<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended January 25, 1997
Commission File Number 1-5452
ONEIDA LTD.
ONEIDA, NEW YORK 13421-2899
(315) 361-3636
NEW YORK 15-0405700
(State of Incorporation) (I.R.S. Employer
Identification No)
Securities registered
pursuant to Section 12(b) of the Act:
Name of exchange
Title of Class on which registered
Common Stock, par value New York Stock Exchange
$1.00 per share
with attached
Preferred Stock purchase
rights
Securities registered pursuant to Section 12(g) of the Act:
6% Cumulative Preferred Stock, par value $25 per share
(Title Of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10 -K or any amendment to
this Form 10 -K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of the close of business on March 18, 1997 was $211,532,066.
The number of shares of Common stock ($1.00 par value) outstanding as of March
18, 1997 was 10,778,704.
Documents Incorporated by Reference
1. Portions of Oneida Ltd.'s Annual Report to Stockholders for the fiscal year
ended January 25, 1997 (Parts I and II of Form 10-K).
2. Portions of Oneida Ltd.'s Definitive Proxy Statement dated April 25, 1997
(Part III of Form 10-K).
<PAGE>
PART I
ITEM 1. BUSINESS.
General.
The Corporation (unless otherwise indicated by the context, the term
"Corporation" means Oneida Ltd. and its wholly-owned subsidiaries) was
incorporated in New York in 1880 under the name Oneida Community, Limited. In
1935, the Corporation's name was changed to Oneida Ltd. It maintains its
executive offices in Oneida, New York.
Since its inception, the Corporation has manufactured and marketed tableware -
initially sterling and later silverplated and stainless steel products. By
acquiring subsidiaries and expanding its tableware lines, the Corporation has
diversified into the manufacture and import of commercial china tableware and
the marketing of other tableware and gift items, most notably, crystal.
Financial Information About Industry Segments.
The Corporation operates in one principal industry, Tableware Products. Until
recently, the Corporation operated in two principal industries, Tableware and
Industrial Wire Products, but on February 12, 1997, the Corporation sold its
Camden Wire subsidiary to International Wire Group, Inc. of St. Louis, Missouri
in a transaction valued at approximately $59 million.
Information regarding the Corporation's operations by industry segment for the
years ended January 25, 1997, January 27, 1996 and January 28, 1995 is set forth
on page 23 of the Corporation's Annual Report to Shareholders for the year ended
January 25, 1997, parts of which are incorporated herein by reference.
Narrative Description of Business.
The following is a description of the business of the Corporation in the
Tableware industry.
TABLEWARE
In the tableware industry, the Corporation is organized to serve two markets:
consumer and foodservice. This is accomplished by an organizational structure
designed to serve four marketing focal points: Consumer Retail Division;
Consumer Direct Division; Foodservice Division and the International Division.
Consumer operations focus on individual consumers, both in the United States and
around the world, offering a variety of tabletop and giftware products including
stainless steel, silverplated, sterling and resin color-handle flatware;
silverplated and stainless steel holloware; cutlery; and crystal stemware and
decorative pieces.
Flatware and holloware are manufactured primarily at the Corporation's
facilities in Sherrill, New York. Its operations have been harmonized with the
Corporation's other two North American manufacturing facilities to maximize the
efficiency of producing a comprehensive product line for domestic and
international markets. Production at Oneida Canada, Limited, a wholly-owned
subsidiary located in Niagara Falls, Ontario, has been integrated with
operations at the Sherrill plant, with each facility producing complementary
items in similar product lines. Meanwhile, Oneida Mexicana, S.A., located in
Toluca, Mexico, manufactures cutlery and consumer flatware patterns which are
not produced at the Corporation's other facilities. The Corporation also
imports products from several international sources.
The Corporation's wide-ranging consumer marketing activities are coordinated by
the Oneida Silversmiths Division. Responsibilities are divided between the
Consumer Retail and Consumer Direct divisions.
<PAGE>
The Consumer Retail Division serves retail accounts, particularly major retail
outlets. Most orders are fulfilled directly by the Corporation from its primary
distribution center located in Sherrill, New York. For some accounts,
however, orders are fulfilled by one of the Corporation's two other distribution
centers which are located in Ontario, California and Nashville, Tennessee.
The Consumer Direct Division is responsible for managing Special Sales, which
focus on serving business customers in the premium, incentive, mail order and
direct selling markets. This division also includes Kenwood Silver Company,
Inc., another wholly-owned subsidiary which plays a significant role in the
overall marketing of the Corporation's products through its operation of retail
factory store outlets. Kenwood Silver presently operates 68 Oneida Factory
Stores in resort and destination shopping areas across the United States.
The Consumer Direct and Retail Divisions are exploring opportunities to
capitalize on the ONEIDA name in new product categories. In 1996, the
Corporation signed license agreements with Robinson Knife Manufacturing Co. and
Encore Promotions, Inc. Robinson Knife will be marketing a line of specialty
kitchen tools and accessories under the ONEIDA name to mass market, department
and specialty stores, while Encore Promotions will run supermarket redemption
programs featuring flatware, china dinnerware, cutlery, cookware and linens,
all bearing the ONEIDA name.
Foodservice operations manufacture and import stainless steel and silverplated
flatware and holloware, and vitreous, porcelain and bone china, which are sold
to restaurants and hotel chains, food distributors, airlines, institutions and
other related customers. These operations are consolidated within the Oneida
Foodservice Division.
Flatware for the foodservice market is sourced primarily from the Corporation's
manufacturing facilities in Sherrill, Niagara Falls and Toluca, while
foodservice holloware is primarily imported. Buffalo China, Inc., a subsidiary
located in Buffalo, New York, is a leading manufacturer of vitreous china for
the foodservice industry. Buffalo China also owns a subsidiary located in
Juarez, Mexico. This subsidiary, Ceramica de Juarez, S.A., produces bisque
china which is finished in Buffalo, as well as finished, undecorated holloware
items.
In November 1996, the Foodservice Division was expanded by the acquisition of
substantially all of the assets of THC Systems, Inc., a leading importer and
marketer of vitreous china and porcelain for the foodservice industry. THC
Systems, Inc. now operates as a wholly-owned subsidiary of the Corporation and
continues to do business under the Rego China tradename.
The Foodservice Division is also the exclusive distributor of certain china
products manufactured by Schonwald and Noritake Co., Inc. for the United States
foodservice and institutional markets.
International operations in both the consumer and foodservice markets are
overseen by the Oneida International Division. The International Division
coordinates the marketing of Oneida's domestically manufactured products
overseas as well as the distribution of products from Oneida Silversmiths'
United Kingdom branch. The Corporation is 80% owner of Oneida International,
Inc., a joint venture formed to market tabletop products of Italian design which
are sourced internationally. Oneida International, Inc. sells these products
through its wholly-owned Italian subsidiary, Sant'Andrea S.r.l., in the
international foodservice market. The foodservice and consumer markets in
Mexico, Central America and South America are served by Oneida Mexicana, S.A.
Complementing the work of the Corporation's international subsidiaries are
Australian and Colombian joint ventures which are designed to increase the
Corporation's sales and market share abroad.
<PAGE>
The percentages of consumer tableware sales and foodservice tableware sales to
total consolidated sales for the fiscal years, which end in January, are as
follows:
Consumer Tableware: 1997 1996 1995
54% 57% 56%
Foodservice Tableware: 1997 1996 1995
46% 43% 44%
The principal raw materials and supplies used by the Corporation for metal
tableware are stainless steel, silver and various copper alloys. For china,
they are various clays, flint and aluminum oxide. These materials are purchased
in the open market to meet current requirements. The Corporation does not
anticipate any delays or difficulties in obtaining raw materials or supplies.
The Corporation owns and maintains many design patents in the United States and
foreign countries. These patents, along with numerous copyrights, protect the
Corporation's product designs and decorations. In addition, the Corporation
has registered its most significant trademarks in the United States and many
foreign countries. Both the consumer and foodservice operations use a number of
trademarks and trade names which are advertised and promoted extensively
including ONEIDA, BUFFALO CHINA, COMMUNITY, DJ, HEIRLOOM, LTD, NORTHLAND, REGO,
ROGERS and SANT'ANDREA. Taken as a whole, the Corporation's intellectual
property, especially the goodwill associated with the ONEIDA name, is a
material, although intangible, corporate asset.
Although consumer operations normally do a greater volume of business during
October, November and December, primarily because of holiday-related orders for
tableware products, the total tableware business is not considered seasonal.
No material part of the Corporation's tableware business is dependent upon a
single customer or a few customers, the loss of which would have a materially
adverse effect. Sufficient inventories of tableware products are maintained by
the Corporation to respond promptly to orders.
Tableware operations had order backlogs of $15,892,000 as of April 5, 1997 and
$14,040,000 as of April 12, 1996. This backlog is expected to be filled during
the current fiscal year, principally in the first quarter. The amount of backlog
is reasonable for the tableware industry.
The Corporation is the only domestic manufacturer of a complete line of
stainless steel, silverplated and sterling tableware products. The Corporation
believes that it is the largest producer of stainless steel and silverplated
flatware in the world. The Corporation faces competition from several smaller
domestic companies that market both imported and domestically manufactured lines
and from hundreds of importers engaged exclusively in marketing foreign-made
tableware products. In recent years there is also competition from department
and specialty stores and foodservice establishments that import foreign-made
tableware products under their own private labels for their sale or use.
The consumer tableware business is highly competitive. The principal factors
affecting domestic competition in this market are design, price and quality.
Other factors that have an effect on competition are availability of replacement
pieces and product warranties. In the opinion of the Corporation, no one factor
is dominant, and the significance of the different competitive factors varies
from customer to customer.
The foodservice tableware business is highly competitive. The principal factors
affecting competition in this market are price, service and quality. The Oneida
Foodservice Division's products and service are highly regarded in this
industry, and it is one of the largest sources of commercial china and stainless
steel and silverplated tableware in the United States.
<PAGE>
Other Matters.
Research and Development
The Corporation places a considerable emphasis on excellence in development and
design. To achieve this end, the Corporation maintains full time, in-house
design and engineering departments which continuously develop, test and improve
products and manufacturing methods. Independent designers and collaborative
efforts with other companies contribute to the Corporation's emphasis on
development and design. The Corporation's actual expenditures on research and
development activities during the past three fiscal years, however, have not
been material.
Environmental
The Corporation does not anticipate that compliance with federal, state and
local environmental laws and regulations will have any material effect upon the
capital expenditures, earnings or competitive position of the Corporation. The
Corporation does not anticipate any material capital expenditures for
environmental control facilities for the remainder of the current fiscal year
or the succeeding fiscal year.
Employees and Employee Relations
The Corporation and its wholly-owned subsidiaries employ approximately 3,590
employees in domestic operations and 1,097 employees in foreign operations.
ITEM 2. PROPERTIES
The principal properties of the Corporation and its subsidiaries are situated
at the following locations and have the following characteristics:
Approximate
Square Feet
Oneida, New York Executive Administrative Offices 95,000
Sherrill, New York Manufacturing Stainless Steel,
Silverplated and Sterling Tableware 1,082,000
Sherrill, New York Manufacturing Knives 135,000
Buffalo, New York Office and Warehouse 82,000
Buffalo, New York Manufacturing China 257,000
Niagara Falls, Ontario Manufacturing Stainless Steel and
Silverplated Flatware 120,000
Bangor, N. Ireland Office and Warehouse 32,000
Toluca, Mexico Manufacturing Stainless Steel Flatware 75,000
Juarez, Mexico Manufacturing Bisque China 65,000
All of these buildings are owned by the Corporation with the following
exceptions:
The offices and warehouses in Bangor, Northern Ireland are leased.
<PAGE>
The Buffalo, New York manufacturing property is subject to a mortgage in the
principal amount of approximately $1,136,000 covering both real property and
equipment to secure a like amount of Industrial Revenue Bonds. Pursuant to the
terms of a Lease Agreement dated February 1, 1980, the real property is leased
by Buffalo China from the Erie County Industrial Development Agency for a term
of twenty years, upon the expiration of which the property will be conveyed
back to Buffalo China.
In addition to the land primarily associated with its manufacturing operations,
the Corporation owns approximately 500 additional acres in the cities of
Sherrill and Oneida and the town of Vernon, New York.
The Corporation leases sales offices and/or showrooms in New York City,
Melville, New York, Los Angeles, Dallas, Atlanta, London, England and Vercelli,
Italy. The Corporation and its subsidiaries lease warehouse space in various
locations throughout the United States. The Corporation also leases retail
outlet space through its wholly-owned subsidiary, Kenwood Silver Company, Inc.,
in various locations throughout the United States.
In January 1983 the Corporation entered into a 25-year lease for an office
facility in Redmond, Washington. The remaining lease commitment for this
facility is $23,084,000. The Corporation has sublet substantially all of the
building through 1999. The sublease income projected through 2003 is $6,843,000.
The Corporation's buildings are located on sufficient property to accommodate
any further expansion or development. The properties are served adequately by
transportation facilities, are well maintained and are adequate for the purposes
for which used.
ITEM 3. LEGAL PROCEEDINGS
Management believes there is no ongoing or pending litigation with a possible
material effect on the financial position of the Corporation.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF STOCKHOLDERS.
None.
PART II
Information required to be furnished under this Part (Items 5 through 9) is set
forth in the Corporation's Annual Report to Shareholders for the year ended
January 25, 1997, at the respective pages indicated, and incorporated by
reference.
ITEM 5. MARKET FOR THE CORPORATION'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS.
Page 27 of the Corporation's Annual Report.
ITEM 6. SELECTED FINANCIAL DATA.
Page 27 of the Corporation's Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Pages 26 of the Corporation's Annual Report
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pages 13 through 27 of the Corporation's Annual Report.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
Some of the information required to be furnished under this Part (Items 10
through 13) is set forth in the Corporation's definitive Proxy Statement dated
April 25, 1997 (File 1-5452) at the respective pages indicated, and incorporated
by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Pages 3 through 4 of the Corporation's definitive Proxy Statement.
Executive Officers of the Registrant
The persons named below are the executive officers of the Corporation and have
been elected to serve in the capacities indicated at the pleasure of the Oneida
Ltd. Board of Directors.
Name, Age and Positions Principal Business Affiliations
with Corporation During Past Five Years
Thomas A. Fetzner, 49 Mr. Fetzner has been Corporate Controller and
Vice President and Vice President for more than the past five
Corporate Controller years.
