fiscal Year End 1995 2.45:1.0
First Quarter Fiscal Year 1996 through
Third Quarter Fiscal Year 1996 3.20:1.0
Fiscal Year End 1996 through
Third Quarter Fiscal Year 1997 2.90:1.0
Fiscal Year End 1997 and thereafter 2.50:1.0"
</TABLE>
11. Section 7.5. Current Ratio is amended in its entirety to read
as follows: "deleted."
5
<PAGE> 6
12. Section 7.6. Consolidated Tangible Net Worth is amended in
its entirety to read as follows: "deleted."
13. Section 8.10. Additional Mortgages is amended by the addition
of the following:
"(c) In connection with the execution of this Second Amendment,
Housewares has executed and delivered a mortgage in favor of the Agent with
respect to property in Chicago, Illinois and Manufacturing has executed and
delivered a mortgage in favor of the Agent with respect to property in
Massillon, Ohio. The Agent has not currently required a title insurance policy
or other due diligence with respect to such mortgages. Within 90 days of a
request by Agent, Borrower agrees to provide Agent with (i) a title insurance
policy relating to such mortgage in such amount and such form as the Agent may
reasonably request, (ii) such opinions of counsel relating to such mortgages as
the Agent may reasonably request, including, without limitation, an opinion as
to enforceability and zoning; and (iii) such other matters of due diligence as
the Agent may reasonably request."
14. Section 8.8. Use of Proceeds is amended in its entirety to
read as follows:
"Group will use the proceeds of the Revolving Credit Facility (a) to
pay off all outstanding Advances made to Housewares or Frem under this Credit
Agreement prior to the effective date of this Second Amendment; and (b) for
general corporate purposes including, without limitation, working capital for
itself and its Subsidiaries. Group will not use any of the proceeds to purchase
or carry "margin stock" (as defined in Regulation U)."
15. Section 8.11. Additional Housewares Covenants is amended in
its entirety to read as follows: "deleted."
16. Section 9.1. Restrictions on Borrowed Funds Indebtedness is
amended by replacing subsection (d) in its entirety by the following:
"(d) Borrowed Funds Indebtedness of Group arising from the Senior
Notes, or from any refinancing or replacement of the Senior Notes; provided,
however, that (i) the aggregate principal amount of such Indebtedness shall not
exceed the then outstanding principal balance of the Senior Notes; (ii) the
periodic installments of interest or fees under such Indebtedness shall not
exceed the periodic installments of interest or fees required under the Senior
Notes; (iii) the final maturity of such Indebtedness shall not be earlier than
the final maturity of the Senior Notes; and (iv) the Average Life of such
Indebtedness shall not be less than the Average Life of the Senior Notes."
17. Section 9.5. Assumptions, Guarantees, Etc., subsection (iv)
is amended in its entirety as follows:
"Guarantees by Subsidiaries of the Senior Notes and any Indebtedness
permitted under Section 9.1(d) as refinancing or replacement of the Senior
Notes."
6
<PAGE> 7
18. Section 9.6. Mergers and Acquisitions is amended as follows:
Subsection (a) is amended by the addition of the following:
"and further provided, that no individual acquisition shall involve an
expenditure in excess of $25,000,000 and the aggregate of all expenditures for
acquisitions during the three year period ending Fiscal Year End 1998 shall not
exceed $50,000,000. (For purposes of determining the amount of such
expenditures, the fair market value of any securities issued, and the principal
amount of any Indebtedness assumed or guaranteed, by the Borrower or any
Subsidiary shall be considered expenditures.)"
Subsection (b) is amended to read as follows: "deleted."
19. Section 9.13. Amendments to Certain Agreements shall be
amended in its entirety to read as follows:
"Neither the Borrower nor any of its subsidiaries shall agree to any
amendment to the terms and provisions of the Senior Notes relating to an
increase in fees or interest rates thereunder, any 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 or
payments thereof, 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 its
subsidiaries, as the case may be."
20. Section 9.14. Transactions with Housewares is deleted.
21. Section 10.1. Guaranties of Lender Obligations. The first
sentence is amended in its entirety to read as follows:
"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 Frem 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"), jointly and severally, hereby guarantees to the Lenders
the full and punctual payment when due (whether at maturity, by acceleration or
otherwise), and the performance by Group, of all its Lender Obligations, whether
now existing or hereafter arising (collectively the "Guaranteed Obligations")."
22. Section 10.6. Security; Set-Off is amended by deleting
"(other than Housewares)" in the first sentence, and by deleting the last
sentence beginning "The Agent" and ending "Housewares."
23. The Agent and the Lenders consent to the repurchase of the
12.70% Notes and 1818 Notes with the proceeds of the Senior Notes.
7
<PAGE> 8
24. The Borrower represent and warrants that each of the Schedules
to the Credit Agreement remain true, accurate and correct as of the date hereof
except as to Schedules 5.4, 5.12, 5.13, 5.14, 5.15, 5.17(c), 5.18, 5.19(a),
5.19(b), 5.23, 5.24 and 8.13 which are replaced by the Schedules attached
hereto.
25. The Borrower shall pay an amendment fee to the Agent in
connection with the execution of this Second Amendment as set forth in a
separate fee letter.
26. The Revolving Credit Commitment and Revolving Credit
Commitment Percentage of each Lender is set forth below such Lender's name on
the execution page of this Second Amendment, which replace and supersede the
Revolving Credit Commitment and Revolving Credit Commitment Percentage set forth
on the execution pages to the original Credit Agreement.
27. Except as specifically set forth herein and in the First
Amendment to Credit Agreement dated December 31, 1995, the Credit Agreement
remains in full force and effect.
WITNESS, the execution hereunder under seal as of the date set forth
above:
BORROWER:
EKCO GROUP, INC.
By: /s/JOHN T. HARAN
------------------------------------
Name: John T. Haran
Title: Vice President and Treasurer
8
<PAGE> 9
GUARANTORS:
EKCO HOUSEWARES, INC.
By: /s/JOHN T. HARAN
------------------------------------
Name: John T. Haran
Title: Vice President and Treasurer
FREM CORPORATION
By: /s/JOHN T. HARAN
------------------------------------
Name: John T. Haran
Title: Vice President and Treasurer
AGENT:
FLEET BANK OF MASSACHUSETTS, N.A., as
Agent
By: /s/MICHAEL A. PALMER
------------------------------------
Name: Michael A. Palmer
Title: Vice President
9
<PAGE> 10
LENDERS:
FLEET BANK OF MASSACHUSETTS, N.A.
By: /s/MICHAEL A. PALMER
---------------------------------
Name: Michael A. Palmer
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: 53.33%
Revolving Credit Commitments: $40,000,000
10
<PAGE> 11
ABN AMRO BANK N.V., BOSTON BRANCH
By: /s/CAROL A. LEVINE
---------------------------------
Name: Carol A. Levine
Title: Senior V.P. and Managing
Director
By: /s/JAMES E. DAVIS
---------------------------------
Name: James E. Davis
Title: V.P.
Address: ABN AMRO Bank, N.V.,
Boston Branch
One Post Office Square - 39th Floor
Boston, Massachusetts 02109
Attn: Carol A. Levine, Managing
Director
Telefax: (617) 988-7910
Revolving Credit
Commitment Percentage: 20%
Revolving Credit Commitments: $15,000,000
11
<PAGE> 12
THE SUMITOMO BANK, LIMITED
By: /s/D. G. EASTMAN
---------------------------------
Name: D. G. Eastman
Title: V.P. and Manager
By: /s/ALFRED DeGEMMIS
---------------------------------
Name: Alfred DeGemmis
Title: V. P.
Address: The Sumitomo Bank, Limited
One Post Office Square, Suite 3820
Boston, Massachusetts 02109
Attn: Alfred DeGemmis, Vice President
Telefax: (617) 423-4884
Revolving Credit
Commitment Percentage: 13.33%
Revolving Credit Commitments: $10,000,000
PNC BANK, NATIONAL ASSOCIATION
By: /s/QUAN L. GRAYS
---------------------------------
Name: Quan L. Grays
Title: Assistant V. P.
Address: PNC Bank, National Association
335 Madison Avenue
New York, New York 10017
Attn: Kwan L. Grays
Telefax: (212) 409-3737
Revolving Credit
Commitment Percentage: 13.33%
Revolving Credit Commitments: $10,000,000
12
<PAGE> 1
EXHIBIT 13
FINANCIAL STATEMENTS
INDEX
Selected Consolidated Financial Data
Common Stock Price Range and Dividends
Management's Discussion and Analysis of Results
of Operations and Financial Condition
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
1
<PAGE> 2
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data of the Company shown below for
the five-year period ended December 31, 1995 are derived from the consolidated
financial statements of the Company audited by independent certified public
accountants. The information set forth below is qualified in its entirety by the
more detailed financial statements and the notes thereto included elsewhere
herein. The following table should be read in conjunction with Management's
Discussion and Analysis of Results of Operations and Financial Condition and the
Company's audited Consolidated Financial Statements and Notes thereto appearing
elsewhere herein.
<TABLE>
<CAPTION>
FISCAL YEARS
1995(1)(2) 1994(1)(2) 1993(1)(2) 1992(2) 1991
---------- ---------- ---------- ------- ----
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA
Current assets $102,610 $111,627 $ 89,831 $ 79,679 $ 64,808
Total assets 304,375 317,783 307,961 255,081 211,484
Current liabilities 57,935 51,118 64,062 41,113 45,173
Long-term obligations, less current portion 74,700 102,580 89,982 71,264 71,644
7% Convertible Subordinated Note 22,000 22,000 22,000 22,000 -
Series B ESOP Convertible Preferred Stock, net 3,458 3,096 2,686 2,111 1,649
Stockholders' equity 135,925 129,116 116,864 110,567 86,841
Common shares outstanding 18,414 18,069 17,844 17,148 14,676
CONSOLIDATED STATEMENT OF OPERATIONS DATA
Net revenues $277,995 $267,048 $246,428 $206,628 $166,717
Cost of sales 191,343 175,451 161,349 129,085 99,130
Consolidation and restructuring charge - - 11,000 - -
Selling, general and administrative 52,783 53,433 50,841 46,581 43,220
EBITDA (3) 50,062 52,261 35,753 39,627 31,008
Amortization of excess of cost over fair value 4,437 4,438 4,195 3,557 2,770
Net interest expense 13,493 12,491 12,206 10,680 9,594
Income before income taxes 15,939 21,235 6,837 16,725 12,003
Income taxes 7,894 9,812 4,578 8,078 6,109
Income before cumulative effect of accounting
changes 8,045 11,423 2,259(4) 8,647 5,894
Earnings per common share before cumulative effect
of accounting changes .40 .57 .11(4) .46 .35
Cash dividends per common share and Series B ESOP
Convertible Preferred share .08 - - - -
<FN>
(1) Includes operations of Kellogg Brush Manufacturing Co. and subsidiaries acquired on April 1, 1993.
