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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
(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 29, 1996
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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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)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 888-1212
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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
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
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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 $96 million based
upon the closing price of the shares on the New York Stock Exchange Composite
Tape on March 21, 1997.
As of March 21, 1997, there were issued and outstanding 18,696,593 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 29, 1996: 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 20, 1997: 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, developer 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 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, home centers, 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
categories (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, now known as Ekco Consumer
Plastics, Inc. ("Plastics"), a manufacturer and marketer of molded plastic
products. (See "Recent Developments" below for information regarding
Plastics as a discontinued operation.)
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.
December 1996 -- sublicense of the Farberware brand name from Meyer
Marketing Company Ltd. for use on the Company's bakeware products.
The Company operates in one industry segment with revenues derived from
sales in four principal product categories: (i) bakeware, (ii) kitchenware,
(iii) cleaning products, and (iv) pest control and small animal care and control
products. 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 be a marketing- and sales-driven
company that holds profit as its measurement of success. The Company is
implementing its
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strategy by making the changes more fully described in "Recent Developments"
below in refocusing its operations and improving operating efficiencies. The
Company will seek to introduce new products more quickly, create innovative and
attractive products and strengthen its customer relationships. The Company also
intends to pursue growth through acquisition of additional consumer product
lines and businesses as opportunities arise.
Recent Developments
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During the fourth quarter of Fiscal 1996 and the first quarter of its
current fiscal year, the Company has initiated certain strategic actions
intended to increase the future profitability of the Company, including the
following, each of which is more fully described below: Consolidating the
Company's cleaning products manufacturing activities into a single site in
Hamilton, Ohio; entering into a licensing agreement for the use of the
Farberware trade name on a line of the Company's bakeware products and
introducing that line at the January 1997 National Housewares Show; and, because
of the Company's relatively small presence in the plastics market, entering into
an agreement to sell Plastics, which will facilitate greater focus on the
Company's core product categories. In addition, Malcolm L. Sherman, who was
elected as the Company's Chairman in July 1996, was appointed as Chief Executive
Officer in December 1996 to replace the Company's former CEO. Several management
changes were made within the Company's core houseware businesses aimed at
refocusing operations: Robert Varakian, the Company's Vice President of
Marketing and President of VIA, now heads sales, marketing and product
development for Housewares. Donato A. DeNovellis, the Company's Executive Vice
President, Finance and Administration, and Chief Financial Officer, now is also
responsible for managing the manufacturing and distribution of Housewares'
products and organizing that company's administrative processes. In addition,
three distinguished individuals have been appointed as directors of the Company
and bring a wealth of retail and financial experience to complement the
Company's current board of directors: George W. Carmany, III, Michael G. Frieze
and Avram J. Goldberg.
During the fourth quarter of Fiscal 1996, the Company announced the
consolidation of its Easthampton, Massachusetts cleaning products manufacturing
plant. The facility will be consolidated into the Company's existing
manufacturing facility in Hamilton, Ohio. See Note 17 of Notes to Consolidated
Financial Statements appearing in Exhibit 13 hereto, incorporated herein by
reference, for information regarding the special charge associated therewith.
In December 1996, the Company announced that it entered into a
sub-licensing agreement with Meyer Marketing Company Ltd. to market bakeware
products under the Farberware brand name. The sub-licensing agreement includes
an initial five-year term which renews automatically for successive one-year
periods until April 30, 2196. The addition of the new Farberware line of
bakeware is intended to provide the Company with a strong entrance into
department and specialty store channels and will broaden the market position for
the Company's bakeware products.
In January 1997, the Board of Directors approved management's plan to sell
Plastics. As a result, the Company reported the results of Plastics and the loss
on disposal as a discontinued operation. The Company's Phoenix, Arizona
manufacturing and distribution facility associated with that division was sold
in January 1997 for $4 million. In February 1997, the Company announced that it
had entered into a letter of intent to sell substantially all of Plastics'
assets. As part of the sale transaction, it is anticipated that the purchaser
will license the Ekco(R) trademark for use in the sale of plastic products
previously manufactured and sold by Plastics and will lease the Company's
Worcester, Massachusetts facility. It is anticipated that the sale will close at
the end of March 1997. See Note 2 of Notes to Consolidated Financial Statements
appearing in Exhibit 13 hereto, incorporated herein by reference, for
information regarding Plastics as a discontinued operation.
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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, uncoated bakeware marketed under the
Ekco(R) trademark, insulated non-stick coated "no burn" bakeware marketed under
the Baker's Secret(R) Air Insulated(TM) trademark and non-stick coated bakeware
marketed under the Farberware brand name, more fully described below. Sales of
bakeware accounted for 33.8% of net revenues from continuing operations in
Fiscal 1996. 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 continually 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. At the National Housewares Show in January 1997,
the Company launched its upscale bakeware products to be sold by VIA under the
Farberware brand name. The Company also introduced its new Baker's Secret(R)
non-stick coating, an extremely durable non-staining coating, new tri-lingual
bakeware packaging for all of the Company's bakeware products, and a number of
new items, including a selection of mini-pans for single and child-size
servings.
KITCHENWARE. The Company sells kitchen tools and gadgets under the Ekco(R),
Ekco Pro(TM) and Baker's Secret(R) trademarks. The Company markets more than
1,000 kitchen tool and gadget products, including multiple colors of the same
item and various packaging combinations. Sales of kitchenware products accounted
for 26.4% of net revenues from continuing operations in Fiscal 1996. 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 offerings, 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 continually updates its kitchenware line and introduces new
items. For example, in January 1997 at the National Housewares Show the Company
introduced a line of barbecue tools and other barbecue items, including a
collapsible turner, fork and tongs which fit easily into drawers and
dishwashers, sauces, spice rubs and wood chips, anti-bacterial cutting boards
marketed under the Ekco(R) trademark with GermAway(TM), tools and gadgets for
baking marketed under the Baker's Secret(R) trademark, and tools and gadgets,
some of which have oversized handles with a unique thumb grip, marketed under
the Ekco PRO(TM) trademark and multi-function tools marketed under the 2 In 1
Tools(TM) trademark.
In January 1997, the Company also introduced as part of its houseware
offerings a variety of tea kettles, in classic, decorated and novelty styles,
and carafes and pump pots, which keep hot drinks hot and cold drinks cold for
up to 8 hours.
VIA. The Company's VIA(TM) bakeware and kitchenware products are designed
for the upscale and specialty marketplace and include kitchen tools and gadgets
such as pasta, garlic and pizza cooking and storage items, multi-
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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. VIA's sales of bakeware and
kitchenware accounted for 4.2% of net revenues from continuing operations in
Fiscal 1996. In January 1997 at the National Housewares Show, the VIA(TM) family
of products was expanded to include Zoo Tools(TM), a creative and fun line of 28
kitchen tools based on animal themes to be jointly marketed with Housewares, and
a line of bakeware marketed under the Farberware brand name.
CLEANING PRODUCTS. The Company manufactures and markets a broad line of
cleaning products, including brushes, brooms and mops for home use marketed
under the Ekco(R) and Clean Results(R) trademarks and indoor and outdoor
specialty cleaning products for janitorial use marketed under the
Wright-Bernet(TM) and Cleaning Specialty(TM) trademarks. Sales of cleaning
products accounted for 21.7% of net revenues from continuing operations in
Fiscal 1996. The Company believes that it is a leading manufacturer of cleaning
brushes for household, kitchen and personal use.
Among the product offerings introduced at the January 1997 National
Housewares Show were anti-bacterial cleaning products, such as sponges and brush
products marketed under the Ekco(R) and GermAway(TM) trademarks, a jumbo sponge
mop marketed under the Ekco(R) and E-Z Wringer(TM) trademarks and scrub brushes
with animal themes marketed under the Ekco(R) and Cleaning Critters(TM)
trademarks.
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.
Sales of pest control and small animal care and control products accounted for
13.9% of net revenues from continuing operations in Fiscal 1996. The Company's
products include spring-action rodent traps and other 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 Fiscal
1996, the Company introduced two storage-saving collapsible live animal cage
traps marketed under the Havahart(R) trademark, and the following products
marketed under the Victor(R) trademark: a mouse trap that requires one quick
click to set, rodent trays which catch rodents and hold them without poisons, a
reusable multi-catch "mice" trap and "mini-cat" repeating mouse trap both of
which catch up to 4 mice without poison, a non-poisonous mosquito barrier spray
for grass, plants and shrubs that repels mosquitoes for up to two weeks and "the
ultimate" flea trap that attracts fleas by use of an electrical heat-emitting
device.
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, home centers, 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 in the January 1997 Home
World Business Magazine category analysis of the top 100 retailers), including
Wal-Mart and Kmart but excluding warehouse clubs. 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 11.0% and 9.5%, respectively, of the Company's net revenues from
continuing operations in Fiscal 1996.
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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 and home center 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, farm
stores, home centers and professional pest control companies; and VIA(TM)
products are distributed primarily through department stores and upscale and
specialty stores.
Sales and Marketing
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The Company markets its products 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 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 and pest control
and small animal care and control products. High volume kitchenware products
(representing approximately 23% 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 of quality and
cost.
Raw Materials and Components
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The Company purchases primary raw materials, including steel, wood, natural
and synthetic fibers, sponges, corrugated boxes and card stock for packaging,
from a number of suppliers, including several major steel companies. All of
these materials are of a commodity nature and are subject to price fluctuations
as supply and demand change which may adversely affect the Company's
profitability. The Company also purchases components and complete products,
primarily kitchen tools and gadgets, from several domestic and foreign
suppliers. The Company believes that raw materials, component items and complete
products are available from numerous 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 products 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.
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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 to 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 by 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 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.
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 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 29, 1996, the Company employed 1,213 persons in the U.S.
including 147 employees of Plastics of whom 664 were represented under
collective bargaining agreements which expire on dates ranging from October 1997
to February 2002. As of such date, the Company also employed 33 persons in
Canada, 13 of whom were represented under a collective bargaining agreement
which expires in July 1997, and four 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
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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 timely introduction of new
products; the impact of competitive products and pricing; certain assumptions
related to consumer purchasing patterns; 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. These forward-looking statements represent
the Company's best estimate as of the date of this annual report on Form 10-K.
The Company assumes no obligation to update such estimates except as required by
the rules and regulations of the Securities and Exchange Commission.
Item 2. PROPERTIES
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As of December 29, 1996, the Company owned or leased for use in its
business the properties set forth in the table below:
<TABLE>
<CAPTION>
Approximate Owned or Lease
Description of Property(1)(2) Location Square Footage Leased Expires
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<S> <C> <C> <C> <C>
Executive offices Nashua, 8,000 Leased 11/06/97
New Hampshire
Administrative offices Franklin Park, 190,000 Leased 01/31/99
for the housewares division Illinois
and warehousing and
distribution center for VIA
products
Manufacturing, warehousing Massillon, Ohio 244,000 Owned N/A
and distribution center for
bakeware
Warehousing and Bolingbrook, 260,000 Leased 06/30/02
distribution center for Illinois 109,000 Leased 11/06/99
kitchen tools, gadgets,
bakeware and other Company
products
Manufacturing, warehousing, Lititz, 330,000 Owned N/A
distribution and office Pennsylvania
facility for pest control
and small animal care and
control products
Manufacturing, warehousing, Easthampton, 326,000 Owned N/A
office and distribution Massachusetts (3)
facility for brushes,
brooms and mops
Manufacturing, warehousing, Worcester, 177,000 Owned N/A
distribution and office Massachusetts (4)
facility for molded plastic
products
Warehousing facility for Worcester, 135,000 Leased 01/31/00
molded plastic products Massachusetts (4)
</TABLE>
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<TABLE>
<CAPTION>
Approximate Owned or Lease
Description of Property Location Square Footage Lease Expires
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Manufacturing, warehousing Phoenix, 104,000 Owned N/A
and distribution facility Arizona (5)
for molded plastic products
Manufacturing, warehousing, Hamilton, Ohio 100,000 Owned N/A
distribution and office
facility for brushes,
brooms and mops
Manufacturing and Obregon, 27,000 Leased 02/03/98
warehousing facility for Sonora, Mexico
kitchen tools and gadgets
Office and warehousing Niagara Falls, 60,000 Owned N/A
facility for products for Ontario, Canada
sale and distribution in
Canada
Manufacturing and Nashville, 42,000 Leased 12/31/97
distribution facility for Tennessee
institutional mop
and broom products
Office facility for VIA(TM) Englewood Cliffs, 3,000 Leased 11/30/97
products New Jersey
Office facility for Caldicot, Gwent, 2,000 Leased 09/01/98
products for sale and U.K.
distribution in the U.K.
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<FN>
(1) In addition to the properties listed in the table, as of December 29, 1996
the Company owned approximately 513,000 square feet of floor space which is
being held for sale or lease. The Company leases other real properties not
set forth above which, in the aggregate, are not deemed material.
(2) Substantially all of the properties owned by the Company are subject to
mortgage liens granted in connection with the Company's Revolving Credit
Facility. The Company believes that its properties are generally suitable
and adequate for its purposes for the foreseeable future.
(3) The cleaning products manufacturing activities performed at the Company's
Easthampton, Massachusetts facility are in the process of being
consolidated into the Company's Hamilton, Ohio facility, and the
Easthampton, Massachusetts property is being held for sale or lease.
(4) The Worcester, Massachusetts properties are associated with the
discontinued operation of Plastics.
(5) The Company sold its Phoenix, Arizona facility on January 17, 1997.
</TABLE>
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Item 3. LEGAL PROCEEDINGS
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Litigation
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The Company is a party to several pending legal proceedings and claims,
including the matters described below. Although the outcome of such proceedings
cannot be determined with certainty, the Company's management, after
consultation with 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. In April 1996, the U.S. District
Court for the Northern District of Ohio ruled that certain insulated bakeware
products manufactured by the Company infringed a patent held by a third-party
plaintiff. The Company ceased manufacturing such products in December 1995. In
July 1996, the court enjoined the Company from infringing the patent and awarded
the plaintiff a royalty of 2% of sales, or approximately $88,000. The Company
believes that it is not liable for infringement, and in December 1996, the
Company filed a notice of appeal, and thereafter, the third-party plaintiff
filed a cross-appeal. The Company and its counsel believe that the Company has
meritorious grounds for its appeal of the court's decision. The Company's
management believes that the final outcome will not have a material adverse
effect on the Company's financial position, results of operation or liquidity.
Environmental Regulation and Claims
- -----------------------------------
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.
9
<PAGE> 11
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
Not applicable.
10
<PAGE> 12
<TABLE>
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
<CAPTION>
Name Age Office Held
- ---- --- -----------
<S> <C> <C>
Malcolm L. Sherman 65 Chief Executive Officer, December 1996 to present;
Chairman of the Board, July 1996 to present; and
consultant to the Company, February 1993 to
December 1996. Mr. Sherman is Chairman of the Board
of Advisors of Gordon Brothers Partners, Inc. (a
group of companies which provide merchant and
financial services to the retail community as well
as serve as wholesalers and retailers of fine
jewelry) and has served in that capacity since
February 1993. He served as Chairman and Director
of K.T. Scott, Ltd. (a chain of wallpaper and
window treatment stores) from January 1991 to
August 1995, and President and Chief Executive
Officer of Morse Shoe, Inc. (a manufacturer,
importer and retailer of shoes) from January 1992
until December 1993. Previously, he was Chairman of
Channel Home Centers, Inc. (a chain of home
improvement stores), Regina Electric (a
manufacturer of vacuum cleaners) and, for many
years, Zayre Stores Inc. (a group of retail chain
stores).
Donato A. DeNovellis 52 Executive Vice President, October 1994 to
present; Chief Financial Officer, July 1993 to present; Vice
President, July 1993 to October 1994; Senior Vice President and
Chief Financial Officer of Ekco Housewares, Inc. from
September 1996 to present. Prior to joining the Company,
Mr. DeNovellis served Xerox Corporation and its
subsidiary companies from 1980 to 1992 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).
Jeffrey A. Weinstein 46 Executive Vice President, April 1985 to present; Secretary, February 1988
to present; General Counsel, October 1978 to present; and
President, Ekco Consumer Plastics, Inc., July 1996 to
present.
</TABLE>
11
<PAGE> 13
<TABLE>
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
<CAPTION>
Name Age Office Held
- ---- --- -----------
<S> <C> <C>
Stuart W. Cohen 50 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
Division of VKM.
Brian R. McQuesten 47 Vice President, February 1996 to present; and Controller, May 1987 to present.
Robert A. Varakian 41 Vice President of Marketing, July 1996 to present; Senior Vice
President--Marketing & Sales of Ekco Housewares, Inc.;
President of B. VIA International Housewares, Inc., October
1995 to present and from February 1994 to October 1994; and
President of Ekco Consumer Products, Ltd. from October 1994
to October 1995. Prior to joining the Company, from 1983 to
February 1994 Mr. Varakian served M. Kamenstein, Inc. in a
number of capacities, including Senior Vice President, Sales
& Marketing from 1988 to February 1994.
Susan M. Scacchi 32 Treasurer from February 1997 to present;
Vice President--Finance of Ekco Housewares, Inc.
from July 1996 to February 1997; Corporate
Accounting Manager from August 1994 to July 1996.
Prior to joining the Company, from January 1993 to August 1994,
Ms. Scacchi was an independent financial management consultant,
and from July 1986 to September 1992 she served Coopers & Lybrand
(a financial accounting firm) in several positions, including
Manager--Business Investigative Services Practice from January 1990
to September 1992.
</TABLE>
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.
12
<PAGE> 14
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.
13
<PAGE> 15
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 1997 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 1997 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 1997 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 1997 Annual Meeting of Stockholders is incorporated herein
by reference.
14
<PAGE> 16
Part IV
-------
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- ------- ----------------------------------------------------------------
Page Number in
Exhibit 13
--------------
(a) 1. Financial Statements:
- --- -- --------------------
Report of independent auditors............. 35
Consolidated balance sheets at December 29,
1996 and December 31, 1995 ................ 15
Consolidated statements of operations for
the fiscal years ended December 29, 1996,
December 31, 1995 and January 1, 1995...... 16
Consolidated statements of stockholders'
equity for the fiscal years ended
December 29, 1996, December 31, 1995 and
January 1, 1995............................ 17
Consolidated statements of cash flows
for the fiscal years ended December 29, 1996,
December 31, 1995 and January 1, 1995...... 18
Notes to consolidated financial
statements................................. 19
Page Number in
Form 10-K
--------------
Independent auditors' report............... 17
2. Financial Statement Schedule:
-- ----------------------------
VIII Valuation and Qualifying Accounts..... 18
Schedules other than that 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 19.)
(b) Reports on Form 8-K --
- --- -------------------
On October 15 and December 5, 1996, the registrant filed reports on Form 8-K as
of October 9, 1996 and December 9, 1996, respectively, to report under "Item 5.
Other Events" the filing of two press releases announcing anticipated lower
than expected third quarter and full year 1996 results and the appointment of
Malcolm L. Sherman as Chief Executive Officer, respectively.
15
<PAGE> 17
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/MALCOLM L. SHERMAN
-----------------------------------------
Malcolm L. Sherman, Chief
Executive Officer
(Principal Executive Officer)
Date: March 27, 1997
By: /s/DONATO A. DeNOVELLIS
-----------------------------------------
Donato A. DeNovellis, Executive Vice
President, Finance and Administration,
and Chief Financial Officer
(Principal Financial Officer)
Date: March 27, 1997
By: /s/BRIAN R. McQUESTEN
-----------------------------------------
Brian R. McQuesten, Vice President and
Controller
(Principal Accounting Officer)
Date: March 27, 1997
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/GEORGE W. CARMANY, III Director March 27, 1997
- -------------------------
George W. Carmany, III
/s/MICHAEL G. FRIEZE Director March 27, 1997
- -------------------------
Michael G. Frieze
/s/AVRAM J. GOLDBERG Director March 27, 1997
- -------------------------
Avram J. Goldberg
/s/T. MICHAEL LONG Director March 27, 1997
- -------------------------
T. Michael Long
/s/STUART B. ROSS Director March 27, 1997
- -------------------------
Stuart B. Ross
/s/MALCOLM L. SHERMAN Director March 27, 1997
- -------------------------
Malcolm L. Sherman
/s/BILL W. SORENSON Director March 27, 1997
- -------------------------
Bill W. Sorenson
/s/HERBERT M. STEIN Director March 27, 1997
- -------------------------
Herbert M. Stein
/s/JEFFREY A. WEINSTEIN Director March 27, 1997
- -------------------------
Jeffrey A. Weinstein
16
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Ekco Group, Inc.
Under date of January 31, 1997, we reported on the consolidated balance
sheets of Ekco Group, Inc. and subsidiaries as of December 29, 1996 and December
31, 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 29, 1996, as contained in the 1996 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 1996. In
connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial statement
schedule as listed in Item 14(a)2 of this report. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth herein.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
March 24, 1997
17
<PAGE> 19
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(Amounts in thousands)
<TABLE>
<Captions>
- ------------------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Year ended December 29, 1996:
Allowance for doubtful
accounts $ 948 $ 130 $ - $ - $ 318 $ 760
Provisions related to
consolidation of
cleaning business - 4,921 - - 3,224 1,697
Provision for disposal of
discontinued operations - 5,500 - - - 5,500
------ ------- ------ ------ ------ ------
$ 948 $10,551 $ - $ - $3,542 $7,957
====== ======= ====== ====== ====== ======
Year Ended December 31, 1995:
Allowance for doubtful
accounts $1,395 $ (290) $ - $ - $ 157 $ 948
Reserves related to plant
consolidations 3,305 - - 3,305 - -
------ ------- ------ ------ ------ ------
$4,700 $ (290) $ - $3,305 $ 157 $ 948
====== ======= ====== ====== ====== ======
Year Ended January 1, 1995:
Allowance for doubtful
accounts $1,473 $ 165 $ - $ - $ 243 $1,395
Provisions related to
restructuring/reorganization
and excess facilities cost 8,323 - - 5,018 - 3,305
------ ------- ------ ------ ------ ------
$9,796 $ 165 $ - $5,018 $ 243 $4,700
====== ======= ====== ====== ====== ======
</TABLE>
18
<PAGE> 20
INDEX TO EXHIBITS
Exhibit
Number Exhibit Description
- -------------------------------
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 (incorporated herein by
reference to Exhibit 3.1(i)(a) to Form 10-K for the year ended
December 31, 1995).
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.
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).
- --------------------------------------------------------------------------------
(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.
19
<PAGE> 21
4.2(a) Indenture dated as of March 25, 1996 among the
registrant, its U.S. operating subsidiaries and
Fleet National Bank of Connecticut
(incorporated herein by reference to Exhibit
4.2(a) to Form 10-K for the year ended December
31, 1995).
4.2(b) Form of 9 1/4% Senior Note due 2006, included in Exhibit
4.2(a)(incorporated herein by reference to Exhibit 4.2(b) to
Form 10-K for the year ended December 31, 1995).
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. (incorporated herein by reference
to Exhibit 4.2(c) to Form 10-K for the year ended December 31,
1995).
4.3 Ekco Group, Inc. Dividend Reinvestment and Stock Purchase Plan
(incorporated herein by reference to Exhibit 4.3 to Form 10-K
for the year ended December 31, 1995).
10.1(a)* 1984 Restricted Stock Purchase Plan, as amended,
originally filed as 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,
originally filed as 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, as
amended (incorporated herein by reference to
Exhibit 10.1(b) to Form 10-K for the year ended
January 1, 1995 and Exhibit 10.1(c)(3) to Form
10-K for the year ended December 31, 1995).
10.1(c)(2) Schedule to Form of Restricted Stock Purchase Agreement.
10.1(d)(1)* Form of Restricted Stock Purchase Agreement, as
amended, for the quarterly purchase of
restricted stock (incorporated by reference to
Exhibit 10.1(d) to Form 10-K for the year ended
December 31, 1995).
10.1(d)(2) Schedule to Form of Restricted Stock Purchase Agreement, as amended.
10.2(a)(1)* 1987 Stock Option Plan, as amended.
10.2(a)(2)* 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 (incorporated herein by
reference to Exhibit 10.1(b)(1) to Form 10-K
for the year ended December 31, 1995).
10.2(b)(2) Schedule to Form of Non-Qualified Stock Option and Repurchase
Agreement, as amended.
10.2(c)(1)* Form of Non-Qualified Stock Option and
Repurchase Agreement dated various dates, as
amended (incorporated herein by reference to
Exhibit 10.2(b)(2)(i) to Form 10-K for the year
ended December 31, 1995).
20
<PAGE> 22
10.2(c)(2) Schedule to Form of Non-Qualified Stock Option and Repurchase
Agreement, as amended.
10.2(d)(1)* Form of Incentive Stock Option Agreement with Robert
Varakian dated as of February 4, 1994, January 24, 1995,
and February 6, 1996 (incorporated herein by reference to Exhibit
10.3(d) to Form 10-K for the year ended January 1995).
10.2(d)(2) Schedule to Form of Incentive Stock Option Agreement.
10.2(e)* Form of Non-Qualified Stock Option Agreement dated as of
February 5, 1997.
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 (incorporated herein by reference to Exhibit 10.4 to Form
10-K for the year ended December 31, 1995).
10.5(a)(1)* Ekco Group, Inc. Employees' Stock Ownership
Plan ("ESOP") 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(a)(2)* Amendment to ESOP dated May 26, 1995.
10.5(a)(3)* Amendment to ESOP dated November 6, 1996.
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
(incorporated herein by reference to Exhibit
10.5(b) to Form 10-K for the year ended
December 31, 1995).
10.5(c) ESOP Loan Agreement dated as of March 30, 1995
(incorporated herein by reference to Exhibit
10.5(c) to Form 10-K for the year ended
December 31, 1995).
10.6* Employment Agreement with Malcolm L. Sherman dated December 4,
1996.
21
<PAGE> 23
10.7* Amended and Restated Employment Agreement with Donato A.
DeNovellis dated as of May 25, 1995, as amended (incorporated
herein by reference to Exhibit 10.3 to Form 10-Q for the
quarterly period ended October 1, 1995, Exhibit 10.9(b) to Form
10-Q for the period ended June 30, 1996 and Exhibit 10.10
hereinbelow).
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 and Exhibit 10.10 hereinbelow).
10.9* 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* Form of Amendment to Employment Agreement with Donato A.
DeNovellis and Jeffrey A. Weinstein.
10.11* Employment Agreement with Robert Varakian dated as of September
25, 1996.
10.12* 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).
10.13* 1995 Restatement of Incentive Compensation Plan for Executive
Employees of Ekco Group, Inc. and its Subsidiaries, as amended
(incorporated herein by reference to Exhibit 10.13 to Form 10-K
for the year ended January 1, 1995 and Exhibit 10.1 to Form 10-Q
for the quarterly period ended September 29, 1996).
10.14* 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).
10.15(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).
10.15(b) Schedule to Form of Split Dollar Agreement.
10.16(a)* Ekco Group, Inc. Amended 1996 Performance Unit Rights Award
Plan.
10.16(b)* Form of Award Agreement dated as of September 25, 1996
(incorporated herein by reference to Exhibit 10.2 to Form 10-Q
for the period ended September 29, 1996).
22
<PAGE> 24
10.16(c)* Form of Award Agreement dated as of December 4, 1996 with Robert
Stein.
10.17* Severance agreement dated December 4, 1996 with Robert
Stein.
10.18 Standstill Agreement with Stephen Weinroth dated as of March 30,
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).
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(a) Credit Agreement dated as of April 11, 1995 among the registrant,
Ekco Housewares, Inc., Frem Corporation (now Ekco Consumer
Plastics, Inc.), Fleet Bank of Massachusetts, N.A., as agent, and
the Lenders party thereto, as amended (incorporated herein by
reference to Exhibit 10.28 to Form 10-Q for the quarterly period
ended April 2, 1995; Exhibit 10.28(b) to Form 8-K as of December
31, 1995; and Exhibit 10.23(c) to Form 10-K for the year ended
December 31, 1995).
10.22(b) Third Amendment to Credit Agreement dated as of November 13, 1996.
11 Statement re: computation of per share earnings. (Reference is
made to Note 12 of Notes to Consolidated Financial Statements in
Exhibit 13 hereto.)
13 1996 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.
27 Financial Data Schedule.
Schedules to Exhibits 10.21 and 10.22 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 SUSAN M. SCACCHI,
TREASURER, EKCO GROUP, INC., 98 SPIT BROOK ROAD, NASHUA, NEW HAMPSHIRE 03062.
23
<PAGE> 25
INDEX TO EXHIBITS FILED WITH FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 29, 1996
Exhibit No. Description
- ---------- -----------
3.1(ii) By-laws as currently in effect, originally
filed as Exhibit 3.2 to Form 10-K for the year
ended December 29, 1991.
10.1(a)* 1984 Restricted Stock Purchase Plan, as amended,
originally filed as 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,
originally filed as Exhibit 10.3(a) to Form
10-K for the year ended December 29, 1991.
10.1(c)(2)* Schedule to Form of Restricted Stock Purchase Agreement.
10.1(d)(2) Schedule to Form of Restricted Stock Purchase Agreement, as
amended.
10.2(a)(1)* 1987 Stock Option Plan, as amended.
10.2(b)(2) Schedule to Form of Non-Qualified Stock Option and Repurchase
Agreement, as amended.
10.2(c)(2) Schedule to Form of Non-Qualified Stock Option and Repurchase
Agreement, as amended.
10.2(d)(2) Schedule to Form of Incentive Stock Option Agreement.
10.2(e)* Form of Non-Qualified Stock Option Agreement dated as of
February 5, 1997.
10.3(b) Schedule to Form of Indemnity Agreement.
10.5(a)(2) Amendment to ESOP dated May 26, 1995.
10.5(a)(3) Amendment to ESOP dated November 6, 1996.
10.6* Employment Agreement with Malcolm L. Sherman dated
December 4, 1996.
10.10 Form of Amendment to Employment Agreement with Donato A.
DeNovellis and Jeffrey A. Weinstein.
10.11* Employment Agreement with Robert Varakian dated
as of September 25, 1996.
10.15(b)* Schedule to Form of Split Dollar Agreement.
10.16(a)* Ekco Group, Inc. Amended 1996 Performance Unit Rights Award
Plan.
10.16(c)* Form of Award Agreement dated as of December 4, 1996 with Robert
Stein.
10.17* Severance agreement dated December 4, 1996 with Robert
Stein.
10.22(b) Third Amendment to Credit Agreement dated as of November 13, 1996.
11 Statement re: computation of per share earnings. (Reference is
made to Note [12] of Notes to Consolidated Financial Statements
in Exhibit 13 hereto.)
13 1996 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.
27 Financial Data Schedule.
- -------------------------------------------------------------------------------
(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.
<PAGE> 1
EXHIBIT 3.1(ii)
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EKCO GROUP, INC.
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BY-LAWS
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ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of New York, State of New York, at such
place as may be fixed from time to time by the board of directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the
first Tuesday of May if not a legal holiday, and if a legal holiday, then on the
next secular day following, at 10:00 A.M., or
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at such other date and time as shall be designated from time to time by the
board of directors and stated in the notice of the meeting, at which they shall
elect by a plurality vote a board of directors, and transact such other business
as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting, shall be given to each stockholder entitled to
vote at such meeting not less than ten (10) days before the date of the meeting.
Section 4. The officer, who has charge of the stock ledger of the
corporation, shall prepare and make, at least ten (10) days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president or the chairman of the board and
shall be called by the president or secretary at the request in writing of a
majority of the board of directors, or at the request in writing of stockholders
owning fifty percent or more of the capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall
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state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten days before the date of the meeting,
to each stockholder entitled to vote at such meeting.
Section 7. The date and time of the opening and closing of the polls
for each matter upon which the stockholders will vote at a meeting shall be
announced at such meeting by the person presiding over the meeting. The board of
directors of the corporation may adopt by resolution such rules, regulations or
procedures for the conduct of meetings of stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules, regulations or
procedures as adopted by the board of directors, the person presiding over a
meeting of stockholders shall have the right and authority to prescribe such
rules, regulations and procedures and to do all such acts as, in the judgment of
such presiding person, are appropriate for the proper conduct of the meeting.