Barry G. Grabow, 53 Mr. Grabow has been Treasurer for more than
Treasurer than the past five years.
Peter J. Kallet, 50 Mr. Kallet was elected President and Chief
President, Chief Operating Officer in January 1996. Mr. Kallet
Operating Officer had been Senior Vice President and General
and a Director Manager of the Oneida Foodservice Division
for more than the past five years.
Glenn B. Kelsey, 45 Mr. Kelsey was elected Executive Vice President
Executive Vice and Chief Financial Officer in January 1996.
President, Chief Mr. Kelsey had been President of Oneida
Financial Officer Foodservice Division for more than the past
and a Director five years.
William D. Matthews, 62 Mr. Matthews has been Chairman of the Board
Chairman of the Board, and Chief Executive Officer for more than the
Executive Officer and past five years.
a Director
Catherine H. Suttmeier, 40 Ms. Suttmeier has been General Counsel and
Vice President, General Secretary for more than the past five years.
Counsel and Secretary She was elected Vice President in December
1992.
Edward W. Thoma, 51 Mr. Thoma has been Senior Vice President,
Senior Vice President, Finance for more than the past five years.
Finance
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
Pages 5 through 11 of the Corporation's definitive Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Pages 1 through 4 of the Corporation's definitive Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Pages 2 through 4 of the Corporation's definitive Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8K.
(a) 1. Financial statements incorporated by reference from the Corporation's
1997 Annual Report to Shareholders and filed as part of this Report:
Consolidated Statement of Operations for the fiscal years ended 1997,
1996 and 1995 (page 13 of the Corporation's Annual Report).
Consolidated Balance Sheet for the fiscal years ended in 1997 and 1996
(pages 14 and 15 of the Corporation's Annual Report).
Consolidated Statement of Cash Flows for the fiscal years ended 1997,
1996 and 1995 (page 16 of the Corporation's Annual Report).
Notes to Consolidated Financial Statements (pages 17-25 of the
Corporation's Annual Report).
Independent Auditor's Report (page 25 of the Corporation's Annual
Report).
2. Financial Statement Schedule:
Schedule for the fiscal years ended 1997, 1996 and 1995:
Valuation and Qualifying Accounts (Schedule II) (page 13 of this
Report).
Independent Auditor's Report (page 12 of this Report).
All other schedules have been omitted because of the absence of conditions under
which they are required or because the required information is included in the
financial statements submitted.
3. Exhibits:
(3) The Restated Certificate of Incorporation and the By-Laws, as
previously amended, which are incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended January 29, 1994.
<PAGE>
(4)(a) Note Agreement dated January 1, 1992, between Oneida Ltd.,
Allstate Life Insurance and Pacific Mutual Life Insurance Company.
Restated and Modified Letter of Credit, Bond Purchase and
Guaranty Agreement dated August 1, 1995, between Oneida Ltd. and Chemical Bank,
N.A., which is incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended January 25, 1996.
Revolving Credit Agreement dated January 19, 1996 between
Oneida Ltd., The Chase Manhattan Bank, N.A., Chemical Bank and NationsBank,
N.A., which is incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended January 25, 1996.
Amendment No. 1 to the January 19, 1996 Revolving Credit
Agreement between Oneida Ltd., The Chase Manhattan Bank, N.A., Chemical Bank and
NationsBank, N.A. Amendment No. 1 is dated September 25, 1996, and was executed
by Oneida Ltd., The Chase Manhattan Bank (successor to The Chase Manhattan Bank,
N.A. and Chemical Bank), NationsBank, N.A. and Marine Midland Bank.
Amendment No. 2 to the January 19, 1996 Revolving Credit
Agreement between Oneida Ltd., The Chase Manhattan Bank, N.A., Chemical Bank and
NationsBank, N.A. Amendment No. 2 is dated November 1, 1996, and was executed by
Oneida Ltd., The Chase Manhattan Bank (successor to The Chase Manhattan Bank,
N.A.), NationsBank, N.A. and Marine Midland Bank.
Note Agreement dated November 15, 1996, between Oneida Ltd.,
THC Systems, Inc., Allstate Life Insurance Company, Allstate Insurance Company
and Pacific Mutual Life Insurance Company.
First Amendment to the January 1, 1992 Note Agreement,
between Oneida Ltd., Allstate Life Insurance and Pacific Mutual Life Insurance
Company. The First Amendment to Note Agreement is dated November 26, 1996, and
was executed by Oneida Ltd., Allstate Life Insurance and Pacific Mutual Life
Insurance Company.
Consent and Amendment No. 3 to the January 19, 1996 Revolving
Credit Agreement dated January 19, 1996 between Oneida Ltd., The Chase Manhattan
Bank, N.A., Chemical Bank and NationsBank, N.A. The Consent and Amendment No. 3
is dated January 24, 1997, and was executed by Oneida Ltd., The Chase Manhattan
Bank (successor to The Chase Manhattan Bank, N.A. and Chemical Bank),
NationsBank, N.A. and Marine Midland Bank.
Amendment, dated February 12, 1997, to the August 1, 1995
Restated and Modified Letter of Credit, Bond Purchase and Guaranty Agreement
dated August 1, 1995, between Oneida Ltd. and Chemical Bank, N.A. Tri-Party
Agreement, dated February 12, 1997, between Oneida Ltd., Camden Wire Co., Inc.
and International Wire Group, Inc.
(b) Shareholder Rights Agreement dated December 13, 1989, which
is incorporated by reference to the Registrant's Annual Report on Form 10-K for
the year ended January 28, 1995. Assignment and Assumption Agreement dated
November 1, 1991, which is incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 28, 1995.
<PAGE>
(10)(a) Employment agreements with two executive employees of the
Corporation dated October 1, 1982, which are incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended January 28, 1995.
Employment Agreements with five executive employees of the Corporation dated
July 26, 1989, which are incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 28, 1995. Employment Agreement
with one executive employee of the Corporation dated March 29, 1995, which is
incorporated by reference to the Registrant's Annual Report on Form 10-K for
the year ended January 27, 1996. Employment agreements with two executive
employees of the Corporation dated February 28, 1996.
(b) Oneida Ltd. Management Incentive Plan adopted by the Board of
Directors on February 24, 1988, which provides for the payment of bonus awards
to senior management employees, which is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended January 28, 1995.
(c) Oneida Ltd. 1987 Stock Option Plan, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
January 30, 1993. Amendment, dated August 1, 1996, to Oneida Ltd. 1987 Stock
Option Plan.
(d) Oneida Ltd. Employee Security Plan adopted by the Board of
Directors on July 26, 1989, which is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended January 28, 1995.
(e) Oneida Ltd. Restricted Stock Award Plan as adopted by the
Board of Directors on November 29, 1989 and approved by shareholders on May 30,
1990 for the granting of common stock to key employees, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
January 27, 1996.
(f) Oneida Ltd. Deferred Compensation Plan for Key Employees as
adopted by the Board of Directors on October 27, 1993, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
January 29, 1994.
(g) Asset Purchase Agreement, dated August 29, 1996 among THC
Systems, Inc., Eugene Goldberg, Robert Goldberg and Oneida Community China,
Inc., which is incorporated by reference to Oneida Ltd.'s Current Report on Form
8-K dated November 4, 1996. Amendment to Asset Purchase Agreement, dated
November 4, 1996, among THC Systems, Inc., Eugene Goldberg, Robert Goldberg and
Oneida Community China, Inc., which is incorporated by reference to Oneida
Ltd.'s Current Report on Form 8-K dated November 4, 1996.
(11) Computation of per share earnings.
(13) Portions of the Oneida Ltd. Annual Report to Shareholders for
the fiscal year ended January 25, 1997, which have been incorporated by
reference in this Form 10-K.
(22) Subsidiaries of the Registrant.
(b) During the quarter ended January 25, 1997, Reports on Form 8-K were
filed by the Registrant on November 18, 1996, December 4, 1996 and January 10,
1997.
<PAGE>
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.
ONEIDA LTD.
By: /s/ WILLIAM D. MATTHEWS
William D. Matthews
Chairman of the Board and
Chief Executive Officer
March 25, 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:
Signature Title Date
Principal Executive Officer
/s/ WILLIAM D. MATTHEWS Chairman of the Board March 25, 1997
William D. Matthews and Chief Executive
Officer
Principal Financial Officer
/s/ GLENN B. KELSEY Executive Vice President March 25, 1997
Glenn B. Kelsey Chief Financial Officer
Principal Accounting Officer
/s/ THOMAS A. FETZNER Vice President and March 25, 1997
Thomas A. Fetzner Corporate Controller
The Board of Directors
/s/ WILLIAM F. ALLYN Director March 25, 1997
William F. Allyn
/s/ R. QUINTUS ANDERSON Director March 25, 1997
R. Quintus Anderson
/s/ GEORGIA S. DERRICO Director March 25, 1997
Georgia S. Derrico
/s/ DAVID E. HARDEN Director March 25, 1997
David E. Harden
<PAGE>
/s/ PETER J. KALLET Director March 25, 1997
Peter J. Kallet
/s/ GLENN B. KELSEY Director March 25, 1997
Glenn B. Kelsey
/s/ WILLIAM D. MATTHEWS Director March 25, 1997
William D. Matthews
/s/ WHITNEY D. PIDOT Director March 25, 1997
Whitney D. Pidot
/s/ RAYMOND T. SCHULER Director March 25, 1997
Raymond T. Schuler
/s/ WALTER A. STEWART Director March 25, 1997
Walter A. Stewart
/s/ WILLIAM M. TUCK Director March 25, 1997
William M. Tuck
<PAGE>
INDEPENDENT AUDITOR'S REPORT
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Stockholders of Oneida Ltd.
Our report on the consolidated financial statements of Oneida Ltd. has been
incorporated by reference in this Form 10-K from page 25 of the 1997 Annual
Report to Shareholders of Oneida Ltd. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in the index on page 7 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included herein.
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
Syracuse, New York
February 20, 1997
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of Oneida Ltd. on Form S-8 (File Nos. 33-49462 and 333-10795) and Form S-3
(File No. 33-64608) our report dated February 20, 1997 on our audits of the
consolidated financial statements and financial statement schedules of Oneida
Ltd. as of January 26, 1997 and January 27, 1996, and for each of the three
years in the period ended January 26, 1997 which report are either included or
incorporated by reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
Syracuse, New York
April 24, 1997
<PAGE>
SCHEDULE II
<TABLE>
ONEIDA LTD.
AND CONSOLIDATED SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 1997, 1996 AND 1995
<CAPTION>
(Thousands)
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Balance
Beginning Cost and End of
Description of Period Expenses Deduction Period
<S> <C> <C> <C> <C>
YEAR ENDED
JANUARY 25, 1997:
Reserves deducted from
assets to which they
apply:
Doubtful accounts
receivable $1,398 $1,087 $ 688<F1> $1,797
Other reserves:
Rebate program $ 434 $1,641 $1,717<F2> $ 358
YEAR ENDED
JANUARY 27, 1996:
Reserves deducted from
assets to which they
apply:
Doubtful accounts
receivable $1,365 $ 283 $ 250<F1> $1,398
Other reserves:
Rebate program $ 471 $1,430 $1,467<F2> $ 434
YEAR ENDED
JANUARY 28, 1995:
Reserves deducted from
assets to which they
apply:
Doubtful accounts
receivable $1,120 $ 399 $ 154<F1> $1,365
Other reserves:
Rebate program $ 605 $1,977 $2,111<F1> $ 471
<FN>
<F1> Adjustments and doubtful accounts written off.
<F2> Payments under rebate program.
</FN>
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibits:
(3) The Restated Certificate of Incorporation and the By-Laws, as
previously amended, which are incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended January 29, 1994.
(4)(a) Note Agreement dated January 1, 1992, between Oneida Ltd.,
Allstate Life Insurance and Pacific Mutual Life Insurance Company.
Restated and Modified Letter of Credit, Bond Purchase and
Guaranty Agreement dated August 1, 1995, between Oneida Ltd. and Chemical Bank,
N.A., which is incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended January 25, 1996.
Revolving Credit Agreement dated January 19, 1996 between
Oneida Ltd., The Chase Manhattan Bank, N.A., Chemical Bank and NationsBank,
N.A., which is incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended January 25, 1996.
Amendment No. 1 to the January 19, 1996 Revolving Credit
Agreement between Oneida Ltd., The Chase Manhattan Bank, N.A., Chemical Bank and
NationsBank, N.A. Amendment No. 1 is dated September 25, 1996, and was executed
by Oneida Ltd., The Chase Manhattan Bank (successor to The Chase Manhattan Bank,
N.A. and Chemical Bank), NationsBank, N.A. and Marine Midland Bank.
Amendment No. 2 to the January 19, 1996 Revolving Credit
Agreement between Oneida Ltd., The Chase Manhattan Bank, N.A., Chemical Bank and
NationsBank, N.A. Amendment No. 2 is dated November 1, 1996, and was executed by
Oneida Ltd., The Chase Manhattan Bank (successor to The Chase Manhattan Bank,
N.A.), NationsBank, N.A. and Marine Midland Bank.
Note Agreement dated November 15, 1996, between Oneida Ltd.,
THC Systems, Inc., Allstate Life Insurance Company, Allstate Insurance Company
and Pacific Mutual Life Insurance Company.
First Amendment to the January 1, 1992 Note Agreement,
between Oneida Ltd., Allstate Life Insurance and Pacific Mutual Life Insurance
Company. The First Amendment to Note Agreement is dated November 26, 1996, and
was executed by Oneida Ltd., Allstate Life Insurance and Pacific Mutual Life
Insurance Company.
Consent and Amendment No. 3 to the January 19, 1996 Revolving
Credit Agreement dated January 19, 1996 between Oneida Ltd., The Chase Manhattan
Bank, N.A., Chemical Bank and NationsBank, N.A. The Consent and Amendment No. 3
is dated January 24, 1997, and was executed by Oneida Ltd., The Chase Manhattan
Bank (successor to The Chase Manhattan Bank, N.A. and Chemical Bank),
NationsBank, N.A. and Marine Midland Bank.
Amendment, dated February 12, 1997, to the August 1, 1995
Restated and Modified Letter of Credit, Bond Purchase and Guaranty Agreement
dated August 1, 1995, between Oneida Ltd. and Chemical Bank, N.A. Tri-Party
Agreement, dated February 12, 1997, between Oneida Ltd., Camden Wire Co., Inc.
and International Wire Group, Inc.