(2) Includes operations of Frem Corporation acquired on January 8, 1992.
(3) EBITDA represents earnings before interest, taxes, depreciation, amortization of excess of cost over
fair value and other amortization.
(4) During Fiscal 1993, the Company recorded a charge of $3,247,000 (net of income taxes of $1,954,000) to
reflect the cumulative effect of changes in the method of accounting for post-retirement and
post-employment benefits.
</FN>
</TABLE>
2
<PAGE> 3
COMMON STOCK PRICE RANGE AND DIVIDENDS
The Company's common stock $.01 par value per share ("Common Stock"),
is traded on the New York Stock Exchange under the ticker symbol "EKO". The
following table sets forth the high and low sale prices per share as reported on
the New York Stock Exchange Composite Tape during the calendar periods
indicated:
<TABLE>
<CAPTION>
LOW HIGH
<S> <C> <C>
1995
First Quarter 5 7/8 6 3/4
Second Quarter 5 5/8 6 3/8
Third Quarter 5 7/8 6 7/8
Fourth Quarter 5 3/8 6 1/2
1994
First Quarter 6 1/2 8 1/8
Second Quarter 6 1/2 7 3/8
Third Quarter 6 1/2 7 3/4
Fourth Quarter 5 7/8 7 1/8
</TABLE>
On March 6, 1996, the Company had 2,090 stockholders of record. The
Company's bank credit facilities and certain debt instruments restrict dividends
and payments that the Company's operating subsidiaries may make to the Company.
3
<PAGE> 4
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following discussion of the consolidated results of operations for
the fiscal years ended December 31, 1995 ("Fiscal 1995"), January 1, 1995
("Fiscal 1994") and January 2, 1994 ("Fiscal 1993") and the discussion of
financial condition at December 31, 1995 should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto.
The Company is a manufacturer and marketer of multiple categories of
branded housewares for everyday home use. The Company operates in one industry
segment, with revenues derived from sales in five principal product categories:
(i) bakeware, (ii) kitchenware, (iii) cleaning products, (iv) pest control and
small animal care and control products and (v) molded plastic products. The
following table summarizes the changes in the components of the Company's net
revenues by product category over the last three fiscal years:
NET REVENUE BY PRODUCT CATEGORY
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bakeware......................................... $ 81,261 29.2% $ 76,557 28.7% $ 67,104 27.2%
Kitchenware...................................... 73,006 26.3 72,022 27.0 68,114 27.6
Cleaning products (a)............................ 55,191 19.9 53,003 19.8 36,922 15.0
Pest control and small animal
care and control products...................... 34,034 12.2 31,943 12.0 29,693 12.1
Molded plastic products.......................... 30,991 11.1 33,523 12.5 31,277 12.7
VIA! (b)......................................... 3,512 1.3 - - - -
Other (c)........................................ - - - - 13,318 5.4
-------- ----- -------- ----- -------- -----
Total net revenues...................... $277,995 100.0% $267,048 100.0% $246,428 100.0%
======== ===== ======== ===== ======== =====
<FN>
(a) The Company acquired its cleaning products business on April 1, 1993.
(b) The Company introduced its VIA! line of products in January 1995, substantially all revenues from
the sale of VIA! products occurred in the second half of Fiscal 1995.
(c) The Company sold its plastic sporting goods business in January 1994.
</FN>
</TABLE>
FISCAL 1995 VS. FISCAL 1994
NET REVENUES
Net revenues for Fiscal 1995 increased approximately $10.9 million
(4.1%) from the prior year. Sales increased for four of the Company's five
product categories in Fiscal 1995 despite a weak retail sales environment. The
increase in net revenues was principally due to increases in revenues in the
Company's bakeware, pest control and cleaning products businesses, as well as
from the introduction of the Company's new line of VIA! products. The increase
was partially offset by a decline in revenues from molded plastic products. The
increase in bakeware revenues was primarily due to increased distribution,
higher levels of promotions and the Company placing the promotions with
retailers earlier than in prior years. The increase sales of pest control
products was principally due to new product introductions, including Roach
Magnet(TM), and increased distribution. Increased sales of cleaning products
resulted from increased distribution and the substantial growth of several
hardware/home-center customers. Net revenues from the Company's new line of VIA!
products were approximately $3.5 million, substantially all of which were
recognized in the second half of Fiscal 1995. Revenues from the sale of molded
plastic products declined because retailers reduced planned promotions in
response to consumer resistance to increased retail selling prices resulting
from significant increases in plastic resin prices.
4
<PAGE> 5
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS (CONTINUED)
GROSS PROFIT
The Company's gross profit margin declined from approximately 34.3% for
Fiscal 1994 to approximately 31.2% for Fiscal 1995. The primary factors
contributing to this decline were (i) the significant year-over-year increase in
the prices of plastic resin and other raw materials, (ii) increases in
manufacturing and distribution costs incurred in anticipation of a higher than
realized volume of sales, (iii) a shift in customer mix, resulting from the
substantial growth of several hardware/home-center customers and (iv) increased
promotional discounting in the fourth quarter of Fiscal 1995. These factors were
partially offset by price increases initiated during the beginning of Fiscal
1995.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses in Fiscal 1995 decreased
approximately $650,000 (1.1%) from the prior year. Selling, general and
administrative expense as a percentage of net revenues declined from 20.0% in
Fiscal 1994 to 19.0% in Fiscal 1995, as a result, in part, of efficiencies
realized from the Company's restructuring plan. The decrease included the
collection of an amount due relating to a 1987 real estate transaction ($1.1
million) which had previously been written off. The increase in expenses of
approximately $450,000 excluding this transaction reflects increased product
placement and advertising costs as well as costs associated with the growth of
VIA!.
NET INTEREST EXPENSE
Net interest expense increased $1.0 million from the Fiscal 1994 level
of $12.5 million. The higher year-over-year expense was attributable to higher
average borrowings and higher interest rates.
INCOME TAXES
The effective income tax rate increased to 49.5% in Fiscal 1995 from
46.2% in Fiscal 1994. The increase occurred primarily because amortization of
goodwill, which is not deductible for income taxes, represents a higher
percentage of income before income taxes.
FISCAL 1994 VS. FISCAL 1993
NET REVENUES
Net revenues for Fiscal 1994 increased approximately $20.6 million
(8.4%) from the prior year. Net revenues for Fiscal 1994 included first-quarter
revenues of $12.7 million from the Company's cleaning products business, which
was acquired by the Company on April 1, 1993. Net revenues for Fiscal 1993
included $13.3 million associated with the Company's plastic sporting goods
business; the assets of which were sold in January 1994. Excluding the foregoing
acquisition and divestiture, net revenues for Fiscal 1994 increased
approximately $21.2 million (8.6%) over net revenues for Fiscal 1993. Each of
the Company's business units contributed to the growth in net revenues.
Retailers, while continuing to adhere to stringent inventory controls, remained
committed to maintaining high service levels for their customers. As a result,
retailers kept their shelves stocked, contributing to the Company's growth in
5
<PAGE> 6
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS (CONTINUED)
NET REVENUES (CONTINUED)
revenues. Approximately $9.5 million of the increase resulted from increased
sales of the Company's bakeware products, which benefited from the introduction
of new products such as Crisp It(TM) pizza pans and Healthy Cooking broiler and
meat loaf pans, along with strong growth in Baker's Secret(R) bakeware products.
Approximately $4.0 million of the increase resulted from increased sales of the
Company's kitchen tool and gadget products, which benefitted from a store aisle
merchandising program introduced in the second half of Fiscal 1993. The
remaining increase of approximately $8.0 million was a result of increases in
the Company's other businesses, including molded plastic products, pest control
and small animal care and control products.
GROSS PROFIT
The Company's gross profit margin in Fiscal 1994 remained essentially
unchanged from the 34.5% in Fiscal 1993. The Company was able to maintain its
gross profit margin despite increases in raw material costs and warehousing and
distribution costs through improved utilization of facilities, primarily at the
Company's cleaning product business, and changes in product mix. Although the
cost of raw materials increased in general, the majority of the increase
resulted from the approximate doubling of prices of plastic resin, the primary
raw material used in the Company's molded plastic products business.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for Fiscal 1994 increased
$2.6 million, (5.0%) from the prior year. Selling, general and administrative
expense as a percentage of net revenues declined from 20.6% for Fiscal 1993 to
20.0% for Fiscal 1994. Selling, general and administrative expense for Fiscal
1993 included $2.6 million associated with the Company's plastic sporting goods
business. Additionally, selling, general and administrative expense for Fiscal
1994 included first quarter expenses of $1.9 million from the Company's cleaning
products business. Excluding the above acquisition and divestiture, selling,
general and administrative expense for Fiscal 1994 increased approximately $3.3
million (6.7%). The increase was primarily due to increased display and sales
promotion costs associated with the Company's 1994 bakeware media campaign and
costs associated with the start-up of VIA!. The increase was partially offset by
benefits associated with implementation of the Company's restructuring plan.
NET INTEREST EXPENSE
Net interest expense for Fiscal 1994 increased $285,000 from the prior
year. The increase was primarily due to the additional debt associated with the
acquisition of the Company's cleaning products business on April 1, 1993.
INCOME TAXES
The effective income tax rate declined to 46% in Fiscal 1994 from 67%
in Fiscal 1993. The decline occurred primarily because amortization of goodwill
for Fiscal 1994 represents a lower percentage of income before income taxes.
6
<PAGE> 7
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
The Company recorded an $11.0 million charge ($6.6 million after income
taxes) for restructuring/reorganization and excess facilities during the fourth
quarter of Fiscal 1993. The restructuring was the result of management's
analysis of the Company's operations and future strategy. The items covered by
the charge were (i) severance and other costs related to a reduction in
personnel;(ii) costs arising from the consolidation of different distribution
and information systems (including the closing of facilities and write-off of
equipment no longer relevant to the Company's operating strategy); and (iii)
costs associated with excess facilities currently classified as held for sale.