Such rules, regulations or procedures, whether adopted by the board of directors
of prescribed by the presiding person, may include, without limitation, the
following: (1) the establishment of an agenda or order of business for the
meeting; (2) rules and procedures for maintaining order at the meeting and the
safety of those present; (3) limitations on attendance at or participation in
the meeting to the stockholders of record of the corporation, their duly
authorized and constituted proxies or such other persons as the presiding person
shall permit; (4) restrictions on entry to the meeting after the time fixed for
the commencement thereof; and (5) limitations on the time allotted to questions
or comments by participants. Unless, and then only to the extent, determined by
the board of directors or the presiding person, meetings of stockholders shall
not be required to be held in accordance with rules of parliamentary procedure.
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Section 7A. At a meeting of the stockholders (whether an annual or
special meeting), only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before a meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the board of directors, or (b)
otherwise properly requested to be brought before the meeting by a stockholder.
For business to be properly requested to be brought before a meeting by a
stockholder pursuant to (b) above, the stockholder must have given timely notice
thereof in writing to the secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than sixty (60) days
prior to the date of the meeting; provided, however, that in the event that the
corporation does not give notice of the date of the meeting to the stockholders
by mail or does not publicly announce the date of the meeting by press release
or otherwise more than sixty (60) days prior to the date of the meeting, notice
by the stockholder to be timely must be delivered to the Secretary of the
corporation not later than the close of business on the tenth (10th) day
following the day on which such announcement of the date of the meeting was
mailed to stockholders. A stockholder's notice to the secretary shall set forth
as to each matter the stockholder proposes to bring before the meeting: (a) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (b) the name and
address, as they appear on the corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of the corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in these by-laws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section. The person presiding
over a meeting of the stockholders, shall, if the facts warrant, determine that
proposed business was not properly
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brought before the meeting in accordance with the provisions of this Section
and, if he or she should so determine, he or she shall so declare to the meeting
and any such proposed business not properly brought before the meeting shall not
be transacted.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjournment
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Each stockholder shall at every meeting of
the stockholders be entitled to one vote in person or by proxy for
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each share of the capital stock having voting power held by such stockholder,
but no proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 11. Whenever the vote of stockholders at a meeting thereof
is required or permitted to be taken for or in connection with any corporate
action, by any provision of the statutes, the meeting and vote of stockholders
may be dispensed with if all of the stockholders who would have been entitled to
vote upon the action if such meeting were held shall consent in writing to such
corporate action being taken; or if the certificate of incorporation authorizes
the action to be taken with the written consent of the holders of less than all
of the stock who would have been entitled to vote upon the action if a meeting
were held, then on the written consent of the stockholders having not less than
such percentage of the number of votes as may be authorized in the certificate
of incorporation; provided that in no case shall the written consent be by the
holders of stock having less than the minimum percentage of the vote required by
statute for the proposed corporate action, and provided that prompt notice must
be given to all stockholders of the taking of corporate action without a meeting
and by less than unanimous written consent.
Section 11A. In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the board of directors, and which date shall not be more than ten (10) days
after the date upon which the resolution fixing the record date is adopted by
the board of directors. Any stockholder of record seeking to have the
stockholders authorize or take corporate action by written consent shall, by
written notice to the secretary, request the board of directors to fix a record
date. The board of directors shall promptly, but in all events within ten (10)
days after the date on which such a request is received, adopt a resolution
fixing the record date (unless a record date has previously been fixed by the
board of directors pursuant to the first sentence of this Section 11A.) If no
record date has been fixed by the board of directors pursuant to the first
sentence of this Section 11A or otherwise within ten (10) days of the date on
which such a request is received by the secretary, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in Delaware, its principal
place of business, or to any officer or agent of the corporation having custody
of the books in which proceedings of meetings of stockholders are recorded.
Delivery shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the board of directors and prior
action by the board of directors is required by applicable law, the record date
for determining the stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the date on which
the board of directors adopts the resolution taking such prior action.
Section 11B. In the event of the delivery, in the manner provided by
Section 11A, to the corporation of the requisite written consent or consents to
take corporate action and/or any related revocation or revocations, the
corporation shall engage independent inspectors of elections for the purpose of
performing promptly a ministerial review of the validity of the consents and
revocations. For the purpose of permitting the inspectors to perform such
review, no action by written consent without a meeting shall be effective until
such date as the independent inspectors certify to the corporation that the
consents delivered to the corporation in accordance with Section 11A represent
at least the minimum number of votes that would be necessary to take the
corporate action. Nothing contained in this Section 11B shall in any way be
construed to suggest or imply that the board of directors or any stockholder
shall not be entitled to contest the validity of any consent or revocation
thereof, whether before or after such certification by the independent
inspectors, or to take any other action (including, without limitation, the
commencement, prosecution or defense of any litigation with respect thereto, and
the seeking of injunctive relief in such litigation).
Section 11C. Every written consent shall bear the date of signature
of each stockholder who signs the consent and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
(60) days of the earliest dated written consent received in accordance with
Section 11A, a written consent or consents signed by a sufficient number of
holders to take such action are delivered to the corporation in the manner
prescribed in Section 11A.
ARTICLE III
DIRECTORS
Section 1. The directors of the corporation shall consist of no less
than six nor more than eleven as determined from time to time by the Board of
Directors. The directors shall be elected at the annual meeting of stockholders
except as provided in Section 2 of this Article (vacancies and newly created
directorships). Directors shall hold office until their successors are elected
and duly qualified or until the earlier of their death, resignation or removal.
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Section 1A. Nomination for the election of directors may be made by
(a) the board of directors or (b) any stockholder entitled to vote in the
election of directors generally. However, any stockholder entitled to vote in
the election of directors generally may nominate one or more persons for
election as directors at a meeting as provided for in (b) above only if written
notice of such stockholder's intent to make such nomination or nominations has
been given, either by personal delivery or by mail, to the secretary of the
corporation not later than, (x) with respect to an election to be held at an
annual meeting of stockholders, sixty (60) days prior to the anniversary date of
the immediately preceding annual meeting, and, (y) with respect to an election
to be held at a special meeting of stockholders for the election of directors,
the close of business on the tenth (10th) day following the date on which notice
of such meeting is first given to stockholders. Each such notice shall set
forth: (a) the name and address of the stockholder who intends to make the
nomination or nominations and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (d) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (e)
the consent of each nominee to serve as a director of the corporation, if so
elected. The person presiding over the meeting may refuse to acknowledge the
nomination of a person not made in compliance with the foregoing procedure, and
any attempt to nominate a person otherwise than in accordance with the
provisions of this Section shall be invalid and shall be of no
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force of effect.
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporate may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected board
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of directors shall be held at such time and place as shall be fixed by the vote
of the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the
chairman of the board or the president on two day's notice to each director,
either personally or by mail or by telegram; special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of three directors.
Section 8. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
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Section 9. Unless otherwise restricted by the certificate of
incorporation of these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 10. The board of directors may, by resolution passed by a
majority of the whole board, 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, 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, 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. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the board of directors.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
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COMPENSATION OF DIRECTORS
Section 12. The directors may be paid a fixed sum for attendance at
each meeting of the board of directors or a stated salary as director, their
expenses, if any, of attendance at each meeting of the board of directors and
may receive grants or options to purchase the common stock of the corporation
pursuant to any stock option or stock purchase plan adopted by the corporation
which permits such grants, or independent of such a plan, on an agreement basis
when approved by a majority of the board of directors. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
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ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and may include a chief executive officer who shall see that
all orders and resolutions of the board of directors are carried out and shall
have authority to establish operating policy for the corporation, and shall
preside at meetings of the stockholders and directors, and shall include a
president, a vice president, a secretary and a treasurer. The board of directors
may also choose additional vice presidents, and one or more assistant
secretaries and assistant treasurers. Any number of offices may be held by the
same person, unless the certificate of incorporation or these by-laws otherwise
provide.
Section 2. The board of directors of its first meeting after each
annual meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
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THE PRESIDENT
Section 6. The president shall be the chief operating officer of the
corporation and shall have general and active management of the business of the
corporation subject to the supervision of the chief executive officer and the
board of directors; provided that in the event of a vacancy in the office of the
chief executive officer or in the absence of the chief executive officer, the
president shall perform his functions and shall preside at the meetings of the
stockholders and directors.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
VICE PRESIDENT
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president,(or in the event there be more
than one vice-president, the vice-presidents in the order designated, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the president, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the president. The vice-president
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and
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record all the proceedings of the meetings of the corporation and of the board
of directors in a book to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the secretary or in the event of his ability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may
be ordered by the board of directors, taking
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proper vouchers for such disbursements, and shall render to the president and
the board of directors, at its regular meetings, or when the board of directors
so requires, an account of all his transactions as treasurer and of the
financial condition of the corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by,
the chairman or vice-chairman of the board of directors or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation.
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Section 2. Where a certificate is countersigned (1) by a transfer
agent other than the corporation or its employee, or, (2) by a registrar other
than the corporation or its employee, any other signature on the certificate may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATE
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment of authority to transfer, it shall be
the duty of the
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corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to interest in such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
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<PAGE> 18
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
CHECKS
Section 4. All checks or demand for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
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<PAGE> 19
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 7. The corporation shall, to the fullest extent permitted by
law, indemnify any person who after July 30, 1986 becomes a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including without limitation an action by or in the right of the corporation)
by reason of the fact that he is or was a director or officer of the
corporation, or, in either such capacity, is or was serving at the request of
the corporation as a director or officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding. The aforesaid indemnity shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person. The corporation may
provide indemnification to any person, by agreement or otherwise, on such terms
and conditions as the Board of Directors may approve. Any agreement for
indemnification of any director or officer, employee or other person may provide
indemnification rights which are broader or otherwise different from those set
forth herein. The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which any officer, director, employee or agent
of the corporation seeking indemnification may be entitled under Delaware law or
any By-Laws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
-19-
<PAGE> 20
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Section.
For purposes of this Section, (1) references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors and officers so that any
person who is or was a director or officer, of such constituent corporation, or
is or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued; (2) references to "other enterprises" shall include
employee benefit plans; (3) references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and (4)
references to "serving at the request of the corporation" shall include any
service as a director or officer of the corporation which imposes duties on, or
involves services by, such director or officer with respect to an employee
benefit plan, its participants, or beneficiaries.
This Section 7 is intended to grant an enforceable right to
indemnification in accordance with its terms to the persons
-20-
<PAGE> 21
described herein. In the event any provision hereof is determined to be
unenforceable, such provision shall be considered severed from this Section 7
which, in all other respects shall remain in force and effect.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting.
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<PAGE> 1
EXHIBIT 10.1(a)
----------------
THE 1984
EKCO GROUP, INC.
RESTRICTED STOCK PLAN
1. Purpose.
-------
The 1984 Ekco Group, Inc. Restricted Stock Plan (the "1984 Plan") is
intended to promote the interests of Ekco Group, Inc. and its subsidiaries
(collectively the "Corporation") and its stockholders by providing an incentive
for directors, officers, executives and employees at all levels within the
Corporation and its subsidiaries.
2. Adoption and Administration of Plan.
-----------------------------------
This 1984 Plan shall become effective as of August 1, 1984, and shall
remain in effect until terminated pursuant to Paragraph 8. The 1984 Plan shall
be administered by a Committee (the "Committee") of three or more directors
appointed by the Board of Directors (the "Board") or by the Board. Reference
herein to the Committee shall be deemed to include the Committee or the Board
when exercising its authority to administer this 1984 Plan. Any action taken by
the Committee with respect to the implementation, interpretation or
administration of the 1984 Plan may be taken by majority vote of the members of
the Committee, and shall be final, conclusive and binding. The Committee members
shall serve at the pleasure of the Board and until their successors are
appointed. No member of the Committee shall be eligible to purchase shares under
this 1984 Plan. Once the Committee makes an offer to sell shares to a person,
such an offer shall be final, conclusive and binding. Once made, the offer may
not be modified or revoked by the Board or the Committee.
3. Stock Subject to Plan.
---------------------
There is hereby established a 1984 Restricted Stock Plan Reserve
("Reserve") to which is allocated 500,000 shares of the Corporation's authorized
common stock, par value $.01 per share ("Stock"). In the event that the shares
of common stock should, as a result of a stock split, stock dividend,
combination of shares, or exchange for other securities by reclassification,
reorganization, redesignation, merger, consolidation, recapitalization or
otherwise, be increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the
Corporation or of another corporation, the number and kind of shares then
remaining in the Reserve shall be appropriately adjusted to reflect such action.
If any such adjustment shall result in a fractional share, the Reserve will be
reduced to the next lowest full share.
Upon the sale of shares of Stock pursuant to this 1984 Plan, the Reserve
shall be reduced by the number of shares sold, and upon the purchase by the
Corporation of shares of Stock pursuant to Paragraphs 5(c) and 7 hereof, the
Reserve shall be increased by such number of shares, and such shares may again
be subject to sale hereunder. Sales of Stock hereunder may be made from
authorized but unissued shares or from treasury shares.
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<PAGE> 2
4. Eligibility.
-----------
Any director (other than a director who is an officer, director or
employee of a corporation owning more than 10% of the outstanding voting
securities of the Corporation), officer or employee of the Corporation is
eligible to participate in this 1984 Plan. In selecting those persons to whom
offers to purchase shares hereunder shall be made at any time and in determining
the number of shares of Stock to be offered, the Committee shall consider the
position and responsibilities of such persons, the value of their services to
the Corporation, and such other factors as the Committee may deem pertinent.
5. Terms of Offers.
---------------
All offers to purchase shares of Stock under this 1984 Plan and all
purchases shall be made in accordance with the following:
(a) PURCHASE PRICE. The purchase price of the shares of Stock to be
offered under this 1984 Plan to any person shall be determined by the
Committee, provided that such purchase price shall not be less than the
par value per offered share nor more than an amount equal to 10% of the
market price per offered share at the close of business on the market day
most immediately preceding the date on which an offer is authorized by the
Committee hereunder. The purchase price shall be paid in full, in cash or
certified or bank check, at the principal office of the Corporation prior
to expiration of the offer in order that the acceptance of the offer be
effective. Any person purchasing shares of Stock hereunder is hereinafter
referred to as "Purchaser." The number of shares purchased pursuant to
each offer is sometimes hereinafter referred to as a "Block of Shares."
The date, after the purchase price is paid and the offer is accepted, on
which the Corporation's transfer agent issues share certificate(s)
representing the Block of Shares, is hereinafter referred to as the
"Closing Date."
(b) RESTRICTIONS ON TRANSFERS. Any offer to sell shares of Stock
under this 1984 Plan shall be conditioned upon the following provisions:
(i) No shares of Stock purchased hereunder may be conveyed,
transferred, encumbered or otherwise disposed of (any such
disposition hereinafter called a "Transfer") by the Purchaser,
except that the foregoing restriction on Transfer shall lapse:
(A) As to all shares owned by a Purchaser upon the death
of such Purchaser.
(B) As to all shares owned by a Purchaser upon the
permanent and total disability (as defined in the
Corporation's wage contribution plan) of such Purchaser.
(C) As to twenty percent (20%) of each Block of Shares on
each of the first, second, third, fourth and fifth anniversary
of the Closing Date for such Block of Shares, provided that
the Purchaser is at each such date an employee or director of
the Corporation.
2
<PAGE> 3
(D) As to all shares owned by a Purchaser, if a Change in
Control occurs. 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), 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.
This subdivision 5(b)(i)(D) shall apply to all shares of
Stock purchased hereunder regardless of when such shares were
issued, provided that with respect to shares of Stock issued
prior to the promulgation of this subdivision of 5(b)(i)(D),
the Purchaser of such shares shall have consented thereto
within 30 days after receipt by such Purchaser of a written
request from the Corporation for such consent.
(E) As to all shares owned by a Purchaser employed by the
Corporation or any of its subsidiaries upon a sale of
substantially all of the Corporation's assets.
This subdivision 5(b)(i)(E) shall apply to all shares of
Stock purchased hereunder regardless of when such shares were
issued, provided that with respect to shares of Stock issued
prior to the promulgation of this subdivision of 5(b)(i)(E),
the Purchaser of such shares shall have consented thereto
within 30 days after receipt by such Purchaser of a written
request from the Corporation for such consent.
3
<PAGE> 4
Shares as to which the foregoing restrictions on Transfer have not lapsed
are sometimes hereinafter referred to as "Restricted Shares."
(ii) Any purported Transfer of Restricted Shares made by a
Purchaser shall be null and void, and the Corporation shall not have
any obligation to recognize or give effect to such Transfer on its
books and records or to recognize the person or persons to whom such
proposed Transfer has been made as the legal or beneficial holder
thereof.
(iii) certificates representing shares of Stock which are sold
pursuant to the provisions of this 1984 Plan shall EITHER (1) bear
the following legend or such other or additional legends as counsel
to the Corporation may deem appropriate:
RESTRICTED SHARES
The shares represented by this certificate are subject to
the terms of an Agreement between the person whose name
appears hereon and Ekco Group, Inc. (the "Corporation") and to
all the terms, conditions, restrictions on transfer and
mandatory sale provisions of the 1984 Ekco Group, Inc.
Restricted Stock Plan. A copy of said Agreement and said Plan
is on file at the principal office of the Corporation.
or (2) be placed into escrow pursuant to an escrow agreement by and
between the Corporation and an escrow agent appointed therein by the
Committee.
(c) SALE OF RESTRICTED SHARES TO CORPORATION ON TERMINATION OF
SERVICE. If the Purchaser terminates his or her directorship or employment
with the Corporation, or if his or her directorship or employment is
terminated by the Corporation for any reason (hereinafter "Termination"),
then, on the effective date of such Termination, the Purchaser shall be
deemed to have sold all Restricted Shares to the Corporation at a price
per share equal to the original price per share paid by the Purchaser, and
the Purchaser shall have no further rights as a stockholder of the
Corporation with respect to any Restricted Shares except the right to
receive payment therefor as aforesaid.
(d) OTHER CONDITIONS. The Committee, in authorizing an offer under
this 1984 Plan, may impose such other terms, conditions or restrictions
thereon as it shall deem appropriate, provided that the same: (i) shall
not provide for the lapse of restrictions hereunder at a rate more rapid
than provided under the plan's terms, and (ii) after the Closing Date for
any Block of Shares under this 1985 Plan, no additional restrictions may
be imposed without the consent of the Purchaser.
6. Manner of Offer and Acceptance.
------------------------------
After the Committee shall have determined that the Corporation should
offer a person the right to purchase shares under this 1984 Plan, an officer of
the Corporation shall present the offeree with a written statement of the terms
of
4
<PAGE> 5
the offer, including but not limited to, the number of shares which such person
shall be entitled to purchase, the purchase price per share as well as the other
terms, conditions and restrictions relating thereto, including those which the
Committee may determine to impose. The offeree shall have fifteen (15) days from
the date of the offer to accept such offer in accordance with its terms.
Any offer made hereunder may be conditioned upon the execution by the
Purchaser of a stock purchase agreement containing the terms, conditions and
restrictions of the offer including those imposed by the Committee, those
required by this 1984 Plan and any additional terms and conditions not
inconsistent herewith, as well as those as shall, in the opinion of the
Committee and counsel for the Corporation, be necessary or desirable to protect
the Corporation and to comply with applicable federal, state and local laws and
regulations and the rules of any stock exchanges upon which the Stock is listed.
7. Delivery and Repayment for Restricted Shares upon Termination of Service.
------------------------------------------------------------------------
(a) Immediately upon Termination, the Purchaser shall be required to
deliver to the Secretary of the Corporation certificates representing all
Restricted Shares reflected in the records of the Corporation as owned by the
Purchaser on the effective date of Termination (hereinafter "Returned Shares"),
which Returned Shares shall be duly endorsed for transfer to the Corporation
with signature guaranteed at the time of delivery to the Corporation's
Secretary. Within thirty (30) days of receipt of Returned Shares, the
Corporation shall make payment for all such Returned Shares at a price per share
equal to the original price per share paid by the Purchaser. Notwithstanding the
foregoing or the provisions of Paragraph 5(c), the Committee shall have the
right, but not the obligation, within twenty (20) days of receipt of Returned
Shares to determine not to purchase all or a portion of Returned Shares, in
which event one or more certificates representing Returned Shares not so
purchased shall thereafter be re-delivered to the Purchaser, and the Purchaser
shall be restored as of the effective date of Termination to all rights as a
stockholder as to such Returned Shares not so purchased. In exercising the
foregoing discretion, the Committee may impose as a condition to the re-delivery
of Returned Shares that such Returned Shares be subject to restrictions on
Transfer, provided that such restrictions do not extend beyond the dates on
which restrictions on Transfer applicable to all such re-delivered Returned
Shares would have lapsed pursuant to Paragraph 5(b) if the Purchaser had
remained a director or employee of the Corporation. If no such action is
communicated to the Purchaser within the twenty (20) day period, then the
Corporation shall pay for all Returned Shares.
(b) If the Purchaser does not deliver certificates representing all
Restricted Shares as provided in Subparagraph (a) above, then:
(1) The Corporation may deposit the purchase price for the
Restricted Shares with the Secretary or Treasurer of the Corporation, in
which event payment for the Restricted Shares shall be deemed to have been
completed. The Secretary or the Treasurer of the Corporation shall make
delivery of such funds to the Purchaser, without interest, upon receipt by
the Corporation of the certificates; and
(2) The Corporation may bring suit to compel the return of the
certificates.
5
<PAGE> 6
(c) Notwithstanding the foregoing, if the Committee has provided for
escrow of the Shares, then the Corporation shall notify the Escrow Agent of
Termination and provide instructions to the Escrow Agent of either (i) the
Corporation's intention to repurchase the Restricted Shares from the Purchaser,
or (ii) the Corporation's determination not to purchase all or any portion of
the Restricted Shares. 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 per share equal to the original price per share paid by the Purchaser. If
the Corporation elects not to purchase all or any portion of the Restricted
Shares, the Escrow Agent shall deliver one or more certificates representing
Restricted Shares the Corporation has determined not to purchase to the
Purchaser and the Purchaser shall be restored, as of the effective date of
Termination, to all rights as a stockholder as to such Restricted Shares not so
purchased. The Committee, acting on behalf of the Corporation, may impose such
restrictions on the transfer of the Restricted Shares which it does not purchase
hereunder as it deems appropriate, provided that such restrictions do not extend
beyond the dates on which restrictions on Transfer applicable to all such Shares
would have lapsed if the Purchaser had remained a director or employee of the
Corporation. If the Corporation does not give the Escrow Agent any instructions
within sixty days after the effective date of Termination, then the Committee
will have been deemed to have instructed the Escrow Agent to purchase the
Restricted Shares from the Purchaser.
8. Amendment and Termination.
-------------------------
The Committee may at any time amend or terminate this 1984 Plan, or make
such modification in this 1984 Plan as it shall deem advisable. However, no
amendment or modification of this 1984 Plan shall increase the amount of shares
of Stock allocated to the Reserve, or materially increase the benefits accruing
to participants under this 1984 Plan, or materially modify the requirements as
to eligibility for participation in this 1984 Plan unless such amendment or
modification has been approved by the affirmative vote of the holders of a
majority of the securities of the Corporation present or represented and
entitled to vote at a meeting of stockholders duly held in accordance with the
Delaware General Corporation Law. In no event shall any such amendment,
termination or modification modify or in any way affect any right or obligation
of a Purchaser created prior thereto without the consent of such Purchaser.
9. Limitation of Liability of Corporation.
--------------------------------------
Nothing contained in this 1984 Plan or any offer or agreement made
pursuant hereto shall be construed to impose any liability on the Corporation in
favor of the Purchaser with respect to any loss, cost or expense which the
Purchaser may incur in connection with or arising out of any transaction in
connection therewith.
10. No Agreement to Employ.
----------------------
Nothing appearing in or done pursuant to this 1984 Plan shall be held or
construed to constitute or be evidence of an agreement or understanding, express
or implied, on the part of the Corporation to employ or retain the Purchaser as
6
<PAGE> 7
an employee and/or director of the Corporation or to allow service as a
consultant with the Corporation to be taken into account for any purpose
hereunder.
11. No Prior Right to Offer.
-----------------------
Nothing in this 1984 Plan shall be deemed to give any director, officer or
employee, or his or her legal representatives or assigns or any other persons or
entity claiming under or through him or her, any contractual or other right to
participate in the benefits of this 1984 Plan.
12. No Loans to Purchasers.
----------------------
Neither the Corporation nor any subsidiary may directly or indirectly lend
money to any Purchaser for the purpose of assisting such Purchaser to acquire or
carry shares of Stock to be sold hereunder.
13. Notices.
-------
Any notice, other communication or delivery required or permitted to be
made or given pursuant to this 1984 Plan shall be sufficiently made or given if
delivered in person or sent by certified mail addressed to an offeree or
Purchaser at his or her address as set forth in the books and records of the
Corporation, or, if to the Corporation, if delivered in person to the Secretary
of the Corporation or sent by certified mail addressed to the Corporation at its
principal office to the attention of the Secretary of the Corporation.
14. Lost Certificates.
-----------------
If a certificate representing Restricted Shares hereunder is lost,
destroyed or stolen, a Purchaser shall give prompt written notification to that
effect to the Corporation and the Corporation's transfer agent. In order for the
transfer agent to arrange for replacement of such certificate, the Purchaser
will be required to sign an Affidavit of Loss and pay to the transfer agent an
insurance premium for a bond of indemnity.
15. Corporation's Right to Equitable Relief, Purchaser's Consent to Jurisdiction
----------------------------------------------------------------------------
and Purchaser's Appointment of Agent for Service of Process.
- -----------------------------------------------------------
By acceptance of an offer hereunder, the Purchaser will be deemed to
acknowledge that in the event of a breach or threatened breach of the provisions
of this 1984 Plan or the terms of any agreement entered into pursuant hereto,
including the attempted Transfer of Restricted Shares by such Purchaser,
monetary damages may not be adequate to compensate the Corporation, and,
therefore, in the event of such 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 other remedies available to it for
any such breach or threatened breach.
7
<PAGE> 8
By acceptance of an offer hereunder, the Purchaser will be deemed to have
specifically consented to the jurisdiction of the courts of the State of New
Hampshire and to have appointed 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 any
agreements entered into pursuant to this 1984 Plan.
16. Severability.
------------
If any provision of this 1984 Plan 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 1984 Plan, and the validity, legality and enforceability
of the rest of this 1984 Plan and any agreements entered into pursuant to this
1984 Plan shall not be affected thereby.
17. Applicable Law.
--------------
This 1984 Plan and any agreement entered into pursuant hereto shall be
construed under the laws of the State of New Hampshire.
8
<PAGE> 1
EXHIBIT 10.1(b)
---------------
THE 1985
EKCO GROUP, INC.
RESTRICTED STOCK PLAN
1. Purpose.
-------
The 1985 Ekco Group, Inc. Restricted Stock Plan (the "1985 Plan") is
intended to promote the interests of Ekco Group, Inc. and its subsidiaries
(collectively the "Corporation") and its stockholders by providing an incentive
for directors, officers, executives and employees at all levels within the
Corporation and its subsidiaries.
2. Adoption and Administration of Plan.
-----------------------------------
This 1985 Plan shall become effective as of September 10, 1985 and shall
remain in effect until terminated pursuant to Paragraph 8. The 1985 Plan shall
be administered by a Committee (the "Committee") of three or more directors
appointed by the Board of Directors (the "Board") or by the Board. Reference
herein to the Committee shall be deemed to include the Committee or the Board
when exercising its authority to administer this 1985 Plan. Any action taken by
the Committee with respect to the implementation, interpretation or
administration of the 1985 Plan may be taken by majority vote of the members of
the Committee, and shall be final, conclusive and binding. The Committee members
shall serve at the pleasure of the Board and until their successors are
appointed. No member of the Committee shall be eligible to purchase shares under
this 1985 Plan. Once the Committee makes an offer to sell shares to a person,
such an offer shall be final, conclusive and binding. Once made, the offer may
not be modified or revoked by the Board or the Committee.
3. Stock Subject to Plan.
---------------------
There is hereby allocated to the 1985 Restricted Stock Plan Reserve
("Reserve") 1,923,506 shares of the Corporation's authorized common stock, par
value $.01 per share ("Stock"). In the event that the shares of common stock
should, as a result of a stock split, stock dividend, combination of shares, or
exchange for other securities by reclassification, reorganization,
redesignation, merger, consolidation, recapitalization or otherwise, be
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Corporation or of another
corporation, the number and kind of shares then remaining in the Reserve shall
be appropriately adjusted to reflect such action. If any such adjustment shall
result in a fractional share, the Reserve will be reduced to the next lowest
full share.
Upon the sale of shares of Stock pursuant to this 1985 Plan, the Reserve
shall be reduced by the number of shares so sold, and upon the purchase by the
Corporation of shares of Stock pursuant to Paragraphs 5(c) and 7 hereof, the
Reserve shall be increased by such number of shares, and such shares may again
be subject to sale hereunder. Sales of Stock hereunder may be made from
authorized but unissued shares or from treasury shares.
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<PAGE> 2
4. Eligibility.
-----------
Any director (other than a director who is an officer, director or
employee of a corporation owning more than 10% of the outstanding voting
securities of the Corporation), officer or employee of the Corporation is
eligible to participate in this 1985 Plan. In selecting those persons to whom
offers to purchase shares hereunder shall be made at any time and in determining
the number of shares of Stock to be offered, the Committee shall consider the
position and responsibilities of such persons, the value of their services to
the Corporation, and such other factors as the Committee may deem pertinent.
5. Terms of Offers.
---------------
All offers to purchase shares of Stock under this 1985 Plan and all
purchases shall be made in accordance with the following:
(a) PURCHASE PRICE. The purchase price of the shares of Stock to be
offered under this 1985 Plan to any person shall be determined by the
Committee, provided that such purchase price shall not be less than the
par value per offered share nor more than an amount equal to 10% of the
market price per offered share at the close of business on the market day
most immediately preceding the date on which an offer is authorized by the
Committee hereunder. The purchase price shall be paid in full, in cash or
certified or bank check, at the principal office of the Corporation prior
to expiration of the offer in order that the acceptance of the offer be
effective. Any person purchasing shares of Stock hereunder is hereinafter
referred to as "Purchaser." The number of shares purchased pursuant to
each offer is sometimes hereinafter referred to as a "Block of Shares."
The date, after the purchase price is paid and the offer is accepted, on
which the Corporation's transfer agent issues share certificate(s)
representing the Block of Shares, is hereinafter referred to as the
"Closing Date."
(b) RESTRICTIONS ON TRANSFERS. Any offer to sell shares of Stock
under this 1985 Plan shall be conditioned upon the following provisions:
(i) No shares of Stock purchased hereunder may be conveyed,
transferred, encumbered or otherwise disposed of (any such
disposition hereinafter called a "Transfer") by the Purchaser,
except that the foregoing restriction on Transfer shall lapse:
(A) As to all shares owned by a Purchaser upon the death
of such Purchaser.
(B) As to all shares owned by a Purchaser upon the
permanent and total disability (as defined in the
Corporation's wage continuation plan) of such Purchaser.
(C) As to twenty five percent (25%) of each Block of
Shares on each of the first, second, third and fourth
anniversary of the Closing Date for such Block of Shares,
provided that the Purchaser is at each such date an employee
2
<PAGE> 3
or director of the Corporation.
(D) As to all shares owned by a Purchaser, if a Change
in Control occurs. 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), 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.
This subdivision 5(b)(i)(D) shall apply to all shares of
Stock purchased hereunder regardless of when such shares were
issued, provided that with respect to shares of Stock issued
prior to the promulgation of this subdivision of 5(b)(i)(D),
the Purchaser of such shares shall have consented thereto
within 30 days after receipt by such Purchaser of a written
request from the Corporation for such consent.
(E) As to all shares owned by a Purchaser employed by
the Corporation or any of its subsidiaries upon a sale of
substantially all of the Corporation's assets.
This subdivision 5(b)(i)(E) shall apply to all shares of
Stock purchased hereunder regardless of when such shares were
issued, provided that with respect to shares of Stock issued
prior to the promulgation of this subdivision of 5(b)(i)(E),
the Purchaser of such shares shall have consented thereto
3
<PAGE> 4
within 30 days after receipt by such Purchaser of a written
request from the Corporation for such consent.
Shares as to which the foregoing restrictions on Transfer have not
lapsed are sometimes hereinafter referred to as "Restricted Shares."
(ii) Any purported Transfer of Restricted Shares made by a
Purchaser shall be null and void, and the Corporation shall not have
any obligation to recognize or give effect to such Transfer on its
books and records or to recognize the person or persons to whom such
proposed Transfer has been made as the legal or beneficial holder
thereof.