(b) Shareholder Rights Agreement dated December 13, 1989, which
is incorporated by reference to the Registrant's Annual Report on Form 10-K for
the year ended January 28, 1995. Assignment and Assumption Agreement dated
November 1, 1991, which is incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 28, 1995.
(10)(a) Employment agreements with two executive employees of the
Corporation dated October 1, 1982, which are incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended January 28, 1995.
Employment Agreements with five executive employees of the Corporation dated
July 26, 1989, which are incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended January 28, 1995. Employment Agreement
with one executive employee of the Corporation dated March 29, 1995, which is
incorporated by reference to the Registrant's Annual Report on Form 10-K for
the year ended January 27, 1996. Employment agreements with two executive
employees of the Corporation dated February 28, 1996.
(b) Oneida Ltd. Management Incentive Plan adopted by the Board of
Directors on February 24, 1988, which provides for the payment of bonus awards
to senior management employees, which is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended January 28, 1995.
(c) Oneida Ltd. 1987 Stock Option Plan, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
January 30, 1993. Amendment, dated August 1, 1996, to Oneida Ltd. 1987 Stock
Option Plan.
(d) Oneida Ltd. Employee Security Plan adopted by the Board of
Directors on July 26, 1989, which is incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended January 28, 1995.
(e) Oneida Ltd. Restricted Stock Award Plan as adopted by the
Board of Directors on November 29, 1989 and approved by shareholders on May 30,
1990 for the granting of common stock to key employees, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
January 27, 1996.
(f) Oneida Ltd. Deferred Compensation Plan for Key Employees as
adopted by the Board of Directors on October 27, 1993, which is incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
January 29, 1994.
(g) Asset Purchase Agreement, dated August 29, 1996 among THC
Systems, Inc., Eugene Goldberg, Robert Goldberg and Oneida Community China,
Inc., which is incorporated by reference to Oneida Ltd.'s Current Report on Form
8-K dated November 4, 1996. Amendment to Asset Purchase Agreement, dated
November 4, 1996, among THC Systems, Inc., Eugene Goldberg, Robert Goldberg and
Oneida Community China, Inc., which is incorporated by reference to Oneida
Ltd.'s Current Report on Form 8-K dated November 4, 1996.
(11) Computation of per share earnings.
(13) Portions of the Oneida Ltd. Annual Report to Shareholders for
the fiscal year ended January 25, 1997, which have been incorporated by
reference in this Form 10-K.
(22) Subsidiaries of the Registrant.
<PAGE>
EXHIBIT 4(a)
ONEIDA LTD.
NOTE AGREEMENT
Dated as of January 1, 1992
$30,000,000 Principal Amount
8.52% Senior Notes
Due January 15, 2002
<PAGE>
TABLE OF CONTENTS
1. DESCRIPTION OF NOTES AND COMMITMENT
1.1 Description of Notes 1
1.2 Commitment; Closing Date 1
2. PREPAYMENT OF NOTES
2.1 Required Prepayments 2
2.2 Optional Prepayments 3
2.3 Notice of Prepayments 3
2.4 Surrender of Notes on Prepayment or Exchange 4
2.5 Direct Payment 4
2.6 Allocation of Payments 4
2.7 Payments Due on Saturdays, Sundays and Holidays 5
3. REPRESENTATIONS
3.1 Representations of the Company 5
3.2 Representations of the Purchasers 12
4. CLOSING CONDITIONS
4.1 Representations and Warranties 13
4.2 Legal Opinions 13
4.3 Events of Default 14
4.4 Payment of Fees and Expenses 14
4.5 Accountants' Letter 14
4.6 Legality of Investment 14
4.7 Private Placement Number 14
4.8 Sale of All Notes 14
4.9 Proceedings and Documents 14
5. INTERPRETATION OF AGREEMENT
5.1 Certain Terms Defined 15
5.2 Accounting Principles 24
5.3 Effect of FASB 106 24
5.4 Valuation Principles 24
5.5 Direct or Indirect Actions 24
<PAGE>
6. AFFIRMATIVE COVENANTS
6.1 Corporate Existence 24
6.2 Insurance 25
6.3 Taxes, Claims for Labor and Materials 25
6.4 Maintenance of Properties 25
6.5 Maintenance of Records 25
6.6 Financial Information and Reports 26
6.7 Inspection of Properties and Records;
Confidentiality 29
6.8 ERISA 29
6.9 Compliance with Laws 30
6.10 Acquisition of Notes 31
6.11 Private Placement Number 31
6.12 NAIC Filings 31
7. NEGATIVE COVENANTS
7.1 Net Worth 31
7.2 Current Ratio 31
7.3 Funded Debt 31
7.4 Priority Indebtedness of Restricted Subsidiaries 32
7.5 Interest Coverage Ratio 32
7.6 Liens 32
7.7 Long-Term Leases 33
7.8 Restricted Payments 34
7.9 Merger or Consolidation 35
7.10 Sale of Assets 35
7.11 Change in Business 36
7.12 Transactions with Affiliates 36
7.13 Consolidated Tax Returns 36
8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1 Nature of Events 36
8.2 Remedies on Default 38
8.3 Annulment of Acceleration of Notes 39
8.4 Other Remedies 39
8.5 Conduct No Waiver; Collection Expenses 40
8.6 Remedies Cumulative 40
8.7 Notice of Default 40
<PAGE>
9. AMENDMENTS, WAIVERS AND CONSENTS
9.1 Matters Subject to Modification 41
9.2 Solicitation of Holders of Notes 41
9.3 Binding Effect 42
10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
10.1 Form of Notes 42
10.2 Note Register 42
10.3 Issuance of New Notes upon Exchange or Transfer 42
10.4 Replacement of Notes 43
11. MISCELLANEOUS
11.1 Expenses 43
11.2 Notices 44
11.3 Reproduction of Documents 44
11.4 Successors and Assigns 44
11.5 Law Governing 44
11.6 Headings 44
11.7 Counterparts 45
11.8 Reliance on and Survival of Provisions 45
11.9 Integration and Severability 45
Annex I: Subsidiaries
Annex II: Existing Funded Debt and Current Debt
Annex III: Description of Liens
Annex IV: Schedule of Insurance
Exhibit A: Form of 8.52% Senior Notes, Due January 15, 2002
Exhibit B: Legal Opinions
<PAGE>
ONEIDA LTD.
NOTE AGREEMENT
Dated as of January 1, 1992
To the Purchasers Named in Schedule I Hereto
Ladies and Gentlemen:
ONEIDA LTD., a New York corporation (the "Company"), agrees with you as
follows:
1. DESCRIPTION OF NOTES AND COMMITMENT
1.1 Description of Notes. The Company has authorized the issuance and sale
of $30,000,000 aggregate principal amount of its Senior Notes (the "Notes"), to
be dated the date of issuance, to bear interest from such date at the rate of
8.52% per annum prior to maturity, payable semi-annually on the fifteenth day of
July and January of each year, commencing July 15, 1992, and at maturity, to
bear interest on overdue principal (including any overdue required or optional
prepayment), premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest at the greater of (a) the rate of interest
publicly announced by Chemical Bank (or its successors or assigns) as its Prime
Rate plus one percent (1%) or (b) 10.52% per annum, to be expressed to mature on
January 15, 2002 and to be substantially in the form attached as Exhibit A. The
term "Notes" as used herein shall include each Note delivered pursuant to this
Note Agreement (the "Agreement") and each Note delivered in substitution or
exchange therefor and, where applicable, shall include the singular number as
well as the plural. Any reference to you in this Agreement shall in all
instances be deemed to include any nominee of yours or any separate account or
other person on whose behalf you are purchasing Notes. You are sometimes
referred to herein as a "Purchaser and, together with the other Purchaser, as
the "Purchasers."
1.2 Commitment: Closing Date. Subject to the terms and conditions hereof
and on the basis of the representations and warranties hereinafter set forth,
the Company agrees to issue and sell to you, and you agree to purchase from the
Company, Notes in the aggregate principal amount set forth opposite your name in
the attached Schedule I at a price of 100% of the principal amount thereof.
<PAGE>
Delivery of and payment for the Notes shall be made at the offices of
Gardner, Carton & Douglas, 321 North Clark Street, Quaker Tower, Chicago,
Illinois 60610, at 9:00 a.m., Chicago Time, on January 30, 1992, or at such
later time or on such later date, not later than 5:00 p.m. Chicago Time, on
January 31, 1992, as may be mutually agreed upon by the Company and the
Purchasers (the "Closing Date"). The Notes will be delivered to you in fully
registered form, issued in your name or in the name of your nominee. Delivery of
the Notes to you on the Closing Date shall be against payment of the purchase
price thereof in Federal Funds or other funds in U.S. dollars immediately
available at the principal office of Chase Lincoln First Bank, N.A., Rochester,
New York, A.B.A. No. 022300173, for deposit in the Company's Account No.
0102042942. If on the Closing Date the Company shall fail to tender the Notes to
you, you shall be relieved of all remaining obligations under this Agreement.
Nothing in the preceding sentence shall relieve the Company of any liability
occasioned by such failure to deliver the Notes. If on the Closing Date any
Purchaser shall fail to tender the purchase price of Notes set forth in Schedule
I hereto to the Company, the Company shall be relieved of all remaining
obligations under this Agreement. Nothing in the preceding sentence shall
relieve any Purchaser of any liability occasioned by its failure to deliver
such Funds. The obligations of each Purchaser shall be several and not joint and
no Purchaser shall be liable or responsible for the acts of any other Purchaser.
2. PREPAYMENT OF NOTES
2.1 Required Prepayments. (a) In addition to payment of all outstanding
principal of the Notes at maturity and regardless of the amount of Note which
may be outstanding from time to time, the Company shall prepay and there shall
become due and payable on January 15 in each year, $4,285,714.29 of the
principal amount of the Notes or such lesser amount as would constitute payment
in full on the Notes, commencing January 15, 1996 and ending January 15, 2001
inclusive, with the remaining principal payable on January 15, 2002. Each such
prepayment shall be at a price of 100% of the principal amount prepaid, together
with interest accrued thereon to the date of prepayment.
(b) In the event of a Change of Control, the Company shall,
immediately upon learning thereof, but in any event within five days after the
date of such Change of Control, give written notice to each holder of a Note of
the Change of Control, accompanied by a certificate of an authorized officer of
the Company describing in detail the nature of the Change of Control. The
Company shall prepay, on a date specified in such
<PAGE>
notice by the Company which shall be not less than 45 or more than 60 calendar
days after the effective date of such Change in Control, the entire principal
amount of the Notes held by each holder at the price set forth in Section
2.2(b).
2.2 Optional Prepayments. (a) Upon notice as provided in Section 2.3, the
Company may prepay the Notes, in whole or in part, at any time, in an amount of
not less than $1,000,000 or in integral multiples of $100,000 in excess thereof
at the price set forth in Section 2.2(b).
(b) Each prepayment made pursuant to Section 2.1(b), Section 7.10 or
paragraph (a) of this Section 2.2 shall be at a price of (i) 100% of the
principal amount to be prepaid, plus interest accrued thereon to the date of
prepayment, if the Reinvestment Yield, on the applicable Determination Date,
equals or exceeds the interest rate payable on or in respect of the Notes, or
(ii) 100% of the principal amount to be prepaid, plus interest accrued thereon
to the date of prepayment, plus a premium, if the Reinvestment Yield, on such
Determination Date, is less than the interest rate payable on or in respect of
the Notes. The premium shall equal () the aggregate present value of the amount
of principal being prepaid (taking into account the manner of application of
such prepayment required by Section 2.2(c)) and the present value of the amount
of interest (exclusive of interest accrued to the date of prepayment) which
would have been payable in respect of such principal absent such prepayment,
determined by discounting (semi-annually on the basis of a 360-day year composed
of twelve 30-day months) each such amount utilizing an interest factor equal to
the Reinvestment Yield, less (y) the principal amount to be prepaid
(c) Any prepayment pursuant to Section 2.2(a) or 7.10 of less than all of
the Notes outstanding shall be applied, to reduce, pro rata, each of the
prepayments and the final payment at maturity required by Section 2.1.
(d) Except as provided in Section 2.1, this Section 2.2 and Section 7.10,
the Notes shall not be prepayable in whole or in part.
2.3 Notice of Prepayments. The Company shall give notice of any
prepayment of the Notes pursuant to Section 2.1(b) or Section 2.2(a) or Section
7.10 to each holder of the Notes not less than 30 days nor more than 60 days
before the date fixed for prepayment, specifying (i) such date, (ii) the
principal amount of the holder's Notes to be prepaid on such date, (iii) the
date as of which the premium, if any, will be calculated and (iv) the accrued
interest applicable to the prepayment. Notice of prepayment having been so
given, the aggregate principal amount of the Notes specified in such
<PAGE>
notice, together with the premium, if any, and accrued interest thereon shall
become due and payable on the prepayment date specified in such notice.
The Company also shall give notice to each holder of the Notes by telecopy,
telegram, telex or other same-day written communication, as soon as practicable
but in any event not later than two business days prior to the prepayment date,
of the premium, if any, applicable to such prepayment and the details of the
calculations used to determine the amount of such premium.
2.4 Surrender of Notes on Prepayment or Exchange. Subject to Section 2.5,
upon any partial prepayment of a Note pursuant to this Section 2 or partial
exchange of a Note pursuant to Section 10.3, such Note may, at the option of
the holder thereof, (i) be surrendered to the Company pursuant to Section 10.3
in exchange for a new Note equal to the principal amount remaining unpaid on the
surrendered Note, or (ii) be made available to the Company for notation thereon
of the portion of the principal so prepaid or exchanged. In case the entire
principal amount of any Note is prepaid or exchanged, such Note shall, at the
written request of the Company, be surrendered to the Company for cancellation
and shall not be reissued, and no Note shall be issued in lieu of such Note.
2.5 Direct Payment. Notwithstanding any other provision contained in the
Notes or this Agreement, the Company will pay all sums becoming due on each Note
held by you or any subsequent Institutional Holder by wire transfer of
immediately available federal funds to such account as you or such subsequent
Institutional Holder has designated in Schedule I, or as you or such subsequent
Institutional Holder may otherwise designate by written notice to the Company,
in each case without presentment and without notations being made thereon,
except that any such Note so paid or prepaid in full shall, at the written
request of the Company, be surrendered to the Company for cancellation. Any
wire transfer shall identify such payment in the manner set forth in Schedule I
and shall identify the payment as principal, premium, if any, and/or interest.