Of this $11.0 million charge, approximately $2.7 million was non-cash, and $8.3
million was cash. Of the $8.3 million cash portion of the charge, $5.0 million
was expended in Fiscal 1994 and $3.3 million was expended in Fiscal 1995. See
Note 17 to the Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
During Fiscal 1995, the Company generated approximately $21.7 million
in cash from operations. Such cash, together with proceeds of $3.3 million from
the sale of property and equipment and proceeds of $3.6 million from investments
previously pledged as collateral, was used for capital expenditures of
approximately $12.7 million, dividend payments of approximately $1.6 million,
the reduction of debt of approximately $13.4 million and net
repurchases/issuances of Common Stock of $900,000.
On March 25, 1996, the Company sold $125.0 million of its 9.25% Senior
Notes due 2006, at a price of 99.291% of face value, in a private offering to
institutional investors. The Company used the net proceeds of the Senior Note
offering to (i) repurchase its outstanding 12.70% Notes due 1998 and 7.0%
Subordinated Convertible Note due 2002 and (ii) to repay substantially all
amounts outstanding under the Revolving Credit Facility. Concurrently with
closing the sale of the 9.25% Senior Notes, the Company entered into an
amendment to its Revolving Credit Facility, which amendment consolidated the
outstanding debt and borrowing capacity of Housewares and Frem with that of the
Company and revised certain financial covenants. Borrowings under the amended
Revolving Credit Facility bear interest at the bank's prime rate, or at LIBOR
plus 1.25% or 1.5%, depending on the Company's borrowing strategy and the ratio
of total debt to cash flow. The Revolving 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
Revolving Credit Facility mature in December 1998. The Senior Notes, as well as
the Revolving Credit Facility, will contain certain financial covenants that
will restrict the sale of assets, the incurrence of additional indebtedness and
certain investments and acquisitions by the Company. The early extinguishment
of the 12.70% Notes and 7% Convertible Subordinated Note will result in an
extraordinary charge against first quarter 1996 earnings of approximately $6.0
million (before income taxes).
7
<PAGE> 8
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS (CONTINUED)
The Company believes that the net proceeds from the Senior Note
offering, together with borrowing capacity under the amended Revolving Credit
Facility will provide sufficient borrowing capacity to finance its ongoing
operations for the foreseeable future. The Company may, however, require
additional funds to finance any further acquisitions.
A facility located in Hudson, New Hampshire classified as held for sale
was sold on October 5, 1995 for $2.8 million in cash. Proceeds from the sale
were used to repay borrowings under the Revolving Credit Facility. The Company's
remaining properties held for sale include a former manufacturing facility
located in Chicago, Illinois and a warehouse located in Lititz, Pennsylvania.
The Company is actively pursuing the sale or lease of these properties, and has
leased the Lititz warehouse facility. The Company plans to sell these properties
within the next two years. The aggregate carrying values of such properties $2.8
million at December 31, 1995, are periodically reviewed and are stated at the
lower of cost or market.
The Company has provided approximately $3.5 million for environmental
remediation and ongoing operation, maintenance and ground water monitoring costs
associated with facilities owned or occupied by the Company's cleaning products
business. 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
interpretation of current laws or regulations be modified.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 121 "Accounting For The
Impairment Of Long-Lived Assets And For Long-Lived Assets To Be Disposed Of"
("FAS 121"). The Company will adopt FAS 121 in fiscal 1996 and does not expect
it to have a material impact on the financial statements.
The Company has not adopted the recently issued Statement of Financial
Accounting Standard No. 123 "Accounting for Stock-based Compensation" ("FAS
123") which is required to be adopted in fiscal 1996. The Company currently
intends to continue to record compensation based on the provisions of Accounting
Principles Board Opinion 25, "Accounting for Stock Issued to Employees," as
allowed by FAS 123. Although the Company has not determined the ultimate impact
of adopting FAS 123 on its present accounting disclosure, it does not believe,
based on the number of options previously granted, that adoption of FAS 123 will
have a material impact on its current accounting disclosure.
INFLATION
Inflation in general was not considered to be a significant factor in
the Company's operations during the periods discussed above.
BUSINESS OUTLOOK
This Annual Report, including the "Letter to Shareholders" and
"Management's Discussion and Analysis of Results of Operations and Financial
Condition," contains forward-looking statements within the meaning of the
"safe-harbor" provisions of the Private Securities Litigation Reform Act of
1995. Such statements are based on management's current expectations and are
subject to a number of factors and uncertainties which could cause actual
results to differ materially from those described in the forward-looking
statements. Such factors and uncertainties include, but are not limited to: the
impact of the level of the Company's indebtedness; restrictive covenants
contained in the Company's various debt documents; general economic conditions
and conditions in the retail environment; the Company's dependence on a few
large customers; price fluctuations in the raw materials used by the Company;
competitive conditions in the Company's markets; the seasonal nature of the
Company's businesses; and the impact of federal, state and local environmental
requirements (including the impact of current or future environmental claims
against the Company). As a result, the Company's operating results may
fluctuate, especially when measured on a quarterly basis.
8
<PAGE> 9
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1995 1995
----------- ----------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 142 $ 129
Accounts receivable, net of allowance for
doubtful accounts of $1,048 and $1,739, respectively 43,823 46,030
Inventories 47,565 48,242
Prepaid expenses and other current assets 6,719 6,296
Deferred income taxes 4,361 7,330
Investments pledged as collateral - 3,600
-------- --------
Total current assets 102,610 111,627
Property and equipment, net 56,380 52,361
Property held for sale or lease, net of
accumulated depreciation of $2,830 and $8,323,
respectively 2,830 7,373
Other assets 5,955 5,440
Excess of cost over fair value of net assets acquired,
net of accumulated amortization of $27,727 and
$23,290, respectively 136,600 140,982
-------- --------
Total assets $304,375 $317,783
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable $ - $ 3,643
Current portion of long-term obligations 18,079 36
Accounts payable 15,607 15,652
Accrued expenses 23,711 27,843
Income taxes 538 3,944
-------- --------
Total current liabilities 57,935 51,118
-------- --------
Long-term obligations, less current portion 74,700 102,580
-------- --------
Other long-term liabilities 9,859 9,375
-------- --------
7% Convertible Subordinated Note 22,000 22,000
-------- --------
Series B ESOP Convertible Preferred Stock, net;
outstanding 1,488 shares and 1,568 shares, respectively
redeemable at $3.61 per share 3,458 3,096
-------- --------
Commitments and contingencies - -
-------- --------
Minority interest 498 498
-------- --------
Stockholders' equity
Common stock, $.01 par value; outstanding
18,414 shares and 18,069 shares, respectively 184 181
Capital in excess of par value 106,916 105,448
Cumulative translation adjustment 929 771
Retained earnings 33,614 27,172
Unearned compensation (3,970) (2,968)
Pension liability adjustment (1,748) (1,488)
-------- --------
135,925 129,116
-------- --------
Total liabilities and stockholders' equity $304,375 $317,783
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
9
<PAGE> 10
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
DECEMBER 31, JANUARY 1, JANUARY 2,
1995 1995 1994
------------ ---------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net revenues $277,995 $267,048 $246,428
-------- -------- --------
Costs and expenses
Cost of sales 191,343 175,451 161,349
Selling, general and administrative 52,783 53,433 50,841
Restructuring/reorganization and
excess facilities charge - - 11,000
Amortization of excess of cost over
fair value 4,437 4,438 4,195
-------- -------- --------
248,563 233,322 227,385
-------- -------- --------
Income before interest and income taxes 29,432 33,726 19,043
-------- -------- --------
Net interest expense
Interest expense 13,590 12,824 12,755
Investment income (97) (333) (549)
-------- -------- --------
13,493 12,491 12,206
-------- -------- --------
Income before income taxes and
cumulative effect of accounting changes 15,939 21,235 6,837
Income taxes 7,894 9,812 4,578
-------- -------- --------
Income before cumulative effect of
accounting changes 8,045 11,423 2,259
Cumulative effect of changes in method
of accounting for post-retirement
and post-employment benefits (net of
income taxes of $1,954) - - (3,247)
-------- -------- --------
Net income (loss) $ 8,045 $ 11,423 $ (988)
======== ======== ========
Per share data
Earnings before cumulative effect of
accounting changes $ .40 $ .57 $ .11
Cumulative effect of accounting changes - - (.19)
-------- -------- --------
Net income (loss) $ .40 $ .57 $ (.08)
======== ======== ========
Weighted average number of shares used
in computation of per share data
Earnings before cumulative effect
of accounting changes 20,318 20,115 19,999
Cumulative effect of accounting changes - - 17,148
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE> 11
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON CAPITAL IN CUMULATIVE PENSION
STOCK, PAR EXCESS OF TRANSLATION RETAINED UNEARNED LIABILITY
SHARES VALUE $.01 PAR VALUE ADJUSTMENT EARNINGS COMPENSATION ADJUSTMENT
------ ---------- ---------- ----------- -------- ------------ ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 3, 1993 17,148 $171 $ 96,651 $1,094 $16,737 $(2,883) $(1,203)
Shares issued under employee common
stock purchase and option plans 89 1 594 - - - -
Net shares issued under restricted common
stock purchase plans 11 - 13 - - (12) -
Shares issued upon preferred stock
conversions 31 - 110 - - - -
Treasury shares issued for acquisition 565 6 6,516 - - - -
Income tax reductions relating to stock
plans - - 318 - - - -
Net loss for the year - - - - (988) - -
Foreign currency translation adjustment - - - (3) - - -
Amortization of unearned compensation - - - - - 443 -
Pension liability adjustment - - - - - - (701)
------ ---- -------- ------ ------- ------- -------
Balance, January 2, 1994 17,844 178 104,202 1,091 15,749 (2,452) (1,904)
</TABLE>
11
<PAGE> 12
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON CAPITAL IN CUMULATIVE PENSION
STOCK, PAR EXCESS OF TRANSLATION RETAINED UNEARNED LIABILITY
SHARES VALUE $.01 PAR VALUE ADJUSTMENT EARNINGS COMPENSATION ADJUSTMENT
------ ---------- ---------- ----------- -------- ------------ ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Shares issued under employee common
stock purchase and option plans 148 2 643 - - - -
Income tax reductions relating to
stock plans - - 327 - - - -
Treasury shares issued upon preferred
stock conversions 77 1 276 - - - -
Net income for the year - - - - 11,423 - -
Foreign currency translation adjustment - - - (320) - - -
Unearned compensation relating to
common stock purchases by employee
stock ownership plan - - - - - (950) -
Amortization of unearned compensation - - - - - 434 -
Pension liability adjustment - - - - - - 416
------ ---- -------- ----- ------- ------- -------
Balance, January 1, 1995 18,069 181 105,448 771 27,172 (2,968) (1,488)
Shares issued under common stock purchase
and option plans and dividend re-
investment 226 2 769 - - - -
Net shares issued under restricted common
stock purchase plans 243 2 1,515 - - (1,437) -