(iii) Certificates representing shares of Stock which are sold
pursuant to the provisions of this 1985 Plan shall EITHER (1) bear
the following legend or such other or additional legends as counsel
to the Corporation may deem appropriate:
RESTRICTED SHARES
The shares represented by this certificate are subject to the
terms of an Agreement between the person whose name appears
hereon and Ekco Group, Inc. (the "Corporation") and to all the
terms, conditions, restrictions on transfer and mandatory sale
provisions of the 1985 Ekco Group, Inc. Restricted Stock Plan.
A copy of said Agreement and said Plan is on file at the
principal office of the Corporation.
or (2) be placed into escrow pursuant to an escrow agreement by and
between the Corporation and an escrow agent appointed therein by the
Committee.
(c) SALE OF RESTRICTED SHARES TO CORPORATION ON TERMINATION OF
SERVICE. If the Purchaser terminates his or her directorship or employment
with the Corporation, or if his or her directorship or employment is
terminated by the Corporation for any reason (hereinafter "Termination"),
then, on the effective date of such Termination, the Purchaser shall be
deemed to have sold all Restricted Shares to the Corporation at a price
per share equal to the original price per share paid by the Purchaser, and
the Purchaser shall have no further rights as a stockholder of the
Corporation with respect to any Restricted Shares except the right to
receive payment therefor as aforesaid.
(d) OTHER CONDITIONS. The Committee, in authorizing an offer under
this 1985 Plan, may impose such other terms, conditions or restrictions
thereon as it shall deem appropriate, provided that the same: (i) shall
not provide for the lapse of restrictions hereunder at a rate more rapid
than provided under the plan's terms, and (ii) after the Closing Date for
any Block of Shares under this 1985 Plan, no additional restrictions may
be imposed without the consent of the Purchaser.
4
<PAGE> 5
6. Manner of Offer and Acceptance.
------------------------------
After the Committee shall have determined that the Corporation should
offer a person the right to purchase shares under this 1985 Plan, an officer of
the Corporation shall present the offeree with a written statement of the terms
of the offer, including but not limited to, the number of shares which such
person shall be entitled to purchase, the purchase price per share as well as
the other terms, conditions and restrictions relating thereto, including those
which the Committee may determine to impose. The offeree shall have fifteen (15)
days from the date of the offer to accept such offer in accordance with its
terms.
Any offer made hereunder may be conditioned upon the execution by the
Purchaser of a stock purchase agreement containing the terms, conditions and
restrictions of the offer including those imposed by the Committee, those
required by this 1985 Plan and any additional terms and conditions not
inconsistent herewith, as well as those as shall, in the opinion of the
Committee and counsel for the Corporation, be necessary or desirable to protect
the Corporation and to comply with applicable federal, state and local laws and
regulations and the rules of any stock exchanges upon which the Stock is listed.
7. Delivery and Repayment for Restricted Shares upon Termination of Service.
------------------------------------------------------------------------
(a) Immediately upon Termination, the Purchaser shall be required to
deliver to the Secretary of the Corporation certificates representing all
Restricted Shares reflected in the records of the Corporation as owned by the
Purchaser on the effective date of Termination (hereinafter "Returned Shares"),
which Returned Shares shall be duly endorsed for transfer to the Corporation
with signature guaranteed at the time of delivery to the Corporation's
Secretary. Within thirty (30) days of receipt of Returned Shares, the
Corporation shall make payment for all such Returned Shares at a price per share
equal to the original price per share paid by the Purchaser. Notwithstanding the
foregoing or the provisions of Paragraph 5(c), the Committee shall have the
right, but not the obligation, within twenty (20) days of receipt of Returned
Shares to determine not to purchase all or a portion of Returned Shares, in
which event one or more certificates representing Returned Shares not so
purchased shall thereafter be re-delivered to the Purchaser, and the Purchaser
shall be restored as of the effective date of Termination to all rights as a
stockholder as to such Returned Shares not so purchased. In exercising the
foregoing discretion, the Committee may impose as a condition to the re-delivery
of Returned Shares that such Returned Shares be subject to restrictions on
Transfer, provided that such restrictions do not extend beyond the dates on
which restrictions on Transfer applicable to all such re-delivered Returned
Shares would have lapsed pursuant to Paragraph 5(b) if the Purchaser had
remained a director or employee of the Corporation. If no such action is
communicated to the Purchaser within the twenty (20) day period, then the
Corporation shall pay for all Returned Shares.
(b) If the Purchaser does not deliver certificates representing all
Restricted Shares as provided in Subparagraph (a) above, then:
(1) The Corporation may deposit the purchase price for the
Restricted Shares with the Secretary or Treasurer of the Corporation, in
which event payment for the Restricted Shares shall be deemed to have been
completed. The Secretary or the Treasurer of the Corporation shall make
5
<PAGE> 6
delivery of such funds to the Purchaser, without interest, upon receipt by
the Corporation of the certificates; and
(2) The Corporation may bring suit to compel the return of the
certificates.
(c) Notwithstanding the foregoing, if the Committee has provided for
escrow of the Shares, then the Corporation shall notify the Escrow Agent of
Termination and provide instructions to the Escrow Agent of either (i) the
Corporation's intention to repurchase the Restricted Shares from the Purchaser,
or (ii) the Corporation's determination not to purchase all or any portion of
the Restricted Shares. 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 per share equal to the original price per share paid by the Purchaser. If
the Corporation elects not to purchase all or any portion of the Restricted
Shares, the Escrow Agent shall deliver one or more certificates representing
Restricted Shares the Corporation has determined not to purchase to the
Purchaser and the Purchaser shall be restored, as of the effective date of
Termination, to all rights as a stockholder as to such Restricted Shares not so
purchased. The Committee, acting on behalf of the Corporation, may impose such
restrictions on the transfer of the Restricted Shares which it does not purchase
hereunder as it deems appropriate, provided that such restrictions do not extend
beyond the dates on which restrictions on Transfer applicable to all such Shares
would have lapsed if the Purchaser had remained a director or employee of the
Corporation. If the Corporation does not give the Escrow Agent any instructions
within sixty days after the effective date of Termination, then the Committee
will have been deemed to have instructed the Escrow Agent to purchase the
Restricted Shares from the Purchaser.
8. Amendment and Termination.
-------------------------
The Committee may at any time amend or terminate this 1985 Plan, or make
such modification in this 1985 Plan as it shall deem advisable. However, no
amendment or modification of this 1985 Plan shall increase the amount of shares
of Stock allocated to the Reserve, or materially increase the benefits accruing
to participants under this 1985 Plan, or materially modify the requirements as
to eligibility for participation in this 1985 Plan unless such amendment or
modification has been approved by the affirmative vote of the holders of a
majority of the securities of the Corporation present or represented and
entitled to vote at a meeting of stockholders duly held in accordance with the
Delaware General Corporation Law. In no event shall any such amendment,
termination or modification modify or in any way affect any right or obligation
of a Purchaser created prior thereto without the consent of such Purchaser.
9. Limitation of Liability of Corporation.
--------------------------------------
Nothing contained in this 1985 Plan or any offer or agreement made
pursuant hereto shall be construed to impose any liability on the Corporation in
favor of the Purchaser with respect to any loss, cost or expense which the
Purchaser may incur in connection with or arising out of any transaction in
connection therewith.
6
<PAGE> 7
10. No Agreement to Employ.
----------------------
Nothing appearing in or done pursuant to this 1985 Plan shall be held or
construed to constitute or be evidence of an agreement or understanding, express
or implied, on the part of the Corporation to employ or retain the Purchaser as
an employee and/or director of the Corporation or to allow service as a
consultant with the Corporation to be taken into account for any purpose
hereunder.
11. No Prior Right to Offer.
-----------------------
Nothing in this 1985 Plan shall be deemed to give any director, officer or
employee, or his or her legal representatives or assigns or any other persons or
entity claiming under or through him or her, any contractual or other right to
participate in the benefits of this 1985 Plan.
12. No Loans to Purchasers.
----------------------
Neither the Corporation nor any subsidiary may directly or indirectly lend
money to any Purchaser for the purpose of assisting such Purchaser to acquire or
carry shares of Stock to be sold hereunder.
13. Notices.
-------
Any notice, other communication or delivery required or permitted to be
made or given pursuant to this 1985 Plan shall be sufficiently made or given if
delivered in person or sent by certified mail addressed to an offeree or
Purchaser at his or her address as set forth in the books and records of the
Corporation, or, if to the Corporation, if delivered in person to the Secretary
of the Corporation or sent by certified mail addressed to the Corporation at its
principal office to the attention of the Secretary of the Corporation.
14. Lost Certificates.
-----------------
If a certificate representing Restricted Shares hereunder is lost,
destroyed or stolen, a Purchaser shall give prompt written notification to that
effect to the Corporation and the Corporation's transfer agent. In order for the
transfer agent to arrange for replacement of such certificate, the Purchaser
will be required to sign an Affidavit of Loss and pay to the transfer agent an
insurance premium for a bond of indemnity.
15. Corporation's Right to Equitable Relief, Purchaser's Consent to Jurisdiction
----------------------------------------------------------------------------
and Purchaser's Appointment of Agent for Service of Process.
- -----------------------------------------------------------
By acceptance of an offer hereunder, the Purchaser will be deemed to
acknowledge that in the event of a breach or threatened breach of the provisions
of this 1985 Plan or the terms of any agreement entered into pursuant hereto,
including the attempted Transfer of Restricted Shares by such Purchaser,
monetary damages may not be adequate to compensate the Corporation, and,
therefore, in the event of such 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 other remedies available to it for
any such breach
7
<PAGE> 8
or threatened breach.
By acceptance of an offer hereunder, the Purchaser will be deemed to have
specifically consented to the jurisdiction of the courts of the State of New
Hampshire and to have appointed 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 any
agreements entered into pursuant to this 1985 Plan.
16. Severability.
------------
If any provision of this 1985 Plan 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 provisions shall be deemed
to be excised from this 1985 Plan and the validity, legality and enforceability
of the rest of this 1985 Plan and any agreements entered into pursuant to this
1985 Plan shall not be affected thereby.
17. Applicable Law.
--------------
This 1985 Plan and any agreement entered into pursuant hereto shall be
construed under the laws of the State of New Hampshire.
8
<PAGE> 1
EXHIBIT 10.1(c)(2)
------------------
EKCO GROUP, INC.
SCHEDULE TO
FORM OF RESTRICTED STOCK PURCHASE AGREEMENT
<TABLE>
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>
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
Stuart W. Cohen 06/12/95 1985 Plan: 1,998 3,592 3,592 3,592 3,592
Vice President,
Strategic Planning
& Business Development
John T. Haran 02/06/96 1984 Plan: -0- 3,333 3,333 3,333 3,333
Vice President and
Treasurer
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
Robert Varakian 07/23/96 1985 Plan: -0- 2,500 2,500 2,500 2,500
Vice President,
Marketing
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
</TABLE>
<PAGE> 1
EXHIBIT 10.1(d)(2)
------------------
EKCO GROUP, INC.
SCHEDULE TO
FORM OF RESTRICTED STOCK PURCHASE AGREEMENT, AS AMENDED
FOR THE QUARTERLY PURCHASE OF RESTRICTED STOCK
<TABLE>
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>
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 03/31/96 1,095
06/30/96 1,095
09/29/96 1,095
12/29/96 1,096
Brian R. McQuesten 04/02/95 309
Vice President & 07/02/95 309
Controller 10/01/95 309
12/31/95 309
03/31/96 901
06/30/96 902
09/29/96 902
12/29/96 901
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
03/31/96 818
06/30/96 819
09/29/96 819
12/29/96 818
</TABLE>
<PAGE> 1
EXHIBIT 10.2(a)(i)
------------------
EKCO GROUP, INC.
1987 STOCK OPTION PLAN
I. DEFINITIONS AND PURPOSES
------------------------
A. Definitions
-----------
Unless otherwise specified or unless the context otherwise requires,
the following terms, as used in this 1987 Stock Option Plan, have the
following meanings:
(1) "COMPANY" means Ekco Group, Inc.
(2) "PLAN" means this 1987 Stock Option Plan.
(3) "ADMINISTRATOR" means the Board of Directors except to the extent
the Board of Directors delegates its authority to a committee of
the Board of Directors.
(4) "AFFILIATE" means a corporation which, for purposes of Section
422 of the Code, is a parent or subsidiary of the Company, direct
or indirect.
(5) "BOARD OF DIRECTORS" means the Board of Directors of the Company.
(6) "CODE" means the United States Internal Revenue Code of 1986, as
amended.
(7) "CONSULTANT" means a person who has a relationship or is
otherwise affiliated with the Company as a consultant.
(8) "DISABILITY" or "DISABLED" means (a) with respect to any Option
granted pursuant hereto which is not intended to be an incentive
stock option within the meaning of Section 422 of the Code and
which is granted to an Ekco Employee who is a party to an
employment agreement with the Company or any Affiliate, which
employment agreement defines disability with respect to such
Ekco Employee and is in full force and effect as of the date as
of which such disability is to be determined, notwithstanding
any later expiration or termination of such employment
agreement, such definition is in such
(03-97)
1
<PAGE> 2
circumstances deemed incorporated herein by reference; and (b) in
all other circumstances, permanent and total disability as
defined in Section 105(d)(4) of the Code.
(9) "EKCO EMPLOYEE" means any employee of the Company or of an
Affiliate (including, without limitation, an employee who is also
serving as an officer or director of the Company or of the
Affiliate).
(10) "OPTION" means a right or option granted under the Plan.
(11) "OPTION AGREEMENT" means an agreement between the Company and a
Participant executed and delivered pursuant to the Plan.
(12) "PARTICIPANT" means an Ekco Employee or Consultant to whom one
or more Options are granted under the Plan, or, where the
context requires, his legal representative.
(13) "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.
(14) "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 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. Purpose of the Plan:
-------------------
The Plan is intended to encourage ownership of Shares by Ekco
Employees and Consultants in order to attract such Ekco Employees and
Consultants, to induce such Ekco Employees and Consultants to
remain affiliated with the Company or an Affiliate and to provide
additional incentive for such Ekco Employees and Consultants to
promote the success of the Company or of an Affiliate. Except as
provided in Article XII below, it is further intended that Options
issued pursuant to the Plan shall be eligible to constitute
"incentive stock options" within the meaning of Section 422 of the
Code. Notwithstanding the foregoing, only Ekco Employees are
eligible to receive "incentive stock options" under the Plan. It is
2
<PAGE> 3
also intended that the Plan shall comply in all respects with Rule
16b-3 or its successors ("Rule 16b-3"), 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 the Plan with respect to such
persons contrary to Rule 16b-3 shall be deemed null and void to the
extent permissible by law and deemed appropriate by the Administrator.
II. SHARES SUBJECT TO THE PLAN
--------------------------
The aggregate number of Shares as to which Options may be granted from
time to time shall be 4,000,000 Shares as of May 12, 1992 (and the
equivalent of such number of Shares after giving effect to any
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 incentive stock 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 shareholders 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. ADMINISTRATION OF THE PLAN
--------------------------
The term "Administrator" as used herein shall mean the Board of
Directors or the committee (the "Committee") of the Board of Directors
to whom it delegates its authority and whose membership shall be
determined by the Board of Directors and subject to change without
cause and without notice, from time to time, by the Board of
Directors. Subject to the provisions of the Plan, the Administrator is
authorized to --
A. interpret the provisions of the Plan or of any Option or Option
Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
3
<PAGE> 4
B. determine which employees or Consultants of the Company or of
an Affiliate shall be granted Options;
C. determine the number of Shares for which an Option or Options
shall be granted, subject to the last paragraph of IV, below; and
D. specify the terms and conditions upon which Options may be
granted;
E. accelerate the time at which an Option may be exercised if in its
judgment it concludes that such acceleration is in the best
interest of the Company and, if an incentive stock option, with
prior written consent of the Participant.
provided, however, that all such interpretations, rules,
determinations, terms and conditions shall be made and prescribed in
the context of preserving the tax status of the Options as incentive
stock options within the meaning of Section 422 of the Code
(hereinafter "incentive stock options"), except as to Options granted
pursuant to Article XII, and complying with Rule 16b-3 with respect to
Participants who are subject to Section 16 of the 1934 Act to the
extent deemed appropriate by the Administrator.
IV. ELIGIBILITY FOR PARTICIPATION
-----------------------------
Each Participant must be an employee or Consultant of the Company or
of an Affiliate at the time an Option is granted. Consultants are
not eligible to receive incentive stock options under the Plan.
Notwithstanding any other provision herein, no member of the
Committee shall be eligible to receive an Option.
The Administrator may at any time and from time to time grant one or
more Options to one or more Ekco Employees or Consutants and may
designate the number of shares to be optioned under each Option so
granted; provided, however, that (a) no Options shall be granted
after the later to occur of ten (10) years from the date of the
adoption of the Plan by the Company or the approval of the Plan by
the shareholders of the Company or the termination of the Plan, (b)
the aggregate fair
4
<PAGE> 5
market value (determined at the time of the grant of the Option) of
the Shares with respect to which incentive stock options are
exercisable for the first time by the Ekco Employee in any calendar
year (under the Plan and/or under any other incentive stock option
plan of the Company or an Affiliate) shall not exceed $100,000, and
(c) no individual shall be granted Options to purchase more than
1,000,000 shares under the Plan during any fiscal year period.
Notwithstanding any of the foregoing provisions, the Administrator
may authorize the grant of an Option to a person not then in the
employ or not yet a Consultant of the Company or of an Affiliate. The
actual grant of such option however shall be conditioned upon such
person becoming eligible to become a Participant at or prior to the
time of the execution of the Option Agreement evidencing such Option.
V. TERMS AND CONDITIONS OF OPTIONS
-------------------------------
Each Option shall be set forth in an Option Agreement substantially in
the form hereto annexed and marked Exhibit A (except as otherwise
provided in Article XII below), duly executed on behalf of the Company
and by the Participant to whom such Option is granted. No Option shall
be granted and no purported grant of any 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. Option Price:
------------
(1) Except as provided in Paragraph (2) below, if the optionee owns
(immediately before the Option is granted) directly or by reason
of the applicable attribution rules (at Code Section 425(d)) ten
percent (10%) or less of the total combined voting power of all
classes of share capital of the Company or an Affiliate, the
Option price (per share) of the Shares covered by each Option
shall be not less than the "fair market value" as hereinafter
defined (per share) of the Shares on the date of the grant of the
Option. In all other cases (except as provided in Paragraph (2)
below), the Option price shall be not less than one hundred ten
percent (110%) of the said fair market value on the date of
grant.
(2) If the Option is granted pursuant to Article XII below, then the
Option price (per share) of the Shares covered by such Option
shall be not less than fifty percent (50%) of the "fair market
value" as on the date of the grant of the Option.
(3) For the purpose of the foregoing Paragraphs (1) and (2), fair
market value shall be determined as follows. If such Shares are
then listed on any national securities exchange, the fair market
5
<PAGE> 6
value shall be the mean between the high and low sales prices, if
any, on the largest such exchange on the date of the grant of the
Option, or, if none, on the most recent trade date thirty (30)
days or less prior to the date of the Option. 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 date of the grant of the Option, or if none,
on the most recent trade date thirty (30) days or less prior to
the date of the grant of the Option 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 date of the grant of the Option or, if none, for
the most recent trade date thirty (30) days or less prior to the
date of the grant of the Option 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 Administrator.
B. Number of Shares:
-----------------
Each Option shall state the number of Shares to which it
pertains.
C. Term of Option:
---------------
Each Option shall terminate not more than ten (10) years from the
date of the grant thereof, or at such earlier time as the Option
Agreement may provide, and shall be subject to earlier
termination as herein provided, except that (1) if the Option
price is required under Paragraph A of this Article V to be at
least 110% of fair market value, each such Option shall terminate
not more than five (5) years from the date of the grant thereof,
and (2) if such Option is not intended to be an "incentive stock
option" within the meaning of Section 422 of the Code, then such
Option shall terminate not more than eleven (11) years from the
date of grant thereof.
D. Date of Exercise:
----------------
6
<PAGE> 7
Upon the authorization of the grant of an Option, the
Administrator may, subject to the provisions of Paragraph C of
this Article V, prescribe the date or dates on which the Option
becomes exercisable, and may provide that the Option rights
accrue or become exercisable in installments over a period of
years or upon the attainment of stated goals or entirely or in
installments upon the occurrence of specified events.
E. Medium of Payment:
-----------------
The Option price shall be payable upon the exercise of the
Option. It shall be payable in such form (permitted by Section
422 of the Code if the Option is intended to be an incentive
stock option within the meaning of such provision), as the
Administrator shall either by rules promulgated pursuant to the
provisions of Article III of the Plan, or in the particular
Option Agreement, provide.
F. Termination of Employment or Consultancy:
----------------------------------------
A participant who ceases to be an employee or Consultant of the
Company or of an Affiliate (for any reason other than death,
Disability or termination by the Participant's employer for
cause), may exercise any Option granted to such Participant, to
the extent that the right to purchase Shares thereunder has
accrued on the date of such termination of employment or
consultancy, but only within such term as the Administrator
shall designate in its discretion in the pertinent Option
Agreement, provided, however, in no event may the Option be
exercised any later than the originally prescribed term of the
Option and, if the Option is intended to be an incentive stock
option within the meaning of Section 422 of the Code, only
within three (3) months after such date. The provisions of this
paragraph, and not the provisions of Paragraph G and H of this
Article V, shall apply to a Participant who subsequently becomes
Disabled or dies after the termination of employment or
consultancy; 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 ten (10) years after the date of the grant of the Option,
or in the case of an Option not intended
7
<PAGE> 8
to be an "incentive stock option" within the meaning of Section
422 of the Code, beyond eleven (11) years after the date of the
grant of the Option. A Participant's employment shall not be
deemed terminated by reason of a transfer to another entity
which is the Company or an Affiliate.
A Participant whose employment or consultancy is terminated by
the Company or Affiliate for "cause" shall forthwith upon such
termination cease to have any right to exercise any Option. For
purposes of this paragraph, "cause" shall be deemed to include
(but shall not be limited to) dishonesty with respect to an
employer, insubordination, substantial malfeasance or
non-feasance of duty, unauthorized disclosure of confidential
information and conduct substantially prejudicial to the
business of the Company or any Affiliate. The determination of
the Administrator as to the existence of cause shall be
conclusive on the Participant and the Company. Notwithstanding
the foregoing, if the Participant is a party to an agreement
with the Company or an Affiliate, which agreement defines cause
for termination and is in effect at the time of such
termination, then for purposes of application of this paragraph
to such Participant, cause shall be deemed to be as defined in
such agreement and any dispute shall be determined as provided
in such agreement, which determination shall be conclusive on
the Participant and the Company.
An Ekco Employee to whom an Option has been granted under the
Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability other
than a permanent and total Disability as defined at Paragraph A
(7) of Article I hereof), or who is on leave of absence for any
purpose permitted by any authoritative interpretation (e.g.,
regulation, ruling, case law, etc.) of Section 422 of the Code,
shall not, during the period of any such absence, be deemed, by
virtue of such absence alone, to have terminated such Ekco
Employee's employment with the Company or with an Affiliate and,
in the case of Options not intended to be incentive stock
options for any purpose approved by the Board of Directors.
G. Total and Permanent Disability:
-------------------------------
8
<PAGE> 9
An Ekco Employee who ceases to be an employee of the Company or
of an Affiliate by reason of Disability may exercise any Option
granted to such Ekco Employee:
(1) to the extent that the right to purchase Shares thereunder
has accrued on the date such Ekco Employee becomes Disabled;
and
(2) in the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights as would have accrued had the Ekco
Employee not become Disabled prior to the end of the
particular accrual period. The proration shall be based
upon the number of days of the accrual period during which
the Ekco Employee was not Disabled.
A Disabled Ekco Employee shall exercise such rights only within a
period of not more than one (1) year after the date that the
Ekco Employee became Disabled or, if earlier, within the
originally prescribed term of the Option.
The Administrator shall make the determination both of whether
Disability has occurred and the date thereof, unless a procedure
is set forth in an employment agreement for such determination,
in which case such procedure shall be used for such
determination. If requested, the Ekco Employee shall be
examined by a physician selected or approved by the
Administrator, the cost of which examination shall be paid for
by the Company.
The provisions of this Section V G shall not apply to
Consultants.
H. Death:
------
In the event of the death of a Participant to whom an Option has
been granted while the Participant is an employee or Consultant
of the Company or of an Affiliate, such Option:
(1) to the extent exercisable but not exercised as of the date
of death; and
(2) in the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of such
rights as would have accrued had the Participant not died
prior to the end of the particular accrual period;
9
<PAGE> 10
may be exercised by the Participant's Survivors. The proration
shall be based upon the number of days during the accrual periods
prior to the Participant's death. Such Option must be exercised
by the Participant's Survivors, if at all, within one (1) year
after the date of death of such Participant or, if earlier,
within the originally 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 an
employee or Consultant of the Company or of an Affiliate.
I. Exercise of Option and Issue of Shares:
---------------------------------------
Options shall 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 participant of a date for delivery
of the Option Shares to the Participant (or to the Participant's
Survivors, as the case may be), 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 Shareholder:
-----------------------
No Participant to whom an Option has been granted shall have
rights as a shareholder 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:
--------------------------------------------
10
<PAGE> 11
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 and shall be exercisable, during
the Participant's lifetime, only by such Participant (or his or
her legal representative). Such 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 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.
L. Other Provisions:
-----------------
The Option Agreement shall contain such limitations and
restrictions upon the exercise of the Option and shall be
necessary in order that such Option can be an "incentive stock
option" within the meaning of Section 422 of the Code, if the
Option is intended to be an incentive stock option within the
meaning of such provision. Further, the Option Agreements
authorized under the Plan shall be subject to such other terms
and conditions, including, without limitation, restrictions upon
the exercise of the Option and rights of the Company to
repurchase shares purchased upon the exercise of the Option, as
the Administrator shall deem advisable and, if the Option is
intended to be an incentive stock option within the meaning of
such provision, which are not inconsistent with the requirements
of Section 422 of the Code.
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
11
<PAGE> 12
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.
(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 compensation 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).
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 are 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
12
<PAGE> 13
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 Committee, upon
authorization from the Board of Directors, may make other adjustments
in outstanding options which it deems appropriate to prevent dilution
or enlargement of rights. No such adjustment shall be made which
shall, within the meaning of Section 425 of the Code, constitute such
a modification, extension or renewal of an Option, which is intended
to be an "incentive stock option" within the meaning of Section 422 of
the Code, as to cause it to be considered as the grant of a new
Option.
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 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.
IX. TERMINATION OF THE PLAN
-----------------------
The Plan shall terminate on May 12, 2002 unless 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 (i) the Stockholders of the Company; or
(ii) the Administrator, including, without limitation, to the extent
necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal
income tax treatment (including deferral of taxation upon exercise) as
may be afforded incentive stock options under Section 422 of the Code,
to the
13
<PAGE> 14
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, provided, however, that any amendment approved by the
Administrator which is of a scope that requires shareholder approval
in order to ensure favorable tax treatment for any incentive stock
options, or requires shareholder approval in order to ensure the
compliance of the Plan with Rule 16b-3, or requires shareholder
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 to whom an Option has been granted who
would be adversely affected by such amendment consents in writing
thereto.
XI. EMPLOYMENT OR CONSULTANCY RELATIONSHIP
--------------------------------------
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment or consultancy, as the case
may be, of a Participant, nor to prevent a Participant from
terminating the Participant's employment or consultancy with the
Company or an Affiliate.
XII. OPTIONS OTHER THAN INCENTIVE STOCK OPTIONS
------------------------------------------
Subject to the provisions of Article II and IV dealing with the
aggregate number of Shares as to which Options may be granted under
this Plan, the Administrator may at any time and from time to time
grant Options in connection with the rendition of services to the
Company or an Affiliate that cannot and/or are not intended to qualify
as "incentive stock options", within the meaning of Section 422 of the
Code, on such terms and conditions as it may from time to time
determine. To the extent that Options are granted which are not
"incentive stock options", the number of Shares available for the
issuance of "incentive stock options" shall be correspondingly reduced
and no such non-incentive stock options shall be issued on such terms
as to affect adversely Options intended to be "incentive stock
options". Any Option which is intended to qualify as an "incentive
stock option" within the meaning of Section 422 of the Code shall be
set forth in an Option Agreement substantially in the form hereto
annexed and marked Exhibit B, with such other terms and
14
<PAGE> 15
provisions as may be approved by the Committee as authorized under
this Plan.
XIII. EFFECTIVE DATE
--------------
This Plan shall become effective upon the later of adoption by the
Board of Directors or of adoption by the Committee, but this Plan
shall only become effective for Options intended to be incentive stock
options within the meaning of Section 422 of the Code if and when:
(a) The Administrator shall have adopted a resolution stating that
incentive stock options may be granted pursuant to this Plan on
or after the date of such resolution; and
(b) either (i) The Plan and the authority to grant incentive stock
options pursuant to the Plan shall have been
approved by holders of at least a majority of the
holders of at least a majority of the issued and
outstanding shares of capital stock of the Company
entitling such holders to vote within twelve (12)
months either before or after adoption of such a
resolution by the Administrator as provided in
Subsection (a) immediately above; or
(ii) the effectiveness of the Plan and the effectiveness
of the grant of any incentive stock option granted
pursuant to the Plan shall have been made subject
to approval by holders of at least a majority of
issued and outstanding shares of capital stock of
the Company entitling such holders to a right to
vote within twelve (12) months either before or
after the adoption of such a resolution by the
Administrator as provided in Subsection (a)
immediately above.
15
<PAGE> 1
EXHIBIT 10.2(b)(2)
------------------
EKCO GROUP, INC.
SCHEDULE TO
FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT
DATED SEPTEMBER 8, 1987, AS AMENDED
<TABLE>
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>
Brian R. McQuesten 30,000
Vice President &
Controller
Linda R. Millman 30,000
Associate General
Counsel & Asst.
Secretary
Jeffrey A. Weinstein 120,000
Executive Vice Presi-
dent, Secretary &
General Counsel
</TABLE>
<PAGE> 1
EXHIBIT 10.2(c)(2)
------------------
SCHEDULE TO
FORM OF NON-QUALIFIED STOCK OPTION AND REPURCHASE AGREEMENT, AS AMENDED
EKCO GROUP, INC.
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:
No. of
Shares Exercise
Name and Position Grant Date Granted Price
- ----------------- ---------- ------- --------
Stuart B. Cohen 06/13/95 7,161 $ 6.0625
Vice President, Strate- 02/06/96 12,847 $ 5.9375
gic Planning & Business 02/04/97 6,424 $ 4.2500
Development
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 02/04/97 12,269 $ 4.2500
John T. Haran 02/06/96 9,295 $ 5.9375
Vice President &
Treasurer
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
02/04/97 4,131 $ 4.2500
Linda R. Millman 02/06/96 3,000 $ 5.9375
Associate General
Counsel & Asst.
Secretary
Robert Stein 06/22/88 134,000 $ 2.1250
Former President & 01/18/90 69,000 $ 2.5625
Chief Executive Officer
Jeffrey A. Weinstein 06/22/88 80,000 $ 2.1250
Executive Vice Presi- 01/18/90 22,000 $ 2.5625
dent, Secretary & 01/13/92 27,300 $10.0625
General Counsel 01/19/93 60,000 $11.3125
01/24/94 22,000 $ 7.4375
01/03/95 16,491 $ 6.5000
02/06/96 16,491 $ 5.9375
02/04/97 8,246 $ 4.2500
<PAGE> 1
EXHIBIT 10.2(d)(2)
------------------
EKCO GROUP, INC.
SCHEDULE TO
FORM OF INCENTIVE STOCK OPTION AGREEMENT
<TABLE>
The below-named employee of the Company has the following Incentive Stock
Option Agreements with the Company pursuant to the Company's 1987 Stock Option
Plan which agreements are identical in form to the foregoing Form of Incentive
Stock Option Agreement except as to the dates, number of shares granted and
exercise prices:
<CAPTION>
No. of
Shares Exercise
Name and Position Grant Date Granted Price
- ----------------- ---------- ------- --------
<S> <C> <C> <C>
Robert Varakian 02-28-94 50,000 $7.3125
Vice President, Mar- 01-24-95 8,000 $6.3125
keting, Ekco Group, 02-06-96 8,000 $5.9375
Inc.