You and any subsequent Institutional Holder of a Note to which this Section 2.5
applies agree that, before selling or otherwise transferring any such Note, you
or it will make a notation thereon of the aggregate amount of all payments of
principal theretofore made and of the date to which interest has been paid.
2.6 Allocation of Payments. If less than the entire principal amount of all
the Notes outstanding is to be paid, the Company will prorate the aggregate
principal amount to be paid among the outstanding Notes in proportion to the
unpaid principal.
<PAGE>
2.7 Payments Due on Saturdays, Sundays and Holidays. In any case where the
date of any required prepayment of the Notes or any interest payment date on the
Notes or the date fixed for any other payment of any Note or exchange of any
Note is a Saturday, Sunday or a legal holiday or a day on which banking
institutions in Chicago, Illinois or New York, New York are authorized by law to
close, then such payment, prepayment or exchange need not be made on such date
but may be made on the next preceding business day which is not a Saturday,
Sunday or a legal holiday or a day on which banking institutions in Chicago,
Illinois or New York, New York are authorized by law to close, with the same
force and effect as if made on the due date.
3. REPRESENTATIONS
3.1 Representations of the Company. As an inducement to, and as part of
the consideration for, your purchase of the Notes pursuant to this Agreement,
the Company represents and warrants to you as follows:
(a) Corporate Organization and Authority. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as presently proposed
to be conducted, to enter into and perform the Agreement and to issue and sell
the Notes as contemplated in the Agreement.
(b) Qualification to Do Business. The Company is duly licensed or qualified
and in good standing as a foreign corporation authorized to do business in each
jurisdiction where the nature of the business transacted by it or the character
of its properties owned or leased makes such qualification or licensing
necessary.
(c) Subsidiaries. The Company has no Subsidiaries, as defined in Section
5.1, except those listed in Annex I, which correctly sets forth whether such
Subsidiary is a Restricted Subsidiary and the jurisdiction of incorporation and
the percentage of the outstanding Voting Stock or equivalent interest of each
Subsidiary which is owned, of record or beneficially, by the Company and/or one
or more Subsidiaries. Each Subsidiary has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation and organization and is duly licensed or qualified and in good
standing as a foreign corporation in each other jurisdiction where the nature of
the business transacted by it or the character of its properties owned or leased
makes such
<PAGE>
qualification or licensing necessary. A list of those jurisdictions wherein each
Subsidiary is qualified to do business is set forth in Annex I. Each Subsidiary
has full corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as presently proposed to be
conducted. The Company or each Subsidiary has good and marketable title to all
of the shares it purports to own of the capital stock of each Subsidiary, as the
case may be, free and clear in each case of any Lien or encumbrance, and all
such shares have been duly issued and are fully paid and nonassessable.
(d) Financial Statements. The consolidated balance sheets of the Company
and its Restricted Subsidiaries as of January 26, 1991 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year ended January 26, 1991, accompanied by the report and unqualified opinion
of Coopers & Lybrand, independent certified public accountants, copies of which
have heretofore been delivered to you, were prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein) and present fairly the
consolidated financial condition and consolidated results of operations and cash
flows of the Company and its Restricted Subsidiaries for and as of the end of
each of such years. The consolidated balance sheets of the Company and its
Restricted Subsidiaries as of July 27, 1991 and July 28, 1990 and the related
unaudited consolidated condensed statements of income, stockholders' equity and
cash flows for the six months ended July 27, 1991 and July 28, 1990, copies of
which have heretofore been delivered to you, were prepared in accordance with
generally accepted accounting principles and present fairly the consolidated
financial condition of the Company and its Restricted Subsidiaries as of such
dates and the consolidated results of their operations and cash flows for the
periods then ended, subject to customary year-end adjustments.
(e) Contingent Liabilities or Adverse Changes. Neither the Company nor any
of its Subsidiaries has any contingent liabilities which are material to the
Company and its Subsidiaries taken as a whole other than as indicated on the
financial statements described in the foregoing paragraph (d) of this Section
3.1, and since January 26, 1991, there have been no material adverse changes in
the condition, financial or otherwise, of the Company and its Subsidiaries
except those occurring in the ordinary course of business.
(f) No Pending Litigation or Proceedings. There are no actions, suits or
proceedings pending or threatened against or affecting the Company or any of
its Subsidiaries, at law or in
<PAGE>
equity or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which might result, either individually or in the aggregate, in any
material adverse change in the business, properties, operations or condition,
financial or otherwise, of the Company and its Subsidiaries taken as a whole or
on the Company's ability to perform its obligations under this Agreement or the
Notes.
(g) Compliance with Law. (i) Neither the Company nor any of its
Subsidiaries is: (x) in default with respect to any order, writ, injunction or
decree of any court to which it is a named party; or (y) in default under any
law, rule, regulation, ordinance or order relating to its or their respective
businesses, the sanctions and penalties resulting from which defaults described
in clauses (x) and (y) might have a material adverse effect on the business,
properties, operations, assets or condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole, or on the Company's ability to
perform its obligations under this Agreement or the Notes.
(ii) Neither the Company nor any Subsidiary nor any Affiliate of the
Company is an entity defined as a designated national" within the meaning of the
Foreign Assets Control Regulations, 31 C.F.R. Chapter V, or for any other
reason, subject to any restriction or prohibition under, or is in violation of,
any Federal statute or Presidential Executive Order, or any rules or regulations
of any department, agency or administrative body promulgated under any such
statute or Order, concerning trade or other relations with any foreign country
or any citizen or national thereof or the ownership or operation of any
property.
(h) Pension Reform Act of 1974. Based upon the representations of the
Purchasers set forth in Section 3.2, neither the purchase of the Notes by you
nor the consummation of any of the other transactions contemplated by this
Agreement is or will constitute a "prohibited transaction" within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code), or
Section 406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Internal Revenue Service has issued a favorable determination
letter with respect to each "employee pension benefit plan," as defined in
Section 3 of ERISA, established, maintained or contributed to by the Company or
any Subsidiary (except for any Plan which is unfunded and maintained primarily
for the purpose of providing deferred compensation for a select group of
management or highly compensated employees) (a "Plan") that the same is
qualified under Section 401(a) and related provisions of the Code and that each
related trust or custodial account is exempt from taxation under Section 501(a)
of the Code.
<PAGE>
All Plans of the Company or any Subsidiary comply in all material respects with
ERISA and other applicable laws. There exist with respect to the Company or any
Subsidiary no "multi-employer plans," as defined in the Multi-employer Pension
Plan Amendments Act of 1980, for which a material withdrawal or termination
liability may be incurred. There exist with respect to all Plans or trusts
established or maintained by the Company or any Subsidiary: (i) no material
accumulated funding deficiency within the meaning of ERISA; (ii) no termination
of any Plan or trust which would result in any material liability to the Pension
Benefit Guaranty Corporation (PBGC) or any "reportable event," as that term is
defined in ERISA, which is likely to constitute grounds for termination of any
Plan or trust by the PBGC; and (iii) no "prohibited transaction," as that term
is defined in ERISA, which is likely to subject any Plan, trust or party
dealing with any such Plan or trust to any material tax or penalty on prohibited
transactions imposed by Section 4975 of the Code.
(i) Title to Properties. The Company and each Subsidiary has (i) good title
in fee simple or its equivalent under applicable law to all the real property
owned by it and (ii) good title to all other Property owned by it, in each case
free from all Liens except (x) those securing Indebtedness of the Company or a
Subsidiary, which are listed in the attached Annex II and (y) other Liens that
would be permitted pursuant to Section 7.6.
(j) Leases. The Company and each Subsidiary enjoy peaceful and undisturbed
possession under all leases under which the Company or such Subsidiary is a
lessee or is operating. None of such leases contains any provision which might
materially and adversely affect the operation or use of the property so leased.
All of such leases are valid and subsisting and neither the Company nor any
Subsidiary is in default with respect to any such leases which are material to
the business, Properties, operations or condition, financial or otherwise, of
the Company and its Subsidiaries taken as a whole.
(k) Franchises, Patents, Trademarks and Other Rights. The Company and
each Subsidiary have all franchises, permits, licenses and other authority
necessary to carry on their businesses as now being conducted and as proposed to
be conducted, and none is in default under any of such franchises, permits,
licenses or other authority which are material to their respective businesses,
Properties, operations or condition, financial or otherwise. The Company and
each Subsidiary own or possess all patents, trademarks, service marks, trade
names, copyrights, licenses and rights with respect to the foregoing necessary
for the present conduct of their businesses, without any known conflict with the
rights of others which might result in any material adverse change in
<PAGE>
their respective businesses, Properties, operations or condition, financial or
otherwise.
(l) Status of Notes and Sale of Notes. The Agreement and the Notes have
been duly authorized on the part of the Company, have been duly elected and
delivered by an authorized officer of the Company and constitute the legal,
valid and binding obligations of the Company, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in equity or at law. The sale of the Notes and compliance by the Company
with all of the provisions of this Agreement and of the Notes (i) are within the
corporate powers of the Company, (ii) have been duly authorized by proper
corporate action, (iii) are legal, (iv) will not violate any provisions of any
law or regulation or order of any court, governmental authority or agency and
(v) will not result in any breach of any of the provisions of, or constitute a
default under, or result in the creation of any Lien on any property of the
Company or any Subsidiary under the provisions of, any charter document, by-law,
loan agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their property may be bound.
(m) No Defaults. No event has occurred and no condition exists which, upon
the issuance of the Notes, would constitute an Event of Default, or with the
lapse of time or the giving of notice or both would become an Event of Default,
under this Agreement. Neither the Company nor any Subsidiary is in default under
any charter document, by-law, loan agreement or other material agreement or
material instrument to which it is a party or by which it or its property may be
bound, nor has the Company nor any Subsidiary obtained any waivers with respect
to any defaults under any loan agreements or other mate rial agreements or
instruments
(n) Governmental Consent. Neither the nature of the Company or any of its
Subsidiaries, their respective businesses or properties, nor any relationship
between the Company or any of its Subsidiaries and any other Person, nor any
circumstances in connection with the offer, issue, sale or delivery of the Notes
is such as to require a consent, approval or authorization of, or withholding
of objection on the part of, or filing, registration or qualification with, any
governmental authority on the part of the Company in connection with the
execution and delivery of this Agreement or the offer, issue, sale or delivery
of the Notes.
<PAGE>
(o) Taxes. All tax returns required to be filed by the Company or any
Subsidiary in any jurisdiction have been filed or appropriate extensions have
been filed with respect thereto, and all taxes, assessments, fees and other
governmental charges upon the Company or any Subsidiary, or upon any of their
respective properties, income or franchises, which are due and payable, have
been paid timely or within appropriate extension periods or are being contested
in good faith by appropriate proceedings. The Company does not know of any
proposed additional tax assessment against it or any Subsidiary for which
adequate provision has not been made on its books. The federal income tax
liability of the Company and its Subsidiaries has been finally determined by the
Internal Revenue Service and satisfied for all taxable years up to and including
the taxable year ended January 31, 1987 and no material controversy in respect
of additional taxes due since such date is pending or to the Company's knowledge
threatened. The provisions for taxes on the books of the Company and each
Subsidiary are adequate for all open years and for the current fiscal period.
(p) Status under Certain Statutes. Neither the Company nor any Subsidiary
is: (i) a "public utility company" or a "holding company," or an "affiliate" or
a "subsidiary company" of a "holding company," or an "affiliate of such a
subsidiary company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or (ii) a public utility" as defined in the
Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act of 1940, as
amended.
(q) Private Offering. Neither the Company nor Manufacturers Hanover
Securities Corporation (the only Person authorized or employed by the Company as
agent, broker, dealer or otherwise in connection with the offering of the Notes
or any similar security of the Company) has offered any of the Notes or any
similar security of the Company for sale to, or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect thereto with,
any prospective purchaser, other than not more than 35 institutional investors,
including the Purchasers, each of whom was offered all or a portion of the Note
at private sale for investment. Neither the Company nor anyone acting on its
authorization will offer the Notes or any part thereof or any similar securities
for issue or sale to, or solicit any offer to acquire any of the same from,
anyone so as to bring the issuance and sale of the Notes within the provisions
of Section 5 of the Securities Act.
<PAGE>
(r) Effect of Other Instruments. Neither the Company nor any Subsidiary is
bound by any agreement or instrument or subject to any charter or other
corporate restriction which materially and adversely affects the business,
properties, operations, or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole or the Company's ability to perform its
obligations under this Agreement or the Notes.
(s) Use of Proceeds. The Company will apply the proceeds from the sale of
the Notes to reduce the outstanding balance of bank Indebtedness in the
approximate amount of $30,000,000 incurred to finance plant modernization. None
of the transactions contemplated in this Agreement (including, without
limitation thereof, the use of the proceeds from the sale of the Notes) will
violate or result in a violation of Section 7 of the Exchange Act, or any
regulations issued pursuant thereto, including, without limitation, Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System (12
C.F.R., Chapter II). Neither the Company nor any Subsidiary owns or intends to
carry or purchase any "margin stock" within the meaning of Regulation G, and
none of the proceeds from the sale of the Notes will be used to purchase or
carry or refinance any borrowing the proceeds of which were used to purchase or
carry any "margin stock" or margin security" in violation of Regulations G, T, U
or X.
(t) Condition of Property. All of the facilities of the Company and each of
its Subsidiaries are in sound operating condition and repair except for
facilities being repaired in the ordinary course of business or facilities which
individually or in the aggregate are not material to the business, properties,
operations, or condition, financial or otherwise, of the company and its
Subsidiaries taken as a whole.
(u) Books and Records. The Company and each of its Subsidiaries (i)
maintain books, records and accounts in reasonable detail which accurately and
fairly reflect their respective transactions and business affairs, and (ii)
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are executed in accordance with
management's general or specific authorization and to permit preparation of
financial statements in accordance with generally accepted accounting
principles.