Income tax reductions relating to stock
plans - - 74 - - - -
Shares issued upon preferred stock
conversion 80 1 288 - - - -
Purchases of treasury stock (204) (2) (1,178) - - - -
Net income for the year - - - - 8,045 - -
Dividends paid - - - - (1,603) - -
Foreign currency translation adjustment - - - 158 - - -
Amortization of unearned compensation - - - - - 435 -
Pension liability adjustment - - - - - - (260)
------ ---- -------- ----- ------- ------- -------
Balance, December 31, 1995 18,414 $184 $106,916 $ 929 $33,614 $(3,970) $(1,748)
====== ==== ======== ===== ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE> 13
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
DECEMBER 31, JANUARY 1, JANUARY 2,
1995 1995 1994
----------- ---------- ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ 8,045 $ 11,423 $ (988)
Adjustments to reconcile net income (loss)
to net cash provided by operations
Depreciation 9,234 9,227 9,545
Restructuring/reorganization and excess
facilities charge - - 2,677
Amortization of excess of cost over fair value 4,437 4,438 4,195
Amortization of deferred finance costs 590 499 467
Other amortization 6,959 4,870 2,970
Deferred income taxes 3,388 1,679 (554)
Cumulative effect of accounting change - - 3,247
Other (353) (102) 586
Change in certain assets and liabilities, net
of effects from acquisition and dispositions
of businesses, affecting cash provided by
operations
Accounts and note receivable 2,666 (10,313) (4,431)
Inventories 719 (15,231) (6,622)
Prepaid marketing costs (4,877) (4,127) (5,490)
Other assets (951) 4,319 (2,453)
Accounts payable and accrued expenses (4,742) (3,348) 6,885
Income taxes payable (3,395) (931) (361)
-------- -------- --------
Net cash provided by operations 21,720 2,403 9,673
-------- -------- --------
Cash flows from investing activities
Proceeds from sale of property and equipment 3,300 5,219 194
Capital expenditures (12,652) (11,106) (15,111)
Acquisition of business - - (26,428)
-------- -------- --------
Net cash used in investing activities (9,352) (5,887) (41,345)
-------- -------- --------
Cash flows from financing activities
Proceeds from issuance of note payable and
long-term obligations 35,183 32,118 30,274
Proceeds from sale of investment held as
collateral 3,600 - -
Payments of dividends (1,603) - -
Purchases of treasury stock (1,180) - -
Purchase of common stock for Employee Stock
Ownership Plan - (950) -
Payments of note and long-term obligations (48,627) (29,417) (17,049)
Other 259 1,484 1,663
-------- -------- --------
Net cash provided by financing
activities (12,368) 3,235 14,888
Effect of exchange rate changes on cash 13 51 113
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents 13 (198) (16,671)
Cash and cash equivalents at beginning of year 129 327 16,998
-------- -------- --------
Cash and cash equivalents at end of year $ 142 $ 129 $ 327
======== ======== ========
Cash paid during the year for
Interest $ 12,557 $ 12,050 $ 12,181
Income taxes 7,912 9,061 4,753
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE> 14
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries (the "Company"). The Company's principal operating
subsidiaries are wholly-owned Ekco Housewares, Inc. ("Housewares"), Frem
Corporation ("Frem"), Kellogg Brush Manufacturing Co. and subsidiaries
("Kellogg"), and majority-owned Woodstream Corporation ("Woodstream"). All
significant intercompany accounts and transactions have been eliminated.
BASIS OF PRESENTATION
The Company uses a 52-53 week fiscal year ending on the Sunday nearest
December 31. Accordingly, the accompanying consolidated financial statements
include the fiscal years ended December 31, 1995 ("Fiscal 1995"), January 1,
1995 ("Fiscal 1994") and January 2, 1994 ("Fiscal 1993").
CASH AND CASH EQUIVALENTS
The Company considers all short-term investments which have an original
maturity of 90 days or less to be cash equivalents.
MARKET EXPANSION PROGRAMS AND ADVERTISING COSTS
The Company incurs certain costs in connection with expanding its
market position at retail. These costs are deferred and amortized using the
straight-line method over the lesser of the period of benefit or the program
period. Program periods currently range from one to three years. It is the
Company's policy to periodically review and evaluate whether the benefits
associated with these costs are expected to be realized and that continued
deferral and amortization is justified. Approximately $3.5 million and $4.4
million of these costs are included in prepaid expenses at December 31, 1995 and
January 1, 1995, respectively.
The Company expenses all advertising costs as incurred.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined on a first-in, first-out ("FIFO") basis for all subsidiaries except
for Kellogg, whose cost is determined on a last-in, first-out ("LIFO") basis.
INVESTMENTS
Investments are carried at cost which approximates market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Assets acquired through
business combinations accounted for under the purchase method are recorded at
appraised value determined as of the acquisition date. The Company provides for
depreciation and amortization over the estimated useful lives of assets or terms
of capital leases on the straight-line method. Improvements are capitalized,
while repair and maintenance costs are charged to operations. When assets are
retired or disposed of, the cost and accumulated depreciation thereon are
removed from the accounts, and gains or losses, if any, are included in
operations.
PROPERTY HELD FOR SALE OR LEASE
It is the Company's policy to make available for sale or lease property
considered no longer necessary for the operations of the Company. The aggregate
carrying values of such property are periodically reviewed and are stated at the
lower of cost or market.
14
<PAGE> 15
INTANGIBLE ASSETS
The excess of cost over fair value of net assets acquired ("goodwill")
is being amortized over 12 to 40 year periods. It is the Company's policy to
periodically review and evaluate the recoverability of goodwill by assessing
long-term trends of profitability and cash flows and to determine whether the
amortization of goodwill over its remaining life can be recovered through
expected future results of operations and cash flows.
Favorable lease rights included in other assets are being amortized
over the life of the lease. Deferred financing costs included in other assets
are debt issuance costs which have been deferred and are being amortized over
the terms of the respective financing arrangements.
INCOME RECOGNITION
Revenues from product sales are recognized at the time the product is
shipped. Investment income is accrued as earned.
TRANSLATION OF FOREIGN CURRENCY
The assets and liabilities of the Company's Canadian and United Kingdom
subsidiaries are translated at year-end exchange rates. Income and expenses are
translated at exchange rates prevailing during the year. The resulting net
translation adjustment for each year is included as a separate component of
stockholders' equity.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect, if any, on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Provision for U.S. income taxes on the undistributed earnings of
foreign subsidiaries is made only on those amounts in excess of the funds
considered to be permanently reinvested.
USE OF ESTIMATES
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued two Statements of
Financial Accounting Standards, "Accounting For The Impairment Of Long-Lived
Assets And For Long-Lived Assets To Be Disposed Of" No. 121 ("FAS 121") and
"Accounting for Stock-based Compensation" No. 123 ("FAS 123"). The Company will
adopt both these standards in fiscal 1996; it does not expect the adoption of
either FAS 121 or FAS 123 to have a material effect on the financial statements.
15
<PAGE> 16
(2) INVENTORIES
The components of inventory were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
----------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Raw materials $11,489 $15,229
Work in process 3,097 4,047
Finished goods 32,979 28,966
------- -------
$47,565 $48,242
======= =======
</TABLE>
At December 31, 1995, and January 1, 1995, inventories carried under
the LIFO method represented approximately 16.9% and 17.4%, respectively, of
total year-end inventories. The effect of using LIFO for these inventories for
Fiscal 1995 and Fiscal 1994 was immaterial to the assets and gross profit of the
Company. During Fiscal 1995 and Fiscal 1994, there was no effect on net income
from liquidation of LIFO layers.
(3) PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
----------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Property and equipment at cost
Land, buildings and improvements $22,856 $22,261
Equipment, furniture and fixtures 71,922 59,839
------- -------
94,778 82,100
Less accumulated depreciation and
amortization 38,398 29,739
------- -------
$56,380 $52,361
======= =======
</TABLE>
(4) NOTE PAYABLE
The note payable, which represented borrowings of the Company's
Employee Stock Ownership Plan (the "ESOP") guaranteed by the Company (the "ESOP
Loan") was paid on March 30, 1995. Interest expense charged to operations for
Fiscal 1995, Fiscal 1994 and Fiscal 1993 relating to the ESOP Loan was $52,000,
$131,000 and $148,000, respectively.
(5) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES
Long-term obligations consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
----------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Revolving Credit Facility $32,693 $ 42,424
12.70% Notes, due 1998 60,000 60,000
Other 86 192
------- --------
92,779 102,616
Less current portion 18,079 36
------- --------
$74,700 $102,580
======= ========
7% Convertible Subordinated Note,
due 2002 $22,000 $ 22,000
======= ========
</TABLE>
16
<PAGE> 17
Other long-term liabilities consisted of the following:
<TABLE>
<S> <C> <C>
Accrued pension cost (see Note 8) $1,950 $1,408
Deferred income taxes 1,369 948
Other long-term liabilities 6,540 7,019
------ ------
$9,859 $9,375
====== ======
</TABLE>
During Fiscal 1995, the Company entered into a bank credit agreement
(the "Revolving Credit Facility") which provides a total line of credit of $75
million allocated among the Company ($30.0 million), Housewares ($35.0 million)
and Frem ($10.0 million). The proceeds from the Revolving Credit Facility were
used to retire certain loans under previous agreements. As of December 31, 1995,
$34.4 million was available for general corporate purposes under the Revolving
Credit Facility, net of approximately $6.9 million in outstanding letters of
credit. The facility matures on December 1, 1998.
Loans under the Revolving Credit Facility bear interest at the bank's
prime rate or 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 Revolving 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 Revolving Credit Facility are collateralized by
substantially all of the assets of the Company. The Revolving Credit Facility
contains certain financial and operating covenants. The most restrictive
covenant requires the Company to maintain a minimum level of cash flow.
Certain information with respect to credit agreements follows:
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Average interest rate of borrowings
outstanding at end of year 7.48% 8.20% 6.13%
Maximum amount of borrowings
outstanding at any month-end $56,533 $42,434 $47,239
Average aggregate borrowings during
the year $43,392 $38,391 $30,898
Weighted average interest rate
during the year 8.08% 6.51% 6.12%
</TABLE>
The 12.70% Notes are obligations of Housewares and its subsidiaries,
principally Ekco Canada, Inc. and Frem ("Ekco Housewares"). The principal is
payable as follows: $18 million on each of December 15, 1996 and 1997, and $24
million on December 15, 1998. In the event of a Change in Control (as defined),
each Noteholder may require Ekco Housewares to prepay the Notes held by such
Noteholder. In addition, if, after a Change in Control, Ekco Housewares fails to
perform or observe any Triggering Covenant (as defined) in stated time periods
and specified circumstances, then each Noteholder may require Ekco Housewares to
prepay the Notes held by such Noteholder and to pay a premium (approximately
$7.9 million at December 31, 1995).