Senior Vice President,
Marketing & Sales
Ekco Housewares, Inc.
President, B. VIA
International House-
wares, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 10.2(e)
---------------
FORM OF
-------
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
EKCO GROUP, INC.
----------------
AGREEMENT made as of the 5th day of February 1997 (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 awarded the Employee a number of Performance Unit
Rights ("Rights") pursuant to the Company's 1996 Performance Unit Rights Award
Plan, as amended, as provided in that certain Award Agreement dated as of
September 25, 1996 by and between the Company and the Employee (the "Award
Agreement");
WHEREAS, the Employee and the Company desire to exchange the Rights
for an Option to purchase shares of Company's common stock of a par value of
$.01 a share (the "Shares") under 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 foregoing and the mutual
covenants set forth herein and for other good and valuable consideration, the
parties hereto agree as follows:
1. GRANT OF OPTION AND CANCELLATION OF RIGHTS
------------------------------------------
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.
The Employee hereby cancels the Rights and the Award Agreement is
hereby terminated and of no force and effect.
2. PURCHASE PRICE
--------------
The purchase price of the Shares covered by this Option shall be Four
and One-Eighth Dollars ($4.125) per Share, subject to adjustment as provided in
the Plan (the "Purchase Price").
<PAGE> 2
3. EXERCISE OF OPTION
------------------
The Option granted hereby shall be exercisable immediately, within the
term set forth in Section 4 below, subject to the provisions of this Agreement.
4. TERM OF OPTION
--------------
(a) 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.
(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. In such
event, this Option shall be exercisable only to the extent that the right to
purchase Shares hereunder is in effect at the date of such cessation of
employment.
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 one (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.
2
<PAGE> 3
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 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
3
<PAGE> 4
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 delivery 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 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
4
<PAGE> 5
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. 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 February 3, 1997, between the undersigned
Employee and the Company."
5
<PAGE> 6
(b) The Employee acknowledges that option agreements have been executed by
the Company with one hundred nineteen (119) other employees of the Company and
its Affiliates and five (5) 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. 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 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;
6
<PAGE> 7
(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.
7
<PAGE> 8
(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, 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.
9. 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.
10. 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.
8
<PAGE> 9
11. 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 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
9
<PAGE> 10
EXHIBIT 10.2(e)
---------------
EKCO GROUP, INC.
SCHEDULE TO
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
DATED AS OF FEBRUARY 5, 1997
Each of the following employees of the Company has a Non-Qualified Stock
Option Agreement with the Company dated as of February 5, 1997 which cancels the
following number of Rights and grants the following number of shares of the
Company's Common Stock pursuant to the Company's 1987 Stock Option Plan which
agreement is identical in form to the foregoing Form of Non-Qualified Stock
Option Agreement, except as to the number of shares:
No. of No. of
Rights Shares
Name and Positions Canceled Granted
- ------------------ -------- -------
Donato A. DeNovellis 100,000 110,000
Executive Vice President,
Finance and Administration
of the Company and
Senior Vice President
and Chief Financial Officer
of Ekco Housewares, Inc.
Malcolm L. Sherman 100,000 110,000
Chairman and Chief Executive
Officer
Robert Varakian 250,000 275,000
Vice President of Marketing
of the Company and
Senior Vice President--Sales
& Marketing of Ekco Housewares,
Inc. and
President, B. VIA International
Housewares, Inc.
Jeffrey A. Weinstein 50,000 55,000
Executive Vice President,
Secretary & General Counsel
of the Company and
President, Ekco Consumer
Plastics, Inc.
10
<PAGE> 1
EXHIBIT 10.3(b)
---------------
SCHEDULE TO
EKCO GROUP, INC.
FORM OF INDEMNITY AGREEMENT
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.:
Present Position Date of
Name With the Company Agreement
- ---- ---------------- ---------
George W. Carmany, III Director 02-04-97
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,
& Chief Financial Officer
Andrew D. Dunn Former Director 08-03-87
Ronald N. Fox Former Officer 06-30-87
Michael G. Frieze Director 02-04-97
Avram J. Goldberg Director 02-04-97
Neil R. Gordon Former Officer 07-30-86
John T. Haran Former Officer 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
Susan M. Scacchi Treasurer 02-04-97
Harold J. Seigle Former Director 08-03-87
Malcolm L. Sherman Chairman of the Board, Chief 05-25-95
Executive Officer & Director
Bill W. Sorenson Director 03-15-88
Herbert M. Stein Director 08-03-87
Robert Stein Former Officer & Director 07-30-86
Robert Varakian Vice President of Marketing 07-23-96
Jeffrey A. Weinstein Executive Vice President, 07-30-86
Secretary & General Counsel
<PAGE> 1
EXHIBIT 10.5(a)(2)
------------------
EKCO GROUP, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
AMENDMENT
- -------------------------------------------------------------------------------
WHEREAS, Ekco Group, Inc. ("Ekco") sponsors the Ekco Group, Inc. Employees'
Stock Ownership Plan (the "Plan"); and
WHEREAS, Ekco has reserved the right to amend the Plan;
NOW, THEREFORE, the Plan is amended as follows:
The following is added to Section 4.1(c) of the Plan:
Effective on the date of the collective bargaining agreement, the employer
has agreed to extend participation to the employees of Woodstream
Corporation who are covered by the agreement with International Association
of Machinists and Aerospace Workers District 98.
IN WITNESS WHEREOF, this amendment is executed on May 26, 1995.
Ekco Group, Inc.
by: /s/ NEIL R. GORDON
---------------------------
NEIL R. GORDON
<PAGE> 1
EXHIBIT 10.5 (a)(3)
-------------------
AMENDMENT TO THE
EKCO GROUP, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
WHEREAS, Ekco Group, Inc. (the "Employer") heretofore adopted the Ekco Group,
Inc. Employees' Stock Ownership Plan (the "Plan"); and
WHEREAS, the Employer reserved the right to amend the Plan; and
WHEREAS, the Employer desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 1996, as
follows:
1. Subsection 2(b) of Article 4 and Subsection 1(a) of Article 7 shall be
amended by adding the following paragraph to the conclusion of said
Sections:
For purposes hereof, "permanent and total disability" means a physical
or mental condition for which the Participant is receiving a Social
Security disability award.
2. Except as hereinabove amended, the provisions of the Plan shall continue in
full force and effect.
IN WITNESS WHEREOF, the Employer, by its duly authorized officer has caused this
Amendment to be executed on the 6th day of November, 1996.
EKCO GROUP, INC.
By: /s/ DONATO A. DENOVELLIS
---------------------------
DONATO A. DENOVELLIS
<PAGE> 1
EXHIBIT 10.6
------------
EKCO GROUP, INC.
98 Spit Brook Road
Nashua, NH 03062
December 4, 1996
Mr. Malcolm L. Sherman
10 Albion Road
Wellesley, MA 02181
Re: Employment Agreement
--------------------
Dear Mal:
This letter is to confirm our understanding with respect to (i) your future
employment by Ekco Group, Inc. (the "Company"), (ii) your agreement to protect
and preserve information and property which is confidential and proprietary to
the Company, and (iii) your agreement not to compete with the Company (the terms
and conditions agreed to in this letter shall hereinafter be referred to as the
"Agreement"). In consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, we have agreed as
follows:
1. EMPLOYMENT. The Company will employ you, and you agree to be employed by
the Company, as the Company's Chief Executive Officer and Chairman of the Board
and you agree to perform such services and discharge such duties and
responsibilities, consistent with that office, as may be prescribed by the Board
of Directors of the Company from time to time. You shall devote your full time
and best efforts in the performance of the foregoing services, provided,
however, that you shall not be prevented or limited from continuing to serve as
a member of the Board of Directors or Board of Trustees of those corporations or
entities which you currently serve and such other positions as to which the
Board of Directors may consent, from time to time, which consent will not be
unreasonably withheld.
2. Term of Employment.
------------------
(a) TERM; TERMINATION. Your employment hereunder shall commence on December
4, 1996 and shall continue thereafter on an "at-will" basis until terminated
either by you or by the Company for any reason upon written notice to the other.
The right of the Company to terminate your employment hereunder, to which you
hereby agree, shall be exercisable by written notice sent to you by the Company
and shall be effective as of the date of such notice.
3. Compensation.
------------
(a) SALARY AND BONUS. The Company shall pay you as compensation for your
services and agreements hereunder during the term hereof (i) salary at the rate
of $250,000 per year,
<PAGE> 2
payable in accordance with the Company's salary payment policy for executive
employees generally, less any amounts required to be withheld under applicable
law, and (ii) a bonus in such amount, if any, as may be determined annually by
the Board of Directors or the Compensation Committee in its sole discretion.
(b) TERMINATION. Upon termination of your employment hereunder, no further
compensation or benefits of any kind shall be payable to you hereunder, except
as provided in Section 5(c) and 5(d) below; provided, however, that you shall
continue to be bound by the terms and conditions of this Agreement (other than
Section 1 hereof).
4. Stock Option.
------------
The Company shall, upon the date of your acceptance of this Agreement,
grant to you a stock option to purchase an aggregate of 900,000 shares of the
common stock, $.01 par value, of the Company, with an exercise price per share
equal to the fair market value of the Common Stock on the date of grant and
subject to the terms and conditions set forth in the Nonqualified Stock Option
Agreement (the "Option Agreement") attached hereto as EXHIBIT A.
5. Benefits and Reimbursement of Expenses.
--------------------------------------
(a) VACATION. You shall be entitled to four weeks of vacation leave for
each 12 months of service performed by you at a time or times (either
consecutively or not consecutively) mutually agreeable to the Company and you.
The Company will not pay you any additional compensation for any vacation time
which is not used.
(b) EMPLOYEE BENEFIT PLANS. You shall also be entitled to participate in
such employee benefit plans and fringe benefits which the Company provides or
may establish for the benefit of its executive employees generally (including,
without limitation, group life, medical, dental and other insurance plans), but
only if and to the extent provided in such employee benefit plans.
(c) REIMBURSEMENT OF EXPENSES. You shall be entitled to reimbursement for
all ordinary and reasonable out-of-pocket business expenses (including first
class air travel and hotel accommodations) which are reasonably incurred by you
in furtherance of the Company's business in accordance with reasonable policies
adopted from time to time by the Company.
(d) EXCISE TAX. In the event you become subject to tax under Section 4999
of the Internal Revenue Code (the "IRC"), or any similar tax ("Excise Tax"), as
a result of any payment (within the meaning of Section 280G of the IRC or other
applicable provision) by the Company or any affiliate of the Company, the
Company agrees that it will then "gross up" your compensation by making an
additional payment to you in an amount which, after reduction for any income or
excise taxes payable as a result of receiving such additional payment, is equal
to the Excise Tax.
6. Confidentiality, Inventions, and Non-Competition Acknowledgements and
---------------------------------------------------------------------
Agreements.
----------
(a) Your agreements set forth in this Section 6 shall survive the
expiration or termination of this Agreement and the termination of
your employment with the Company for any reason.
- 2 -
<PAGE> 3
(b) You acknowledge that irreparable injury would be caused to the Company
by your breach of any of the provisions of this Section 6, and agree
that in the event of any such breach, the Company and any of its
affiliates, in addition to such other rights and remedies as may exist
in its favor, may apply to any court of law or equity having
jurisdiction to enforce the specific performance of the provisions of
this Section 6 and may apply for injunctive relief against any act
which would violate any such provisions.
(c) You recognize that you now have knowledge of and/or may hereafter gain
knowledge of, confidential information, trade secrets, confidential
processes, confidential patentable or unpatentable inventions or
confidential "know how", including, without limitation, techniques,
formulae, designs, developments, projects, technical information and
manufacturing process and distribution methods, relating to, or
concerned with the business of the Company and its affiliates prior to
the termination of this Agreement and their respective suppliers,
customers, stockholders, licensors, licensees, and other persons or
entities with which the Company or its affiliates has, has had, or may
in the future have any commercial, scientific or technical
relationship. During the term of this Agreement and at all times
following the termination of your employment for any reason, you will
not, directly or indirectly, divulge, furnish or make accessible to
anyone (other than as required in the regular course of your
employment by the Company or with the consent of the Board of
Directors) such information. The prohibitions contained in this
Section 6(c) shall not apply to information which is (a) within the
domain of the general public; (b) generally known within the industry
or industries in which the Company or its affiliates is involved; or
(c) independently developed by you without utilization of confidential
information gained while in the employ of the Company; provided that
you shall not have disclosed such information in violation of this
Agreement. All documents, records, apparatus, equipment and other
physical property furnished to you by the Company or any affiliates of
the Company or produced by you or others in connection with your
services to the Company or any such affiliate shall be and remain the
sole property of the Company. You will return and deliver such
property to the Company as and when requested by the Company. Copies
of documents and records may be kept, but shall be kept completely
confidential to the same extent as other confidential information of
the Company. You shall return and deliver all such property upon
termination of your employment for any reason, and you will not take
with you any such property or any reproduction of such property upon
such termination.
(d) Any work or research or the results thereof, made or developed by you,
alone or in conjunction with others during the term of your
employment, including but without limitation, any designs, patents,
inventions, processes, know-how or formulae created, invented or
conceived during the period of your employment by
- 3 -
<PAGE> 4
the Company, whether during or out of the usual hours of work, which
arise out of or are related to the business, research, or
development work or field of operation of the Company, or any of its
affiliates, shall to the extent of your interest therein be the sole
and exclusive property of the Company, shall be disclosed in writing
to the Company and to no other person, unless so directed in writing
by the Board of Directors, and you hereby assign to the Company all
and any right which you have or may acquire in the same. To this
end, both during the period of your employment and at all times
thereafter, you agree to execute all necessary papers, instruments
and documents properly required to effect such assignment to the
Company or its nominee, to make application through the Company's
patent attorney or general counsel at the expense of the Company,
for such United States and foreign patents as may be specified from
time to time by the Company on inventions, processes, or formulae
which are or become the property of the Company hereunder, and to
execute assignments upon the Company's request, for your entire
interest in all such applications to the Company or to its nominee
without compensation (other than your usual compensation as an
employee of the Company) and you agree to give the Company and its
patent attorney or general counsel all reasonable assistance in
preparing such applications, descriptions, and illustrations of each
such invention, process, or formula and in connection with
proceedings relating thereto or to such other applications or
patents resulting therefrom; and further agree to execute all lawful
papers considered necessary by the Company and do all that the
Company reasonably requests in order to protect the Company's rights
in said inventions, processes, and formulae or to obtain patents
thereon, including, without limitation, continuations, reissues,
renewals, and extensions. It is further agreed that your obligations
specified hereunder shall not expire with the termination of this
Agreement or your employment, but the Company agrees to pay you a
reasonable amount for any time that you spend in such work at the
Company's request after the termination of this Agreement or your
employment hereunder and agrees to reimburse you for expenses
reasonably or necessarily incurred in connection with such work.
(e) In consideration of your continued employment by the Company, and the
other benefits accruing to you hereunder, and subject to the
fulfillment by the Company of its obligations to you hereunder, you
agree that during the term of this Agreement and for a period of
thirty-six (36) months following the date of termination of your
employment pursuant to Section 2 hereof (such period of employment and
thirty-six (36) month period being referred to in this Agreement as
the "Non-Competition Period"), you will not engage or participate,
directly or indirectly, within the United States of America or Canada
either as principal, agent, employee, employer, consultant,
stockholder, partner or in any other individual or representative
capacity whatever, in the conduct or management of, or own any stock
or other proprietary interest in, or debt of, any business which
- 4 -
<PAGE> 5
shall be competitive with any business which is or was conducted by
the Company or any affiliate of the Company, while you were an
employee of the Company, unless you shall have obtained the prior
written consent of the Board of Directors, and which consent shall
make express reference to this Agreement. Notwithstanding any other
provision in this Section 6, you shall be free without such consent to
make investments, directly or indirectly, in the securities of any
publicly-owned entity if your ownership thereof is limited to not more
than three percent (3%) of the issued and outstanding securities of
any class of securities of such entity. You acknowledge that your
skills and your experience are such that you can anticipate finding
employment at an executive level in a wide variety of industries and
represent and agree that the restrictions imposed by this Section 6 on
employment are necessary for the protection of the legitimate
interests and competitive position of the Company and do not impose
undue hardships on you.
(f) During the Non-Competition Period, you shall not, directly or
indirectly, solicit any officer, director, executive, employee or
consultant of the Company or any affiliate of the Company to leave
such employment or terminate such position.
7. NO CONFLICTING AGREEMENTS. You hereby represent and warrant that you
have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against loss, damage,
liability or expense arising from any claim based upon circumstances alleged to
be inconsistent with such representation and warranty.
8. 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 registered or certified mail, return receipt requested, postage prepaid.
If to Malcolm L. Sherman: Malcolm L. Sherman
10 Albion Road
Wellesley, MA 02181
If to the Company: Ekco Group, Inc.
98 Spit Brook Road
Nashua, NH 03062
Attn: Executive Vice President
and General Counsel
- 5 -
<PAGE> 6
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 registered
or certified mail, on the fifth (5th) business day following the day such
mailing is made.
(b) ENTIRE AGREEMENT. This Agreement and the Option Agreement embody the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersede 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
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 or that aspect of the Company's business in which you are
principally involved. Your rights and obligations under this Agreement may not
be assigned by you 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 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.
- 6 -
<PAGE> 7
(h) ARBITRATION. Except with respect to the provisions of Section 6 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
Boston, MA, 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 with sixty (60) days, the office
of the American Arbitration Association in Boston, MA 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 State of New 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 8(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 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 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.
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<PAGE> 8
(l) 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 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.
(m) 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 legal fees and expenses.
(n) 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.
[REMAINDER OF PAGE DELIBERATELY LEFT BLANK]
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<PAGE> 9
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
----------------------------------
Name: Donato A. DeNovellis
Title: EVP/CFO
Accepted and Approved
/s/ MALCOLM L. SHERMAN
- ------------------------------
Malcolm L. Sherman
Dated: 12/4/96
-------
- 9 -
<PAGE> 1
EXHIBIT 10.10(b)
----------------
FORM OF AMENDMENT TO EMPLOYMENT AGREEMENT
AMENDMENT AGREEMENT made as of the 1st day of October 1996 by and between
Ekco Group, Inc. (hereinafter "Group") and ___________(hereinafter "Executive").
WHEREAS, a certain employment agreement was amended and restated and
entered into between Group and Executive as of May 25, 1995 (the "Agreement");
and
WHEREAS, the Executive and Group desire to amend the Agreement as
hereinafter set forth.
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. The Agreement is hereby amended as follows:
1.1 Deleting Section 6 in its entirety and inserting in its the
following:
"6. LETTER OF CREDIT. In order to assure Executive the prompt payment of
amounts due [him/her] under Section 5 of this Agreement, Group agrees
to continue to secure and to keep in place one or more irrevocable
letter(s) of credit from Fleet Bank of Massachusetts, N.A. or another
bank reasonably acceptable to Executive in the initial amount at least
equal or greater than (i)______ (___) times Executive's Adjusted
Salary, or (ii) the sum of the Lump Sum Payment Amount and a
reasonable amount calculated to cover the Executive's Medical, Dental
and Life Insurance Coverage Continuation, Outplacement Benefit,
[Automobile Benefits] and Gross-Up Payment (collectively, the
"Section 5.3.4 Severance Benefits"), in substantially the form of
Exhibit A, or upon other terms reasonably acceptable to Executive,
which shall allow Executive (or [his/her] legal representative) to
draw down amounts due [him/her] under Section 5 of this Agreement upon
certification by Executive (or [his/her] legal representative) that
payments are due [him/her] pursuant to this Agreement. The amount of
the letter(s) of credit shall be adjusted at least annually to reflect
changes in Executive's salary, so that it shall at all times be at
least equal to the greater of (i)_______ (____) times the Adjusted
Salary, or (ii) the Section 5.3.4 Severance Benefits. In addition, to
the extent not included above, the
<PAGE> 2
letter(s) of credit (or a separate letter of credit) shall include an
amount which Group, in its reasonable judgment, determines is
necessary to secure Group's obligations under any stock appreciation
right plan or other equity-linked plan (other than the ESOP),
provided, however, that such amount need not include any amount with
respect to stock options, restricted stock subject to repurchase
rights, or any equity plan giving Executive ownership of shares. An
initial determination of the amount necessary to secure such
equity-linked obligations shall be made on the date of grant to
Executive of such equity-linked right, and the amount shall
subsequently be adjusted at least annually to reflect the value on
such date of such rights. A failure by Group to keep such letter(s) of
credit in effect, or to renew or to make alternate arrangements to
secure its obligations in the amount required hereunder, by way of an
escrow agreement, trust, or other device, which arrangements shall be
reasonably satisfactory to Executive, at least thirty (30) days prior
to the expiration date of the letter(s) of credit or any such
alternate arrangement shall constitute an event of default under this
Agreement entitling Executive, after written notice to Group and the
passage of a ten (10) day cure period without such default being
cured, to all of the benefits accorded to [him/her] in the event of a
termination by Group without Good Cause following a Change of Control
pursuant to Section 5, without, however, the requirement that
Executive terminate [his/her] employment hereunder. Group agrees to
notify Executive within three (3) business days of any failure or
inability to maintain or renew such letter(s) of credit or other
device adopted pursuant to this Section. Notwithstanding the
foregoing, at the election of the Board of Directors of Group by
resolution of such Board 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, the obligation to maintain letter(s) of credit
shall be relieved to the extent amounts are contributed to a trust or
trusts under the terms of which such amounts are specifically
earmarked as security for payment of obligations under this Agreement
and are at all times at least equal to the greater of (i)_____ (____)
times the Adjusted Salary, or (ii) the Section 5.3.4 Severance
Benefits. Such trust or trusts may contain a provision that its funds
will be returned to Group so as to be available to its general
creditors in the event of the bankruptcy of Group. Group agrees that
it will not take any action to prevent, hinder or delay the exercise
by Executive of [his/her] rights to exercise the security provisions
provided in this Section 6 and, further, agrees to
<PAGE> 3
cooperate with Executive as may be necessary to enable Executive to
exercise and obtain the benefits of such security provisions, in the
absence of fraudulent or unlawful conduct on the part of Executive
with respect to such exercise."
2. The Agreement as amended hereby is hereinafter referred to as the
"Employment Agreement."
3. This Amendment Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof.
4. Except as expressly provided for herein, the Employment Agreement is
hereby ratified and confirmed and shall continue in full force and effect.
5. This Amendment Agreement may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment Agreement to be
executed and delivered by its duly authorized officer and its corporate seal to
be hereunto affixed and Executive has hereunto set [his/her] hand and seal as of
the day and year first above written in duplicate originals.
EKCO GROUP, INC.
[Seal]
By:
---------------------------------
Title:
------------------------------
------------------------------------
EXECUTIVE
<PAGE> 4
SCHEDULE TO FORM OF AMENDMENT
TO EMPLOYMENT AGREEMENT
The employees listed below each have entered into an Amendment to
Employment Agreement with the Company identical in form to the foregoing Form of
Amendment to Employment Agreement except as to the multiplier of Adjusted
Salary.
Name and Position(s) Adjusted Salary Multiplier
- -------------------- --------------------------
Donato A. DeNovellis Four (4) times
Executive Vice President,
Finance & Administration
Brian R. McQuesten Two and one half (2 1/2) times
Vice President & Controller
Linda R. Millman Two and one half (2 1/2) times
Associate General Counsel &
Assistant Secretary
Jeffrey A. Weinstein Four (4) times
Executive Vice President,
Secretary and General
Counsel
Harry E. Whaley Two and one half (2 1/2) times
President, Woodstream
Corporation
<PAGE> 1
EXHIBIT 10.11
-------------
EMPLOYMENT AGREEMENT
BETWEEN
EKCO HOUSEWARES, INC.
AND
ROBERT VARAKIAN
AS OF
SEPTEMBER 25, 1996
SECTION PAGE
1. Employment 1
2. Term 2
3. Compensation 2
4. Reimbursement of Expenses 4
5. Termination Upon Death or Disability 5
6. Termination by Executive or Company 6
7. Confidentiality and Non-Competition 13
8. Arbitration 17
9. General 17
<PAGE> 2
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 25th day of September, 1996 (hereinafter the
"Effective Date") by and between Ekco Housewares, Inc., a Delaware corporation
with a principal place of business in Franklin Park, Illinois (hereinafter the
"Company"), and Robert Varakian of 28 Windsor Drive, Pine Brook, New Jersey
07058 (hereinafter "Executive").
WHEREAS, Ekco Capital Enterprises, Inc. and Executive entered into an
employment agreement dated February 28, 1994 ("Former Agreement"), and now each
wish to replace the Former Agreement with this Employment Agreement ("Agreement"
or "Employment Agreement"), except as specifically indicated below; and
WHEREAS, Company desires to employ Executive, pursuant to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the parties covenant and agree as follows:
1. EMPLOYMENT
Company, or its successor hereby employs Executive and Executive hereby
accepts employment as an executive employee of Company to perform such executive
and managerial services as may be assigned to him by or under the authority of
the Board of Directors of Company (the "Board of Directors"), consistent with
such status as an executive employee. Executive agrees to use his best efforts,
skills and abilities faithfully to promote the interests of Company and to
perform such services as may be required of him by Company from time to time
consistent with his status. Executive shall report to and obey the lawful
directions of the Chairman and Chief Executive Officer of Ekco Group, Inc.
("Group"). Without limiting the generality of the foregoing, Executive agrees to
serve as Senior Vice President, Sales and Marketing of the Company and as
President of B. Via International Housewares (if and so long as he is elected to
those offices by the Board of Directors) and to serve (without additional
compensation) as a director, executive officer or executive employee of such
Affiliates of Company as Company may from time to time reasonably request,
provided that Executive consents thereto and that service for such Affiliates
will not require Executive to devote substantial time and effort to their
affairs. Further, without limiting the generality of the foregoing, if Executive
is asked by the Company to assume a position other than Senior Vice President,
Sales and Marketing, which position has greater responsibility than the position
of Senior Vice President, Sales and Marketing, in good faith the Company and
Executive
<PAGE> 3
agree to renegotiate the compensation to which Executive is entitled under this
Agreement, and if compensation is agreed upon Executive agrees to assume such
position. Failing such agreement, Executive will continue to serve as Senior
Vice President, Sales and Marketing of the Company and as President of B. Via
International Housewares pursuant to this Agreement. Executive agrees to devote
his full business time and energies to the business and affairs of Company and
to work exclusively for Company (and such Affiliates) during the term of this
Agreement, except as Company and Executive may otherwise agree in writing from
time to time; provided, however, that nothing contained in this Section 1 shall
be deemed to prevent or limit the right of Executive to: (i) make passive
investments in the securities of any publicly-owned corporation, and (ii) make
any other passive investments with respect to which Executive is not obligated
or required to, and does not in fact, devote any substantial managerial efforts
which interfere with Executive's fulfillment of his duties hereunder.
Executive shall perform the duties of his office generally in the Chicago
Metropolitan area; provided, however, that he shall be obligated to take such
trips outside of such area as shall be necessary in connection with his duties.
2. TERM
Executive's employment hereunder shall commence on the Effective Date and
shall continue under the provisions of this Agreement until December 31, 1999;
or as earlier terminated as hereinafter set forth. If this Agreement is not
terminated on or prior to December 31, 1999, this Agreement shall automatically
renew on December 31, 1999 and annually thereafter for periods of one year,
unless terminated as provided herein (the "Term"). It is expressly acknowledged,
understood and agreed that the Former Agreement shall be replaced by this
Agreement and the Former Agreement shall be terminated and be given no further
force or effect, effective as of the Effective Date.
3. COMPENSATION
3.1 Except as otherwise provided in Sections 5 and 6 hereof, for his
services hereunder Executive shall receive from Company the following
compensation:
3.1.1 For 1997, 1998 and 1999, salary at the annual rate of Three Hundred
Thousand Dollars ($300,000) (the "Base Salary Rate"), payable in equal
installments in accordance with Company's pay policy and in any event
not less frequently than monthly; for all years after 1999, Executive's
salary will be determined by the
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<PAGE> 4
Board of Directors, but will be increased at least five percent (5%)
per year.
3.1.2 Executive may become eligible for bonus payments as follows:
A. FOR THE REMAINDER OF 1996. For the year ending December 31, 1996,
Executive shall be paid a bonus equal to the greater of One Hundred and
Fifty Thousand Dollars ($150,000) or two percent (2%) of net sales of
Ekco Capital Enterprises, Inc. for the 1996 fiscal year of Ekco Capital
Enterprises, Inc. This bonus shall be paid on or before March 1, 1997.
B. FOR 1997. For the year ending December 31, 1997, Executive shall be
paid a guaranteed bonus of Two-Hundred Thousand Dollars ($200,000);
provided, however, that if Executive's employment terminates for any
reason other than termination by Company for "good cause" pursuant to
Section 6.2.2, the bonus to be paid to Executive pursuant to this
Section 3.1.2(B) shall be prorated based on the number of days
Executive was employed during the year ending December 31, 1997. This
bonus shall be paid on or before March 1, 1998.
C. FOR 1998 AND 1999. No bonus potential.
D. FOR ALL YEARS AFTER 1999. Beginning with respect to the year ending
December 31, 2000 and for each subsequent year during the Term,
Executive shall be paid a bonus, on or before March 1 of the following
year, in such amount, if any, as the Board of Directors of Group (or
the Compensation Committee thereof) may determine annually in its
discretion.
3.1.3 Fringe benefits, including four weeks per year vacation time, life,
medical and dental insurance, and 401(k) retirement plan participation
similar in nature and benefits as those provided to other executive
employees of subsidiaries of Ekco Group, Inc. ("Group").
3.1.4 The use of a Company-owned or leased automobile having a cost as
delivered to Executive of not more than Fifty Thousand Dollars
($50,000) for use by Executive primarily in connection with the
performance of his duties under this Agreement and primarily for the
benefit of Company. Such automobile shall be exchanged by Company for
a new automobile once every three (3) years during the term of
employment of Executive pursuant to this
- 3 -
<PAGE> 5
Agreement. Company will maintain this automobile and provide Executive
with insurance and reimbursement for business related fuel usage in the
course of his employment. At the Company's option, the requirements of
this Section 3.1.4 may be satisfied by the Company by the payment to
Executive of one thousand dollars ($1,000) per month for expenses
relating to the use and maintenance of an automobile.
3.1.5 Such other compensation pursuant to such executive bonus plans, stock
option plans or other stock plans, available to employees of Company
from time to time, as the Board of Directors may in its sole discretion
determine.
4. REIMBURSEMENT OF EXPENSES
4.1.1 Company shall reimburse Executive for travel, entertainment and other
business expenses reasonably incurred by him in connection with the
business of Company and its Affiliates to the extent and in a manner
consistent with then Company policy. Notwithstanding the foregoing, it
is understood and agreed that Executive may travel first class on any
flight to and from the United States to the Far East and business class
on any flight to and from the United States to a location outside of
North America and on any other international flight to and from a
location outside of North America.
4.1.2 Company shall reimburse Executive (or pay directly, if Executive so
elects) for rent of a furnished apartment (including cleaning service)
in the Chicago metropolitan area, in a reasonable amount. In addition,
Company shall reimburse Executive for the cost of once weekly
round-trip business class air travel for one person between New Jersey
and Chicago.
4.1.3 If Executive decides to relocate to the Chicago metropolitan area,
Company shall reimburse Executive for moving and relocation expenses,
including the hiring of a moving company, to the Chicago metropolitan
area, consistent with Company's relocation and moving policies for
executive employees, a copy of which is attached to this Agreement.
Without limiting the generality of the foregoing, upon Executive's
relocation to the Chicago metropolitan area, Company shall reimburse
Executive for the difference between $775,000 and the proceeds
received by Executive (net of all customary closing costs such as
broker commissions, legal fees and
- 4 -
<PAGE> 6
transfer taxes) upon sale of his Pine Brook residence.
4.1.4 Company shall reimburse Executive for up to $5,000 of his out-of-pocket
expenses incurred in connection with the review of this Agreement by
his attorneys.
5. TERMINATION UPON DEATH OR DISABILITY
5.1 Executive's employment by Company shall terminate upon the death of
Executive, or if, by virtue of total and permanent disability, Executive is
unable to perform his duties hereunder.