(v) Full Disclosure. Neither the Private Placement Memorandum dated
November 1991 which has heretofore been delivered to you (including the
Company's Annual Report on Form 10-K for the year ended January 26, 1991, its
Quarterly Reports on Form 10-Q for the periods ended April 27, 1991 and July 27,
1991 and its Annual Report to Stockholders for the
<PAGE>
year ended January 26, 1991), the financial statements referred to in paragraph
(d) of this Section 3.1, nor this Agreement, nor any other statement or document
furnished by the Company to you in connection with the negotiation of the sale
of the Notes, taken together, contain any untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein or
herein not misleading in light of the circumstances under which they were made.
There is no fact known, or which, with reasonable diligence would be known, by
the Company which the Company has not disclosed to you in writing which has a
material adverse effect on or, so far as the Company can now foresee, will have
a material adverse effect on the business, property, operations or condition,
financial or otherwise, of the Company and its Subsidiaries taken as a whole or
the ability of the Company to perform its undertakings under and in respect of
this Agreement and the Notes.
(w) Environmental Compliance. The Company and each Subsidiary (i) is in
compliance in all material respects with all applicable environmental,
transportation, health and safety statutes and regulations, including, without
limitation, regulations promulgated under the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. 6901 et seq., and (ii) has not acquired, incurred or
assumed, directly or indirectly, any material contingent liability in connection
with the release or storage of any toxic or hazardous waste or substance into
the environment. The Company and its Subsidiaries have not acquired, incurred or
assumed, directly or indirectly, any material contingent liability in connection
with a release or other discharge of any hazardous, toxic or waste material,
including petroleum, on, in, under or into the environment surrounding any
property owned, used or leased by any of them.
3.2 Representations of the Purchasers. As an inducement to, and as part of
the Company's consideration for the sale of the Notes pursuant to this
Agreement, each of you represents, respectively, and in entering into this
Agreement the Company understands, that (i) you are an Institutional Holder,
(ii) you are acquiring Notes for the purpose of investment and for your own
account and not with a view to the distribution thereof; provided that the
disposition of your property shall at all times be and remain within your
control, subject, however, to compliance with Federal securities laws. You
acknowledge that the Notes have not been registered under the Securities Act or
the laws of any state and you understand that the Notes must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. You have been advised that the
Company does not contemplate registering, and is not legally required to
register, the Notes under the Securities Act
<PAGE>
Each of you further represents that either: (i) no part of the funds to be
used by you to purchase the Notes will constitute assets allocated to any
separate account maintained by you; or (ii) no part of the funds to be used by
you to purchase the Notes will constitute assets allocated to any separate
account maintained by you such that the application of such funds will
constitute a prohibited transaction under Section 406 of ERISA; or (iii) all or
a part of such funds will constitute assets of one or more separate accounts
maintained by you, and you have disclosed to the Company the names of such
employee benefit plans whose assets in such separate account or accounts exceed
10% of the total assets or are expected to exceed 10% of the total assets of
such account or accounts as of the date of such purchase and the Company has
advised you in writing that the Company is not a party-in-interest nor are the
Notes employer securities with respect to the particular employee benefit plans
disclosed to the Company by you as aforesaid (for the purpose of this clause
(iii), all employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan). As used herein, the terms
"separate account," party-in-interest," "employer securities," and "employee
benefit plan" have the meanings assigned to them in ERISA.
4. CLOSING CONDITIONS
Your obligation to purchase the Notes on the Closing Date shall be subject
to the performance by the Company of its agreements hereunder which are to be
performed at or prior to the time of delivery of the Notes, and to the following
conditions to be satisfied on or before the Closing Date:
4.1 Representations and Warranties. The representations and warranties of
the Company contained in this Agreement or otherwise made in writing in
connection herewith shall be true and correct on or as of the Closing Date and
the Company shall have delivered to you a certificate to such effect, dated the
Closing Date and executed by the President or the chief financial officer of the
Company.
4.2 Legal Opinions. You shall have received from Gardner, Carton & Douglas,
who is acting as your special counsel in this transaction, and from Catherine H.
Suttmeier, associate counsel to the Company and from Shearman & Sterling,
special counsel for the Company, their respective opinions, dated as of such
Closing Date, in form and substance satisfactory to you and covering
substantially the matters set forth or provided in the attached Exhibit B.
<PAGE>
4.3 Events of Default. No event shall have occurred and be continuing on
the Closing Date which would constitute an Event of Default, as defined in
Section 8.1, or with notice or lapse of time or both would become such an Event
of Default, and the Company shall have delivered to you a certificate to such
effect, dated the Closing Date and executed by the President or the chief
financial officer of the Company.
4.4 Payment of Fees and Expenses. The Company shall have paid all
reasonable fees, expenses, costs and charges, including the fees and expenses of
your special counsel, incurred by you through the Closing Date and incident to
the proceedings in connection with, and transactions contemplated by, this
Agreement and the Notes.
4.5 Accountants' Letter. You shall have received a letter from the
Company's independent certified public accountants acknowledging that you and
the other Purchasers may rely on their opinion accompanying the audited
financial statements referred to in Section 3.1(d).
4.6 Legality of Investment. Your acquisition of the Notes shall constitute
a legal investment as of the Closing Date under the laws and regulations of
each jurisdiction to which you may be subject (without resort to any "basket or
leeway provision which permits the making of an investment without restriction
as to the character of the particular investment being made), and such
acquisition shall not subject you to any penalty or other onerous condition in
or pursuant to any such law or regulation.
4.7 Private Placement Number. A private placement number shall have been
obtained from Standard & Poor's Corporation.
4.8 Sale of All Notes. Contemporaneously with the sale of the Notes to you,
the Company will complete and close the sale of Notes being purchased by each of
the Purchasers set forth in Schedule I hereto.
4.9 Proceedings and Documents. All proceedings taken in connection with the
transactions contemplated by this Agreement, and all documents necessary to the
consummation of such transactions shall be satisfactory in form and substance to
you and your special counsel, and you and your special counsel shall have
received copies (executed or certified as may be appropriate) of all legal
documents or proceedings which you and they may reasonably request.
<PAGE>
5. INTERPRETATION OF AGREEMENT
5.1 Certain Terms Defined. The terms hereinafter set forth when used in
this Agreement shall have the following meanings:
Affiliate - Any Person (other than a Subsidiary) (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, the Company, (ii) which beneficially owns or holds
5% or more of any class of the Voting Stock of the Company or any Subsidiary or
(iii) 5% or more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% of the equity interest) of which is beneficially owned or held
by the Company or a Subsidiary. The term control means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
Agreement - As defined in Section 1.1.
Capitalized Lease - Any lease the obligation for Rentals with respect
to which, in accordance with generally accepted accounting principles, would be
required to be capitalized on a balance sheet of the lessee or for which the
amount of the asset and liability thereunder, as if so capitalized, would be
required to be disclosed in a note to such balance sheet.
Change of Control - The occurrence of any one or more of the following:
(a) any Person (other than an Executive Officer) or a group of
Persons (other than a group of Persons consisting solely of Executive Officers)
shall purchase or otherwise acquire, directly or indirectly, in one or more
transactions, beneficial ownership of securities representing 20% or more of the
combined voting power of the Company's Voting Stock, determined on the date
prior to the date of such purchase or acquisition (or, if there is more than one
transaction, the date of the last such purchase or acquisition);
(b) the Company shall convey, transfer, lease or otherwise
dispose of all or substantially all Consolidated Total Assets to any Person
(other than a Majority-Owned Restricted Subsidiary);
(c) there shall occur, in any consecutive twenty-four month
period, a replacement of or change in a majority of the members of the Board of
Directors of the Company, and such replacement shall not have been initiated by
the Board of
<PAGE>
Directors which is incumbent at the time of commencement of such twenty-four
month period;
(d) the Company shall merge or consolidate into any other
corporation other than into a Majority-Owned Restricted Subsidiary (and the
Company shall not be the surviving corporation) in a transaction in which more
than 20% of the voting power of the Company's Voting Stock (determined on the
date prior to the date of the consummation of such transaction) is exchanged;
(e) the Company or any Restricted Subsidiary shall purchase or
otherwise acquire, directly or indirectly, in one or more transactions,
beneficial ownership of Voting Stock of the Company, if, after giving effect to
such purchase or acquisition, the Company (together with all Restricted
Subsidiaries) shall have acquired, during any period of twelve consecutive
months, beneficial ownership of an aggregate of 30% or more of the Voting Stock
of the Company outstanding on the date immediately prior to the last such
purchase or acquisition during such period (or, if there is more than one
transaction, the date of the last such purchase or acquisition); or
(f) the Company shall make a distribution of cash, securities or
other properties (other than regular periodic cash dividends at a rate which is
substantially consistent with past practice, including with respect to increases
in dividends, and other than Common Stock or rights to acquire Common Stock) to
holders of capital stock (including by means of dividend, reclassification,
recapitalization or otherwise) which, together with all other such distributions
during the 365-day period preceding the date of such distribution, has an
aggregate fair market value in excess of an amount equal to 30% of the fair
market value of the Voting Stock of the Company outstanding on the date
immediately prior to such distribution.
Closing Date - As defined in Section 1.2.
Code - As defined in Section 3.1(h).
Consolidated Adjusted Net Income - For any period, the gross revenues
of the Company and its Restricted Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined on a
consolidated basis after eliminating earnings or losses attributable to
outstanding minority interests, but excluding in any event:
(a) (i) any gains or losses on the sale or other disposition of
Investments and (ii) any gains or losses on the sale or other disposition of
plant, property and equipment which gains or losses exceed, in the aggregate,
$100,000
<PAGE>
during any fiscal year and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary accrued
prior to the date it became a Restricted Subsidiary;
(d) net earnings and losses of any corporation (other than a
Restricted Subsidiary), substantially all the assets of which have been acquired
in any manner by the Company or any Restricted Subsidiary, realized by such
corporation prior to the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Restricted Subsidiary) with which the Company or a Restricted Subsidiary shall
have consolidated or which shall have merged into or with the Company or a
Restricted Subsidiary prior to the date of such consolidation or merger;
(f) net earnings of any business entity (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an ownership
interest unless such net earnings shall have actually been received by the
Company or such Restricted Subsidiary in the form of cash distributions or
readily marketable securities;
(g) any portion of the net earnings of any Restricted Subsidiary
which for any reason is unavailable for payment of dividends to the Company or
any other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(j) any gain arising from the acquisition of any securities of
the Company or any Restricted Subsidiary;
(k) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from income
arising during such fiscal period or during the period consisting of the four
consecutive fiscal quarters immediately following the end of such fiscal
period; and
<PAGE>
(l) any other extraordinary gain.
Consolidated Current Assets and Consolidated Current Liabilities - As
of the date of any determination thereof, such assets and liabilities of the
Company and its Restricted Subsidiaries as shall be determined on a consolidated
basis in accordance with generally accepted accounting principles to constitute
current assets and current liabilities, respectively.
Consolidated Income Available for Interest Charges - For any period,
the sum (without duplication) of (i) Consolidated Adjusted Net Income for such
period, plus (ii) (to the extent deducted in determining Consolidated Adjusted
Net Income), all provisions for any federal, state, or other income taxes made
by the Company and its Subsidiaries during such period and (iii) Consolidated
Interest Charges for such period.
Consolidated Interest Charges - For any period, the interest expense on
all Indebtedness (including the interest component of Rentals under Capitalized
Leases and capitalized interest), of the Company and its Restricted Subsidiaries
on a consolidated basis for such period.
Consolidated Tangible Assets. Consolidated Total Assets less the sum of
(i) deferred assets, determined in accordance with generally accepted accounting
principles on a consolidated basis, other than prepaid insurance, prepaid
taxes, deferred taxes and deferred pension expense, (ii) all goodwill, trade
names, trademarks, patents, organization expense, unamortized debt discount and
expense and other similar intangibles properly classified as intangibles in
accordance with generally accepted accounting principles and (iii) Restricted
Investments.
Consolidated Tangible Net Worth - Stockholders' equity of the Company
and its Restricted Subsidiaries on a consolidated basis, determined in
accordance with generally accepted accounting principles less the sum of (i) all
goodwill, trade names, trademarks, patents, organization expense, unamortized
debt discount and similar intangibles properly classified as intangibles in
accordance with generally accepted accounting principles and (ii) Restricted
Investments.
Consolidated Total Assets - The consolidated total assets of the
Company and its Restricted Subsidiaries determined in accordance with generally
accepted accounting principles.
Consolidated Total Capitalization - The sum of (i) Consolidated
Tangible Net Worth and (ii) Funded Debt of the Company and its Restricted
Subsidiaries.
<PAGE>
Credit - All Indebtedness which by its terms matures on demand or one
year or less from the date of creation thereof, including current maturities of
Funded Debt.
Determination Date - The day 2 days before the date fixed for a
prepayment pursuant to a notice required by Sections 2.2(b) or 2.3 or the day 2
days before the date of declaration pursuant to Section 8.2.
ERISA - As defined in Section 3.1(h).
Event of Default - As defined in Section 8.1.
Exchange Act - The Securities Exchange Act of 1934, as amended, and as
it may be further amended from time to time.
Executive Officers - The Persons listed as executive officers in the
most recent Form 10-K of the Company filed pursuant to the Exchange Act.
Fund Debt - All Indebtedness owed or guaranteed which by its terms
matures more than one year from its date of creation or which may be renewed or
extended at the option of the obligor for more than a year from such date,
whether or not theretofore renewed or extended, excluding current maturities of
such obligations.
Guaranties - All obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) of a
Person guaranteeing or, in effect, guaranteeing any Indebtedness, dividend or
other obligation, of any other Person in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds () for the purchase or payment of such
Indebtedness or obligation, (y) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds for the purchase
or payment of such Indebtedness or obligation, (iii) to lease property or to
purchase securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation, or (iv) otherwise to
assure the owner of the Indebtedness or obligation against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness
<PAGE>
equal to the maximum aggregate amount of such obligation, liability or dividend.
Indebtedness - (i) All items of borrowed money, including Capitalized
Leases, which in accordance with generally accepted accounting principles would
be included in determining total liabilities as shown on the liability side of a
balance sheet as of the date at which Indebtedness is to be determined, (ii) all
Guaranties (other than Guaranties of Indebtedness of the Company by a Restricted
Subsidiary or of a Restricted Subsidiary by the Company), letters of credit and
endorsements (other than of notes, bills and checks presented to banks for
collection or deposit in the ordinary course of business), in each case to
support Indebtedness of other Persons; and (iii) all items of borrowed money
secured by any mortgage, pledge or Lien existing on property owned subject to
such mortgage, pledge, or Lien, whether or not the borrowed money secured
thereby shall have been assumed by the Company or any Restricted Subsidiary.