The 12.70% Notes restrict the payments Ekco Housewares can make to the
Company, and contain certain financial and operating covenants which limit or
restrict the sale of assets, additional indebtedness, and certain investments
and acquisitions. Under the most restrictive financial covenant, Ekco Housewares
must maintain a current ratio of 1.25 to 1.00. At December 31, 1995, the total
amount that could be paid to the Company by Ekco Housewares was approximately
$800,000. Total net assets (total assets less total liabilities) of Ekco
Housewares excluding intercompany items were approximately $83 million at
December 31, 1995.
17
<PAGE> 18
The 7% Convertible Subordinated Note is due November 30, 2002, and is
convertible into common stock at a conversion price of $10.50 per share subject
to certain adjustments. It is callable until December 1996 if the price of the
common stock averages $18 or more for 45 consecutive days immediately preceding
the call notice date. After four years, the Note is callable at an initial
premium of 3.5%, which declines to zero in the final year of maturity. The Note
requires the Company to maintain a minimum net worth of $84 million subject to
adjustment under certain circumstances.
The total of long-term obligations, with the exception of the 7%
Convertible Subordinated Note, mature over the three years ending December 1998
as follows (amounts in thousands): 1996- $18,079; 1997- $18,007; 1998- $56,693.
(6) ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
----------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Payroll $ 2,456 $ 2,145
Compensated absences 1,831 1,933
Sales and promotional allowances 6,417 6,131
Provisions related to restructuring/
reorganization and excess facilities costs - 3,305
Interest and non-income taxes 3,745 3,944
Insurance 2,562 2,509
Professional fees 956 1,605
Provision for environmental matters 2,099 2,080
Other 3,645 4,191
------- -------
$23,711 $27,843
======= =======
</TABLE>
(7) INCOME TAXES
Total income tax expense for Fiscal 1995, Fiscal 1994 and Fiscal 1993
was allocated as follows:
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Income from operations $7,894 $9,812 $4,578
Stockholders' equity, for compensation
expense for tax purposes in excess of
amounts recognized for financial reporting
purposes (74) (327) (318)
------ ------ ------
$7,820 $9,485 $4,260
====== ====== ======
</TABLE>
A reconciliation of the provision for income taxes to the statutory
income tax rate applied to combined domestic and foreign income before income
taxes for Fiscal 1995, Fiscal 1994 and Fiscal 1993 was as follows:
18
<PAGE> 19
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Income (loss) before income taxes
Domestic $16,319 $21,543 $7,573
Foreign (380) (308) (736)
------- ------- ------
$15,939 $21,235 $6,837
======= ======= ======
Federal income tax at normal rates 35% 35% 35%
State income taxes, net of federal benefit 4% 4% 11%
Change in federal rate - - (3%)
Difference between foreign and
federal effective rates 1% - 2%
Amortization of excess of cost over
fair value 10% 7% 22%
------- ------- ------
50% 46% 67%
======= ======= ======
</TABLE>
The components of the provision for income taxes were as follows:
<TABLE>
<CAPTION>
FEDERAL STATE FOREIGN TOTAL
------- ----- ------- -----
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
FISCAL 1995
Current $3,894 $ 641 $ (29) $4,506
Deferred 2,968 404 16 3,388
------ ------ ----- ------
$6,862 $1,045 $ (13) $7,894
====== ====== ===== ======
FISCAL 1994
Current $7,119 $1,098 $ (84) $8,133
Deferred 1,324 310 45 1,679
------ ------ ----- ------
$8,443 $1,408 $ (39) $9,812
====== ====== ===== ======
FISCAL 1993
Current $3,640 $1,484 $ 8 $5,132
Deferred (38) (372) (144) (554)
------ ------ ----- ------
$3,602 $1,112 $(136) $4,578
====== ====== ===== ======
</TABLE>
The significant components of deferred income tax expense attributable
to income from operations for Fiscal 1995, Fiscal 1994 and Fiscal 1993 were as
follows:
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Utilization of net operating loss and tax credits $ - $ - $ 2,303
Depreciation 2,008 (969) (1,438)
Inventory 106 (527) (173)
Benefit plans (63) (258) 1,815
Restructuring/reorganization and excess
facilities charge - - (4,400)
Accruals, provisions and other liabilities 1,928 3,623 1,453
Other (591) (190) (114)
------ ------ -------
$3,388 $1,679 $ (554)
====== ====== =======
</TABLE>
19
<PAGE> 20
The tax effects of temporary differences and carryforwards that give
rise to significant portions of net deferred tax asset (liability) consisted of
the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
----------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Receivables $ 341 $ 518
Inventory 1,322 1,428
Benefit plans 3,405 3,342
Accruals, provisions and other liabilities 3,385 5,313
Depreciation (5,663) (3,655)
Other 202 (564)
------- -------
$ 2,992 $ 6,382
======= =======
</TABLE>
The Company's federal income tax returns for all years subsequent to
December 1987 are subject to review by the Internal Revenue Service.
(8) RETIREMENT PLANS, POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS
The Company and certain of its subsidiaries have various pension plans
which cover certain of their employees and provide for periodic payments to
eligible employees upon retirement. Benefits for non-union employees are
generally based upon earnings and years of service prior to 1989 and certain
non-union employees receive benefits from allocated accounts under a defined
contribution plan. Benefits for certain union employees are based upon dollar
amounts attributed to each year of credited service; certain other union
employees receive benefits from allocated accounts under a defined contribution
plan and from prior contributions to a multi-employer plan. The Company's policy
is to make contributions to these plans sufficient to meet the minimum funding
requirements of applicable laws and regulations, plus such amounts, if any, as
the Company's actuarial consultants determine to be appropriate. The Company
also provides supplemental retirement benefits for certain management personnel
based on earnings and years of service.
At December 31, 1995 and January 1, 1995, the Company reported, as a
separate component of stockholders' equity, the amount of the additional
liability in excess of the unrecognized prior service costs of its pension
plans.
Net pension expense consisted of the following:
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
U.S. defined benefit plans
Service cost-benefits earned during the period $ 211 $ 257 $ 229
----- ----- -----
Interest accrued on projected benefit obligation 597 559 528
----- ----- -----
Expected return on assets
Actual return (582) (196) (373)
Unrecognized gain (loss) 69 (368) (183)
----- ----- -----
(513) (564) (556)
Amortization of prior service cost and
unrecognized loss 110 120 54
Settlement loss 89 138 38
----- ----- -----
U.S. defined benefit plans, net 494 510 293
Canadian defined benefit plan (2) (7) (2)
U.S. defined contribution plans 113 127 129
----- ----- -----
Total net pension expense $ 605 $ 630 $ 420
===== ===== =====
</TABLE>
20
<PAGE> 21
The following sets forth the funded status of the Company's defined
benefit pension plans and amounts recognized in the consolidated balance sheets:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
------------------------- -------------------------
PLANS WITH PLANS WITH PLANS WITH PLANS WITH
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEEDING BENEFITS EXCEEDING BENEFITS
ACCUMULATED EXCEEDING ACCUMULATED EXCEEDING
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Accumulated benefit obligation
Vested $(1,595) $(6,938) $(1,342) $(6,592)
Nonvested (38) (65) (40) (44)
------- ------- ------- -------
Total (1,633) (7,003) (1,382) (6,636)
Effect of projected
compensation increases (260) - (233) -
------- ------- ------- -------
Projected benefit obligation (1,893) (7,003) (1,615) (6,636)
Plan assets 2,534 4,844 2,338 4,864
------- ------- ------- -------
Plan assets in excess of (less than)
projected benefit obligations 641 (2,159) 723 (1,772)
Unrecognized actuarial net gain (losses) (211) 1,957 (263) 1,852
Unrecognized prior service cost 107 42 115 47
Additional liability - (1,790) - (1,535)
------- ------- ------- -------
Prepaid (accrued) pension cost included
in consolidated balance sheet $ 537 $(1,950) $ 575 $(1,408)
======= ======= ======= =======
</TABLE>
Plan assets are invested primarily in pooled funds maintained by
insurance companies. The projected benefit obligation was determined using an
assumed discount rate of 7.5% for December 31, 1995 and 8.0% for January 1,
1995. The nature of the domestic pension plans is such that an estimate of
future compensation increases is not required. The assumed long-term rate of
return on plan assets was 9% for Fiscal 1995, Fiscal 1994 and Fiscal 1993. At
December 31, 1995, the various plans held an aggregate of 8,900 shares of the
Company's common stock.
The Company sponsors defined benefit post-retirement health and life
insurance plans that cover certain retired and active employees. The Company
expects to continue these benefits indefinitely, but reserves the right to amend
or discontinue all or any part of the plans at any time.
Effective January 4, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Post-retirement
Benefits Other Than Pensions" ("FAS 106") and recognized immediately the
cumulative effect of the change in accounting for post-retirement benefits of
$2.9 million ($1.8 million after income taxes) which represents the accumulated
post-retirement benefit obligation existing at January 1, 1993. FAS 106 requires
that the cost of these benefits be recognized in the financial statements during
the employees' active working lives. Previously, costs were recognized as claims
were incurred. The Company's funding policy for these plans remains on a
pay-as-you-go basis.
21
<PAGE> 22
The following sets forth the amounts recognized in the consolidated
balance sheets for the Company's post-retirement benefit plans:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
----------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accumulated post-retirement benefit obligation
Fully eligible active employees $ 778 $ 649
Retirees 1,103 1,518
Other active employees 658 547
------ ------
2,539 2,714
Plan assets - -
Unrecognized net (gain) loss (29) 55
------ ------
Accrued post-retirement benefit cost $2,510 $2,769
====== ======
</TABLE>
Post-retirement benefit expense consisted of the following:
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Service cost (benefits attributed to
employee services during the year) $ 43 $ 46 $ 44
Interest expense on the accumulated
post-retirement benefit obligation 182 199 206
---- ---- ----
Net periodic post-retirement benefit
expense $225 $245 $250
==== ==== ====
</TABLE>
The discount rates used in determining the accumulated post-retirement
benefit obligation as of December 31, 1995 and January 1, 1995 were 7.5% and
8.0%, respectively. The Company subsidy is a defined dollar amount and will not
increase in the future; therefore, no medical trend rate has been assumed and
the results of the calculation of the plan liabilities will not be affected by
future medical cost trends. The pay-as-you-go expenditures for post-retirement
benefits were $484,000, $415,000 and $170,000 for Fiscal 1995, Fiscal 1994 and
Fiscal 1993, respectively.