5.2 In the event of such a termination of employment as a result of Executive's
death or total and permanent disability, all compensation hereunder shall
terminate and Company shall have no further obligations hereunder except
that Company shall pay to Executive (or his estate) the following:
5.2.1 In the event of death, a lump-sum payment equal to the Base Salary
Rate in effect at the date of such termination of employment, payable
no later than sixty (60) days after the date of such termination.
Company may purchase insurance with respect to its obligations pursuant
to this Section 5.2.1, and to the extent benefits are paid pursuant to
such insurance, Company's commitment under this Section 5.2.1 shall be
satisfied; and
5.2.2 In the event of total and permanent disability, amounts in lieu of
Salary, at the Base Salary Rate in effect at the date of such
termination of employment, payable in the manner specified in Section
3.1.1, for a period of twelve (12) months following the date of such
termination of employment at the rate of one-twelfth of such Base
Salary Rate per month; and
5.2.3 Such portion of Executive's Salary, as has accrued by virtue of
Executive's employment during the period prior to termination and has
not yet been paid, together with any amounts for expense reimbursement
and similar items which were properly incurred in accordance with the
provisions of Section 4 prior to termination and have not yet been paid.
5.3 Amounts to which Executive would otherwise be entitled under Section 5.2.2
above shall be reduced by the amount of any disability insurance proceeds
actually paid to or for the benefit of Executive (or his estate or legal
representatives) with respect to such twelve (12) months following the date
of termination under any disability
- 5 -
<PAGE> 7
policy the premiums for which have been paid by Company or any Affiliate.
5.4 The determination that, by virtue of total and permanent disability,
Executive is unable to perform his duties hereunder shall be made by a
physician chosen by Executive (or his legal representative) and reasonably
satisfactory to Company. The cost of such examination shall be borne by
Company. Without limiting the generality of the foregoing, unless otherwise
agreed, Executive shall be conclusively presumed to be totally and
permanently disabled hereunder if for reasons involving mental or physical
illness or physical injury he fails to perform such duties for a period of
one hundred and eighty (180) consecutive calendar days or for any periods
aggregating six (6) months or more in any twelve (12) month period. For
purposes of this Section 5, Executive's date of termination in the event of
such total and permanent disability shall be the earlier of the date of
such physician's examination pursuant to which such determination is made
or the first business day after which either such 180-day or such six-month
period has expired.
6. TERMINATION BY EXECUTIVE OR COMPANY
6.1 Executive's employment may be terminated at any time by Executive by
written notice of at least three (3) months to Company, which time period
may be waived by Company in its discretion. If such notice is not given
after a Change of Control as discussed in the following sentence, Executive
shall be entitled to no further payments hereunder other than the payment
of any bonus Executive may be entitled to pursuant to Section 3.1.2(B). If
such notice is given after six (6) months of but within twenty four (24)
months of a Change of Control (as defined in Section 6.4) (a "Change of
Control Notice"), and unless such Change of Control 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, then upon such termination
by Executive pursuant to this paragraph of this Section 6.1, Executive (or
his estate, if he dies prior to receiving the payments hereinafter set
forth in this sentence) shall be entitled to receive within thirty (30)
days of such termination (a) a lump-sum payment equal to three (3) times
the Base Salary Rate in effect on the date of such termination, plus (b) a
lump sum cash payment equal to (i) three (3) times the greater of (i)
$150,000, or (ii) the bonus received by Executive for the fiscal year prior
thereto. For the purposes of this Section 6.1, the time when a
- 6 -
<PAGE> 8
termination occurs shall be the effective date of termination of Executive.
In addition, in the event of such a termination pursuant to a Change of
Control Notice, Company shall provide, and Executive shall continue to be
entitled to receive, such medical, dental and life insurance coverage as he
shall have been receiving pursuant to Section 3.1.3 as of the date of his
Change of Control Notice until the earlier of (x) his full-time employment
by a third party who offers Executive at least comparable benefits in the
particular benefit category or (y) three (3) years following such date of
termination, but only to the extent Company is able to continue the
applicable coverage of Executive under the terms of such group policies or
other policies providing coverage for Executive. Notwithstanding any other
provision in this Section 6.1, in the event Company is unable to continue
the applicable coverage of Executive under the terms of the applicable
policies, then Company shall cooperate with Executive in any actions which
may be necessary to allow Executive, to the extent possible, either (i) to
buy such policy or (ii) to continue insurance coverage with the insurer
writing Company's applicable group policy outside of Company's group plan.
Group shall pay to Executive 140% of the cost of such insurance coverage,
but in no event more than twice the cost of such coverage allocable to
Executive under the group or other policy covering him prior to
termination. In the event of termination as provided in this Section 6.1
Executive shall be entitled as of the date of termination or thereafter to
no other compensation under this Agreement (including, without limitation,
Section 4 or Section 6), except as provided in this Section 6.1, Section
6.3 and Section 6.3.1, and except as provided in Section 7.5 in the event
that Company exercises the option granted therein. Any compensation payable
under this Section 6.1 shall be paid notwithstanding Executive's total and
permanent disability or death occurring after termination of his employment
hereunder. In the event Executive dies or becomes totally and permanently
disabled after the date of any such notice but prior to the date of
termination of his employment under this Section 6.1, the provisions of
this Section 6.1 and not the provisions of Section 5 shall apply.
6.2 Executive's employment may be terminated at any time by Company, with or
without good cause (as defined below), by written notice to Executive,
effective immediately unless otherwise stated in such notice.
6.2.1 In the event Executive's employment hereunder is terminated by
Company without "good cause," at any time during the Term prior to any
Change of Control (as defined in Section 6.4) or in the event this
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<PAGE> 9
Agreement is not renewed on any December 31 as provided in Section 2,
then Executive (or his estate) shall be entitled to a lump sum payment
payable within thirty (30) days of the date of termination equal to two
(2) times his Base Salary Rate plus any bonus Executive may be entitled
to pursuant to Section 3.1.2(B). In addition, Executive shall continue
to be entitled to the continuation of such medical, dental, and life
insurance coverage as he shall be receiving pursuant to Section 3.1.3
as of the date of notice of termination until the earlier of (a) his
full time employment by a third party or (b) the term of his severance
payments, but only to the extent Company is able to continue the
applicable coverage of Executive under the terms of such Company
policies or other policies providing coverage for Executive.
Notwithstanding any other provision in this Section 6.2.1, in the event
Company is unable to continue the applicable coverage of Executive
under the terms of the applicable policies, then Company shall
cooperate with Executive in any actions which may be necessary to allow
Executive, to the extent possible, either (i) to buy such insurance
policy or (ii) to continue insurance coverage with the insurer writing
Company's applicable group policy outside of Company's Group plan.
Company shall pay to Executive 140% of the cost of such insurance
coverage, but in no event more than twice the cost of such coverage
allocable to Executive under the Company or other policy covering him
prior to termination. Such compensation shall be paid notwithstanding
Executive's total and permanent disability or death subsequent to such
notice, but in the event Executive (or his estate, legal
representative, or beneficiaries) receives death or disability benefits
pursuant to Section 5, such benefits shall constitute an offset for
amounts due under this Section 6.2.1. Executive shall be entitled as of
the date of termination to no other compensation under this Agreement
(including, without limitation, Section 3 or 5), except as provided in
Section 6.3 and Section 6.4 and except as provided in Section 7.5 in
the event that Company exercises the option granted therein.
6.2.2 In the event Company shall terminate Executive's employment for good
cause, then Executive shall be entitled as of the date of termination
to no compensation under this Agreement (including, without
limitation, Section 3 or 5 above), except as provided in Section 6.3
and except as provided in Section 7.5
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<PAGE> 10
in the event that Company exercises the option granted therein.
6.2.3 Immediately upon a Change of Control, and without regard to whether or
not Executive's employment is terminated or a Constructive Termination
occurs at such time or thereafter, Executive shall immediately have the
unconditional, unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or optioned (subject
to his obligation to pay the option exercise price to the extent
theretofore not paid) to Executive by Group at any time prior to the
Change of Control as if all restrictions had lapsed and all events
necessary to vest in the Executive such rights, including the lapsing
of time, had occurred.
Following a Change of Control and upon an event of "Constructive
Termination" (as defined in Section 6.2.4) or termination of
Executive's employment without good cause, Executive shall receive
within ten (10) days of such event a lump-sum payment equal to three
(3) times the Base Salary Rate in effect on the date of such
Constructive Termination, plus a lump sum cash payment equal to the
greater of three (3) times (i) $150,000, or (ii) the bonus received by
Executive for the fiscal year prior to the year in which the
Constructive Termination or termination without good cause occurs. For
the purposes of this Section 6.2.3, the time when a Constructive
Termination occurs shall be the day any event occurs which is included
in the definition of Constructive Termination in Section 6.2.4. In
addition, Executive shall immediately upon Constructive Termination
pursuant to this Section 6.2.3 have the unconditional, unencumbered and
free right, title and interest in all shares of stock of Group which
were granted, sold or optioned (subject to his obligation to pay the
option exercise price to the extent theretofore not paid) to Executive
by Group at any time prior to the effective date of Constructive
Termination as if all restrictions had lapsed and all events necessary
to vest in the Executive such rights, including the lapsing of time,
had occurred.
6.2.4 As used herein, "Constructive Termination" shall be deemed to have
occurred if and when (i) Executive's base salary is decreased below the
level in effect on the date of the last amendment of this Agreement, or
the bonus percentage applicable to Executive's participation in any
compensation bonus plan or arrangement is reduced, without the
Executive's
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<PAGE> 11
consent, provided, however, that nothing herein shall be construed to
guarantee the Executive's bonus awards if performance is below
applicable targets, or (ii) the importance of the Executive's job
responsibilities is reduced without the Executive's consent, (iii)
Executive is required to relocate from New Jersey without his consent
or after Executive has relocated to the Chicago area, he is required to
relocate to a location other than the greater Chicago metropolitan area
without his consent, or (iv) termination of the Company's commitment
provided in Section 4.1.2.
6.3 In the event of any termination pursuant to any of Sections 6, 6.1, and
6.2, Executive shall be paid such portion of his Salary as has accrued by
virtue of Executive's employment during the period prior to termination and
has not yet been paid, together with any amounts for expense reimbursement,
vacation accruals and similar items which have been properly incurred or
accrued in accordance with the provisions of Section 4 prior to termination
and have not yet been paid.
6.4 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), other than Group, 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
- 10 -
<PAGE> 12
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.
6.5 As used herein, "good cause" shall mean and be limited to a) a material
breach of any of Executive's obligations under Section 1 or 7 hereof, or b)
any action by Executive during the term of this Agreement involving willful
malfeasance or gross negligence of which Executive has been given written
notice and which continues following, or is not remedied by Executive
within, fifteen (15) days thereafter.
6.6 Company, in its sole discretion, may apply for and procure in its own name
(whether or not for its own benefit) policies of insurance insuring the
life of Executive in such amounts as Company may deem advisable. Executive
shall have no right, title, or interest in any such policies of insurance,
except to the extent his estate or other persons are specifically named as
beneficiaries thereof. Executive agrees to submit to any medical or other
examination and to execute and deliver any applications or other instrument
in writing, reasonably necessary to effectuate such insurance.
6.7 In the event of termination pursuant to Section 6.1 or 6.2.3, the payments
to be made to Executive under Section 6.1 or Section 6.2.3 shall be
subject to reduction as described below.
6.7.1. The following definitions shall apply for purposes of this Section 6.7:
6.7.1.1 "Code" means the Internal Revenue Code of 1986, as amended.
6.7.1.2 "Executive Parachute Payments" means all payments to Executive,
from whatever source and whether or not pursuant to this Employment
Agreement, which if not reduced by this Section 6.7 would be parachute
payments.
6.7.1.3 "Safe Harbor Exclusions" means the smallest amount of Executive
Parachute Payments under Section 6.1 or Section 6.2.3 the exclusion of
which would cause all remaining Executive Parachute Payments no longer
to be parachute payments (as a consequence of all remaining Executive
Parachute Payments having aggregate present value less than three
times the base amount). For purposes of determining Safe Harbor
Exclusions, the last payments in time under
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<PAGE> 13
Section 6.1 or Section 6.2.3 shall be excluded first. If there is no
amount of Executive Parachute Payments the exclusion of which would
cause all remaining Executive Parachute Payments no longer to be
parachute payments, or if there are no Executive Parachute Payments,
the Safe Harbor Exclusions shall be zero.
6.7.1.4 "Associated Income Tax," with respect to an amount of taxable
income, means the maximum marginal combined federal, state and local
income tax rate, including under Code section 4999 or successor
provisions if and only if applicable, applied to such taxable income.
For purposes of this Section 6.7, Associated Income Tax will be
considered payable at the time of receipt of the taxable income.
6.7.1.5 The following phrases have the meaning ascribed by Code section 280G
and successor provisions:
applicable Federal rate
base amount
parachute payment
present value.
6.7.2. If (i) the present value of Executive Parachute Payments reduced by
Associated Income Tax is less than (ii) the present value of Executive
Parachute Payments other than Safe Harbor Exclusions reduced by
Associated Income Tax, then the Safe Harbor Exclusions shall not be
paid to Executive, notwithstanding Section 6.1 or Section 6.2.1.
6.7.3. If either Executive or Company determines that, in accordance with
Section 6.7.2, the Safe Harbor Exclusions are not payable to
Executive, then the following procedure shall be followed:
6.7.3.1 The party making such determination shall give written notice (the
"Exclusion Notice") to the other party not later than ten days
following the termination of employment, setting forth in reasonable
detail the calculations on which such determination is based and
specifying the Safe Harbor Exclusions which are not payable.
6.7.3.2 In the event such Exclusion Notice is given by either party and not by
the other, and if such other party disputes the substance of the
Exclusion Notice, such other party shall give written notice of such
dispute (the "Dispute Notice") within ten days after receipt of the
Exclusion Notice, setting forth in reasonable detail the basis for
such dispute. If such other
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<PAGE> 14
party does not give a Dispute Notice within such ten days, the
substance of the Exclusion Notice shall be conclusively deemed to be
correct and final, and the Safe Harbor Exclusions specified therein
shall not be paid to Executive.
6.7.3.3 If a Dispute Notice is given, or if Exclusion Notices are given by
both parties which differ as to the Safe Harbor Exclusions identified
therein, the parties shall negotiate in good faith to resolve such
dispute. In the absence of resolution within 30 days after receipt of
the Dispute Notice or the later of the two Exclusion Notices, as the
case may be, either party may by written notice given to the other
party submit the matter for arbitration in accordance with Section 8
except that, notwithstanding any provision of Section 8 to the
contrary, such arbitration shall be before a single arbitrator to be
agreed upon by the parties or, in the absence of agreement as to the
arbitrator within ten days after receipt of such notice of submission
to arbitration, to be appointed by the American Arbitration
Association or its successor.
7. CONFIDENTIALITY AND NON-COMPETITION
7.1 Executive's agreements set forth in this Section 7 shall survive the
expiration or termination of this Agreement and the termination of his
employment with Company for any reason.
7.2 Executive acknowledges that irreparable injury would be caused to Company
by his breach of any of the provisions of this Section 7, and agrees that
in the event of any such breach, Company and any of its Affiliates, in
addition to such other rights and remedies as may exist in its favor, may
apply to any court of law or equity having jurisdiction to enforce the
specific performance of the provisions of this Section 7 and may apply for
injunctive relief against any act which would violate any such provisions.
The covenants of Executive contained in this Section 7 shall be construed
as independent of all other provisions contained in this Agreement and
shall be enforceable, notwithstanding the existence of any claim or cause
of action of Executive against Company or any of its Affiliates, whether
predicated on this Agreement or otherwise.
7.3 Executive recognizes that he now has knowledge of and/or may hereafter gain
knowledge of, confidential information, trade secrets, confidential
processes, confidential patentable or unpatentable inventions or
confidential
- 13 -
<PAGE> 15
"know how", including, without limitation, techniques, formulae, designs,
developments, projects, technical information and manufacturing process and
distribution methods, relating to, or concerned with the business of
Company and its Affiliates during the term of this Agreement and their
respective suppliers, customers, stockholders, licensors, licensees, and
other persons or entities with which Company or its Affiliates has, has
had, or may in the future have any commercial, scientific or technical
relationship, and which information has not previously been made public or
thereafter made public. During the term of this Agreement and at all times
following the termination of Executive's employment for any reason,
Executive will not, directly or indirectly, divulge, furnish or make
accessible to anyone (other than as required in the regular course of his
employment by Company or with the consent of the Board of Directors of
Company) such information. As used in the first sentence hereof, the phrase
"made public" shall apply to information (a) within the domain of the
general public; (b) generally known within the industry or industries in
which Company or its Affiliates is involved; or (c) is independently
developed by Executive without utilization of confidential information
gained while in the employ of Company; provided that no information shall
be deemed to have been made public if it is within the domain of the
general public or generally known within the industry or industries in
which Company or its Affiliates is involved. All documents, records,
apparatus, equipment and other physical property furnished to Executive by
Company or any Affiliate of Company or produced by Executive or others in
connection with his services to Company or any such Affiliate shall be and
remain the sole property of Company. Executive will return and deliver such
property to Company as and when requested by Company. Copies of documents
and records may be kept, but shall be kept completely confidential to the
same extent as other confidential information of Company. Executive shall
return and deliver all such property upon termination of his employment for
any reason, and Executive will not take with him any such property or any
reproduction of such property upon such termination.
7.4 Any work or research or the results thereof, made or developed by
Executive, alone or in conjunction with others during the term of his
employment, including but without limitation, any designs, patents,
inventions, processes, know-how or formulae created, invented or conceived
during the period of his employment by Company , whether during or out of
the usual hours of work, which arise out of or are related to the business,
research, or development work or field of operation of Company, or any
- 14 -
<PAGE> 16
of its Affiliates, shall to the extent of Executive's interest therein be
the sole and exclusive property of Company, shall be disclosed in writing
to Company and to no other person, unless so directed in writing by the
Board of Directors, and Executive hereby assigns to Company all and any
rights which he has or may acquire in the same. To this end, both during
the period of Executive's employment and at all times thereafter, Executive
agrees to execute all necessary papers, instruments and documents properly
required to effect such assignment to Company or its nominee, to make
application through Company's patent attorney or general counsel at the
expense of Company, for such United States and foreign patents as may be
specified from time to time by Company on inventions, processes, or
formulae which are or become the property of Company hereunder, and to
execute assignments upon Company's request, for Executive's entire interest
in all such applications to Company or to its nominee without compensation
(other than his usual compensation as an employee of Company) and Executive
agrees to give Company and its patent attorney or general counsel all
reasonable assistance in preparing such applications, descriptions, and
illustrations of each such invention, process, or formula and in connection
with proceedings relating thereto or to such other applications or patents
resulting therefrom; and further agrees to execute all lawful papers
considered necessary by Company and do all that Company reasonably requests
in order to protect Company's rights in said inventions, processes, and
formulae or to obtain patents thereon, including, without limitation,
continuations, reissues, renewals, and extensions. It is further agreed
that Executive's obligations specified hereunder shall not expire with the
termination of his employment, but Company agrees to pay Executive a
reasonable amount for any time that Executive spends in such work at
Company's request after the termination of his employment hereunder and
agrees to reimburse Executive for expenses reasonably or necessarily
incurred in connection with such work.
7.5 In consideration of his continued employment by Company and the other
benefits accruing to him hereunder, and subject to the fulfillment by
Company of its obligations to Executive hereunder, Executive agrees that
during the term hereof and for a period of one year following the date of
termination of Executive's employment, if such termination is as a result
of Executive's termination or termination by Company of this Agreement
(such period of employment and one year period being referred to in this
Agreement as the "Non-Competition Period"), he will not engage or
participate, directly or indirectly, within the United States of America
either as principal, agent,
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<PAGE> 17
employee, employer, consultant, stockholder, partner or in any other
individual or representative capacity whatever, in the conduct or
management of, or own any stock or other proprietary interest in, or debt
of, any business which shall be competitive with any business which is or
was conducted by Company or any Affiliate of Company, while Executive was
an employee of Company under this Agreement, unless he shall have obtained
the prior written consent of the Board of Directors, and which consent
shall make express reference to this Agreement. During the Non-Competition
Period, Company, at Company's sole election, will pay Executive the Base
Salary Rate then in effect on the date of his termination from employment
with Company on the same terms as he had received his salary immediately
prior to the termination, less any payments paid or payable to Executive
pursuant to the terms of Section 5.2.2, Section 6.1, Section 6.2, Section
6.2.1 or Section 6.2.3 hereof, it being understood that notwithstanding any
other provision contained in this Section 7.5, the Non-Competition Period
will not in any event extend beyond the period for which Executive is paid
following termination of his employment under the terms of this Section,
7.5 or otherwise under the terms of this Agreement. Notwithstanding any
other provision in this Section 7, Executive shall be free without such
consent to make investments, directly or indirectly, in the securities of
any publicly-owned corporation if his ownership thereof is limited to not
more than three percent (3%) of the issued and outstanding securities of
any class of securities of such corporation. Executive acknowledges that
his skills and experience are such that he can anticipate finding
employment at an executive level in a wide variety of industries and
represents and agrees that he will be providing services to Company that
are special, unique and extraordinary and that the restrictions imposed by
this Section 7 on employment are necessary for the protection of the
legitimate interests and competitive position of Company and do not impose
undue hardships on Executive.
7.6 During the Non-Competition Period, Executive will not, directly or
indirectly, solicit any officer, director, executive, employee or
consultant of Company or any Affiliate of Company to leave such employment
or terminate such position, nor will he directly or indirectly employ,
hire, retain or cause to be employed, hired, or retained (other than by
Company or, with Company's consent, its Affiliates), or establish a
business with, any person who within one year prior to such employment,
retainer or establishment was employed or retained by Company or its
Affiliates in any of the above-mentioned capacities, provided, however,
that this Section 7.6 shall not
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<PAGE> 18
prohibit Executive directly or indirectly from employing, hiring, retaining
or causing to be employed, hired, or retained, any person who the Executive
establishes was dismissed by Company or its Affiliates without cause or who
has terminated due to a Change of Control.
8. ARBITRATION
Except with respect to the provisions of Section 7, any dispute or
disagreement arising under or relating to the provisions of this Agreement,
or any breach thereof, including, without limitation, relating to Section 1
hereof or to whether a termination of Executive's employment was with "good
cause", shall be resolved by binding arbitration in accordance with the
Commercial Rules of the American Arbitration Association or its successor
(except as set forth herein), and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. The decision of the arbitrators shall be made by majority vote and
be final and absolute. In any such arbitration, one arbitrator shall be
selected by Company and one arbitrator shall be selected by Executive. Each
party shall have thirty (30) days from the receipt by one party of a notice
of the other party of submission to arbitration to choose an arbitrator. A
third arbitrator shall be selected by the two so chosen within ten (10)
days of the selection of the most recently selected of the two arbitrators
so chosen. Failing action within any of such periods by any party or the
arbitrators, any unappointed arbitrator or arbitrators shall be appointed
by the American Arbitration Association (or its successor) upon application
of any party or arbitrator. The parties shall promptly furnish to the
arbitrators such information as the arbitrators may reasonably request. The
expenses of any arbitration proceeding (not including the other party's
attorney's fees and expenses) shall be paid by Company if the Executive
recovers any amount or otherwise obtains relief in such proceeding and by
the Executive if the Executive initiated arbitration and there is a
specific finding that the Executive's claim was frivolous. In all other
circumstances, the expenses of such arbitration proceeding (not including
attorney's fees and expenses) shall be divided equally. Arbitration shall
take place in Nashua, New Hampshire, or such other place on which the
parties shall agree.
9. GENERAL
9.1 This Agreement is personal and shall in no way be subject to assignment by
Executive.
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<PAGE> 19
9.2 This Agreement shall be binding upon and shall inure to the benefit of
Company and its successors and assigns either by merger, operation of law,
consolidation, assignment, purchase or otherwise of a controlling interest
in the business of Company and Executive, his heirs, executors,
administrators, legal representatives, and permitted assigns. Company
agrees that a successor in interest by merger, operation of law,
consolidation, assignment, purchase or otherwise of a controlling interest
in the business of Company will be informed prior to such event of the
existence of this Agreement. Company will require any successor (whether
direct or indirect, by purchase, merger, operation of law, consolidation,
assignment or otherwise of a controlling interest in the business, stock or
other assets of Company) to assume expressly and agree to perform this
Agreement. Failure of Company to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to such compensation and benefits in
the same amount and on the same terms as he would be entitled hereunder in
the event of a termination without "good cause", except that, for the
purposes of implementation hereof, the date on which any such succession
becomes effective shall be deemed to be the date on which Executive becomes
entitled to such compensation and benefits from Company. As used in this
Agreement, "Company" shall mean Ekco Housewares, Inc. as hereinbefore
defined and any successor as aforesaid.
9.3 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 of competent
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 be
enforceable to the fullest extent permitted by law; and (ii) if any
provision, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, Company and
Executive agree that the court making such determination shall have the
power to reduce the duration and/or 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.
9.4 All notices and communications required or permitted to be given hereunder
shall be duly given by delivering the same in hand or by depositing such
notice or communication in
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<PAGE> 20
the mail, sent by certified or registered mail, return receipt requested,
postage prepaid, as follows:
If sent to Company: Ekco Housewares, Inc.
98 Spit Brook Rd.
Nashua, New Hampshire 03062
Attention: C.E.O
With a Copy to: Ekco Group, Inc.
98 Spit Brook Rd.
Nashua, New Hampshire 03062
Attention: C.E.O.
If sent to
Executive: Robert Varakian
28 Windsor Drive
Pine Brook, New Jersey 07058
or such other address as either party furnishes to the other by like
notice.
9.5 This Agreement constitutes the entire agreement and understanding between
the parties in relation to the subject matter hereof and there are no
promises, representations, conditions, provisions or terms related thereto
other than those set forth in this Agreement. This Agreement supersedes all
previous understandings, agreements and representations between Company and
Executive regarding Executive's employment by Company, written or oral.
9.6 All captions in this Agreement are intended solely for the convenience of
the parties, and none shall be deemed to affect the meaning or construction
of any provision hereof.
9.7 No failure of Company or Executive to exercise any power reserved to it or
him, respectively, by this Agreement, or to insist upon strict compliance
by Executive or Company, respectively, with any obligation or condition
hereunder, and no custom or practice of the parties at variance with the
terms hereof, shall constitute a waiver of Company's or Executive's right,
as the case may be, to demand exact compliance with any of the terms
hereof. Waiver by either party of any particular default by the other party
hereto shall not affect or impair the waiving party's rights with respect
to any subsequent default of the same, similar or different nature, nor
shall any delay, forbearance or omission of either party to exercise any
power or right arising out of any breach or default by the other party of
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<PAGE> 21
any of the terms, provisions or covenants hereof, affect or impair its or
his right to exercise the same, nor shall such constitute a waiver by
Company or Executive, as the case may be, of any right hereunder, or the
right to declare any subsequent breach or default and to terminate this
Agreement prior to the expiration of its term.
9.8 As used herein, the term "Affiliate" shall be deemed to include any
corporation, joint venture, or other business enterprise, whether
incorporated or unincorporated, which Company directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with.
9.9 This contract shall be construed under and be governed in all respects by
the laws of the State of New Hampshire.
9.10 Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment provided for herein be reduced by any
compensation earned by Executive as the result of employment by another
employer or by retirement benefits after the date of termination or
otherwise, except as specifically set forth herein.
9.11 No amendment or modification to this Agreement shall be effective unless in
writing and signed by both parties hereto. This Agreement may be executed
in any number of counterparts, and each such counterpart hereof shall be
deemed to be an original instrument, but all such counterparts together
shall constitute but one agreement.
9.12 Group hereby unconditionally and irrevocably guarantees the prompt
performance of the obligations assumed in this Agreement by Company, its
wholly-owned subsidiary.
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<PAGE> 22
IN WITNESS WHEREOF, Company has caused this Agreement to be executed and
delivered by its duly authorized officer and its corporate seal to be hereunto
affixed and Executive has hereunto set his hand and seal as of the day and year
first written above in duplicate originals.
EKCO HOUSEWARES, INC.
By
/S/DONATO A. DENOVELLIS
-----------------------
EKCO GROUP, INC., AS GUARANTOR
By /S/DONATO A. DENOVELLIS
--------------------------
ROBERT VARAKIAN
/S/ROBERT VARAKIAN
------------------
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<PAGE> 1
EXHIBIT 10.15(b)
----------------
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:
Date of Face Amount
Name and Position Agreement of Policy
- ----------------- --------- ----------
Jeffrey A. Weinstein 10/01/92 $527,352
Executive Vice Presi-
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
<PAGE> 1
EXHIBIT 10.16(a)
----------------
EKCO GROUP, INC.
AMENDED
1996 PERFORMANCE UNIT RIGHTS AWARD PLAN
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page No.
-------
1. Purpose.......................................................... 1
2. Administration................................................... 1
3. Participants..................................................... 1
4. Operation........................................................ 1
5. Appreciation of Rights........................................... 2
6. Nature of Rights................................................. 2
7. Effective Date................................................... 2
8. Limits on Awards................................................. 2
9. Dilution......................................................... 3
10. Award Agreements................................................. 3
11. Transferability.................................................. 3
12. Securities Act of 1933........................................... 3
13. Withholding of Tax............................................... 4
14. Termination and Amendment of Plan................................ 4
15. Rights of Employees and Directors................................ 4
16. Compliance with Laws............................................. 4
17. Nonexclusivity of Plan........................................... 5
18. Severability..................................................... 5
19. Applicable Law................................................... 5
i
<PAGE> 3
EKCO GROUP, INC.
AMENDED
1996 PERFORMANCE UNIT RIGHTS AWARD PLAN
1. Purpose
The purpose of this Ekco Group, Inc. Amended 1996 Performance Unit Rights
Award Plan (the "Plan") is to provide a means by which Ekco Group, Inc. (the
"Company") and/or its subsidiary corporations shall be able to attract and
retain competent key employees and directors and provide those persons with an
opportunity to participate in the increased value of the Company which their
efforts, initiative and skill have helped produce.
2. Administration
(a) The Plan shall be administered on behalf of the Company by the
Compensation Committee (the "Committee") of the Board of Directors (the "Board")
as that Committee may be constituted from time to time.
(b) Subject to the express provisions of the Plan, the Committee shall
have complete and discretionary authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it, and to make all other
determinations necessary or advisable for the administration of the Plan. The
determinations of the Committee on the matters referred to in this paragraph 2
shall be conclusive.
3. Participants
Participants in the Plan shall be selected by the Committee from key
employees and directors of the Company or any subsidiary of the Company (the
"Participants").
4. Operation
(a) Participants shall be awarded Performance Unit Rights (the "Rights")
for a period of six years or such shorter period as may be determined by the
Committee (the "Designated Period"). The Designated Period may vary as among
Participants and as among awards to a Participant. On the date on which the
Right is exercised ("Exercise Date"), the Participant shall receive an amount
equal to the appreciation in market value of his or her Rights as determined in
paragraph 5 of the Plan. That amount shall be payable in cash, shares of common
stock of the Company ("Company Common Stock"), or some combination of both, as
set forth in the Award Agreement. No fractional shares shall be issued but a
Participant shall be entitled to a cash adjustment for a fractional share that
would otherwise be issued. Rights will be cancelled upon the Participant's
exercise of such Rights, and no further payment shall be made as to Rights
exercised by a Participant.
<PAGE> 4
(b) Vesting of Rights. The Committee may designate a vesting schedule with
respect to each separate Award of Rights. The Committee may, in its sole
discretion (but is not obligated to) provide for the acceleration of vesting of
Rights upon the occurrence of certain enumerated events, including, but not
limited to, the death, disability or retirement of the Participant.
(c) Definition of Performance Unit Rights. A Right is an award in the form
of a right to receive, upon exercise of the Right during the Designated Period,
but without other payment, an amount based on appreciation in the value of
Company Common Stock over a base price established in the Award Agreement.
Unless the Committee provides otherwise, and such provision is reflected in the
Award Agreement, the minimum base price of a Right granted under this Plan shall
be not less than the Fair Market Value (as defined below) of the underlying
Company Common Stock on the date the Right is granted.