Indebtedness of the Company and its Restricted Subsidiaries at January 25, 1992
is set forth in Annex II hereto.
Institutional Holder - Any bank, trust company, insurance company,
pension fund, mutual fund or other similar financial institution, including,
without limiting the foregoing, any qualified institutional buyer within the
meaning of Rule 144A under the Securities Act, which is or becomes a holder of
any Note.
Investments - All investments made, in cash or by delivery of property,
directly or indirectly, in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or securities or by loan,
advance, capital contribution or otherwise; provided, however, that Investments
shall not mean or include routine investments in property to be used or consumed
in the ordinary course of business.
Loan - Any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to file any financing statement under
the Uniform Commercial Code of any jurisdiction in connection with any of the
foregoing.
Long-Term Lease - Any lease of real or personal property (other than a
Capitalized Lease) having an original term of more than three years, including
any period for which the lease may be renewed at the option of the lessor,
whether or not theretofore renewed.
<PAGE>
Majority-Owned - When applied to a Restricted Subsidiary, any
Restricted Subsidiary 80% of the Voting Stock of which is owned by the Company
and/or its Majority-Owned Restricted Subsidiaries.
Noteholder - Any holder of a Note.
Notes - As defined in Section 1.1.
PBGC - As defined in Section 3.1(h).
Plan - As defined in Section 3.1(h).
Person - Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof
Priority Indebtedness - Without duplication (i) Funded Debt and Current
Debt of Restricted Subsidiaries (except to the Company or a Majority-Owned
Restricted Subsidiary) in each case unsecured by Liens, (ii) the aggregate
amount of Guaranties by Restricted Subsidiaries (except of Indebtedness of the
Company or a Majority-Owned Restricted Subsidiary), (iii) Funded Debt and
Current Debt of the Company and its Restricted Subsidiaries (except to the
Company or a Majority-Owned Restricted Subsidiary) secured by any Lien on the
Property of the Company or any Restricted Subsidiary and (iv) the redemption or
liquidation value (whichever is higher) of all equity securities of Restricted
Subsidiaries (other than common stock) which are not legally and beneficially
owned by the Company or its Restricted Subsidiaries.
Property - Any real or personal or tangible or intangible asset.
Reinvestment Yield - The sum of (i) the yield set forth on page USD of
the Bloomberg Financial Markets Service at 11:00 a.m., Central Time on the
Determination Date opposite the maturity of the U.S. Treasury Security
corresponding to the Weighted Average Life to Maturity, rounded to the nearest
month, of the principal amount of the Notes to be prepaid, plus (ii) .50 of 1%
with respect to Notes to be prepaid pursuant to Section 2.2(a) or (b) or Notes
the payment of which has been accelerated with premium pursuant to Section 8.2.
If no maturity exactly corresponding to such rounded Weighted Average Life to
Maturity shall appear therein, yields for the two most closely corresponding
published maturities (one of which occurs prior and the other subsequent to the
Weighted Average Life to Maturity) shall be calculated pursuant to the foregoing
sentence and the Reinvestment Yield shall be interpolated from
<PAGE>
such yields on a straight-line basis (rounding in each of such relevant periods,
to the nearest month).
Rentals - As of the date of any determination thereof, all fixed
payments (including all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the property) payable by the
Company or a Restricted Subsidiary, as lessee or sublessee under a lease of real
or personal property, but exclusive of any amounts required to be paid by the
Company or a Restricted Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes,
assessments, amortization and similar charges. Fixed rents under any so-called
"percentage leases" shall be computed solely on the basis of the minimum rents,
if any, required to be paid by the lessee regardless of sales volume or gross
revenues.
Restricted Investments - Any Investment, except for:
(a) Investments in Restricted Subsidiaries;
(b) Investments made in the ordinary course of business in
Property and assets to be used in the ordinary course of business of the Company
and its Restricted Subsidiaries;
(c) Investments in Current Assets arising from the sale of goods
and services in the ordinary course of business of the Company and its
Restricted Subsidiaries;
(d) advances to and Guaranties of loans to employees of the
Company and its Restricted Subsidiaries for expenses incurred in the ordinary
course of business;
(e) Investments in direct obligations of the United States or any
instrumentality thereof, provided that such obligations have a final maturity
not in excess of one year from the date of acquisition thereof;
(f) Investments in certificates of deposit maturing within one
year from the date of acquisition thereof issued by (i) Manufacturers Hanover
Trust Company, Chemical Bank, Chase Manhattan Bank, or North Carolina National
Bank, or (ii) in the case of any other bank, a bank organized under the laws of
the United States or any state thereof, having capital, surplus and undivided
profits aggregating at least $100,000,000 and whose long-term corporate debt is,
at the time of acquisition thereof by the Company, accorded a rating of "A" or
better by Moody's Investors Service, Inc., or "A" or better by Standard & Poor's
Corporation;
<PAGE>
(g) Investments in commercial paper issued by any corporation
organized under the laws of the United States or any state thereof, rated in the
highest category by Moody's Investors Service, Inc. or Standard & Poor's
Corporation:
(h) Investments in money market funds registered under the
Investment Company Act of 1940 which invest in securities which, in the
aggregate, have an average rating of A or better (or an equivalent) by Moody's
Investors Services, Inc. or Standard Poor's Corporation;
(i) Investments in tax-exempt municipal bonds maturing not more
than one year from the date of issue and which bear at least a MIG-l rating; and
(j) Guaranties by the Company of Long-Term Leases of Majority-
Owned Restricted Subsidiaries.
Restricted Subsidiary - Any Subsidiary (i) which is organized under the
laws of the United States, Puerto Rico, Mexico, Canada or a member of the
European Economic Community and (ii) which is designated as a "Restricted
Subsidiary in Annex I hereto or a written notice provided to each Noteholder.
Securities Act - The Securities Act of 1933, as amended, and as it may
be further amended from time to time.
Subsidiary - Any corporation of which more than 50% of the outstanding
shares of Voting Stock are owned or controlled by the Company or one or more
Subsidiaries.
Voting Stock - Capital stock of any class of a corporation having power
to vote for the election of members of the board of directors of such
corporation, or persons performing similar functions (whether or not at the time
stock of any class shall have or might have special voting powers or rights by
reason of the happening of any contingency).
Weighted Average Life to Maturity - As applied to any prepayment of
principal of the Notes, at any date, the number of years obtained by dividing
(a) the then outstanding principal amount of the Notes to be prepaid into (b)
the sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity, or other required payment,
including payment at final maturity, foregone by such prepayment by (ii) the
number of years (calculated to the nearest l/12th) which will elapse between
such date and the making of such payment.
Terms which are defined in other Sections of this Agreement shall have the
meanings specified therein.
<PAGE>
5.2 Accounting Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with generally
accepted accounting principles in force at the time of determination, except
where such principles are inconsistent with the requirements of this Agreement.
5.3 Effect of FASB 106. In computing compliance with the covenants set
forth in this Agreement, any accrual of liabilities for unfunded post-retirement
medical benefit plans of the Company and its Restricted Subsidiaries on a
consolidated basis resulting from the Statement of Financial Accounting
Standards Board FAS No. 106 shall be disregarded.
5.4 Valuation Principles. Except where indicated expressly to the contrary
by the use of terms such as fair value, fair market value" or "market value,
each asset, each liability and each capital item of any Person, and any quantity
derivable by a computation involving any of such assets, liabilities or capital
items, shall be taken at the net book value thereof for all purposes of this
Agreement. "Net book value, for purposes of Section 7.10 hereof, with respect to
any asset, liability or capital item of any Person shall mean the amount at
which the same is recorded or, in accordance with generally accepted accounting
principles, should have been recorded in the books of account of such Person, as
reduced by any reserves which have been or, in accordance with generally
accepted accounting principles, should have been set aside with respect thereto,
without giving effect to any write-up, write-down or write-off, relating
thereto which was made after the date of this Agreement.
5.5 Direct or Indirect Actions. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
6. AFFIRMATIVE COVENANTS
The Company agrees that, for so long as any amount remains unpaid on any
Note:
6.1 Corporate Existence. The Company will maintain and preserve, and will
cause each Subsidiary to maintain and preserve, its corporate existence and
right to carry on its business and use, and cause each Subsidiary to use, its
best efforts to maintain, preserve, renew and extend all of its
<PAGE>
rights, powers, privileges and franchise necessary to the proper conduct of its
business; provided, however, that the foregoing shall not prevent any
transaction permitted by Sections 7.9 or 7.10.
6.2 Insurance. The Company will insure and keep insured at all times all of
its properties and all of its Subsidiaries properties which are of an insurable
nature and of the character usually insured by companies operating similar
properties, against loss or damage by fire and from other causes customarily
insured against by companies engaged in similar businesses in such amounts as
are usually insured against by such companies. The Company also will maintain
for itself and its Subsidiaries at all times with financially sound and
reputable insurers adequate insurance against loss or damage from such hazards
and risks to the person and property of others as are usually insured against by
companies operating properties similar to the properties of the Company and its
Subsidiaries. All such insurance shall be carried with financially sound and
reputable insurers accorded a rating of A-XII or better by A.M. Best Company,
Inc. A summary of insurance presently in force is contained in the attached
Annex IV.
6.3 Taxes, Claims for Labor and Materials. The Company will pay and
discharge when due, and will cause each Subsidiary to pay and discharge when
due, all taxes, assessments and governmental charges or levies imposed upon it
or its property or assets, or upon properties leased by it (but only to the
extent required to do so by the applicable lease), prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien upon its property or assets, provided that neither the Company nor any
Subsidiary shall be required to pay any such tax, assessment, charge, levy or
claim, the payment of which is being contested in good faith and by proper
proceedings that will stay the forfeiture or sale of any property and with
respect to which adequate reserves are maintained in accordance with generally
accepted accounting principles.
6.4 Maintenance of Properties. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties (whether owned in fee or a leasehold interest) in good repair and
working order, ordinary wear and tear excepted, and from time to time will make
all necessary repairs, replacements, renewals and additions.
6.5 Maintenance of Records. The Company will keep, and will cause each
Subsidiary to keep, at all times proper books of record and account in which
full, true and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary,
<PAGE>
in accordance with generally accepted accounting principles consistently applied
throughout the period involved (except for such changes as are disclosed in such
financial statements or in the notes thereto and concurred in by the independent
certified public accountants), and the Company will, and will cause each
Subsidiary to, provide reasonable protection against loss or damage to such
books of record and account.
6.6 Financial Information and Reports. The Company will furnish to you and
to any other Institutional Holder (in duplicate if you or such other holder so
request), the following:
(a) As soon as available and in any event within 45 days after the end
of each of the first three quarterly accounting periods of each fiscal year of
the Company, a consolidated balance sheet of the Company and its Restricted
Subsidiaries as of the end of such period and consolidated statements of
earnings and cash flows of the Company and its Restricted Subsidiaries for the
periods beginning on the first day of such fiscal year and the first day of such
quarterly accounting period and ending on the date of such balance sheet,
setting forth in comparative form the corresponding consolidated figures for the
corresponding periods of the preceding fiscal year, all in reasonable detail
prepared in accordance with generally accepted accounting principles
consistently applied throughout the period involved (except for changes
disclosed in such financial statements or in the notes thereto and concurred in
by the Company's independent certified public accountants) and certified by the
chief financial officer or chief accounting officer of the Company (i) outlining
the basis of presentation, and (ii) stating that the information presented in
such statements presents fairly the financial condition of the Company and its
Subsidiaries and the results of operations for the period, subject to customary
year-end audit adjustments; provided that so long as the Company shall file a
quarterly report on Form 10-Q or any similar form with the Securities and
Exchange Commission or any successor agency which contains the information set
forth in this paragraph (a), the requirements of this paragraph (a) shall be
satisfied by forwarding Form 10-Q to the holder of the Notes within such 45-day
period:
(b) As soon as available and in any event within 90 days after the
last day of each fiscal year a consolidated and a consolidating balance sheet of
the Company and its Restricted Subsidiaries as of the end of such fiscal year
and the related audited consolidated and consolidating statements of earnings,
stockholders' equity and cash flows for such fiscal year, in each case setting
forth in comparative form figures for the preceding fiscal year, all in
reasonable detail, prepared in accordance with generally accepted accounting
principles consistently applied throughout the period involved (except for
<PAGE>
changes disclosed in such financial statements or in the notes thereto and
concurred in by independent certified public accountants) and accompanied by a
report as to the consolidated balance sheet and the related consolidated
statements of Coopers & Lybrand or any firm of independent public accountants of
recognized national standing selected by the Company to the effect that such
financial statements have been prepared in conformity with generally accepted
accounting principles and present fairly, in all material respects, the
financial condition of the Company and its Restricted Subsidiaries and that the
examination of such financial statements by such accounting firm has been made
in accordance with generally accepted auditing standards; provided that so long
as the Company shall file an annual report on Form 10-K or any similar form with
the Securities and Exchange Commission or any successor agency which contains
the information set forth in this paragraph (b), the requirements of this
paragraph (b) shall be satisfied by forwarding Form 10-K to the holder of the
Notes within such 90-day period;
(c) Together with the financial statements delivered pursuant to
paragraphs (a) and (b) of this Section 6.6, a certificate of the chief financial
officer or chief accounting officer, (i) to the effect that such officer has re-
examined the terms and provisions of this Agreement and that at the date of such
certificate, during the periods covered by such financial reports and as of the
end of such periods, the Company is not, or was not, in default in the
fulfillment of any of the terms, covenants, provisions and conditions of this
Agreement and that no Event of Default, or event which, with the lapse of time
or the giving of notice, or both, would become an Event of Default, is
occurring or has occurred as of the date of such certificate, during such
periods and as of the end of such periods, or if the signer is aware of any such
default, event or Event of Default, he shall disclose in such statement the
nature thereof, its period of existence and what action, if any, the Company has
taken or proposes to take with respect thereto, and (ii) stating whether the
Company is in compliance with Sections 7.1 through 7.13 and setting forth, in
sufficient detail, the information and computations required to establish
whether or not the Company was in compliance with the requirements of Sections
7.1 through 7.11 during the periods covered by the financial reports then being
furnished and as of the end of such periods;
(d) Together with the financial reports delivered pursuant to
paragraph (b) of this Section 6.6, a certificate of the independent certified
public accountants (i) stating that in making the examination necessary for
expressing an opinion on such financial statements, nothing came to their
attention that caused them to believe that there is in existence or has
<PAGE>
occurred any Event of Default hereunder, or any event (the occurrence of which
is ascertainable by accountants in the course of normal audit procedures) which,
with the lapse of time or the giving of notice, or both, would become an Event
of Default hereunder or, if such accountants shall have obtained knowledge of
any such event or Event of Default, describing the nature thereof and the
length of time it has existed and (ii) acknowledging that holders of the Notes
may rely on their opinion on such financial statements;
(e) Within 15 days after the Company obtains knowledge thereof, notice
of any litigation not fully covered by insurance or any governmental proceeding
pending against the Company or any Subsidiary in which the damages sought exceed
$5,000,000 or which might otherwise materially adversely affect the business,
property, operations or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole:
(f) As soon as available, copies of each financial statement, notice,
report and proxy statement which the Company shall furnish to its stockholders;
copies of all press releases; copies of each registration statement and
periodic report which the Company may file with the Securities and Exchange
Commission, and any other similar or successor agency of the Federal government
administering the Securities Act, the Exchange Act or the Trust Indenture Act of
1939, as amended; copies of each report relating to the Company or its
securities which the Company may file with any securities exchange on which any
of the Company's securities may be registered; copies of any orders in any
material proceedings to which the Company or any of its Subsidiaries is a party,
issued by any governmental agency, Federal or state, having jurisdiction over
the Company or any of its Subsidiaries; and, except at such times as the Company
is a reporting company under Section 13 or 15(d) of the Exchange Act or has
complied with the requirements for the exemption from registration under the
Exchange Act set forth in Rule 12g-3-2(b), such financial or other information
as any holder of the Notes may reasonably determine is required to permit such
holder to comply with the requirements of Rule 144A under the Securities Act in
connection with the resale by it of the Notes;
(g) As soon as available, a copy of each other report submitted to the
Company or any Subsidiary by independent accountants retained by the Company or
any Subsidiary in connection with any interim or special audit made by them of
the books of the Company or any Subsidiary; and
(h) Such additional information as you or such other Institutional
Holder of the Notes may reasonably request concerning the Company and its
Subsidiaries.