The Company also adopted Statement of Financial Accounting Standards
No. 112, "Employers' Accounting for Post-employment Benefits" ("FAS 112")
effective January 4, 1993, resulting in an after-tax charge of $1.4 million (net
of income taxes of $900,000). The Company accrues benefits provided to former or
inactive employees after employment but before retirement. The ongoing impact of
FAS 112 is not expected to have a material effect on earnings in future years.
There was no cash flow impact associated with either the adoption of
FAS 106 or FAS 112.
(9) EMPLOYEE STOCK OWNERSHIP PLAN
On February 23, 1989, the Company's Board of Directors adopted the Ekco
Group, Inc. Employees' Stock Ownership Plan (the "ESOP") for non-union United
States employees of the Company and subsidiaries designated by the Company's
Board of Directors as participants in the ESOP. The ESOP holds Company preferred
and common stock.
SERIES B ESOP CONVERTIBLE PREFERRED STOCK
The Company sold 1.8 million shares of the Series B ESOP Convertible
Preferred Stock at a price of $3.61 per share to the ESOP trust in 1989. At
December 31, 1995, approximately 1.5 million shares of the Company's common
stock were reserved for conversion of Series B ESOP Convertible Preferred Stock.
22
<PAGE> 23
An unearned ESOP compensation amount is reported as an offset to the
Series B ESOP Convertible Preferred Stock amount in the consolidated balance
sheets. The unearned compensation is being amortized as shares in the Series B
ESOP Convertible Preferred Stock are allocated to employees. Shares are
allocated ratably over the life of the ESOP Loan or, if less, the actual period
of time over which the indebtedness is repaid. The allocation of shares is based
upon a formula equal to a percentage of the Company's payroll costs. The
percentage is determined by the Company's Board of Directors annually and may
require principal prepayments. The Company's Board of Directors has approved
principal prepayments of $480,000, $477,000 and $439,000 for Fiscal 1995, Fiscal
1994 and Fiscal 1993 to be paid in 1996, 1995 and 1994, respectively. For Fiscal
1995, Fiscal 1994 and Fiscal 1993, $652,000, $687,000 and $686,000,
respectively, has been charged to operations. The actual cash contributions,
excluding the above mentioned prepayments, to the ESOP by the Company during
Fiscal 1995, Fiscal 1994 and Fiscal 1993 were $302,000, $390,000 and $390,000,
respectively.
Upon retirement or termination from the Company, each employee has the
option to either convert the vested Series B ESOP Convertible Preferred Stock
into Common Stock of the Company or redeem the Series B ESOP Convertible
Preferred Stock for cash at a price of $3.61 per share. The change in the
principal amount of the Series B ESOP Convertible Preferred Stock from year to
year is solely due to redemptions and conversions by vested employees retiring
or leaving the Company. The Series B ESOP Convertible Preferred Stock pays a
dividend equal to the dividend on the Company's common stock.
Series B ESOP Convertible Preferred Stock, net, consisted of the
following:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
----------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Series B ESOP Convertible Preferred Stock,
par value $.01 $ 5,372 $ 5,662
Unearned compensation (1,914) (2,566)
------- -------
$ 3,458 $ 3,096
======= =======
</TABLE>
ESOP COMMON STOCK
In October 1990, the Company's Board of Directors authorized the
Trustee of the ESOP to purchase up to 1.0 million shares of the Company's common
stock. The Company agreed to finance the purchase through a 20-year 10% loan
from the Company to the ESOP. During Fiscal 1994, the Company provided the ESOP
with approximately $950,000 to purchase approximately 137,000 shares of the
Company's common stock in the public market. As of January 1, 1995, the ESOP had
purchased, in open market transactions, a total of 1.0 million shares of the
Company's common stock at a total cost of approximately $3.3 million. Unearned
compensation equal to such cost (included as a component of stockholders equity)
is being amortized as shares of the Company's common stock are allocated to
employee accounts. Shares are allocated ratably over the life of the loan or, if
less, the actual period of time over which the indebtedness is repaid, subject
to the minimum allocation of 50,000 shares in any one year. For each of Fiscal
1995, Fiscal 1994 and Fiscal 1993, 50,000 shares were allocated to employees'
accounts. For Fiscal 1995, Fiscal 1994 and Fiscal 1993, $165,000, $155,000 and
$136,000, respectively, have been charged to operations.
(10) MINORITY INTEREST
Minority interest consists of 5% cumulative preferred stock of
Woodstream Corporation, $50 par value (redeemable at Woodstream's option at $52
per share). Dividends on the 5% cumulative preferred stock are included in
interest expense.
(11) STOCKHOLDERS' EQUITY
PREFERRED STOCK, $.01 PAR VALUE
On February 12, 1987, the Company's stockholders authorized a class of
20 million shares of preferred stock which may be divided and issued in one or
more series having such relative rights and preferences as may be determined by
the Company's Board of Directors.
23
<PAGE> 24
PREFERRED STOCK RIGHTS
In 1987, the Board of Directors of the Company declared a dividend
payable to stockholders of record as of April 9, 1987, of one preferred share
purchase right ("Right") for each outstanding share of common stock. In 1988,
1989 and 1992, the Company's Board of Directors amended the preferred share
purchase rights plan. The amended plan provides that each Right, when
exercisable, will entitle the holder thereof until April 9, 1997, to purchase
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
par value $.01 per share, at an exercise price of $20, subject to certain
anti-dilution adjustments. The Rights will not be exercisable or transferable
apart from shares of common stock until the earlier of (i) the tenth day after a
public announcement that a person or group has acquired beneficial ownership of
15% or more of the outstanding shares of common stock, other than, so long as
certain conditions are met, as a result of the beneficial ownership of certain
common stock or securities convertible into common stock held by The 1818 Fund,
L.P., a Delaware limited partnership (an "Acquiring Person") or (ii) the tenth
day after a person commences, or announces an intention to commence, a tender or
exchange offer for 15% or more of the outstanding shares of common stock. The
Rights are redeemable by the Company at $.02 per Right at any time prior to the
time that a person or group becomes an Acquiring Person.
In the event that the Company is a party to a merger or other business
combination transaction in which the Company is not the surviving entity, each
Right will entitle the holder to purchase, at the exercise price of the Right,
that number of shares of the common stock of the acquiring company which, at the
time of such transaction would have a market value of two times the exercise
price of the Right. In addition, if a person or group becomes an Acquiring
Person, each Right not owned by such person or group would become exercisable
for the number of shares of common stock which, at that time, would have a
market value of two times the exercise price of the Right.
COMMON STOCK, $.01 PAR VALUE
Share information regarding common stock consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JANUARY 1, 1995
----------------- ---------------
<S> <C> <C>
Authorized shares 60,000,000 60,000,000
========== ==========
Shares issued 27,854,441 27,292,641
Shares held in treasury 9,440,577 9,223,600
---------- ----------
Shares outstanding 18,413,864 18,069,041
========== ==========
</TABLE>
TREASURY STOCK
During Fiscal 1993, the Company issued 564,651 shares of treasury stock
in connection with the acquisition of Kellogg. During Fiscal 1995, the Company
purchased approximately 205,000 shares of its common stock in open-market
transactions at a cost of approximately $1.2 million.
STOCK OPTION PLANS
At December 31, 1995, approximately 1.5 million shares of the Company's
common stock were available for grants of options to employees and directors
under the Company's stock option plans. Options granted under the plans are
granted at prices not less than 100% of the fair market value (as defined) on
the dates the options are granted and, accordingly, there have been no charges
to income in connection with the options other than incidental expenses. Options
must be exercised within the period prescribed by the respective stock option
plan agreements, but not later than 10 years for certain options and 11 years
for others.
24
<PAGE> 25
Changes in options and option shares under the plans during the
respective fiscal years were as follows:
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------------------- ----------------------- -----------------------
OPTION PRICE NUMBER OF OPTION PRICE NUMBER OF OPTION PRICE NUMBER OF
PER SHARE SHARES PER SHARE SHARES PER SHARE SHARES
------------ --------- ------------ --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year $2.13-$11.31 2,593,093 $2.13-$11.31 2,484,721 $2.13-$10.06 1,857,248
Options granted $6.06-$ 6.56 340,895 $6.81-$ 7.56 424,584 $7.44-$11.31 746,773
Options exercised $2.19-$ 3.38 (150,814) $2.25-$ 2.63 (59,600) $2.25-$ 5.19 (15,100)
Options cancelled $2.63-$11.31 (231,738) $2.56-$11.31 (256,612) $2.56-$11.31 (104,200)
--------- --------- ---------
Options outstanding,
end of year $2.13-$11.31 2,551,436 $2.13-$11.31 2,593,093 $2.13-$11.31 2,484,721
========= ========= =========
Options exercisable,
end of year $2.13-$11.31 2,047,779 $2.13-$11.31 1,946,153 $2.13-$11.31 1,723,292
========= ========= =========
Shares reserved for
future grants 1,479,231 1,588,388 1,756,360
========= ========= =========
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
OPTION PRICE AND MARKET VALUE AT DATE OF GRANT
----------------------------------------------
NUMBER
OF SHARES PER SHARE AMOUNT
--------- --------- ------
<S> <C> <C> <C>
Options outstanding at December 31, 1995,
which were granted during fiscal years:
1987 380,000 $ 3.69 $ 1,401,250
1988 430,428 $2.13-$ 2.25 924,749
1989 31,373 $ 3.38 100,001
1990 159,100 $ 2.56 407,694
1991 44,600 $ 2.63 117,075
1992 334,950 $7.25-$10.06 3,331,372
1993 497,540 $7.44-$11.31 5,266,261
1994 351,550 $6.81-$ 7.56 2,625,284
1995 321,895 $6.06-$ 6.56 2,057,119
--------- -----------
2,551,436 $16,230,805
========= ===========
</TABLE>
Of the options outstanding at December 31, 1995, options to acquire
1,688,069 shares at a weighted average exercise price of $5.82 per share became
exercisable on the grant date. Under certain circumstances, a portion of shares
purchased pursuant to the exercise of such options are subject to repurchase by
the Company within three years of the date of grant of the option at the option
exercise price. At December 31, 1995, 377,825 of such shares were subject to
such repurchase.