5. Appreciation of Rights
The underlying value of the Company Common Stock (the "Stock Value") on
both the date the Right is awarded (the "Award Date") and the Exercise Date
shall be stated in each Participant's Award Agreement and shall be determined by
either (i) the Committee, in its sole discretion, or (ii) a formula based on the
market value (the "Fair Market Value") of the Company Common Stock on a
particular day or the average price of the Company Common Stock over a series of
days. The appreciation in the Stock Value of Rights for purposes of determining
payments to be made to a Participant shall be measured by determining the Stock
Value of Rights held by that Participant on the Exercise Date and subtracting
from that the Stock Value of the same Rights on the Award Date. The measurement
of appreciation shall be made separately with respect to each separate award of
Rights.
6. Nature of Rights
The Rights shall be used solely as a device for the measurement and
determination of the amount to be paid to Participants as provided in the Plan.
The Rights shall not constitute or be treated as property or as a trust fund of
any kind. All amounts at any time attributable to the Rights shall be and remain
the sole property of the Company and all Participants' rights hereunder are
limited to the rights to receive cash or shares of Company Common Stock as
provided in this Plan.
7. Effective Date
The Plan shall become effective upon approval of it by the affirmative
vote of a majority of the Board and the Plan shall be deemed to be adopted on
the date of that meeting.
2
<PAGE> 5
8. Limits on Awards
The maximum number of Rights that may be granted under the Plan is
2,000,000.
9. Dilution
In the event of a stock split, stock dividend, reclassification,
reorganization or other capital adjustment of shares of Company Common Stock,
the number of Rights of a Participant and the maximum number of Rights provided
in paragraph 8 shall be adjusted in the same manner as shares of the Company
Common Stock reflected by those Rights would be adjusted.
10. Award Agreements
Each award of a Right under this Plan shall be evidenced by an Award
Agreement in a form approved by the Committee setting forth the number of
Rights, vesting schedule, if any, the formula for determining the price of
Company Common Stock upon which the Right is based and the term. The Award
Agreement shall also set forth (or incorporate by reference) other material
terms and conditions applicable to the Award as determined by the Committee
consistent with the limitations of this Plan.
11. Transferability
Any rights arising under the Plan shall not be transferable otherwise than
by will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order (as defined in the Internal Revenue Code of 1986, as
amended, or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations thereunder), or as otherwise deemed
appropriate by the Committee.
12. Securities Act of 1933
Upon issuance of Company Common Stock to the Participant, or his heirs,
the recipient of that Company Common Stock shall represent that the shares of
Company Common Stock are taken for investment and not resale and make those
other representations as may be necessary to qualify the issuance of the shares
as exempt from the Securities Act of 1933 or to permit registration of the
shares and shall represent that he or she shall not dispose of those shares in
violation of the Securities Act of 1933, or any applicable state securities
laws. The Company reserves the right to place a legend on any stock certificate
issued under the Plan to assure compliance with this paragraph. No shares of
Company Common Stock shall be required to be distributed until the Company or
Participant shall have taken such action, if any, as is then required to comply
with the provisions of the Securities Act of 1933 or any other then applicable
federal or state securities law.
3
<PAGE> 6
13. Withholding of Tax
There shall be deducted from each distribution under the Plan the amount
of any tax required by any governmental authority to be withheld and paid over
by the Company to that governmental authority for the account of the person
entitled to the distribution.
14. Termination and Amendment of Plan
The Board or the Committee may at any time amend, suspend or terminate the
Plan, as it shall deem advisable; provided, however, that no such amendment or
termination may, without the consent of the Participant to whom any Right shall
have been previously awarded, adversely affect any of the Participant's rights
with respect to that Right.
15. Rights of Employees and Directors
(a) No Right to an Award. Status as an employee or director shall not be
construed as a commitment that any one or more awards of Rights will be made
under this Plan to an employee or director or to employees or directors
generally. Status as a Participant shall not entitle the Participant to any
additional awards of Rights.
(b) No Assurance of Employment or Director Status. Nothing contained in
this Plan (or in any other documents related to this Plan or to any Right
awarded hereunder) shall confer upon any Participant any right to continue in
the employ or other service of the Company or any subsidiary or constitute any
contract of employment or change any employee's or Participant's compensation or
other benefits or limit the right of the Company (or, if applicable, a
subsidiary) to terminate the employment or other service of any Participant with
or without cause.
16. Compliance with Laws
This Plan, Award Agreements, and the grant, exercise, conversion,
operation and vesting of Rights, and the issuance and delivery of shares of
Company Common Stock and/or other securities or property or the payment of cash
under this Plan or Award Agreements, are subject to compliance with all
applicable federal and state laws, rules and regulations (including, but not
limited to, state and federal insider trading, registration, reporting and other
securities laws and federal margin requirements) and to such approvals by any
listing, regulatory or other governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions (and
provide such evidence, assurance and representations to the Company as to
compliance with any thereof) as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements.
4
<PAGE> 7
17. Nonexclusivity of Plan
Nothing in this Plan shall limit or be deemed to limit the authority of
the Company, the Board or the Committee to grant awards or authorize any other
compensation, with or without reference to the Company Common Stock, under any
other plan or authority.
18. Severability
In case any provision in this Plan shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions, or of such provision in any other jurisdiction, shall
not in any way be affected or impaired hereby.
19. Applicable Law
This Plan, Award Agreement and any related documents and matters shall be
governed in accordance with the laws of the State of New Hampshire, except as to
matters of federal law.
5
<PAGE> 1
EXHIBIT 10.16(c)
----------------
EKCO GROUP, INC.
1996 PERFORMANCE UNIT RIGHTS AWARD PLAN
FORM OF AWARD AGREEMENT
-----------------------
This 1996 Performance Unit Rights Award Plan Award Agreement (hereinafter
this "Award Agreement") is entered into as of December 4, 1996 (hereinafter the
"Award Date") between Ekco Group, Inc., a Delaware corporation with a principal
place of business located at 98 Spit Brook Road, Nashua, New Hampshire 03062
(hereinafter the "Company") and Robert Stein (hereinafter the "Employee"), an
individual who resides at 30 Blood Road, Andover, Massachusetts 01810.
The Company has adopted the 1996 Performance Unit Rights Award Plan
(hereinafter the "Plan"). All capitalized terms used in this Award Agreement and
not otherwise defined shall have the meanings given to them in the Plan.
Pursuant to Section 3 of the Plan, the Employee has been designated as a
Participant in the Plan. Pursuant to Section 4 of the Plan, the Company has
granted Rights to the Employee upon the terms and conditions set forth herein,
as required by the Plan.
For good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Employee hereby agree to the terms and
conditions set forth herein as required by the terms of the Plan:
1. NUMBER OF RIGHTS AWARDED. This Award Agreement evidences the award by
the Company to the Employee of [No. of Rights] Rights, effective as of the Award
Date, and pursuant to Section 4 of the Plan.
2. DESIGNATED PERIOD. Pursuant to Section 4 of the Plan, the Employee may
exercise the Rights awarded under this Award Agreement at any time or times
during a period of time commencing on the Award Date and ending on [Date of End
of Period] (hereinafter the "Designated Period"). The Employee may exercise any
or all of his Rights on any given day or days during the Designated Period and
any such day or days shall be known as an Exercise Date. The amount of the award
paid to the Employee on such Exercise Date by the Company shall be calculated
pursuant to Section 3 of this Award Agreement and pursuant to the other
applicable terms and conditions of this Award Agreement and the Plan.
Immediately after the expiration of the Designated Period, all Rights hereunder
which have not been exercised shall be forfeited, and the Employee (and his
beneficiaries, if applicable) shall thereafter have no rights or entitlement
with respect to such forfeited Rights.
3. VALUE OF THE RIGHT.
(a) VALUE. Upon exercise of any Right on an Exercise Date, the
Employee shall be entitled to payment by the Company of an amount equal to the
appreciation in value of the
1
<PAGE> 2
Right awarded hereunder, as determined according to paragraph (b) below,
multiplied by the number of Rights exercised on the Exercise Date. The Employee
shall receive payment upon exercise of the Right in cash, payable by wire
transfer within three business days of the Exercise Date. In the event that the
Company fails to pay the Employee such amount on a timely basis, the Company
shall also pay the Employee (i) interest on overdue amounts at a rate per annum
equal to the prime rate of interest as announced from time to time by Fleet Bank
of Massachusetts, N. A. plus two (2) percentage points and (ii) Employee's costs
of enforcement and collection, including reasonable attorneys fees and expenses.
(b) FORMULA. The formula for determining the appreciation in value
of the Right shall be as follows: (i) $[Dollar Amount] subtracted from (ii) the
lesser of (A) the average value of the Company Common Stock over the ten (10)
business days preceding any Exercise Date and (B) $[Dollar Amount]. The closing
price of the Company Common Stock on the New York Stock Exchange for each of the
ten (10) business days shall be the basis for determining the ten-day average
value discussed above. If the Company Common Stock is not traded on the New York
Stock Exchange, the closing price on the principal exchange on which the shares
are traded shall be used, or, if no closing price is available, the basis for
determining the value of the shares of the Company Common Stock shall be
determined by the Committee, in its sole discretion.
4. TAXES AND WITHHOLDING. The Employee agrees that to the extent
applicable, the Employee shall be responsible for any and all federal, state or
local taxes which may become due and owing in relation to the Rights awarded
herein, and that the Company may withhold any federal, state or local taxes upon
the exercise of the Rights, at such time and upon such terms and conditions as
required by law.
5. NO ASSIGNABILITY. Any rights arising hereunder shall not be
transferable otherwise than by will, the laws of descent and distribution, or
pursuant to a qualified domestic relations order (as defined in the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations thereunder);
provided, however, that the Rights may be transferred to a member of the
Employee's immediate family or to a trust or other entity for his or such family
member's benefit.
6. GENERAL TERMS. The Rights and this Award Agreement are subject to, and
the Company and the Employee agree to be bound by, all applicable provisions of
the Plan. Such provisions are incorporated herein by reference. The Employee
acknowledges receipt of a copy of the Plan. In the event of a conflict between
the terms of this Award Agreement and the Plan, the Plan shall be the
controlling document.
7. OTHER PROVISIONS.
(a) Neither the Employee nor any person entitled to exercise the
Rights shall have any rights as a stockholder with respect to any Rights.
2
<PAGE> 3
(b) The Employee acknowledges that the Company has the right to
terminate, modify, or amend the Plan at any time, but that no such termination,
modification or amendment may, without the Employee's consent, adversely affect
the rights of the Employee hereunder.
(c) In the event that any provision of this Award Agreement is held
to be invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Award Agreement.
(d) The rights and obligations under this Award Agreement shall
inure to the benefit of, and shall be binding upon, the Company, the Employee
and the Employee's representatives and beneficiaries.
(e) Any notices or communications under this Award Agreement or the
Plan shall be given by delivering the same in hand or by depositing such notice
or communication in the mail, certified or registered mail, return receipt
requested, postage prepaid, as follows:
To the Company: EKCO GROUP, INC.
98 Spit Brook Rd.
Nashua, New Hampshire 03062
Attention: Chief Financial Officer
To the Employee: Mr. Robert Stein
30 Blood Road
Andover, Massachusetts 01810
or at such other address as either party may hereafter designate in writing to
the other.
(f) The interpretation, performance and enforcement of this Award
Agreement shall be governed by the laws of the State of New Hampshire.
[THE BALANCE OF THE PAGE LEFT BLANK INTENTIONALLY]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EKCO GROUP, INC.
By: ___________________________
Malcolm L. Sherman
Chief Executive Officer and
Chairman of the Board
Attest:
______________________
Secretary
_______________________
Robert Stein
4
<PAGE> 5
SCHEDULE TO
FORM OF AWARD AGREEMENT FOR ROBERT STEIN
<TABLE>
Robert Stein has five Award Agreements with the Company pursuant to
the Company's 1996 Amended Performance Unit Rights Award Plan which are
identical in form to the foregoing Form of Award Agreement except as to the
number of Rights awarded, the designated period and the value thereof:
<CAPTION>
Date of No. of Designated Average Pre-ward
Name Award Rights Period Date Value
- ---- ----- ------ ------ ----------
<S> <C> <C> <C> <C>
Robert Stein 12-04-96 200,000 12-04-96 to $3.6875
09-08-98
Robert Stein 12-04-96 124,000 12-04-96 to $3.5000
06-22-99
Robert Stein 12-04-96 69,000 12-04-96 to $3.5000
12-01-99
Robert Stein 12-04-96 66,359 12-04-96 to $5.9375
12-01-99
Robert Stein 12-04-96 66,359 12-04-96 to $6.5000
12-01-99
</TABLE>
5
<PAGE> 1
EXHIBIT 10.17
-------------
EKCO GROUP, INC.
98 Spit Brook Road
Nashua, NH 03062
December 4, 1996
Mr. Robert Stein
30 Blood Road
Andover, MA 01810
RE: SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT
------------------------------------------
Dear Bob:
This letter sets forth the terms of your agreement with Ekco Group, Inc.
(the "Company") and its subsidiaries and affiliates ("Ekco") regarding the
termination of your employment with Ekco.
We have agreed as follows:
I. TERMINATION OF EMPLOYMENT: The effective date of the termination of your
employment will be the date set forth above (the "Separation Date"). You hereby
resign from your positions as an employee of and the President and Chief
Executive Officer of the Company 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 from time to
time reasonably request to evidence the foregoing. 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.
1. SEVERANCE PAYMENTS: Your resignation shall be treated as a termination
by the Company of your employment without "Good Cause" pursuant to the Amended
and Restated Employment Agreement dated May 25, 1995 as amended (the "Employment
Agreement") between you and the Company. You and the Company agree that the
terms of this Agreement supersede the terms of the Employment Agreement, except
as explicitly set forth in Section 8 below. On January 2, 1997, or, if later,
the eighth day following your execution of this Agreement, provided you have not
exercised your right of rescission described in Section 11 below, the Company
will pay you by wire transfer a lump sum of One Million Nine Hundred Seventeen
Thousand Dollars ($1,917,000) less such amounts as the Company customarily
deducts and withholds from compensation payments. In addition to such amount,
you have an accrued vested benefit of $592,147 pursuant to the Company's
Supplemental Employee Retirement Program (the "SERP"). The Company will pay such
amount to you in lieu of any other payment or benefit under the SERP, in a lump
sum, by wire
<PAGE> 2
Mr. Robert Stein
December 4, 1996
Page 2
transfer, on January 2, 1997, less such amounts as the Company is required to
withhold for income tax purposes. In addition, the Company shall also reimburse
you for expenses incurred by you in connection with your employment with the
Company in accordance with past practice through the Separation Date, provided
that you submit such expense reimbursement request to the Chief Financial
Officer of the Company prior to January 15, 1997.
2. SEVERANCE BENEFITS: Until the earlier of (i) November 30, 1999 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 the Company, the Company will provide
you with medical, dental and group life insurance coverage and excess life
insurance coverage, in the same amounts and on the same terms and conditions as
it now provides such coverage to you. You agree to continue to pay the Company
for your share of the cost of such benefits by paying the Company, 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 the Company, at the
Company's option, you will accept such benefit(s) in lieu of those provided by
the Company, and the Company will reimburse you for the difference in the cost
(or, if such reimbursement is taxable to you, an amount equal to 140% of such
cost). In the event the Company cannot continue your coverage under the terms of
the applicable policies, the Company 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 the Company's applicable group policy outside of the Company's
group plan. In the event that the Company 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
the Company paid for your coverage under its group policies prior to the
Separation Date. For purposes of calculating the Company's costs of coverage as
to which the Company self insures, the costs shall be the amount that the
Company then charges individuals who elect to purchase COBRA continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act
("COBRA"), 42 USCS [Section]1396a, ET. SEQ., following termination of their
employment with the Company.
3. PERSONAL PROPERTY: Within two weeks from the date of this Agreement, you
will return to the Company, and not use, all property which belongs to Ekco or
which otherwise pertains to its business, including without limitation any and
all automobiles,
<PAGE> 3
Mr. Robert Stein
December 4, 1996
Page 3
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 the Company promptly for any personal charges made
to date in accordance with the Company's practice.
On or before December 16, 1996, you will transfer the account for your
cellular phone (508-989-6098) and the telephone at your home (508) 475-4267)
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.
4. 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 (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 the Company's 401(k)
plan, Employee Stock Purchase Plan ("ESPP"), and the Ekco Group, Inc. Employee
Stock Ownership Plan ("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.
5. CONSULTATION/COOPERATION: You shall make yourself available, upon
reasonable notice, through November 30, 1999 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. To the
extent such consultation involves more than deminimus time, the Company agrees
to compensate you for your consulting services at a reasonable rate to be
mutually agreed upon by you and the Company. You also shall
<PAGE> 4
Mr. Robert Stein
December 4, 1996
Page 4
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 the President of the Company. It is understood that
your obligations under this Section 6 shall not unreasonably interfere with your
other business obligations. The Company shall promptly reimburse you for
reasonable out of pocket expenses incurred by you at Ekco's request in complying
with your obligations under this Section 6. The Company agrees to indemnify,
defend and hold you harmless from damages incurred by you in connection with
providing such services to the same extent as the Company indemnifies its
directors pursuant to the terms the Company's bylaws.
6. RESTRICTED STOCK AND OPTIONS: We mutually acknowledge that as of the
date hereof you are the holder of 103,795 shares of Ekco Group, Inc. Common
Stock, $.01 par value ("Shares") which are subject to Restricted Stock Purchase
Agreements (the "Restricted Shares") and rights to purchase up to 797,718 Shares
("Options") 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, the Company 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. The Company agrees not to exercise any right of repurchase prior to such
date. You and the Company agree that all of your Options and rights under the
Stock Option Agreements are hereby terminated, except for Options to purchase up
to 124,000 Shares pursuant to a Stock Option Agreement dated June 22, 1988 and
Options to purchase up to 69,000 Shares pursuant to a Stock Option Agreement
dated January 18, 1990 (together, the "Remaining Option Agreements") which shall
remain in full force and effect in accordance with their terms and which shall
remain exercisable in accordance with their terms until June 4, 1997. Upon
execution of this Agreement the Company will issue to you the Performance Units
Rights Awards
<PAGE> 5
Mr. Robert Stein
December 4, 1996
Page 5
attached hereto as EXHIBITS 1-5. The Company represents that the grant of the
Performance Units Rights Awards to you are exempt purchases pursuant to Rule
16b-3 and agrees to indemnify, defend and hold you harmless from all liabilities
(including reasonable attorneys fees) arising out of the breach of this
representation. Promptly upon payment of the full purchase price in accordance
with the terms of the Remaining Option Agreements, the Company will deliver you
the certificates representing such Shares in accordance with the terms of the
Remaining 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 the Company 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 upon
exercise of Performance Unit Rights Awards you will also recognize income for
federal income tax purposes, and that similarly the Company will be required to
withhold on such date in accordance with applicable federal regulations. You
hereby agree to cooperate with the Company in such withholding, and, upon
receipt of notice from the Company, to pay to the Company 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.
7. NON-COMPETITION/NON-DISPARAGEMENT/CONFIDENTIALITY: The obligations set
forth in "Section 9, Confidentiality and Non-Competition" of your Employment
Agreement are reaffirmed and incorporated herein by reference, except that such
obligations shall continue until November 30, 1999 provided that you have
received and are continuing to receive all payments and benefits required to be
paid and provided pursuant to this Agreement.
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 the business of Ekco. The
Company will use reasonable efforts to cause its officers not to make any
statements that are intended to harm you or your reputation.
All information relating in any way to the subject matter of
<PAGE> 6
Mr. Robert Stein
December 4, 1996
Page 6
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 and the Company acknowledge that promptly
following the execution of this Agreement, the Company will disseminate the
press release attached hereto as Exhibit 6.
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 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. You
therefore agree that in the event of a 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 breach. The breach of any portion of this paragraph number 8
shall, in addition to any other remedy available to Ekco, entitle Ekco to
recover all of its costs and expenses, including reasonable attorneys' fees, in
enforcing its rights and your obligations under this Agreement.
8. 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
<PAGE> 7
Mr. Robert Stein
December 4, 1996
Page 7
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) 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 and Massachusetts anti-discrimination statutes, 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.
<PAGE> 8
Mr. Robert Stein
December 4, 1996
Page 8
Notwithstanding the foregoing, this Section shall not release Ekco from the
obligations expressly set forth in this Agreement, any ongoing indemnification
obligation (including any right to advancement of expenses) set forth in the
ByLaws of the Company or any of its subsidiaries, or with respect to the
Indemnification Agreement dated as of July 30, 1986 between you and the Company
(the "Indemnification Agreement") or as a matter of law, Remaining Option
Agreements, or distributions not yet made to you under the terms of the ESOP,
401(k) or the ESPP. Without limiting the generality of the foregoing, the
Company will indemnify, defend and hold you harmless against claims brought
against you for recovery of amounts paid or payable to you under this Agreement,
provided that such indemnification and defense shall be subject to the same
limitations on indemnification as are applicable to indemnification of officers
and directors under the Delaware General Corporation Law.
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 and directors do not as of
the date of this Agreement have actual knowledge of actions or omissions by you
which may constitute the basis for any claims against you.
9. 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. RESCISSION 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, you deliver a
notice of rescission to the President of the Company. To be effective, such
rescission must be postmarked or delivered in-hand within the seven (7) day
period to the President of the Company.
12. SPLIT DOLLAR LIFE INSURANCE/LETTER OF CREDIT: You and the Company will
cooperate to cause that certain letter of credit issued by Fleet Bank of
Massachusetts, N.A. in accordance with your existing Employment Agreement to be
amended promptly upon execution of this Agreement to (i) reduce the aggregate
amount thereof to $2,600,000 and (ii) secure the Company's obligations under
Section 2 of this Agreement in lieu of the Company's obligations under the
<PAGE> 9
Mr. Robert Stein
December 4, 1996
Page 9
Employment Agreement. Until the letter of credit is so amended, the Company
agrees that the Company's obligations to you under Section 2 of this Agreement
shall be deemed to be a surviving obligation under the Employment Agreement for
purposes of the letter of credit, entitling you to draw on the letter of credit
if and to the extent the Company breaches its obligations to you under Section 2
of this Agreement. Upon payment to you of the amounts referred to in Section 2,
you will return the original letter of credit together with any amendment to the
Company. Effective on December 15, 1996, 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 the Company all of your right, title and
interest in and to such policy, provided, however, that at your request prior to
such date the Company will cooperate with you to transfer such policy to you to
the extent such transfer can be accomplished without cost to the Company.
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 Remaining Stock
Option, Performance Unit Rights Award and Restricted Stock Purchase Agreements
referred to in paragraph 7, and the terms of the Company'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 Commonwealth of Massachusetts. 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.
<PAGE> 10
Mr. Robert Stein
December 4, 1996
Page 10
This Agreement is executed and shall take effect as an instrument under
seal.
Very truly yours,
Ekco Group, Inc.
By: /s/ MALCOLM L. SHERMAN
-------------------------------
Malcolm L. Sherman,
Chairman
Agreed:
/s/ ROBERT STEIN
- -----------------------
Robert Stein
Date: 12/4/96
-------
<PAGE> 1
EXHIBIT 10.22(b)
----------------
THIRD AMENDMENT TO CREDIT AGREEMENT
This Amendment is made as of November 13, 1996 among EKCO GROUP, INC., a
Delaware Corporation ("Group"), EKCO HOUSEWARES, INC., a Delaware corporation
and a wholly owned subsidiary of Group ("Housewares"), and EKCO CONSUMER
PLASTICS, INC. (formerly Frem Corporation), a Massachusetts corporation and a
wholly owned subsidiary of Housewares ("Frem" and collectively with Group and
Housewares, the "Obligors"); FLEET NATIONAL BANK (formerly 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,
as amended (the "Credit Agreement").
WHEREAS, the Obligors and the Lenders have agreed to certain modifications
of the Credit Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Section 1.1. Definitions shall be amended as follows:
"BORROWING BASE" shall mean eighty percent (80%) of Eligible Accounts.
In calculating the Borrowing Base, the Borrower shall deduct from Eligible
Accounts the amount of any (i) deposit which an account debtor may have paid
with respect to the goods or services to which such account receivable relates;
(ii) potential setoff; (iii) amount in dispute; and (iv) advertising or other
allowance (except an allowance for prompt payment) that will be deducted from
the receivable in the ordinary course of collection. The Agent, in its
discretion, may from time to time by seven (7) days prior notice to the Borrower
(a) determine that any item included in the Borrowing Base is unacceptable for
inclusion in the Borrowing Base in the future; or (b) establish reserves against
the collection of any accounts receivable where the Agent has a reasonable basis
to doubt the full and timely collectability of such accounts receivable.
"ELIGIBLE ACCOUNTS" shall mean accounts receivable which (a) arise
from the sale of goods which have been shipped; (b) are not outstanding for more
than 120 days after the date of invoice; (c) are not past due for more than 30
days beyond the due date specified in the invoice; (d) are not represented by a
note or other negotiable instrument; (e) are due from an account debtor located
in the United States; (f) the account debtor is CREDIT WORTHY and not subject to
any insolvency proceedings; (g) are not due from a Subsidiary or an Affiliate;
and (h) are subject to a first priority perfected security interest in favor of
the Lenders.
"MAXIMUM REVOLVING CREDIT AMOUNT" shall mean $35,000,000.
2. ARTICLE 2. THE CREDITS. (a) The introduction and Section 2.1 shall
be amended in their entirety to read as follows:
<PAGE> 2
"Subject to the terms and conditions hereof, and in reliance on the
representations and warranties contained herein, each of the Lenders hereby
establish 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
$35,000,000. All references hereinafter made to Borrowers or Borrower shall mean
Group.
SECTION 2.1. THE REVOLVING CREDIT FACILITIES. (a) Subject to the terms
and conditions of this Agreement and so long as there exists no Default, at any
time prior to the Revolving Credit Termination Date or the earlier acceleration
of the Revolving Credit Notes, each Lender shall severally make such Advances to
the Borrower as the Borrower may from time to time request, by notice to the
Agent in accordance with Section 2.2, in an aggregate amount with respect to any
Revolving Credit Facility (i) as to each Lender, not to exceed at any time the
amount of such Lender's Revolving Credit Commitment with respect to such
Revolving Credit Facility, and (ii) as to all of the Lenders, not to exceed an
amount determined by subtracting (A) the aggregate outstanding balance of all
Advances theretofore made by the Lenders with respect to such Revolving Credit
Facility PLUS the aggregate amount available to be drawn under all Letters of
Credit issued by the Agent for the account of the applicable Obligor in
accordance with Section 2.11 hereof, PLUS the amount of any unreimbursed draws
under Letters of Credit FROM (B) the lesser of (x) the Borrowing Base or (y) the
Maximum Revolving Credit Amount from time to time in effect for such Revolving
Credit Facility. Concurrently with the execution of the Agreement, the Borrower
will execute and deliver to the Lenders their Revolving Credit Notes to evidence
the Advances under the respective Revolving Credit Facilities.
(b) Subject to the foregoing limitations and the provisions of Article
4 hereof, the Borrower shall have the right to repay the outstanding balance of
the Advances and to request further Advances, by notice to the Agent in
accordance with Section 2.2; PROVIDED that the Agent and the Lenders shall have
the absolute right to refuse to make any Advances for so long as there would
exist any Default upon the making of such Advance of after giving effect
thereto. All outstanding Advances and all interest accrued and unpaid thereon
and all other amounts outstanding hereunder shall be paid in full on the
Revolving Credit Termination Date.
(c) The Borrower shall furnish a computation of the Borrowing Base on
a form approved by the Agent by the fifteenth (15th) day of each calendar month
which computation shall be prepared as of the close of business on the last
business day of the preceding calendar month and certified as correct by the
Borrower's chief financial officer, treasurer or controller. The Lenders shall
have no obligation to make any Advance if the Borrower fails to furnish such
computation on a timely basis."
(d) SECTION 2.5. FEES. Subsection (a) shall be amended by substituting
"one-half of one percent (.50%)" for "three-eighths of one percent (.375%)."
2
<PAGE> 3
Subsection (b) shall be amended by substituting "the Applicable
Margin-LIBOR Rate" for "one and one-quarter percent (1.25%)."
3. The following SECTION 6.14 shall be added following Section 6.13:
"SECTION 6.14. MONTHLY FINANCIAL STATEMENTS. As soon as available, and
in any event within thirty (30) days after the end of each month of the Borrower
(except such period shall be forty-five (45) days after the last month of the
Borrower's fiscal year), the Borrower shall furnish the Agent and the Lenders
with unaudited consolidated and consolidating balance sheets of Group and its
Subsidiaries, as of the end of such month and related consolidated and
consolidating statements of income, and consolidated statements of stockholders'
equity and estimated cash flows of Group and its Subsidiaries for such month and
for the period commencing at the end of the previous fiscal year and ending with
the end of such month."
4. 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:
Period Consolidated EBITDA (Group)
------ ---------------------------
Fiscal Year End 1995 $43,000,000
First Quarter Fiscal Year 1996 through
Third Quarter Fiscal Year 1996 40,000,000
Fourth Quarter Fiscal Year 1996 30,000,000
First Quarter Fiscal Year 1997 through
Third Quarter Fiscal Year 1997 45,000,000
Fiscal Year End 1997 and thereafter 50,000,000"
5. 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.
3
<PAGE> 4
Period Ratio
------ -----
Fiscal Year End 1995 2:45:1.0
First Quarter Fiscal Year 1996 through
Third Quarter Fiscal Year 1996 2:25:1.0
Fiscal Year End 1996 1:60:1:0
First Quarter Fiscal Year 1997 and thereafter 2:75:1.0"
6. 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:
Period Ratio
------ -----
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 1:30:1:0
First Quarter Fiscal Year 1997 through
Third Quarter Fiscal Year 1997 1:75:1.0
Fiscal Year End 1997 and thereafter 2:00:1.0"
7. 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:
4
<PAGE> 5
Period Ratio
------ -----
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 4:50:1:0
First Quarter Fiscal Year 1997 through
Third Quarter Fiscal Year 1997 2.90:1.0
Fiscal Year End 1997 and thereafter 2.50:1.0"
8. SECTION 9.6. MERGERS AND ACQUISITIONS. The proviso to subsection
(a) added by the Second Amendment dated March 26, 1996 is amended in its
entirety as follows:
"and further provided, that no acquisition shall be made without the
prior written approval of Majority Lenders and no acquisition that involves an
expenditure in excess of $5,000,000 shall be made without the prior written
consent of all Lenders."
9. SECTION 12.1. ACTION BY LENDERS. Subparagraph (a) is amended in its
entirety to read as follows:
"(a) no reduction in principal, interest rates, Revolving Credit
Commitment Fee, Letter of Credit Commitment Fee or any other fee relating to the
Revolving Credit Commitments or the Advances shall be made;"
10. The Lenders hereby waive compliance with respect to the following
financial covenants for the Third Quarter Fiscal Year 1996: Section 7.1 Minimum
Consolidated EBITDA, 7.2 Ratio of Consolidated EBITA to Consolidated
Interest Expense, 7.4 Ratio of Consolidated Senior Funded Indebtedness to
Consolidated EBITDA. Such waiver shall not apply with respect to any other
period.
11. The Borrower agrees to provide a written supplement to the Schedules
to the Credit Agreement on or before November 22, 1996, such that the
Schedules as modified by the supplement will be true, accurate and correct as of
the date of this Third Amendment.
12. The Borrower shall pay an amendment fee to the Agent for the pro rata
benefit of the Lenders in connection with the execution of this Third Amendment
of $93,750. The Borrower agrees to pay an additional amendment fee of $43,750
in the event the Borrower and the Lenders reach agreement for a further
amendment which restates the financial covenants and other provisions as deemed
necessary for Fiscal 1997 and 1998.
5
<PAGE> 6
13. 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 Third Amendment, which replace and supersede the
Revolving Credit Commitment and Revolving Credit Commitment Percentage set forth
on the execution pages to the Second Amendment.
14. Except as specifically set forth herein and in the First Amendment to
Credit Agreement dated December 31, 1995 and the Second Amendment to Credit
Agreement dated March 25, 1996, 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/DONATO A. DENOVELLIS
-------------------------------------------
Name: Donato A. DeNovellis
Title: Executive Vice President, Finance
and Administration and Chief
Financial Officer
GUARANTORS:
EKCO HOUSEWARES, INC.
By: /S/DONATO A. DENOVELLIS
-------------------------------------------
Name: Donato A. DeNovellis
Title: Senior Vice President and Chief
Financial Officer
EKCO CONSUMER PLASTICS, INC.