<PAGE>
6.7 Inspection of Properties and Records; Confidentiality. The Company will
allow, and will cause each Subsidiary to allow, any representative of you or any
other Institutional Holder, so long as you or such other Institutional Holder
holds any Note, at your expense, to visit and inspect any of its properties, to
examine its books of record and account and to discuss its affairs, finances and
accounts with its officers and its public accountants (and by this provision the
Company authorizes such accountants to discuss with you or such Institutional
Holder its affairs, finances and accounts), all at such reasonable times and as
often as you or such Institutional Holder may reasonably request. So long as an
Event of Default or an event which, with the passage of time or the giving of
notice, or both, would become an Event of Default has occurred and is
continuing, the Company agrees to pay the costs of any inspections made pursuant
to this Section 6.7. Each Noteholder covenants and agrees to treat as
confidential all nonpublic information furnished to it pursuant to the
provisions of Sections 6.6 and this 6.7 which has been designated in writing as
confidential by an officer of the Company; provided that each Noteholder
reserves the right to make such disclosure to (i) such Noteholder's directors,
officers, employees, auditors, financial advisers, rating agencies and
attorneys, (ii) any other Noteholder, (iii) any Person to which such Noteholder
offers to sell such Note or any part thereof or a participation in all or any
part of such Note, (iv) any Federal or state regulatory authority having
jurisdiction over such Noteholder or (v) the National Association of Insurance
Commissioners or any similar organization. The confidentiality restrictions
contained in this Section 6.7 shall not apply to information which (a) is or
becomes generally available to the public other than as a result of a disclosure
by any Noteholder or its representatives or (b) becomes available to any
Noteholder on a nonconfidential basis from a source other than the Company or
one of its agents.
6.8 ERISA. (a) The Company agrees that all assumptions and methods used to
determine the actuarial valuation of employee benefits, both vested and
unvested, under any Plan of the Company or any Subsidiary, and each such Plan,
whether now existing or adopted after the date hereof, will comply in all
material respects with ERISA and other applicable laws.
(b) The Company will not at any time permit any Plan established,
maintained or contributed to by it or any Subsidiary or "affiliate" (as defined
in Section 407(d)(7) of ERISA) to:
(i) engage in any "prohibited transaction" as such term is
defined in Section 4975 of the Code or in Section 406 of ERISA;
<PAGE>
(ii) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA, whether or not waived; or
(iii) be terminated under circumstances which are likely to result
in the imposition of a lien on the property of the Company or any Subsidiary
pursuant to Section 4068 of ERISA, if and to the extent such termination is
within the control of the Company;
if the event or condition described in clauses (i), (ii) or (iii) above is
likely to subject the Company or any Subsidiary or ERISA affiliate to a
liability which, in the aggregate, is material in relation to the business,
property, operations, or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole.
(c) Upon the request of you or any other Institutional Holder, the
Company will furnish a copy of the annual report of each Plan (Form 5500)
required to be filed with the Internal Revenue Service. Copies of annual
reports shall be delivered no later than 30 days after the later of the date
such report has been filed with the Internal Revenue Service or the date the
copy is requested.
(d) Promptly upon the occurrence thereof, the Company will give you
and each other Institutional Holder written notice of (i) a reportable event
with respect to any Plan; (ii) the institution of any steps by the Company, any
Subsidiary, any ERISA affiliate, the PBGC or any other person to terminate any
Plan; (iii) the institution of any steps by the Company, any Subsidiary, or any
ERISA affiliate to withdraw from any Plan; (iv) a prohibited transaction in
connection with any Plan; (v) any material increase in the contingent liability
of the Company or any Subsidiary with respect to any post-retirement welfare
liability; or (vi) the taking of any action by the Internal Revenue Service, the
Department of Labor or the PBGC with respect to any of the foregoing which, in
any of the events specified above, would result in any material liability of the
Company or any of its Subsidiaries.
6.9 Compliance with Laws. The Company will comply, and will cause each
Subsidiary to comply, with all laws, rules and regulations relating to its or
their respective businesses, other than laws, rules and regulations the failure
to comply with which or the sanctions and penalties resulting therefrom,
individually or in the aggregate, would not have a material adverse effect on
the business, property, operations, or condition, financial or otherwise, of the
Company or such Subsidiary, and would not result in the creation of a Lien
which, if incurred in the ordinary course of business, would
<PAGE>
not be permitted by Section 7.6 or any of the property of the Company or any
Subsidiary; provided, however, that the Company and its Subsidiaries shall not
be required to comply with laws, rules and regulations the validity or
applicability of which are being contested in good faith and by appropriate
proceedings; provided that the failure to comply with such laws, rules or
regulations would not have a material adverse effect on the business,
properties, operations, assets or condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole.
6.10 Acquisition of Notes. The Company will forthwith cancel any Notes in
any manner or at any time acquired by the Company or any Subsidiary or Affiliate
and such Notes shall not be deemed to be outstanding for any of the purposes of
this Agreement or the Notes.
6.11 Private Placement Number. The Company consents to the filing of copies
of this Agreement with Standard Poor's Corporation and the National Association
of Insurance Commissioners to obtain a private placement number.
6.12 NAIC Filings. The Company shall, on the date it provides its audited
financial statements to the Noteholders pursuant to Section 6.6(b),
simultaneously provide such statements to the National Association of Insurance
Commissioners, Securities Valuation Office, 195 Broadway, New York, New York
10007.
7. NEGATIVE COVENANTS
The Company agrees that, for so long as any amount remains unpaid on any
Note:
7.1 Net Worth. The Company will not at any time permit its Consolidated
Tangible Net Worth to be less than $85,000,000.
7.2 Current Ratio. The Company will not at any time permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities to be less than
1.75 to 1.0.
7.3 Funded Debt. The Company will not, and will not permit any Restricted
Subsidiary to, create, assume, incur, guarantee or otherwise become liable for,
directly or indirectly, any Funded Debt, unless, after giving effect thereto and
the application of the proceeds thereof, Funded Debt of the Company and its
Restricted Subsidiaries on a consolidated basis then outstanding would not
exceed 55% of Consolidated Total Capitalization.
<PAGE>
7.4 Priority Indebtedness of Restricted Subsidiaries. The Company will not
permit any Restricted Subsidiary to permit to exist, create, assume, incur,
guarantee or otherwise be or become liable, directly or indirectly, in respect
of any Priority Indebtedness, except Priority Indebtedness excluding fifty
percent (50%) of the then outstanding principal amount of all tax-exempt
Indebtedness of Restricted Subsidiaries issued at or prior to January 26, 1991)
which, after giving effect thereto and the application of proceeds thereof, (a)
does not exceed twenty percent (20%) of Consolidated Tangible Net Worth and (b)
does not result in aggregate Funded Debt incurred pursuant to this Section 7.4.,
when added to aggregate Indebtedness incurred pursuant to Section 7.6(f),
exceeding 20% of Consolidated Tangible Net Worth.
7.5 Interest Coverage Ratio. The Company will not, as of the end of any
fiscal quarter, permit the ratio of Consolidated Income Available for Interest
Charges to Consolidated Interest Charges for the four preceding consecutive
fiscal quarters to be less than 1.5 to 1.0.
7.6 Liens. Neither the Company nor any Restricted Subsidiary will cause or
permit or hereafter agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), any of its Property, whether now owned
or subsequently acquired, to be subject to a Lien except:
(a) Liens securing the payment of taxes, assessments or governmental
charges or levies or the demands of suppliers, mechanics, repairmen, workmen,
materialmen, carriers, warehousers, landlords and other like Persons, or similar
statutory Liens, provided that (i) such Liens do not in the aggregate materially
reduce the value of any Properties subject to the Liens or materially interfere
with their use in the ordinary conduct of the Company's or any Restricted
Subsidiaries business, (ii) all claims which such Liens secure are not
delinquent or are being actively contested in good faith and by appropriate
proceedings and (iii) adequate reserves have been established therefor on the
books of the Company;
(b) Liens incurred or deposits made in the ordinary course of business
(i) in connection with worker's compensation, unemployment insurance, social
security and other like laws, or (ii) to secure the performance of letters of
credit, bids, tenders, sales contracts, leases, statutory obligations, surety,
appeal and performance bonds and other similar obligations, in each case not
incurred in connection with the borrowing of money, the obtaining of advances or
the payment of the deferred purchase price of Property otherwise than permitted
by paragraph (f) below;
<PAGE>
(c) Attachment, judgment and other similar Liens arising in connection
with court proceedings, provided that (i) execution and other enforcement are
effectively stayed, (ii) all claims which the Liens secure are being actively
contested in good faith and by appropriate proceedings and (iii) adequate
reserves have been established therefor on the books of the Company, if required
by generally accepted accounting principles;
(d) Liens on Property of a Restricted Subsidiary, provided that such
Liens secure only obligations owing between the Company and any Restricted
Subsidiary or between Majority-Owned Restricted Subsidiaries;
(e) Liens existing as of January 30, 1992, which Liens are set forth
in Annex III hereto:
(f) Other Liens solely on real estate, plant equipment and supplies
not otherwise permitted under subparagraphs (a) through (e) above securing
Indebtedness; provided that the Indebtedness secured by such Liens does not
exceed the lesser of the cost or fair market value of the Property; and
provided, further, that the aggregate amount of such Indebtedness secured by
Liens permitted by this subparagraph (f), when added to the aggregate amount of
other Funded Debt of Restricted Subsidiaries incurred after the Closing Date,
does not exceed twenty percent (20%) of Consolidated Tangible Net Worth;
(g) Liens resulting from extension, refunding, renewal or replacement
of the Indebtedness secured by Liens described in subparagraphs (d), (e) and (f)
above, up to the amount outstanding under such Indebtedness at the time of such
extension, refunding, renewal or replacement; provided that any new Lien
attaches only to the same Property theretofore subject to such earlier Lien; and
(h) In the event that the Company or any Restricted Subsidiary
creates, assumes, incurs or permits to exist any Lien not otherwise permitted by
this Section 7.6, the Company will make or cause to be made provision whereby
the Notes will be secured equally and ratably with all other obligations secured
by such Liens, and in any case the Notes shall have the benefit, to the full
extent that, and with such priority as, the holders may be entitled thereto
under applicable law, of an equitable Lien on such Property securing the Notes.
Any violation of this Section 7.6 shall constitute an Event of Default whether
or not any such provision is made for equal and ratable security pursuant to
this subparagraph (h).
7.7 Long-Term Leases. The Company will not, and will not permit any
Restricted Subsidiary to, become obligated,
<PAGE>
as lessee under any Long-Term Lease unless, at the time of entering into such
Long-Term Lease and after giving effect thereto, the average aggregate annual
Rentals payable by the Company and its Restricted Subsidiaries on a
consolidated basis during the term of such Long-Term Lease pursuant to Long-Term
Leases will not exceed 10 of Consolidated Tangible Net Worth, determined as of
the end of the Company's prior fiscal quarter.
7.8 Restricted Payments. The Company will not, except as hereinafter
provided:
(a) declare or pay any dividends, either in cash or property, on any
shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company;)
(b) directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock or any class or any warrants,
rights or options to purchase or acquire any shares of its capital stock (other
than in exchange for the same or similar securities or out of the net cash
proceeds from the issuance or sale of other shares of capital stock of the
Company);
(c) make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock: or
(d) make any Restricted Investment;
(all such declarations, payments, purchases, redemptions, retirements,
distributions and investments being herein collectively called "Restricted
Payments) if, after giving effect thereto (i) the Company could not incur an
additional $1.00 of Funded Debt pursuant to Section 7.3, (ii) an Event of
Default pursuant to Section 8.1 shall have occurred and (iii) the aggregate
amount of all Restricted Payments made during the period from and after January
26, 1991, to and including the date of the Restricted Payment in question would
exceed the sum of:
(x) $12,500,000, plus
(y) 75% (or minus 100% in the case of a deficit) of Consolidated
Net Income for such period (computed on a cumulative basis for the entire period
from January 26, 1991).