The remaining options outstanding at December 31, 1995, which cover the
acquisition of 863,367 shares at a weighted average exercise price of $7.43 per
share are exercisable from the date of grant through the date of exercise up to
one-fifth of the number of shares covered by such options on or after each of
the first five anniversaries of the date of grant. All such options will be
fully exercisable on and after the fifth such anniversary.
RESTRICTED STOCK PURCHASE PLANS
Under the Company's restricted stock purchase plans, the Company may
offer to sell shares of common stock to employees of the Company and its
subsidiaries at a price per share of not less than par value ($.01) and not more
than 10% of market value on the date the offer is approved, and on such other
terms as deemed appropriate. Shares are awarded in the name of the employee, who
has all rights of a stockholder, subject to certain repurchase provisions.
Restrictions on the disposition of shares for the shares purchased expire
annually, over a period not to exceed five years, if certain performance targets
are achieved, otherwise they lapse on the tenth anniversary. Common stock
reserved for future grants aggregated 838,520 shares at December 31, 1995. The
following table summarizes the activity of the restricted stock purchase plans
during the respective fiscal years (fair market value determined at date of
purchase).
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------- ----------- -----------
NUMBER FAIR NUMBER FAIR NUMBER FAIR
OF MARKET OF MARKET OF MARKET
SHARES VALUE SHARES VALUE SHARES VALUE
------ ------ ------ ------ ------ ------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Unvested shares outstanding,
beginning of year 51 $ 312 177 $ 654 291 $ 988
Shares issued 288 1,824 - - 25 184
Shares repurchased (45) (297) - - (14) (171)
Shares vested (27) (118) (126) (342) (125) (347)
--- ------ ---- ----- ---- -----
Unvested shares outstanding,
end of year 267 $1,721 51 $ 312 177 $ 654
=== ====== ==== ===== ==== =====
</TABLE>
26
<PAGE> 27
The difference between the issue price and the fair market value of the
shares at the date of issuance is accounted for as unearned compensation and
amortized to expense over the lapsing of restrictions. During Fiscal 1995,
Fiscal 1994 and Fiscal 1993, unearned compensation charged to operations was
$270,000, $279,000 and $307,000, respectively. To the extent the amount
deductible for income taxes exceeds the amount charged to operations for
financial statement purposes, the related tax benefits are credited to
additional paid-in-capital when realized.
EMPLOYEE STOCK PURCHASE PLAN
The Company has an employee stock purchase plan (the "Plan") that
permits employees to purchase up to a maximum of 500 shares per quarter of the
Company's common stock at a 15% discount from market value. During Fiscal 1995,
Fiscal 1994 and Fiscal 1993, employees purchased 72,844 shares, 88,938 shares
and 73,880 shares, respectively, for a total of approximately $376,000, $503,000
and $545,000, respectively. At December 31, 1995, approximately 1.1 million
shares were reserved for future grants under the Plan. There have been no
charges to income in connection with the Plan other than incidental expenses.
ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company has not adopted the recently issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-based Compensation" ("FAS
123"), which is required to be adopted in Fiscal 1996. The Company currently
intends to continue to record compensation based on the provisions of Accounting
Principles Board Opinion No. 25. "Accounting for Stock Issued to Employees" as
allowed by FAS 123. Although the Company has not determined the ultimate impact
of adopting FAS 123 on its present disclosure, it does not believe, based on the
number of options previously granted, that the adoption will have a material
impact on its current disclosure.
INCOME TAX BENEFITS
Income tax benefits relating to stock option plans, restricted stock
plans and employee stock purchase plan credited to additional paid-in-capital as
realized in Fiscal 1995, Fiscal 1994 and Fiscal 1993 were $74,000, $327,000 and
$318,000, respectively.
(12) EARNINGS PER COMMON SHARE
Primary earnings per common share are based upon the weighted average
of common stock and dilutive common stock equivalent shares, including Series B
ESOP Convertible Preferred Stock, 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.
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1995 1994 1993
------ ------ ------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Weighted average shares of common stock
outstanding during the year 18,354 17,953 17,616
Weighted average common equivalent
shares due to stock options 426 545 713
Series B ESOP Convertible
Preferred Stock 1,538 1,617 1,670
------ ------ ------
20,318 20,115 19,999
====== ====== ======
</TABLE>
(13) COMMITMENTS AND CONTINGENCIES
EMPLOYMENT CONTRACTS
The Company has employment agreements with certain of its executive
officers and management personnel. These agreements generally continue until
terminated by the executive or the Company, and provide for salary continuation
for a specified number of months under certain circumstances. Certain of the
agreements provide the employees with certain additional rights after a Change
of Control (as defined) of the Company occurs. A portion of the Company's
obligations under certain of these agreements are secured by
27
<PAGE> 28
letters of credit. The agreements include a covenant against competition with
the Company, which extends for a period of time after termination for any
reason. As of December 31, 1995, if all of the employees under contract were to
be terminated by the Company without good cause (as defined) under these
contracts, the Company's liability would be approximately $6.6 million ($10.0
million following a Change of Control).
SEVERANCE POLICY
The Board of Directors of the Company has adopted a severance policy
for all exempt employees of the Company. In the event of a Change of Control (as
defined), each exempt employee of the Company whose employment is terminated,
whose duties or responsibilities are substantially diminished, or who was
directed to relocate within 12 months after such Change of Control, will
receive, in addition to all other severance benefits accorded to similarly
situated employees, salary continuation benefits for a period of months
determined by dividing his or her then yearly salary by $10,000, limited to not
more than 12 months. This policy does not apply to any exempt employee of the
Company who is a party to a contractual commitment with the Company which
provides him or her with greater than 12 months salary, severance payment or
salary continuation upon his or her termination in the event of a Change of
Control. This policy may be rescinded at any time by the Company's Board of
Directors prior to a Change of Control.
LEASES
The Company leases offices, warehouse facilities, vehicles and
equipment under operating and capital leases. The terms of certain leases
provide for payment of minimum rent, real estate taxes, insurance and
maintenance. Rents of approximately $3.4 million, $2.4 million and $1.9 million,
were charged to operations for Fiscal 1995, Fiscal 1994 and Fiscal 1993,
respectively.
The Company receives rental income from properties currently held for
sale. Rental income included in selling, general and administrative expenses was
approximately $154,000, $200,000 and $1.5 million, for Fiscal 1995, Fiscal 1994
and Fiscal 1993, respectively.
Minimum rental payments and income required under leases that had
initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1995, were as follows:
<TABLE>
<CAPTION>
OPERATING RENTAL
LEASES INCOME
--------- ------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
FISCAL YEAR
1996 $2,241 $160
1997 1,609 166
1998 1,300 170
1999 1,294 -
2000 971 -
</TABLE>
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, after consultation with outside legal
counsel, 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 at
Massillon and Hamilton, Ohio; Easthampton, Massachusetts; Chicago, Illinois;
Lititz, Pennsylvania and at the previously owned facility in Hudson, New
Hampshire hazardous substances and oil have been detected and that additional
investigation will be, and
28
<PAGE> 29
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 by the Company in 1993,
the Company engaged environmental engineering consultants ("Consultants") to
review potential environmental liabilities at all of Kellogg's properties.
Additional investigation and testing resulted in the identification of likely
environmental remedial actions, operation, maintenance and ground water
monitoring and the estimated costs therefore. Management, based upon the
engineering studies, originally estimated the total remediation and ongoing
ground water monitoring costs to be approximately $6.0 million, including the
effects of inflation, and accordingly at that time, recorded a liability of
approximately $3.8 million, representing the undiscounted costs of remediation
and the net present value of future costs discounted at 6%. Based upon the most
recent cost estimates provided by the Consultants, the Company believes the
total remaining remediation costs will be approximately $2.0 million and the
expense for the ongoing operation, maintenance and ground water monitoring will
be approximately $50,000 for fiscal 1996 and approximately $25,000 for each of
the thirty years thereafter. As of December 31, 1995, the liability recorded by
the Company was approximately $3.5 million. The Company expects to pay
approximately $325,000 of the remediation costs in fiscal 1996 with the balance
being paid out in fiscal 1997 and fiscal 1998. During Fiscal 1995, the Company
paid approximately $211,000 of such costs. The estimates may subsequently change
should additional sites be identified or further remediation measures be
required or undertaken or interpretation of current laws or regulations be
modified. The Company has not anticipated any insurance proceeds or third-party
payments in arriving at the above estimates.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which subject the Company to concentrations of
credit risk consist primarily of trade receivables. Mass merchandisers comprise
a significant portion of the Company's customer base. The Company had trade
receivables of approximately $10.0 million and $11.4 million from mass
merchandisers at December 31, 1995 and January 1, 1995, respectively. Although
the Company's exposure to credit risk associated with non-payment by mass
merchandisers is affected by conditions or occurrences within the retail
industry, trade receivables from mass merchandisers were current at December 31,
1995 and no retailer exceeded 10% of the Company's receivables at that date.
(14) INDUSTRY AND GEOGRAPHIC AREA INFORMATION
The Company is a manufacturer and marketer of multiple categories of
branded housewares products for everyday home use. The Company operates in one
industry segment, with revenues derived from sales in five principal product
categories: (i) bakeware, (ii) kitchenware, (iii) cleaning products, (iv) pest
control and small animal care and control products and (v) molded plastic
products. Sales and marketing operations outside the United States are conducted
principally through a subsidiary in Canada and by direct sales. One customer
accounted for net revenues of approximately $37.3 million (13.4%) and $31.3
million (11.8%) for Fiscal 1995 and Fiscal 1994, respectively. Two customers
each accounted for 9.5% or approximately $23.0 million and $22.9 million of net
revenues for Fiscal 1993.
29
<PAGE> 30
The following table shows information by geographic area:
<TABLE>
<CAPTION>
UNAFFILIATED INCOME BEFORE
NET REVENUES INCOME TAXES TOTAL ASSETS
------------ ------------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
FISCAL 1995
United States $265,535 $16,423 $301,896
Canada 12,460 (380) 7,742
Eliminations - (104) (5,263)
-------- ------- --------
Consolidated $277,995 $15,939 $304,375
======== ======= ========
FISCAL 1994
United States $254,608 $21,576 $315,829
Canada 12,440 (308) 7,111
Eliminations - (33) (5,157)
-------- ------- --------
Consolidated $267,048 $21,235 $317,783
======== ======= ========
FISCAL 1993
United States $232,447 $ 7,677 $303,933
Canada 13,981 (736) 9,152
Eliminations - (104) (5,124)
-------- ------- --------
Consolidated $246,428 $ 6,837 $307,961
======== ======= ========
</TABLE>
United States revenues include approximately $9.4 million, $9.7 million
and $10.6 million of export sales to unaffiliated customers for Fiscal 1995,
Fiscal 1994 and Fiscal 1993, respectively.