By: /S/DONATO A. DENOVELLIS
-------------------------------------------
Name: Donato A. DeNovellis
Title: Vice President, Chief Financial
Officer and Clerk
6
<PAGE> 7
AGENT:
FLEET NATIONAL BANK (formerly Fleet Bank of
Massachusetts, N.A.), as Agent
By: /S/THOMAS F. MCNAMARA
-------------------------------------------
Name: Thomas F. McNamara
Title: Vice President
LENDERS:
FLEET NATIONAL BANK (formerly Fleet Bank of
Massachusetts, N.A.)
By: /S/THOMAS F. MCNAMARA
-------------------------------------------
Name: Thomas F. McNamara
Title: Vice President
Address: Fleet National Bank
75 State Street
Boston, Massachusetts 02109
Attn: Thomas F. McNamara,
Vice President
Telefax: (617) 346-1837
Revolving Credit
Commitment Percentage: 40.00%
Revolving Credit Commitments: $14,000,000
7
<PAGE> 8
ABN AMRO BANK N.V., BOSTON BRANCH
By: /S/CAROL A. LEVINE
--------------------------------------------
Name: Carol A. Levine
Title: Senior Vice President &
Managing Director
By: /S/CHARLES J. WAHLE
--------------------------------------------
Name: Charles J. Wahle
Title: Assistant Vice President
Address: ABN AMRO Bank, N.V.,
Boston Branch
One Post Office Square - 39th Floor
Boston, Massachusetts 02109
Attn: Charles J. Wahle, Vice President
Telefax: (617) 988-7910
Revolving Credit
Commitment Percentage: 20%
Revolving Credit Commitments: $7,000,000
8
<PAGE> 9
THE SUMITOMO BANK, LIMITED
By: /S/D.G. EASTMAN
--------------------------------------------
Name: D.G. Eastman
Title: Vice President & Manager
By: /S/ ALFRED DEGEMMIS
--------------------------------------------
Name: Alfred DeGemmis
Title: Vice President
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: $4,666,666
9
<PAGE> 10
PNC BANK, NATIONAL ASSOCIATION
By: /S/KWAN L. GRAYS
--------------------------------------------
Name: Kwan L. Grays
Title: Assistant Vice President
Address: PNC Bank, National Association
345 Park Avenue, 29th Floor
New York, New York 10154
Attn: Kwan L. Grays
Telefax: (212) 409-3737
Revolving Credit
Commitment Percentage: 13.33%
Revolving Credit Commitments: $4,666,666
MELLON BANK, N.A.
By: /S/RITA C. LONG
--------------------------------------------
Name: Rita C. Long
Title: Vice President
Address: Mellon Bank, N.A.
One Boston Place - 6th Floor
Boston, Massachusetts 02108
Attn: Rita Long
Telefax: (617) 722-3516
Revolving Credit
Commitment Percentage: 13.33%
Revolving Credit Commitments: $4,666,666
10
<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
Management's Report
Report of Independent Auditors
<PAGE> 2
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data of the Company shown below for the
five-year period ended December 29, 1996 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 (1)
------------------------------------------------------------------------
1996 (2) 1995(2) 1994(2) 1993(2) 1992
-------- ------- ------- ------- ----
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA
Current assets $139,377 $139,425 $145,290 $124,220 $109,970
Total assets 292,076 301,058 312,518 303,332 250,423
Current liabilities 49,734 54,618 45,973 59,595 36,674
Long-term obligations, less current portion 124,182 96,700 124,460 111,820 93,045
Series B ESOP Convertible Preferred Stock 4,098 3,458 3,096 2,686 2,111
Stockholders' equity 102,515 135,925 129,116 116,864 110,567
Common shares outstanding 18,580 18,414 18,069 17,844 17,148
CONSOLIDATED STATEMENT OF OPERATIONS DATA
Net revenues from continuing operations (1) $249,870 $247,004 $233,527 $215,145 $176,155
Cost of sales 164,505 160,933 148,935 139,736 108,871
Selling, general and administrative 59,737 49,152 48,286 45,847 41,115
Special charges (3) 9,877 - - 11,000 -
EBITDA before special charges (4) 39,609 50,896 48,511 40,730 33,604
Amortization of excess of cost over fair value 3,636 3,636 3,637 3,394 2,779
Net interest expense 12,416 13,493 12,491 12,206 10,680
Income (loss) from continuing operations
before income taxes (1) (301) 19,790 20,178 2,962 12,710
Income taxes 2,370 9,828 9,102 2,637 6,170
Income (loss) from continuing operations before
extraordinary charges and cumulative effect of
accounting changes (1)(5)(6) (2,671) 9,962 11,076 325 6,540
Earnings (loss) from continuing operations
common share before extraordinary charges
and cumulative effect of accounting changes
(1)(5)(6) (.14) .49 .55 .02 .35
Cash dividends per common share and Series
B ESOP Convertible Preferred share .02 .08 - - -
</TABLE>
2
<PAGE> 3
(1) On January 31, 1997, the Company's Board of Directors approved management's
plan to dispose of the Company's molded plastic products business.
Accordingly, prior year financial information has been restated to reflect
the molded plastic business operations as discontinued operations. See Note
2 of Notes to Consolidated Financial Statements.
(2) Includes operations of Kellogg Brush Manufacturing Co. and subsidiaries
acquired on April 1, 1993.
(3) See Note 17 of Notes to Consolidated Financial Statements for information
on special charges.
(4) EBITDA before special charges represents earnings from continuing
operations before special charges, interest, taxes, depreciation,
amortization of excess of cost over fair value and other amortization.
(5) During Fiscal 1996, the Company recorded an extraordinary charge of $3.2
million (net of income taxes of $2.1 million) for the early extinguishment
of long-term obligations.
(6) During Fiscal 1993, the Company recorded a charge of $3.2 million (net of
income taxes of $2.0 million) to reflect the cumulative effect of changes
in the method of accounting for post-retirement and post-employment
benefits.
3
<PAGE> 4
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:
LOW HIGH
1996
First Quarter 5 5/8 6 1/4
Second Quarter 5 1/8 6 3/8
Third Quarter 4 5/8 5 7/8
Fourth Quarter 3 1/4 4 7/8
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
On March 6, 1997, the Company had 2,078 stockholders of record. At December
29, 1996, the Company was not in compliance with certain covenants of its bank
credit facility and such noncompliance has been waived. The Company has
suspended the payment of a quarterly dividend and does not anticipate paying
cash dividends for the foreseeable future. In order for the Company to pay a
dividend, its arrangement with holders of its 9.25% Senior Notes due 2006 and
bank credit facility would need to be amended.
4
<PAGE> 5
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 29, 1996 ("Fiscal 1996"), December 31, 1995 ("Fiscal
1995") and January 1, 1995 ("Fiscal 1994") and the discussion of financial
condition at December 29, 1996 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 following table summarizes the
changes in the components of the Company's net revenues from continuing
operations by product category over the last three fiscal years:
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C>
Bakeware ...................................... $ 84,537 33.8% $ 81,261 32.9% $ 76,558 32.8%
Kitchenware.................................... 65,846 26.4% 73,006 29.6% 72,023 30.8%
Cleaning products.............................. 54,248 21.7% 55,191 22.3% 53,003 22.7%
Pest control and small animal
care and control products.................... 34,617 13.9% 34,034 13.8% 31,943 13.7%
VIA .......................................... 10,622 4.2% 3,512 1.4% - -
-------- ----- -------- ----- -------- -----
Total net revenues.................... $249,870 100.0% $247,004 100.0% $233,527 100.0%
======== ===== ======== ===== ======== =====
</TABLE>
FISCAL 1996 vs. FISCAL 1995
NET REVENUES FROM CONTINUING OPERATIONS
Net revenues from continuing operations for Fiscal 1996 increased
approximately $2.9 million (1.2%) from the prior year. The increase was
primarily due to sales of the Company's new insulated bakeware and growth of the
Company's new line of VIA products. This increase was substantially offset by a
decline in sales of the Company's kitchen tools and gadgets and cleaning
products. Sales of kitchen tools and gadgets were heavily affected earlier in
Fiscal 1996 by the high year end inventories held by our retail customers and
weak consumer demand in a category that is highly dependent on impulse
purchases. In addition, the Company's net revenues were negatively affected by:
(i) its strategic decision to re-focus the J-Hook program to improve
profitability; (ii) the loss of kitchen tools and gadgets sales to customer
direct import programs and (iii) a reduction in customer shelf space allotted
for the Company's products.
GROSS PROFIT FROM CONTINUING OPERATIONS
The Company's gross profit margin of 34.2% for Fiscal 1996 was slightly
lower than the Fiscal 1995 level of 34.8%. The gross margin decline is primarily
attributable to manufacturing inefficiencies in the Company's bakeware products
as a result of customer demand for the new insulated bakeware products which
significantly exceeded expectations and a shift in customer mix in the cleaning
products with more sales to home-center customers where margins are typically
lower.
5
<PAGE> 6
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES OF CONTINUING OPERATIONS
Selling, general and administrative expenses for Fiscal 1996 increased
approximately $10.6 million (21.5%) from the prior year. The increase was
primarily due to increased expenditure on product development of $3.3 million
and higher levels of advertising and promotion in expectation of additional
sales which did not materialize. In addition, the 1995 results included the
favorable impact from the collection of a previously written off receivable
($1.1 million) relating to a 1987 real estate transaction. The remainder of the
increase relates to a number of individually insignificant items, including
severance unrelated to severance of Company's former CEO, legal and professional
fees and growth of the Company's VIA product line.
NET INTEREST EXPENSE
Net interest expense for Fiscal 1996 declined to $12.4 million from the
Fiscal 1995 level of $13.5 million. The decline in net interest expense was
primarily due to lower average interest rates.
SPECIAL CHARGES
The special charges of $9.9 million in Fiscal 1996 relate to the following:
the adjustment to the carrying value of certain real property located in
Chicago, Illinois ($2.0 million), recorded in the third quarter; the severance
arrangement for the Company's former CEO ($3.0 million); and the consolidation
of the Company's cleaning products manufacturing facilities ($4.9 million) both
recorded in the fourth quarter. This consolidation will be implemented over
approximately a nine month period and will combine the manufacturing of cleaning
products currently located in Easthampton, Massachusetts into the existing
cleaning products manufacturing facility in Hamilton, Ohio. There will be
additional operating expenses of approximately $1.5 million during 1997
associated with the orderly transition of manufacturing activities to the
Hamilton, Ohio facility. The estimated annualized pre-tax savings from this
consolidation is expected to be approximately $2.3 million.
INCOME TAXES
The effective income tax rate increased to 787% in Fiscal 1996 from 50% in
Fiscal 1995. The increase occurred primarily because amortization of goodwill
and certain special charges, which are not deductible for income tax purposes,
represent a significant percentage of income from continuing operation before
income taxes. See Note 7 of Notes to consolidated Financial Statements for the
reconciliation of the provision for income taxes from continuing
operations to the statutory income tax rate applied to income from continuing
operations before income taxes.
6
<PAGE> 7
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
EXTRADORDINARY CHARGE
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 12.7% Notes due 1998 and 7.0%
Convertible Subordinated Note due 2002 and (ii) repay substantially all amounts
outstanding under its revolving credit facility. The early extinguishment of the
12.7% Notes and 7% Convertible Subordinated Note resulted in an extraordinary
pre-tax charge of $5.3 million and an after tax charge of $3.2 million.
DISCONTINUED OPERATIONS
Discontinued operations consisted of the following:
FISCAL 1996 FISCAL 1995
----------- -----------
(AMOUNTS IN THOUSANDS)
Loss from operations $26,648 $3,851
Income tax benefits 1,928 1,934
------ -----
Net loss from operations $24,720 $1,917
====== =====
Loss on disposal, net of income
taxes ($1,925) $ 3,575 $ -
======= =====
The Company recorded a $5.5 million pre-tax charge in the fourth quarter of
Fiscal 1996 for the estimated costs associated with its decision to dispose of
its molded plastics business operations. The fourth quarter charge included a
pre-tax provision of $1.2 million for anticipated operating losses in fiscal
1997 until the estimated date of disposition, a $3.3 million estimated loss on
the disposition of the molded plastics business operations and a provision for
other disposal costs of $1.0 million. In the third quarter of Fiscal 1996 the
Company recorded a pre-tax charge of approximately $22.7 million to reduce the
carrying value of the molded plastics business assets (principally goodwill). As
this goodwill is not deductible for income tax purposes, there was no related
tax benefit.
FISCAL 1995 VS. FISCAL 1994
NET REVENUES FROM CONTINUING OPERATIONS
Net revenues for Fiscal 1995 increased approximately $13.5 million (5.8%)
from the prior year. Sales increased for all of the Company's product categories
in Fiscal 1995 despite a weak retail sales environment. 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 in sales of pest control products was principally due
to new product introductions, including Roach Magnet, and increased
distribution. Increased sales of cleaning products resulted from increased
distribution and the substantial growth of several hardware/homecenter
customers. Net revenues from the Company's new line of VIA products were
approximately $3.5 million, substantially all of which occurred in the second
half of Fiscal 1995.
GROSS PROFIT FROM CONTINUING OPERATIONS
7
<PAGE> 8
The Company's gross profit margin declined from approximately 36.2% for Fiscal
1994 to approximately 34.8% for Fiscal 1995. The primary factors contributing to
this decline were (i) increases in manufacturing and distribution costs incurred
in anticipation of a higher than realized volume of sales, (ii) a shift in
customer mix, resulting from the substantial growth of several hardware/home-
center customers with lower margins and (iii) 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 EXPENSES OF CONTINUING OPERATIONS
Selling, general and administrative expenses in Fiscal 1995 increased
approximately $900,000 (1.8%) from the prior year. Selling, general and
administrative expenses as a percentage of net revenues declined from 20.7% in
Fiscal 1994 to 19.9% in Fiscal 1995. The increase in expenses reflects increased
product placement and advertising costs, as well as costs associated with the
growth of VIA. The increase was partially offset by the collection of an amount
due relating to a 1987 real estate transaction ($1.1 million) which had
previously been written off.
NET INTEREST EXPENSE
Net interest expense increased $1.0 million to $13.5 million in Fiscal 1995
from the Fiscal 1994 level of $12.5 million. The higher year-over-year expense
was attributable to higher average borrowings and higher average interest rates.
INCOME TAXES FROM CONTINUING OPERATIONS
The effective income tax rate increased to 50% in Fiscal 1995 from 45% in
Fiscal 1994. The increase occurred primarily because amortization of goodwill,
which is not deductible for income tax purposes, represents a higher percentage
of income from continuing operations before income taxes.
DISCONTINUED OPERATIONS
The decline in profits from the Company's molded plastic business
operations was primarily due to the significant year-over-year increase in the
prices of plastic resin which adversely affected gross profit margin.
LIQUIDITY AND CAPITAL RESOURCES
During Fiscal 1996, the Company generated approximately $20.2 million from
operations including $4.8 million from the Company's molded plastic products
business operations, which are being classified as discontinued operations. The
comparable results for Fiscal 1995 was $21.7 million including $1.0 million from
discontinued operations. Such funds, along with proceeds from the sale of
facilities in Lititz, Pennsylvania and Niagara Falls, Canada ($1.8 million),
proceeds from the sale of the Company's wireforming business assets and other
non essential assets ($1.5 million) and net proceeds from the refinancing of
debt ($2.5 million) were used for capital expenditures of approximately $9.8
million including $1.5 million for the discontinued molded plastic business
operations, dividend payments of approximately $800,000 and elimination of
outstanding borrowings under the Company's bank credit facility. The remaining
funds increased the Company's cash balance by approximately $15 million.
On March 25, 1996, the Company sold $125.0 million of its 9.25% Senior
Notes due 2006 ("Senior Notes") at a price of 99.291% of face value in a private
offering to institutional investors. Interest on the Senior Notes is payable
semi-annually on April 1 and October 1 of each year. The Company used the net
proceeds of the Senior
8
<PAGE> 9
Note offering to (i) repurchase its outstanding 12.70% Notes due 1998 and 7.0%
Convertible Subordinated Note due 2002 and (ii) to repay substantially all
amounts outstanding under its 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 consolidated the outstanding
debt and borrowing capacity of the Company and its wholly-owned subsidiaries and
revised certain financial covenants (as so amended, the "Revolving Credit
Facility"). In November 1996, the Company and its lender banks (the "Bank
Group") agreed to certain modifications of the Revolving Credit Facility. The
Revolving Credit Facility was reduced to a maximum credit line of $35 million
from a level of $75 million under the original agreement. The maximum
outstanding balance of the Revolving Credit Facility will equate to 80% of
eligible accounts receivable as determined at the end of each calendar month.
The Revolving Credit Facility provides for a commitment fee of one-half of one
percent on the unused portion of the commitment. Borrowings under the 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, as defined. Borrowings under the Revolving Credit Facility
mature in December 1998. The Senior Notes, as well as the Revolving Credit
Facility, contain certain financial covenants that may restrict the sale of
assets, payment of dividends, the incurrence of additional indebtedness and
certain investments and acquisitions by the Company.
At December 29, 1996, the Company was not in compliance with certain
covenants of the Revolving Credit Facility and such noncompliance has been
waived. The Company has suspended the payment of quarterly dividends and does
not anticipate paying a cash dividend for the foreseeable future. In order for
the Company to pay a dividend, its arrangements with holders of its Senior Notes
and the Bank Group would need to be amended. The Company is currently
renegotiating with the Bank Group the Revolving Credit Facility and modification
of certain covenants. At December 29, 1996, $21.8 million was available for
general corporate purposes under the Revolving Credit Facility, net of
approximately $11.8 million in outstanding letters of credit. The Company
believes it has sufficient borrowing capacity to finance its ongoing operations
for the foreseeable future. The Company may, however, require additional funds
to finance any acquisitions.
During fiscal 1997, the Company anticipates it will receive net proceeds of
approximately $16 million from the disposal of its molded plastics business
assets. Of this amount, the Company received $4 million in January 1997 from the
sale of its molded plastic products manufacturing and distribution facility in
Phoenix, Arizona.
The Company has recorded a liability of approximately $3.4 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 operations. 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.
INFLATION
Inflation in general was not considered to be a significant factor in the
Company's operations during the periods discussed above.
9
<PAGE> 10
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
BUSINESS OUTLOOK
This Annual Report, including "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
provision of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. 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 timely
introduction of new products; the impact of competitive products and pricing;
certain assumptions related to consumer purchasing patterns; 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. These
forward-looking statements represent the Company's best estimate as of the date
of this Annual Report. The Company assumes no obligation to update such
estimates except as required by the rules and regulations of the Securities and
Exchange Commission.
10
<PAGE> 11
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 29, DECEMBER 31,
1996 1995
----------- -----------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 15,706 $ 142
Accounts receivable, net of allowance for
doubtful accounts of $760 and $948, respectively 42,182 38,590
Inventories 47,422 40,989
Prepaid expenses and other current assets 6,180 6,685
Deferred income taxes 10,857 4,361
Net assets of discontinued operations 17,030 48,658
------- --------
Total current assets 139,377 139,425
Property and equipment, net 34,998 38,076
Property held for sale or lease, net of
accumulated depreciation of $2,079 - 2,830
Other assets 6,569 5,955
Excess of cost over fair value of net assets acquired,
net of accumulated amortization of $28,690 and
$25,054, respectively 111,132 114,772
-------- --------
Total assets $292,076 $301,058
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term obligations $ - $ 18,000
Accounts payable 18,395 14,325
Accrued expenses 28,688 21,755
Income taxes 2,651 538
------- --------
Total current liabilities 49,734 54,618
------- --------
Long-term obligations, less current portion 124,182 96,700
------- --------
Other long-term liabilities 11,052 9,859
------- --------
Series B ESOP Convertible Preferred Stock, net;
outstanding 1,439 shares and 1,488 shares,
respectively, redeemable at $3.61 per share 4,098 3,458
------- --------
Commitments and contingencies - -
------- --------
Minority interest 495 498
------- --------
Stockholders' equity
Common stock, $.01 par value; outstanding
18,580 shares and 18,414 shares, respectively 186 184
Capital in excess of par value 107,622 106,916
Cumulative translation adjustment 869 929
Retained earnings (deficit) (1,352) 33,614
Unearned compensation (2,963) (3,970)
Pension liability adjustment (1,847) (1,748)
-------- --------
102,515 135,925
-------- --------
Total liabilities and stockholders' equity $292,076 $301,058
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 12
<TABLE>
<CAPTION>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED
DECEMBER 29, DECEMBER 31, JANUARY 1,
1996 1995 1995
----------- ----------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net revenues $249,870 $247,004 $233,527
Costs and expenses -------- -------- --------
Cost of sales 164,505 160,933 148,935
Selling, general and administrative 59,737 49,152 48,286
Special charges 9,877 - -
Amortization of excess of cost over
fair value 3,636 3,636 3,637
-------- -------- --------
237,755 213,721 200,858
-------- -------- --------
Income before interest and income taxes 12,115 33,283 32,669
-------- -------- --------
Net interest expense
Interest expense 12,565 13,590 12,824
Investment income (149) (97) (333)
-------- -------- --------
12,416 13,493 12,491
-------- -------- --------
Income (loss) from continuing operations
before income taxes and extraordinary
charges (301) 19,790 20,178
Income taxes 2,370 9,828 9,102
-------- -------- --------
Income (loss) from continuing operations
before extraordinary charge (2,671) 9,962 11,076
Discontinued operations
Income (loss) from operations of
discontinued operations, net of tax
benefits (expense) of $1,928; 1,934;
(710) (24,720) (1,917) 347
Loss on disposal net of tax
benefit of $1,925 (3,575) - -
-------- -------- --------
Income (loss) before extraordinary
charges (30,966) 8,045 11,423
Extraordinary charge for early retirement
of debt, net of tax benefit of $2,139 (3,208) - -
-------- -------- --------
Net income (loss) $(34,174) $ 8,045 $ 11,423
======== ======== ========
Per share data
Income (loss) from continuing operations
before extraordinary charge $(0.14) $0.49 $0.55
Income (loss) from operations of
discontinued operations (1.34) (0.09) 0.02
(Loss) on disposal of business (0.19) - -
------ ---- ----
Income (loss) before extraordinary charge (1.67) .40 .57
Extraordinary charge (0.18) - -
------ ----- ----
Net income (loss) $(1.85) $ .40 $ .57
====== ===== ====
Weighted average number of shares used
in computation of per share data 18,489 20,318 20,115
====== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE> 13
<TABLE>
<CAPTION>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLITTED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON CAPITAL IN CUMULATIVE
STOCK, PAR EXCESS OF TRANSLATION
SHARES VALUE $.01 PAR VALUE ADJUSTMENT
------ ---------- ---------- ---------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Beginning balance, January 2, 1994 17,844 $178 $104,202 $1,091
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 - - - -
Foreign currency translation adjustment - - - (320)
Unearned compensation relating to
common stock purchases by employee
stock ownership plan - - - -
Amortization of unearned compensation - - - -
Pension liability adjustment - - - -
------ --- ------- ----
Balance, January 1, 1995 18,069 181 105,448 771
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 -
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 - - - -
Dividends paid - - - -
Foreign currency translation adjustment - - - 158
Amortization of unearned compensation - - - -
Pension liability adjustment - - - -
------ --- ------- ---
Balance, December 31, 1995 18,414 184 106,916 929
Shares issued under employee common
stock purchase and option plans and
dividend reinvestment 90 1 360 -
</TABLE>
<TABLE>
<CAPTION>
RETAINED PENSION
EARNINGS UNEARNED LIABILITY
(DEFICIT) COMPENSATION ADJUSTMENT
--------- ------------ ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Beginning balance, January 2, 1994 $15,749 $(2,452) $(1,904)
Shares issued under employee common
stock purchase and option plans - - -
Income tax reductions relating to
stock plans - - -
Treasury shares issued upon preferred
stock conversions - - -
Net income for the year 11,423 - -
Foreign currency translation adjustment - - -
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 27,172 (2,968) (1,488)
Shares issued under common stock purchase
and option plans and dividend re-
investment - - -
Net shares issued under restricted common
stock purchase plans - (1,437) -
Income tax reductions relating to stock
plans - - -
Shares issued upon preferred stock
conversion - - -
Purchases of treasury stock - - -
Net income for the year 8,045 - -
Dividends paid (1,603) - -
Foreign currency translation adjustment - - -
Amortization of unearned compensation - 435 -
Pension liability adjustment - - (260)
------ ------ -------
Balance, December 31, 1995 33,614 (3,970) (1,748)
Shares issued under employee common
stock purchase and option plans and
dividend reinvestment - - -
</TABLE>
13
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Net shares issued under restricted
common stock purchase plan 27 - 171 - - (168) -
Shares issued upon preferred stock
conversion 49 1 175 - - - -
Net loss for the year - - - - (34,174) - -
Dividends paid - - - - (792) - -
Foreign currency translation adjustment - - - (60) - -
Amortization of unearned compensation - - - - - 1,175 -
Pension liability adjustment - - - - - - (99)
------ --- ------- --- -------- ------- -------
Balance, December 29, 1996 18,580 $186 $107,622 $869 $ (1,352) $(2,963) $(1,847)
====== ==== ======== ==== ======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE> 15
EKCO GROUP, INC. AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
FISCAL YEARS ENDED
DECEMBER 29, DECEMBER 31, JANUARY 1,
1996 1995 1995
------------ ------------ ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ (34,174) $ 8,045 $ 11,423
Adjustments to reconcile net income (loss)
to net cash provided by operations
Depreciation 7,374 7,018 7,335
Amortization of excess of cost over fair value 3,636 3,636 3,637
Amortization of deferred finance costs 517 590 499
Other amortization 6,607 6,959 4,870
Special charges 9,877
(Income) loss from discontinued operations, net 28,295 1,917 (347)
Extraordinary charges, net 3,208
Deferred income taxes (5,837) 3,388 1,679
Other 82 (201) (102)
Change in certain assets and liabilities, net
of effects from acquisition and dispositions
of businesses, affecting cash provided by
operations
Accounts receivable (3,704) 895 (8,925)
Inventories (6,364) 504 (11,080)
Prepaid marketing costs (4,413) (4,877) (4,127)
Other assets 506 (908) 4,946
Accounts payable and accrued expenses 7,636 (2,871) (4,717)
Income taxes payable 2,114 (3,395) (931)
--------- -------- --------
Net cash provided by (used in) operating activities
Continuing operations 15,360 20,700 4,160
Discontinued operations 4,823 1,020 (1,757)
--------- -------- --------
Net cash provided by operating
activities 20,183 21,720 2,403
--------- -------- --------
Cash flows from investing activities
Proceeds from sale of property and equipment 3,306 3,300 5,219
Capital expenditures for continuing operations (8,320) (8,566) (8,503)
Capital expenditures for discontinued operations (1,490) (4,086) (2,603)
--------- -------- --------
Net cash used in investing activities (6,504) (9,352) (5,887)
--------- -------- --------
Cash flows from financing activities
Proceeds from issuance of note payable and
long-term obligations 125,101 35,183 32,118
Proceeds from sale of investment held as
collateral - 3,600 -
Payments of dividends (792) (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 (122,781) (48,627) (29,417)
Other 361 259 1,484
--------- -------- --------
Net cash provided by financing activities 1,889 (12,368) 3,235
Effect of exchange rate changes on cash (4) 13 51
--------- -------- --------
Net increase (decrease) in cash and cash equivalents 15,564 13 (198)
Cash and cash equivalents at beginning of year 142 129 327
--------- -------- --------
Cash and cash equivalents at end of year $ 15,706 $ 142 $ 129
========= ======== ========
Cash paid during the year for
Interest $ 9,851 $ 12,557 $ 12,050
Income taxes 184 7,912 9,061
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE> 16
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"), Kellogg
Brush Manufacturing Co. and subsidiaries ("Kellogg"), and majority-owned
Woodstream Corporation ("Woodstream"). On January 31, 1997, the Company's Board
of Directors approved management's plan to dispose of the Company's molded
plastic products business [wholly-owned subsidiary Ekco Consumer Plastics, Inc.
(formerly Frem Corporation)]. Accordingly, prior year financial information has
been restated to reflect the operations of the molded plastic products business
as discontinued operations (see Note 2). 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 29, 1996 ("Fiscal 1996"), December 31,
1995 ("Fiscal 1995") and January 1, 1995 ("Fiscal 1994").
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 maintaining and
expanding its market position. 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 $2.9 million and $3.5
million of these costs are included in prepaid expenses at December 29, 1996 and
December 31, 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.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. 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.
16
<PAGE> 17
INTANGIBLE ASSETS
The excess of cost over fair value of net assets acquired ("goodwill") is
being amortized over 30 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 undiscounted 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 foreign 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.
(2) DISCONTINUED OPERATIONS
On January 31, 1997, the Company's Board of Directors approved management's
plan to dispose of the Company's molded plastic products business. Accordingly,
the Company has reported the results of the operations of the molded plastic
products business and the loss on disposal as discontinued operations and prior
year financial information has been similarly restated. The Company's
manufacturing and distribution facility in Phoenix, Arizona was sold in January,
1997 for approximately $4 million. The Company has also entered into a letter of
intent to sell substantially all of the remaining assets of its molded plastic
products business.
17
<PAGE> 18
<TABLE>
Net assets of discontinued operations classified separately in the
consolidated balance sheets are summarized as follows:
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 1995
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accounts receivable, net $ 4,210 $ 5,233
Inventories 6,138 6,576
Prepared expenses and other current assets 67 34
Property and equipment, net 16,743 18,304
Excess of cost over fair value - 21,828
Accounts payable (2,416) (1,361)
Accrued expenses (2,212) (1,956)
Loss on disposal (5,500) -
------- -------
$17,030 $48,658
======= =======
</TABLE>
<TABLE>
Certain information with respect to statements of operations from
discontinued operations is summarized as follows:
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Net revenues $ 26,764 $30,991 $33,521
-------- ------- -------
Cost of sales 26,758 30,410 26,516
Selling, general and administrative 3,325 3,631 5,147
Special charges 22,728 - -
Goodwill amortization 601 801 801
-------- ------- -------
53,412 34,842 32,464
-------- ------- -------
Income (loss) before income taxes (26,648) (3,851) 1,057
Income taxes (benefit) (1,928) (1,934) 710
-------- ------- -------
Income (loss) from discontinued operations $(24,720) $(1,917) $ 347
======== ======= =======
</TABLE>
The special charge of $22.7 million (principally goodwill) was a reduction
in the third quarter of Fiscal 1996 of the carrying value of the molded plastic
products business. Under the provisions of Statement of Financial
Accounting Standard No. 121, which establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles and goodwill
related to those assets, the Company determined in the third quarter of Fiscal
1996 that an adjustment to the carrying value of the molded plastic products
business was required.
<TABLE>
The charge in Fiscal 1996 for loss on disposal of the molded plastic
business includes the following (amounts in thousands):
<S> <C>
Carrying value of net assets in excess of
anticipated proceeds $3,300
Expenses of asset disposal and anticipated
operating loss for the period December 29, 1996
through the estimated date of disposal 2,200
------
Loss on disposal before taxes 5,500
Income tax benefit 1,925
------
Loss on disposal $3,575
======
</TABLE>
18
<PAGE> 19
(3) INVENTORIES
<TABLE>
The components of inventory were as follows:
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 1995
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Raw materials $ 9,628 $ 8,965
Work in process 3,253 2,801
Finished goods 34,541 29,223
------- -------
$47,422 $40,989
======= =======
</TABLE>
At December 29, 1996, and December 31, 1995, inventories carried under
the LIFO method represented approximately 21.8% and 19.6%, respectively, of
total year-end inventories. The effect of using LIFO for these inventories for
Fiscal 1996 and Fiscal 1995 was immaterial to the financial position and results
of operations of the Company. During Fiscal 1996 and Fiscal 1995, there was no
effect on net income from liquidation of LIFO layers.