(15) SUPPLEMENTAL INFORMATION
The following amounts were charged to costs and expenses:
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1994 FISCAL 1993
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Advertising $6,475 $5,971 $4,920
====== ====== ======
Provision for doubtful accounts $ (442) $ 247 $ 449
====== ====== ======
Amortization of excess of cost over fair value $4,437 $4,438 $4,195
====== ====== ======
Amortization of deferred finance costs $ 590 $ 499 $ 467
====== ====== ======
Other Amortization
Prepaid marketing costs $5,799 $3,676 $1,768
Unearned compensation 1,087 1,121 1,129
Favorable lease rights 73 73 73
------ ------ ------
$6,959 $4,870 $2,970
====== ====== ======
</TABLE>
30
<PAGE> 31
(16) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table presents the unaudited quarterly results of
operations for Fiscal 1995 and Fiscal 1994:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- -----
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FISCAL 1995
Net revenues $58,732 $61,691 $83,041 $74,531 $277,995
Gross profit 18,007 18,462 26,106 24,077 86,652
Income before income taxes 255 1,546 8,442 5,696 15,939
Net income 134 811 4,647 2,453 8,045
Net income per share .01 .04 .23 .12 .40
FISCAL 1994
Net revenues $54,354 $59,199 $78,623 $74,872 $267,048
Gross profit 17,746 19,542 27,112 27,197 91,597
Income before income taxes 1,849 1,989 8,321 9,076 21,235
Net income 979 1,033 4,476 4,935 11,423
Net income per share .05 .05 .22 .25 .57
</TABLE>
(17) RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
The Company recorded an $11.0 million charge ($6.6 million after income
taxes) for restructuring/reorganization and excess facilities during the fourth
quarter of Fiscal 1993. The restructuring was the result of management's
analysis of the Company's operations and future strategy. The items covered by
the charge were (i) severance and other costs related to a reduction in
personnel, (ii) costs arising from the consolidation of different distribution
and information systems (including the closing of facilities and write-off of
equipment no longer relevant to the Company's operating strategy); and (iii)
costs associated with excess facilities classified as held for sale. In 1995,
the combination of the Company's principal housewares business units into a
single operating division completed this restructuring/reorganization. Of the
$11.0 million charge, approximately $2.7 million was non-cash, and $8.3 million
was cash. Of the $8.3 million cash portion of the charge, $5.0 million was
expended in Fiscal 1994 and $3.3 million was expended in Fiscal 1995. The table
below shows the components of the original charge and the amounts charged
against the reserve.
31
<PAGE> 32
<TABLE>
<CAPTION>
PROVISION FISCAL RESERVE FISCAL
RECORDED 1994 BALANCE AT 1995
IN FISCAL RESERVE JANUARY 1, RESERVE
1993 ACTIVITY 1995 ACTIVITY
--------- -------- ---------- --------
(AMOUNTS IN THOUSAND)
<S> <C> <C> <C> <C>
Accrued Expenses
Severance and other related
personnel costs $ 3,200 $1,135 $2,065 $2,065
Costs associated with implementing
distribution and operating
strategy 2,600 2,600 - -
Costs associated with excess
facilities 2,023 783 1,240 1,240
Other 500 500 - -
------- ------ ------ ------
Total Cash Items 8,323 $5,018 $3,305 $3,305
====== ====== ======
Non Cash Charges and Write-offs
Property held for resale 1,000
Write-off of equipment 1,250
Other 427
-------
$11,000
=======
</TABLE>
The Company estimates the benefit it received in Fiscal 1994 from the
restructuring at approximately $2.4 million and an additional benefit of $1.9
million during Fiscal 1995. The benefit is primarily due to lower expenses
associated with the reduction, in personnel.
(18) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, accounts payable,
and accrued expenses approximate fair value because of the short maturity of
these items.
The carrying amount of the debt issued pursuant to the Company's bank
credit agreement approximates fair value because the interest rates change with
market interest rates.
There are no quoted market prices for the 12.70% Notes, 7% Convertible
Subordinated Note or Series B ESOP Preferred Stock. Because each of these
securities contain unique terms, conditions, covenants and restrictions, there
are no identical obligations that have quoted market prices. In order to
determine the fair value of the 7% Convertible Subordinated Note, the Company
compared it to obligations which trade publicly and concluded that the fair
value of the Note is approximately its book value, $22 million. In order to
determine the fair value of the 12.70% Notes, the Company discounted the cash
payments on the Notes using discount rates ranging from 7.50% to 7.70%. Based
upon such discount rates, the fair value of the $60 million 12.70% Notes would
be approximately $65.6 million.
Each share of Series B ESOP Preferred Stock is redeemable at a price of
$3.61 per share or convertible into one share of the Company's common stock.
Assuming all shares were allocated and all employees were fully vested, the
redemption value of the ESOP Preferred Stock would be $5.7 million. Given these
same assumptions the shares could be converted into common stock having a market
value of $10.0 million at January 1, 1995.
These fair value estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore, cannot be
determined with precision. Changes in assumptions could significantly affect
these estimates.
32
<PAGE> 33
(19) SUBSEQUENT EVENT
On March 25, 1996, the Company sold $125.0 million of its 9.25% Senior
Notes due 2006, at a price of 99.291% of face value, in a private offering to
institutional investors. The Company used the net proceeds of the Senior Note
offering to (i) repurchase its outstanding 12.70% Notes due 1998 and 7.0%
Subordinated Convertible Note due 2002 and (ii) to repay substantially all
amounts outstanding under the Revolving Credit Facility. Concurrently with
closing the sale of the 9.25% Senior Notes, the Company entered into an
amendment to its Revolving Credit Facility, which amendment consolidated the
outstanding debt and borrowing capacity of Housewares and Frem with that of the
Company and revised certain financial covenants. Borrowings under the amended
Revolving Credit Facility bear interest at the bank's prime rate, or at LIBOR
plus 1.25% or 1.5%, depending on the Company's borrowing strategy and the ratio
of total debt to cash flow. The Revolving 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
Revolving Credit Facility mature in December 1998. The Senior Notes, as well as
the Revolving Credit Facility, will contain certain financial covenants that
will restrict the sale of assets, the incurrence of additional indebtedness and
certain investments and acquisitions by the Company. The early extinguishment
of the 12.70% Notes and 7% Convertible Subordinated Note will result in an
extraordinary charge against first quarter earnings of approximately $6.0
million (before income taxes).
33
<PAGE> 34
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Ekco Group, Inc.
We have audited the accompanying consolidated balance sheets of Ekco
Group, Inc. and subsidiaries as of December 31, 1995 and January 1, 1995, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the fiscal years in the three-year period ended December 31,
1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ekco Group,
Inc. and subsidiaries as of December 31, 1995 and January 1, 1995, and the
results of their operations and their cash flows for each of the fiscal years in
the three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
In 1993, the Company changed its method of accounting for income taxes,
post-retirement benefits other than pensions and post-employment benefits.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
February 5, 1996, except as to Note 19,
which is as of March 25, 1996
34
<PAGE> 1
EXHIBIT 21
<TABLE>
SUBSIDIARIES OF EKCO GROUP, INC.
The following are the subsidiaries of the registrant, all of which are
wholly-owned except for Woodstream Corporation, which is majority-owned:
<CAPTION>
Jurisdiction of
Subsidiary Name Incorporation
- --------------- ---------------
<S> <C>
OPERATING SUBSIDIARIES
Ekco Housewares, Inc. Delaware
Ekco Canada Inc. Ontario, Canada
Ekco Distribution of Illinois, Inc. Delaware
Ekco Manufacturing of Ohio, Inc. Delaware
Ekco International Housewares Limited United Kingdom
Frem Corporation Massachusetts
Woodstream Corporation Pennsylvania
Kellogg Brush Manufacturing Co. Massachusetts
Cleaning Specialty Co. Tennessee
Wright-Bernet, Inc. Ohio
B. VIA International Housewares, Inc. Delaware
INACTIVE SUBSIDIARIES
Delhi Manufacturing Corporation Delaware
Ekco Capital Enterprises, Inc. Delaware
Ekco Wood Products Co. Delaware
Fenwick California
FPI, Inc. Washington
Trappe of Aspen, Inc. Pennsylvania
</TABLE>
<PAGE> 1
EXHIBIT 23
----------
Consent of Independent Auditors
-------------------------------
The Board of Directors and Stockholders
Ekco Group, Inc.
We consent to incorporation by reference in the Registration Statement
(No. 33-42785) on Form S-8 pertaining to the 1984 and 1985 Restricted Stock
Plans of Ekco Group, Inc., in the Registration Statement (No. 33-50800) on Form
S-8 pertaining to the 1984 Employee Stock Purchase Plan of Ekco Group, Inc., in
the Registration Statement (No. 33-50802) on Form S-8 pertaining to the 1987
Stock Option Plan of Ekco Group, Inc., in the Registration Statement (No.
33-29448) on Form S-8 pertaining to the 1988 Directors' Stock Option Plan of
Ekco Group, Inc., and in the Registration Statement (No. 33-58319) on Form S-3
pertaining to the Dividend Reinvestment and Stock Purchase Plan of Ekco Group,
Inc., of our report dated February 5, 1996, with respect to the consolidated
balance sheets of Ekco Group, Inc. and subsidiaries as of December 31, 1995 and
January 1, 1995, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the fiscal years in the
three-year period ended December 31, 1995, which report appears in the December
31, 1995 Form 10-K of Ekco Group, Inc.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
March 25, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 142
<SECURITIES> 0
<RECEIVABLES> 44,871
<ALLOWANCES> 1,048
<INVENTORY> 47,565
<CURRENT-ASSETS> 102,610
<PP&E> 94,778
<DEPRECIATION> 38,398
<TOTAL-ASSETS> 304,375
<CURRENT-LIABILITIES> 57,935
<BONDS> 96,700
3,458
0
<COMMON> 184
<OTHER-SE> 135,741
<TOTAL-LIABILITY-AND-EQUITY> 304,375
<SALES> 277,995
<TOTAL-REVENUES> 277,995
<CGS> 191,343
<TOTAL-COSTS> 244,126
<OTHER-EXPENSES> 4,437
<LOSS-PROVISION> (443)
<INTEREST-EXPENSE> 13,590
<INCOME-PRETAX> 15,939
<INCOME-TAX> 7,894
<INCOME-CONTINUING> 8,045
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,045
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