(4) PROPERTY AND EQUIPMENT, NET
<TABLE>
Property and equipment consisted of the following:
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 1995
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Property and equipment at cost
Land, buildings and improvements $14,623 $15,757
Equipment, furniture and fixtures 58,963 54,235
------- -------
73,586 69,992
Less accumulated depreciation and
amortization 38,588 31,916
------- -------
$34,998 $38,076
======= =======
</TABLE>
(5) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES
<TABLE>
Long-term obligations consisted of the following:
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 1995
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Revolving Credit Facility $ - $ 32,693
9.25% Senior Notes, due 2006 (net
of unamortized discount of $818) 124,182 -
12.7% Notes, due 1998 - 60,000
7% Convertible Subordinated Note,
due 2002 - 22,000
Other - 7
-------- --------
124,182 114,700
Less current portion - 18,000
-------- --------
$124,182 $ 96,700
======== ========
<CAPTION>
Other long-term liabilities consisted of the following:
<S> <C> <C>
Accrued pension cost (see Note 8) $ 2,327 $1,950
Deferred income taxes 2,028 1,369
Other long-term liabilities 6,697 6,540
------- ------
$11,052 $9,859
======= ======
</TABLE>
19
<PAGE> 20
On March 25, 1996, the Company sold $125.0 million of its 9.25% Senior
Notes due 2006 ("Senior Notes") at a price of 99.291% of face value in a
private offering to institutional investors. Interest on the Senior Notes is
payable semi-annually on April 1 and October 1 of each year. The Company used
the net proceeds of the Senior Note offering to (i) repurchase its outstanding
12.70% Notes due 1998 and 7.0% Convertible Subordinated Note due 2002 and (ii)
to repay substantially all amounts outstanding under its 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 the
Company and its wholly-owned subsidiaries, and revised certain financial
covenants (as so amended, the "Revolving Credit Facility"). In November 1996,
the Company and its lender banks (the "Bank Group") agreed to certain
modifications of the Revolving Credit Facility. The Revolving Credit Facility
was reduced to a maximum credit line of $35 million from a level of $75 million
under the original agreement. The maximum outstanding balance of the Revolving
Credit Facility will equate to 80% of eligible accounts receivable as
determined at the end of each calendar month. The Revolving Credit Facility
provides for a commitment fee of one-half of one percent on the unused portion
of the commitment. Borrowings under the 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, as
defined. Borrowings under the Revolving Credit Facility mature in December
1998. The Senior Notes, as well as the Revolving Credit Facility, contain
certain financial covenants that may restrict the sale of assets, payment of
dividends, the incurrence of additional indebtedness and certain investments
and acquisitions by the Company.
As of December 29, 1996, $21.8 million was available for general corporate
purposes under the Revolving Credit Facility, net of approximately $11.8 million
in outstanding letters of credit.
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.
At December 29, 1996, the Company was not in compliance with certain covenants
of the Revolving Credit Facility and such noncompliance has been waived. The
Company has suspended the payment of quarterly dividends and does not anticipate
paying cash dividends for the foreseeable future. In order for the Company to
pay a dividend, its arrangement with holders of its Senior Notes and the Bank
Group would need to be amended. The Company is currently renegotiating with the
Bank Group the maximum available borrowings under the Revolving Credit Facility
and modification to certain covenants.
<TABLE>
The early extinguishment of the 12.7% Notes and 7% Convertible Subordinated Note
resulted in an extraordinary charge of $3.2 million consisting of the following:
<CAPTION>
(Amounts in thousands)
<S> <C>
Premium on 12.70% Notes, due 1998 $ 6,511
Discount on prepayment of 7% Convertible
Subordinated Note, due 2002 (3,218)
Write-off of related unamortized financing
costs 2,054
-------
Extraordinary charge before income tax benefit 5,347
Income tax benefit 2,139
-------
Net extraordinary charge $ 3,208
=======
</TABLE>
20
<PAGE> 21
<TABLE>
Certain information with respect to credit agreements follows:
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Average interest rate of borrowings
outstanding at end of year N/A 7.48% 8.20%
Maximum amount of borrowings
outstanding at any month-end $31,909 $56,533 $42,434
Average aggregate borrowings during
the year $ 9,390 $43,392 $38,391
Weighted average interest rate
during the year 7.68% 8.08% 6.51%
</TABLE>
(6) ACCRUED EXPENSES
<TABLE>
Accrued expenses consisted of the following:
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 1995
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Payroll $ 5,033 $ 2,325
Compensated absences 1,755 1,787
Sales and promotional allowances 6,393 5,726
Provisions related to consolidation of
cleaning business 1,697 -
Interest and non-income taxes 4,326 3,593
Insurance 2,516 2,318
Professional fees 715 566
Provision for environmental matters 1,782 2,099
Other 4,471 3,341
------- -------
$28,688 $21,755
======= =======
</TABLE>
(7) INCOME TAXES
<TABLE>
Total income tax expense (benefit) for Fiscal 1996, Fiscal 1995 and
Fiscal 1994 was allocated as follows:
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Income (loss) from continuing operations $ 2,370 $ 9,828 $9,102
Income (loss) from discontinued operations (1,928) (1,934) 710
Income (loss) from disposal of discontinued
operation (1,925) - -
Extraordinary charge for early retirement
of debt (2,139) - -
Stockholders' equity, for compensation
expense for tax purposes in excess of
amounts recognized for financial reporting
purposes - (74) (327)
------- ------- ------
$(3,622) $ 7,820 $9,485
======= ======= ======
</TABLE>
21
<PAGE> 22
<TABLE>
A reconciliation of the provision for income taxes from continuing
operations to the statutory income tax rate applied to combined domestic and
foreign income before income taxes for Fiscal 1996, Fiscal 1995 and Fiscal 1994
was as follows:
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT
PERCENTAGES)
<S> <C> <C> <C>
Income (loss) from continuing operations
before income taxes
Domestic $ (19) $20,408 $20,819
Foreign (282) (618) (641)
----- ------- -------
$(301) $19,790 $20,178
===== ======= =======
Federal income tax (credit) at normal rates (35%) 35% 35%
State income taxes, net of federal benefit 141% 5% 4%
Difference between foreign and
federal effective rates 30% 1% -
Amortization of excess of cost over fair value 423% 6% 6%
Special charges 227% - -
Other 1% 3% -
----- ------- -------
787% 50% 45%
===== ======= =======
</TABLE>
<TABLE>
The components of the provision for income taxes for continuing operations were
as follows:
<CAPTION>
FEDERAL STATE FOREIGN TOTAL
------- ------- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
FISCAL 1996
- -----------
Current $ 4,189 1,688 $ (8) $ 5,869
Deferred (2,608) (891) - (3,499)
------- ------ ---- -------
$ 1,581 $ 797 $ (8) $ 2,370
======= ====== ==== =======
FISCAL 1995
- -----------
Current $ 5,986 $ 993 $(41) $ 6,938
Deferred 2,562 312 16 2,890
------- ------ ---- -------
$ 8,548 $1,305 $(25) $ 9,828
======= ====== ==== =======
FISCAL 1994
- -----------
Current $ 6,622 $1,023 $(96) $ 7,549
Deferred 1,216 292 45 1,553
------- ------ ---- -------
$ 7,838 $1,315 $(51) $ 9,102
======= ====== ==== =======
</TABLE>
<TABLE>
The significant components of deferred income tax expense attributable
to income from continuing operations for Fiscal 1996, Fiscal 1995 and Fiscal
1994 were as follows:
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Depreciation $ 644 $1,713 $(1,135)
Inventory (516) 193 (406)
Benefit plans 167 (72) (240)
Accruals, provisions and other liabilities 4,461 1,414 3,542
Other (1,257) (358) (208)
------- ------ -------
$ 3,499 $2,890 $ 1,553
======= ====== =======
</TABLE>
The tax effects of temporary differences and carry forwards that give
rise to significant portions of net deferred tax asset (liability) consisted of
the following:
22
<PAGE> 23
<TABLE>
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 1995
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Receivables $ 244 $ 341
Inventory 846 1,322
Benefit plans 3,572 3,405
Accruals, provisions and other liabilities 10,046 3,385
Depreciation (5,005) (5,663)
Other (874) 202
------- -------
$ 8,829 $ 2,992
======= =======
</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 29, 1996 and December 31, 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.
<TABLE>
Net pension expense consisted of the following:
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
U.S. defined benefit plans
Service cost-benefits earned during the period $ 232 $ 211 $ 257
----- ----- -----
Interest accrued on projected benefit obligation 607 597 559
----- ----- -----
Expected return on assets
Actual return (516) (582) (196)
Unrecognized gain (loss) (32) 69 (368)
----- ----- -----
(548) (513) (564)
Amortization of prior service cost and
unrecognized loss 390 110 120
Settlement loss 38 89 138
----- ----- -----
U.S. defined benefit plans, net 719 494 510
Canadian defined benefit plan 2 (2) (7)
U.S. defined contribution plans 150 113 127
----- ----- -----
Total net pension expense $ 871 $ 605 $ 630
===== ===== =====
</TABLE>
23
<PAGE> 24
<TABLE>
The following sets forth the funded status of the Company's defined
benefit pension plans and amounts recognized in the consolidated balance sheets:
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 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 $(1,708) $(7,294) $(1,595) $(6,938)
Nonvested (2) (87) (38) (65)
------- ------- ------- -------
Total (1,710) (7,381) (1,633) (7,003)
Effect of projected
compensation increases (259) - (260) -
------- ------- ------- -------
Projected benefit obligation (1,969) (7,381) (1,893) (7,003)
Plan assets 2,510 5,001 2,534 4,844
------- ------- ------- -------
Plan assets in excess of (less than)
projected benefit obligations 541 (2,380) 641 (2,159)
Unrecognized actuarial net gain (losses) (107) 1,865 (211) 1,915
Unrecognized prior service cost 99 35 107 42
Additional liability - (1,847) - (1,748)
------- ------- ------- -------
Prepaid (accrued) pension cost included
in consolidated balance sheet $ 533 $(2,327) $ 537 $(1,950)
======= ======= ======= =======
</TABLE>
24
<PAGE> 25
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%. 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%. At December 29, 1996, the
various plans held an aggregate of 11,410 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.
In accordance with Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Post-retirement Benefits Other Than Pensions" ("FAS
106"), the cost of these benefits are recognized in the financial statements
during the employees' active working lives. The Company's funding policy for
these plans is on a pay-as-you-go basis.
<TABLE>
The following sets forth the amounts recognized in the consolidated
balance sheets for the Company's post-retirement benefit plans:
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 1995
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accumulated post-retirement benefit obligation
Fully eligible active employees $ 765 $ 778
Retirees 1,035 1,103
Other active employees 649 658
------ ------
2,449 2,539
Plan assets - -
Unrecognized net (gain) loss 137 (29)
------ ------
Accrued post-retirement benefit cost $2,586 $2,510
====== ======
</TABLE>
<TABLE>
Post-retirement benefit expense consisted of the following:
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Service cost (benefits attributed to
employee services during the year) $ 51 $ 43 $ 46
Interest expense on the accumulated
post-retirement benefit obligation 172 182 199
---- ---- ----
Net periodic post-retirement benefit
expense $223 $225 $245
==== ==== ====
</TABLE>
The discount rates used in determining the accumulated post-retirement
benefit obligation as of December 29, 1996 and December 31, 1995 was 7.5%. 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
$147,000, $484,000 and $415,000 for Fiscal 1996, Fiscal 1995 and Fiscal 1994,
respectively.
In accordance with Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Post-employment Benefits" ("FAS 112"), the Company
accrues benefits provided to former or inactive employees after employment but
before retirement. The ongoing impact of FAS 112 does not have a material effect
on earnings.
25
<PAGE> 26
(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 29, 1996, approximately 1.4 million shares of the Company's common
stock were reserved for conversion of Series B ESOP Convertible Preferred Stock.
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 approved
principal prepayments of $522,000, $567,000 and $477,000 for Fiscal 1996, Fiscal
1995 and Fiscal 1994 to be paid in 1997, 1996 and 1995, respectively. For Fiscal
1996, Fiscal 1995 and Fiscal 1994, $816,000, $652,000 and $687,000,
respectively, has been charged to operations. The actual cash contributions,
excluding the above mentioned prepayments, to the ESOP by the Company during
Fiscal 1996, Fiscal 1995 and Fiscal 1994 were $453,000, $302,000, 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.
<TABLE>
Series B ESOP Convertible Preferred Stock, net, consisted of the following:
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 1995
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Series B ESOP Convertible Preferred Stock,
par value $.01 $ 5,196 $ 5,372
Unearned compensation (1,098) (1,914)
------- -------
$ 4,098 $ 3,458
======= =======
</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 financed the purchase through a 20-year 10% loan from the
Company to the ESOP. The ESOP has 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 1996, Fiscal 1995 and Fiscal 1994,
50,000 shares were allocated to employees' accounts. For Fiscal 1996, Fiscal
1995 and Fiscal 1994, $165,000, $165,000 and $155,000, respectively, have been
charged to operations.
26
<PAGE> 27
(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.
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
<TABLE>
Share information regarding common stock consisted of the following:
<CAPTION>
DECEMBER 29, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Authorized shares 60,000,000 60,000,000
========== ==========
Shares issued 27,996,648 27,854,441
Shares held in treasury 9,417,004 9,440,577
---------- ----------
Shares outstanding 18,579,644 18,413,864
========== ==========
</TABLE>
TREASURY STOCK
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.
27
<PAGE> 28
STOCK COMPENSATION PLANS
<TABLE>
At December 29, 1996, the Company has five stock based compensation
plans which are described below. The Company applies Accounting Principle Board
Opinion No. 25 "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock compensation plans.
Accordingly, no compensation has been recognized for its stock option plans and
its employee stock purchase plan. Compensation costs for its restricted stock
purchase plans and 1996 Performance Unit Rights Award Plan are described below.
Since the Company accounts for compensation plans under APB 25, certain pro
forma information regarding net income and earnings per share is required by
Statement of Financial Accounting Standards Board No. 123 "Accounting for Stock
Based Compensation." (FASB 123) as if the Company had accounted for its
compensation plans under the fair value approach of this statement. For the
purposes of the pro forma disclosures, the estimated fair value of the
compensation plans is amortized to expense over the plans vesting period. The
Company's pro forma information is as follows:
<CAPTION>
(amounts in thousands except for earnings per share information):
FISCAL 1996 FISCAL 1995
----------- -----------
<S> <C> <C> <C>
Net income (loss) As reported $(34,174) $8,045
Pro forma $(35,891) $7,869
Earnings (loss) per
share As reported $ (1.85) $ .40
Pro forma $ (1.95) $ .39
</TABLE>
The fair value of the Company's stock option plans and 1996 Performance
Unit Rights Award Plans was estimated at the grant date using a Black-Scholes
option pricing model. The estimated weighted average assumptions under that
model for Fiscal 1996 and Fiscal 1995 were: volatility factor of the expected
market price of the Company's stock of 0.45; zero future dividend yield and
risk free interest rates of 5.6%, 5.89%, 6.05% and 6.22%, based on one, two,
three and six year strip yields of U.S. Treasury Securities at December 29,
1996. It was also assumed that the stock options have a weighted average
expected life of five years and nine months and the Performance Unit Rights
Awards have a weighted average expected life of two years and three months.
STOCK OPTION PLANS
At December 29, 1996, approximately 1.2 million shares of the Company's
stock was 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. Accordingly, under APB 25 no compensation cost is
recognized. The pro forma net income impact under FASB 123 is estimated to be
$1,183,000 for Fiscal 1996 and $136,000 for Fiscal 1995. Options must be
exercised within the period described by the respective stock option plan
agreements, but not later than 10 years for certain options and 11 years for
others.
28
<PAGE> 29
<TABLE>
A summary of the Company's stock option activity, and related
information for Fiscal 1996 follows:
<CAPTION>
(amounts in thousands except for earnings per share information):
WEIGHTED
AVERAGE
OPTION
SHARES PRICE
(000) PER SHARE
------- ---------
<S> <C> <C>
Outstanding at beginning of year 2,551 $6.36
Options granted 1,208 4.02
Options exercised (25) 2.38
Options canceled (925) 7.42
------
Options outstanding
at end of year 2,809 5.04
======
Options exercisable at
end of year 1,840 5.11
======
Weighted-average fair
value of options
granted during the year $ 2.02
</TABLE>
Exercise prices for options outstanding as of December 29, 1996 ranged
from $2.13 to $11.31. The weighted-average remaining contractual life of those
options is 6.5 years.
<TABLE>
Changes in options and option shares under the plans during the
respective fiscal years were as follows:
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
------------------------------- ------------------------------- ----------------------------
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 2,551,436 $2.13-$11.31 2,593,093 $2.13-$11.31 2,484,721
Options granted $3.38-$ 5.94 1,207,792 $6.06-$ 6.56 340,895 $6.81-$ 7.56 424,584
Options exercised $2.25-$ 2.63 (24,700) $2.19-$ 3.38 (150,814) $2.25-$ 2.63 (59,600)
Options canceled $3.69-$11.31 (924,723) $2.63-$11.31 (231,738) $2.56-$11.31 (256,612)
--------- --------- ---------
Options outstanding,
end of year $2.13-$11.31 2,809,805 $2.13-$11.31 2,551,436 $2.13-$11.31 2,593,093
========= ========= =========
Options exercisable,
end of year $2.13-$11.31 1,840,305 $2.13-$11.31 2,047,779 $2.13-$11.31 1,946,153
========= ========= =========
Shares reserved for
future grants 1,196,162 1,479,231 1,588,388
========= ========= =========
</TABLE>
29
<PAGE> 30
<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 29, 1996,
which were granted during fiscal years:
1987 180,000 $ 3.69 $ 663,750
1988 415,428 $2.13-$ 2.25 890,999
1989 31,373 $ 3.38 100,001
1990 153,400 $ 2.56 393,088
1991 40,600 $ 2.63 106,575
1992 209,550 $7.25-$10.06 2,074,534
1993 263,240 $7.44-$11.31 2,857,543
1994 198,250 $6.81-$ 7.56 1,486,578
1995 198,031 $6.06-$ 6.56 1,256,377
1996 1,119,933 $3.38-$ 5.94 4,329,290
--------- -----------
2,809,805 $14,158,735
========= ===========
</TABLE>
Of the options outstanding at December 29, 1996, options to acquire
1,139,105 shares at a weighted average exercise price of $4.71 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 29, 1996, 181,154 of such shares were subject to
such repurchase. Additionally outstanding at December 29, 1996 were options to
acquire 900,000 shares at an exercise price of $3.38 per share, of which 300,000
options were immediately exercisable, with the remaining options exercisable in
300,000 share increments on or after the date on which the fair market value (as
defined) of the common stock is equal to or greater than $6.00 and $8.00,
respectively.
The remaining options outstanding at December 29, 1996, which cover the
acquisition of 770,700 shares at a weighted average exercise price of $7.47 per
share, become exercisable in five equal annual installments beginning on the
first anniversary of the date of grant.
RESTRICTED STOCK PURCHASE PLANS
<TABLE>
Under the Company's restricted stock purchase plans, the Company may
offer to sell shares of common stock to employees of the Company and its
subsidiaries at a price per share of not less than par value ($.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 681,928 shares at December 29, 1996. 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).
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
------------------- ------------------ -------------------
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 257 $ 1,660 51 $ 312 177 $ 654
Shares issued 40 232 288 1,824 - -
Shares repurchased (13) (61) (45) (297) - -
Shares vested (152) (1,004) (37) (179) (126) (342)
--- ------- --- ------ ---- -----
Unvested shares outstanding,
end of year 132 $ 827 257 $1,660 51 $ 312
=== ======= === ====== ==== =====
</TABLE>
30
<PAGE> 31
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 1996,
Fiscal 1995 and Fiscal 1994, unearned compensation charged to operations was
$1.0 million (including a special charge of $482,000 pursuant to severance
arrangement with the Company's former CEO), $270,000 and $279,000, 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. The pro forma net income
impact under FASB 123 is not material.
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 1996,
Fiscal 1995 and Fiscal 1994, employees purchased 56,983 shares, 72,844 shares
and 88,938 shares, respectively, for a total of approximately $255,000, $376,000
and $503,000, respectively. At December 29, 1996, approximately 1.1 million
shares were reserved for future issuances under the Plan. Under APB 25, there
have been no charges to income in connection with the Plan other than incidental
expenses. The pro forma net income impact under FASB 123 is not material.
1996 PERFORMANCE UNIT RIGHTS AWARD PLAN
In September 1996, the Company's Board of Directors approved the 1996
Performance Unit Rights Award Plan whereby selected key employees and directors
may receive performance unit rights ("Rights") which are rights to receive an
amount based on the appreciated value of the Company's common stock over an
established base price. The maximum number of Rights that may be granted under
the plan as amended is 2,000,000. On September 25, 1996, the Company awarded
400,000 Rights to key employees and 100,000 Rights to a director at fair market
value ($4.88 per right) which rights were exercisable through December 31, 2001.
No provision was required in the accompanying financial statement for these
Rights. Subsequent to year end, these Rights were cancelled and the holders were
issued options under the Company's 1987 Stock Option Plan to purchase 550,000
shares of common stock at an exercise price of $4.13, exercisable immediately
and not subject to repurchase.
On December 4, 1996 the Company issued 525,718 Rights at a weighted
average base price of $4.26 per Right with a cap on the value of the common
stock underlying the Rights on the exercise date of $6.63 per right under a
severance arrangement with Company's former CEO. A provision of $256,000 for
Fiscal 1996 was included in special charges for these Rights. The pro forma net
income impact under FASB 123 is estimated to be $507,000 in additional
compensation expense.
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 and Fiscal 1994 were $74,000 and $327,000, respectively.
(12) INCOME (LOSS) PER COMMON SHARE
Primary income (loss) per common share is 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 income (loss) per share has been omitted since it is 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.
31
<PAGE> 32
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1996 1995 1994
---------- ------ ------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Weighted average shares of common stock
outstanding during the year 18,489 18,354 17,953
Weighted average common equivalent anti-
shares due to stock options dilutive 426 545
Series B ESOP Convertible anti-
Preferred Stock dilutive 1,538 1,617
---------- ------ ------
18,489 20,318 20,115
========== ====== ======
</TABLE>
(13) COMMITMENTS AND CONTINGENCIES
EMPLOYMENT CONTRACTS
The Company has employment agreements and arrangements with its
executive officers and certain management personnel. The 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. The majority 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 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 29, 1996, 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
$3.9 million ($7.2 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 $2.6 million, $3.4 million and $2.4 million,
were charged to operations for Fiscal 1996, Fiscal 1995 and Fiscal 1994,
respectively.
The Company received rental income from properties held for sale.
Rental income included in selling, general and administrative expenses was
approximately $96,000, $154,000, and $200,000 for Fiscal 1996, Fiscal 1995 and
Fiscal 1994, respectively.
Minimum rental payments required under leases that had initial or
remaining noncancellable lease terms in excess of one year as of December 29,
1996, were as follows (amounts in thousands):
32
<PAGE> 33
<TABLE>
<CAPTION>
FISCAL YEAR
<S> <C>
1997 $2,151
1998 1,533
1999 1,455
2000 947
2001 947
2002 410
</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 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. Such
investigation and testing resulted in the identification of likely environmental
remedial actions, operation, maintenance and ground water monitoring and the
estimated costs thereof. 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 and compliance costs will be approximately $1.8 million and the
expense for the ongoing operation, maintenance and ground water monitoring will
be approximately $12,500 for fiscal 1997 and approximately $12,500 to $25,000
for each of the thirty years thereafter. As of December 29, 1996, the liability
recorded by the Company was approximately $3.4 million. Although the current
estimated costs of remediation are less than the liability recorded at December
29, 1996, the Company does not consider any adjustment to be prudent at this
time given the inherent uncertainties involved in completing the remediation
processes. The Company expects to pay approximately $110,500 of the remediation
costs in fiscal 1997 with the balance being paid out in fiscal 1998 and fiscal
1999. During Fiscal 1996, the Company paid approximately $147,000 of such costs.
The estimates may subsequently change should additional sites be identified or
further remediation measures be required or
33
<PAGE> 34
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 $12.9 million and $8.8 million from mass
merchandisers at December 29, 1996 and December 31, 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 29,
1996 and one mass merchandiser accounted for 16% of the Company's receivables at
that date while no other retailer exceeded 10%.
(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 four principal product
categories: (i) bakeware, (ii) kitchenware, (iii) cleaning products, and (iv)
pest control and small animal care and control 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 from continuing operations of approximately $27.5 million (11.0%),
$30.5 million (12.3%) and $24.2 million (10.4%) for Fiscal 1996, Fiscal 1995 and
Fiscal 1994, respectively.
<TABLE>
The following table shows information by geographic area from
continuing operations:
<CAPTION>
UNAFFILIATED INCOME BEFORE
NET REVENUES INCOME TAXES TOTAL ASSETS
------------ ------------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
FISCAL 1996
-----------
United States $236,901 $ 6 $288,259
Canada 12,969 (282) 9,104
Eliminations - (25) (5,287)
-------- ------- --------
Consolidated $249,870 $ (301) $292,076
======== ======= ========
FISCAL 1995
-----------
United States $235,642 $20,512 $298,579
Canada 11,362 (618) 7,742
Eliminations - (104) (5,263)
-------- ------- --------
Consolidated $247,004 $19,790 $301,058
======== ======= ========
FISCAL 1994
-----------
United States $222,126 $20,852 $310,564
Canada 11,401 (641) 7,111
Eliminations - (33) (5,157)
-------- ------- --------
Consolidated $233,527 $20,178 $312,518
======== ======= ========
</TABLE>
United States revenues include approximately $10.9 million, $9.1
million and $9.3 million of export sales to unaffiliated customers for Fiscal
1996, Fiscal 1995 and Fiscal 1994, respectively.
34
<PAGE> 35
(15) SUPPLEMENTARY INFORMATION
<TABLE>
The following amounts were charged to costs and expenses:
<CAPTION>
FISCAL 1996 FISCAL 1995 FISCAL 1994
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Advertising $6,971 $5,751 $5,136
====== ====== ======
Provision for doubtful accounts $ 130 $ (290) $ 165
====== ====== ======
Amortization of excess of cost over fair value $3,636 $3,636 $3,637
====== ====== ======
Amortization of deferred finance costs $ 517 $ 590 $ 499
====== ====== ======
Other Amortization
Prepaid marketing costs $5,025 $5,799 $3,676
Unearned compensation 1,509 1,087 1,121
Favorable lease rights 73 73 73
------ ------ ------
$6,607 $6,959 $4,870
====== ====== ======
</TABLE>
(16) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
The following table presents the unaudited quarterly results of
operations for Fiscal 1996 and Fiscal 1995:
<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 1996
- -----------
CONTINUING OPERATIONS
Net revenues $51,090 $50,606 $73,116 $75,058 $249,870
Gross profit 15,639 16,033 27,273 26,420 85,365
Special charges (2,000) (7,877) (9,877)
Income (loss) before taxes (775) (1,333) 5,065 (3,258) (301)
Income (loss) (31) (329) 1,579 (3,890) (2,671)
Income (loss) per share - (0.02) 0.08 (0.21) (0.14)
DISCONTINUED OPERATIONS
Net revenues 5,871 5,274 10,344 5,275 26,764
Gross profit 233 503 284 (1,014) 6
Special charges - - (22,728) - (22,728)
(Loss) before taxes (757) (282) (23,657) (1,952) (26,648)
(Loss) (347) (206) (22,909) (1,258) (24,720)
Income (loss) per share (0.02) (0.01) (1.24) (0.07) (1.34)
Loss on disposal net of taxes - - - (3,575) (3,575)
Loss on disposal per share - - - (0.19) (0.19)
EXTRAORDINARY CHARGE
Charge before tax benefit (5,347) - - - (5,347)
Net extraordinary charge per
share (3,208) - - - (3,208)
Extraordinary charge per share (0.18) - - - (0.18)
NET (LOSS) (3,586) (535) (21,330) (8,723) (34,174)
Net (loss) per share (0.19) (0.03) (1.15) (0.47) (1.85)
</TABLE>
35
<PAGE> 36
<TABLE>
<S> <C> <C> <C> <C> <C>
FISCAL 1995
- -----------
CONTINUING OPERATIONS
Net revenues $52,968 $52,613 $71,635 $69,788 $247,004
Gross profit 17,601 17,456 26,116 24,898 86,071
Income before taxes 1,173 1,829 9,652 7,136 19,790
Income 616 959 5,313 3,074 9,962
Income per share 0.03 0.05 0.26 0.15 0.49
DISCONTINUED OPERATIONS
Net revenues 5,764 9,078 11,406 4,743 30,991
Gross profit 406 1,006 (10) (821) 581
Income (loss) before taxes (918) (283) (1,210) (1,440) (3,851)
(Loss) (482) (148) (666) (621) (1,917)
(Loss) per share (0.02) (0.01) (0.03) (0.03) (0.09)
NET INCOME 134 811 4,647 2,453 8,045
Net income per share 0.01 0.04 0.23 0.12 0.40
</TABLE>
The quarterly information for Fiscal 1996 and Fiscal 1995 reflects the Company's
operations of molded plastics products business as discontinued operations. In
addition, the quarterly information for Fiscal 1996 has been restated to reflect
a tax benefit of $2.1 million for the extraordinary charge in the first quarter
and classifying $22.7 million of special charges previously reported for the
third quarter as discontinued operations.
(17) SPECIAL CHARGES
<TABLE>
The special charges in Fiscal 1996 consisted of the following (amounts
in thousands):
<CAPTION>
<S> <C>
Writedown of the carrying value of
certain real property to fair market value $2,000
Severance arrangement of the Company's former CEO 2,956
Consolidation of the Company's cleaning
manufacturing activities 4,921
------
$9,877
======
</TABLE>
<TABLE>
During the fourth quarter of Fiscal 1996 the Company announced the
consolidation of its cleaning products manufacturing plant, located in
Easthampton, Massachusetts. This plant will be consolidated into the Company's
existing cleaning products manufacturing facility in Hamilton, Ohio. The
components of the pre-tax charge set out above are as follows (amounts in
thousands):
<CAPTION>
<S> <C>
Severance and other personnel related costs $1,806
Write-off of equipment 499
Write-down of real property to fair market value 2,424
Other 192
------
$4,921
======
</TABLE>
In 1993, the Company recorded an $11.0 million ($2.7 million of
non-cash items and $8.3 million of cash related items) charge for
restructuring/reorganization and excess facilities. The Company charged $5.0
million and $3.3 million of related costs against this provision in 1994 and
1995, respectively. The restructuring/reorganization was completed in fiscal
1995.
36
<PAGE> 37
(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.
The Senior Notes are not actively traded and there was no quoted market
price at December 29, 1996. There were two trades of the Senior Notes during
December 1996 and January 1997 at a price of $97 and $99, respectively. Using an
average price of $98, the fair value at December 29, 1996 would be $122.5
million.
There are no quoted market prices for the Series B ESOP Preferred
Stock. 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 $5.2 million. Given these
same assumptions the shares could be converted into common stock having a market
value of $6.1 million at December 29, 1996.
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.
37
<PAGE> 38
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 29, 1996 and December 31, 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 29,
1996. 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 29, 1996 and December 31, 1995, and the
results of their operations and their cash flows for each of the fiscal years in
the three-year period ended December 29, 1996, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
January 31, 1997
38
<PAGE> 1
EXHIBIT 21
----------
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:
Jurisdiction of
Subsidiary Name Incorporation
- --------------- ---------------
OPERATING SUBSIDIARIES:
Ekco Housewares, Inc. Delaware
Ekco Canada Inc. Ontario, Canada
Ekco Consumer Plastics, Inc. Massachusetts
(formerly known as Frem Corporation)
Ekco Distribution of Illinois, Inc. Delaware
Ekco Manufacturing of Ohio, Inc. Delaware
Ekco International Housewares Limited United Kingdom
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
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Ekco Group, Inc.
We consent to incorporation by reference in the Registration Statement on
Form S-8 (File No. 33-42785) pertaining to the 1984 and 1985 Restricted Stock
Purchase Plans of Ekco Group, Inc., in the Registration Statement on Form S-8
(File No. 33-50800) pertaining to the 1984 Employee Stock Purchase Plan of Ekco
Group, Inc., in the Registration Statement on Form S-8 (File No. 33-50802)
pertaining to the 1987 Stock Option Plan of Ekco group, inc., and in the
Registration Statement on Form S-8 (File No. 33-29448) pertaining to the 1988
Directors' Stock Option Plan of Ekco Group, Inc., and in the Registration
Statement on Form S-3 (File No. 33-58319) pertaining to the Dividend
Reinvestment and Stock Purchase Plan of Ekco Group, Inc., of our report dated
January 31, 1997 relating to the consolidated balance sheets of Ekco Group,
Inc. and subsidiaries as of December 29, 1996 and December 31, 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 29,
1996, which report is included in the December 29, 1996 Annual Report on Form
10-K of Ekco Group, Inc.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
March 24, 1996
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-29-1996
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4,098
0
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