The Company will not declare any dividend which constitutes a Restricted
Payment payable more than 60 days after its date of declaration. Any dividend
which complies with the provisions of this Section 7.8 on the date of its
declaration shall
<PAGE>
be deemed to comply on its date of payment, provided that any intervening event
giving rise to non-compliance is not the result of a Restricted Payment.
7.9 Merger or Consolidation. The Company will not, and will not permit any
Restricted Subsidiary to, merge or consolidate with any other Person, except
that:
(a) The Company may consolidate with or merge into any Person or
permit any other Person to merge into it, provided that immediately after giving
effect thereto,
(i) The Company is the successor corporation or, if the Company
is not the successor corporation, the successor corporation is a corporation
organized under the laws of a state of the United States of America or the
District of Columbia and shall expressly assume in writing the Company's
obligations under the Notes and this Agreement;
(ii) There shall exist no Event of Default or event which, with
the passage of time or giving of notice, or both, would constitute an Event of
Default; and
(iii) The Company or such successor corporation could incur at
least $1.00 of additional Funded Debt pursuant to Section 7.3;
(b) Any Restricted Subsidiary may (i) merge into the Company or
another Majority-Owned Restricted Subsidiary or (ii) sell, transfer or lease all
or any part of its assets to the Company or to another Majority-Owned Restricted
Subsidiary or (iii) merge into any Person which, as a result of such merger,
concurrently becomes a Restricted Subsidiary, provided in each such instance
that there shall exist no Event of Default or event which, with the passage of
time or giving of Notice, or both, would constitute an Event of Default
7.10 Sale of Assets. During any fiscal year, the Company will not, and will
not permit any Restricted Subsidiary to, sell, lease, transfer or otherwise
dispose of any assets, in one or a series of transactions, other than in the
ordinary course of business, to any Person, other than the Company or a
Majority-Owned Restricted Subsidiary (collectively a "Disposition"), if after
giving effect to such Disposition, the aggregate book value of all Dispositions
made during such fiscal year would exceed ten percent (10%) of Consolidated
Tangible Assets as of the end of the immediately preceding fiscal year.
Notwithstanding the foregoing, the Company may make a Disposition in excess of
the aforesaid percentage if the Company shall, within 180 days after such
Disposition, (a) use
<PAGE>
pro rata the net proceeds from the sale of such assets exceeding ten percent
(10%) to invest in other tangible Property and of at least equivalent value for
use in the business of the Company and its Restricted Subsidiaries or (b) prepay
Funded Debt, including the Notes, on a pro rata basis among all issuers of such
Funded Debt, including the Noteholders, subject to the prepayment requirements
of Section 2.2(a) and at the price set forth in Section 2.2(b).
7.11 Change in Business. Neither the Company nor any Restricted Subsidiary
(whether now existing or hereafter acquired or organized) will engage in any
business if, giving effect thereto, less than 80% of the Consolidated Tangible
Assets of the Company at the most recently ended fiscal quarter would be
attributable to the current business of the Company and its Restricted
Subsidiaries taken as a whole, including, but not limited to, the manufacturing,
advertising, sales, distribution, of industrial wire, household and foodservice
products and related businesses
7.12 Transactions with Affiliates. The Company will not, and will not permit
any Subsidiary to, enter into any transaction (including the furnishing of
goods or services) with an Affiliate except in the ordinary course of business
as presently conducted and on terms and conditions no less favorable to the
Company or such Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate.
7.13 Consolidated Tax Returns. The Company will not file, or consent to the
filing of, any consolidated Federal income tax return with any Person other than
a Restricted Subsidiary, except to the extent that the Company is required under
the Code to do otherwise.
8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1 Nature of Event. An "Event of Default" shall exist if any one or more
of the following occurs:
(a) Default in the payment of interest on any of the Notes which
continues for a period of three (3) days following the date such payment is due;
(b) Default in the payment of the principal of any of the Notes or the
premium thereon, if any, at maturity, upon acceleration of maturity or at any
date fixed for prepayment;
(c) Default shall occur (i) in the payment of the principal of,
premium, or interest on any other Indebtedness of the Company or its
Subsidiaries, aggregating in excess of
<PAGE>
$1,000,000 as and when due and payable (whether by lapse of time, declaration,
call for redemption or otherwise), (ii) under any mortgage, agreement or other
instrument of the Company or any Subsidiary securing such Indebtedness or under
or pursuant to which such Indebtedness aggregating in excess of $1,000,000 is
issued, (iii) under any leases other than Capitalized Leases of the Company or
any Subsidiary, with aggregate Rentals in excess of $1,000,000 or (iv) with
respect to any combination of the foregoing involving Indebtedness and/or
Rentals aggregating in excess of $1,000,000 regardless of whether such defaults
would be Events of Default hereunder, and (x) any such defaults with respect to
the payment of money shall continue, unless waived, beyond the period of grace,
if any, allowed with respect thereto and, (y) solely in the case of any default
not involving the payment of money, the sums due thereunder shall have been
accelerated and such acceleration shall not have been annulled:
(d) Default in the observance or performance of Sections 7.1, 7.3,
7.4, 7.5, 7.7, 7.8, 7.9, 7.10 or 7.11.
(e) Default in the observance or performance of any other covenant or
provision of this Agreement which default is not remedied within 30 days after
the earlier of the date (a) management of the Company knew of such default or
(b) on which written notice of such default is provided to the Company by any
Noteholder;
(f) Any representation or warranty made by the Company in this
Agreement, or made by the Company in any written statement or certificate
furnished by the Company in connection with the issuance and sale of the Notes
or furnished by the Company pursuant to this Agreement, proves incorrect in any
material respect as of the date of the issuance or making thereof.
(g) Any judgments, writs or warrants of attachment or any similar
processes individually or in the aggregate in excess of $1,500,000 shall be
entered or filed against the Company or any Subsidiary or against any property
or assets of either and remain unpaid, unvacated, unbonded or unstayed (through
appeal or otherwise) for a period of 60 days after the Company or any Subsidiary
receives notice thereof;
(h) The Company or any Subsidiary shall incur a "Distress Termination"
(as defined in Title IV of ERISA) of any Plan or any trust created thereunder
which results in material liability to the PBGC, the PBGC shall institute
proceedings to terminate any Plan or any trust created thereunder, or a trustee
shall be appointed by a United States District Court pursuant to Section 4042(b)
of ERISA to administer any Plan or any trust created thereunder; or
<PAGE>
(i) The Company or any Subsidiary shall
(i) generally not pay its debts as they become due or admit in
writing its inability to pay its debts generally as they become due;
(ii) file a petition in bankruptcy or for reorganization or for
the adoption of an arrangement under the Federal Bankruptcy Code, or any similar
applicable bankruptcy or insolvency law, as now or in the future amended (herein
collectively called "Bankruptcy Laws"), or an answer or other pleading admitting
or failing to deny the material allegations of such a petition or seeking,
consenting to or acquiescing in relief provided for under the Bankruptcy Laws;
(iii) make an assignment of all or a substantial part of its
property for the benefit of its creditors:
(iv) seek or consent to or acquiesce in the appointment of a
receiver, liquidator, custodian or trustee of it or for all or a substantial
part of its property;
(v) be finally adjudicated a bankrupt or insolvent;
(vi) be subject to the entry of a court order, which shall not be
vacated, set aside or stayed within 30 days from the date of entry, appointing a
receiver, liquidator, custodian or trustee of it or for all or a substantial
part of its property, or entering of an order for relief pursuant to an
involuntary case, or effecting an arrangement in, bankruptcy or for a
reorganization pursuant to the Bankruptcy Laws or for any other judicial
modification or alteration of the rights of creditors; or
(vii) be subject to the assumption of custody or sequestration by
a court of competent jurisdiction of all or a substantial part of its property,
which custody or sequestration shall not be suspended or terminated within 30
days from its inception.
8.2 Remedies on Default. When any Event of Default described in paragraphs
(a) through (h) of Section 8.1 has happened and is continuing, the holder or
holders of at least 25% in principal amount of the Notes then outstanding may by
notice to the Company declare the entire principal, together with the premium
set forth below, and all interest accrued on all Notes to be, and such Notes
shall thereupon become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are expressly
<PAGE>
waived. Notwithstanding the foregoing, when (i) any Event of Default described
in paragraphs (a) or (b) of Section 8.1 has happened and is continuing, any
holder may by notice to the Company declare the entire principal, together with
the premium set forth below, and all interest accrued on the Notes then held by
such holder to be, and such Notes shall thereupon become, forthwith due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which are expressly waived and (ii) where any Event of Default described
in paragraph (i) of Section 8.1 has happened, then all outstanding Notes shall
immediately become due and payable without presentment, demand or notice of any
kind. Upon the Notes or any of them becoming due and payable as aforesaid, the
Company will forthwith pay to the holders of such Notes the entire principal of
and interest accrued on such Notes, plus a premium in the event that the
Reinvestment Yield shall, on the Determination Date, be less than the interest
rate payable on or in respect of the Notes. Such premium shall equal the
aggregate present value of the principal so accelerated and the aggregate
present value of the interest which would have been payable in respect of such
principal absent such accelerated payment, determined by discounting (semi-
annually on the basis of a 360-day year composed of twelve 30-day months) each
such amount utilizing an interest factor equal to the Reinvestment Yield, less
(y) the principal amount to be accelerated.
8.3 Annulment of Acceleration of Notes. The provisions of Section 8.2 are
subject to the condition that if the principal of and accrued interest on the
Notes have been declared immediately due and payable by reason of the occurrence
of any Event of Default described in paragraphs (a) through (h), inclusive, of
Section 8.1, the holder or holders of 66-2/3% in aggregate principal amount of
the Notes then outstanding may, by written instrument furnished to the Company,
rescind and annul such declaration and the consequences thereof, provided that
(i) at the time such declaration is annulled and rescinded no judgment or decree
has been entered for the payment of any monies due pursuant to the Notes or this
Agreement, (ii) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal, interest
or premium on the Notes which has become due and payable solely by reason of
such declaration under Section 8.2) shall have been duly paid and (iii) each and
every other Event of Default shall have been cured or waived; and provided
further, that no such rescission and annulment shall extend to or affect any
subsequent default or Event of Default or impair any right consequent thereto.
8.4 Other Remedies. Subject to the provisions of Section 8.3, if any Event
of Default shall be continuing, any holder of Notes may enforce its rights by
suit in equity, by action at
<PAGE>
law, or by any other appropriate proceedings, whether for the specific
performance (to the extent permitted by law) of any covenant or agreement
contained in this Agreement or in the Notes or in aid of the exercise of any
power granted in this Agreement, and may enforce the payment of any Note held by
such holder and any of its other legal or equitable rights.
8.5 Conduct No Waiver; Collection Expenses. No course of dealing on the
part of any holder of Notes, nor any delay or failure on the part of any holder
of Notes to exercise any of its rights, shall operate as a waiver of such rights
or otherwise prejudice such holder's rights, powers and remedies. If the Company
fails to pay, when due, the principal of, or the interest on, any Note, or fails
to comply with any other provision of this Agreement, the Company will pay to
each holder, to the extent permitted by law, on demand, such further amounts as
shall be sufficient to cover the reasonable cost and expenses, including but not
limited to reasonable attorneys' fees, incurred by such holders of the Notes in
collecting any sums due on the Notes or in otherwise enforcing any of their
rights.
8.6 Remedies Cumulative. No right or remedy conferred upon or reserved to
any holder of Notes under this Agreement is intended to be exclusive of any
other right or remedy, and every right and remedy shall be cumulative and in
addition to every other right or remedy given under this Agreement or now or
hereafter existing under any applicable law. Every right and remedy given by
this Agreement or by applicable law to any holder of Notes may be exercised from
time to time and as often as may be deemed expedient by such holder, as the case
may be.
8.7 Notice of Default. With respect to Events of Default or claimed
defaults, the Company will give the following notices:
(a) The Company promptly will furnish to each holder of a Note notice
in writing by registered or certified mail, return receipt requested, of the
occurrence of an Event of Default or an event which, with the lapse of time or
the giving of notice, or both, would become an Event of Default. Such notice
shall specify the nature of such default, the period of existence thereof and
what action the Company has taken or is taking or proposes to take with respect
thereto.
(b) If the holder of any Note or of any other evidence of Indebtedness
of the Company or any Subsidiary gives any notice or takes any other action with
respect to a claimed default, the Company will forthwith give written notice to
the extent of the Company's knowledge thereof to each holder of the then out
standing Notes, describing the notice or action and the nature of the claimed
default.
<PAGE>
9. AMENDMENTS, WAIVERS AND CONSENTS
9.1 Matters Subject to Modification. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holder or holders of at least 66-2/3% in aggregate
principal amount of outstanding Notes; provided, however, that, without the
written consent of the holder or holders of all of the Notes then outstanding,
no such waiver, modification, alteration or amendment shall be effective which
will (i) change the time of payment (including any required prepayment) of the
principal of or the interest on any Note, (ii) reduce the principal amount
thereof or the premium, if any, or reduce the rate of interest thereon, (iii)
change any provision of any instrument affecting the preferences between holders
of the Notes or between holders of the Notes and other creditors of the Company,
or (iv) change any of the provisions of Section 8.1, Section 8.2, Section 8.3
or this Section 9.
For the purpose of determining whether holders of the requisite principal
amount of Notes have made or concurred in any waiver, consent, approval, notice
or other communication under this Agreement, Notes held in the name of, or owned
beneficially by, the Company, any Subsidiary or any Affiliate thereof, shall not
be deemed outstanding.
9.2 Solicitation of Holders of Notes. The Company will not solicit, request
or negotiate for or with respect to any proposed waiver or amendment of any of
the provisions of this Agreement or the Notes unless each holder of the Notes
(irrespective of the amount of Notes then owned by it) shall concurrently be
informed thereof by the Company and shall be afforded the opportunity of
considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver or consent effected pursuant
to the provisions of this Section 9 shall be delivered by the Company to each
holder of outstanding Notes forthwith following-the date on which the same shall
have been executed and delivered by the holder or holders of the requisite
percentage of outstanding Notes. The Company will not, directly or indirectly,
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of the Notes as
consideration for or as an inducement to the entering into by any holder of the
Notes of any waiver or amendment of any of the terms and provisions of this
Agreement unless such remuneration is concurrently paid, on the same terms,
ratably to each holder of the then outstanding Notes.
<PAGE>
9.3 Binding Effect. Any such amendment or waiver shall apply equally to all
the holders of the Notes and shall be binding upon them, upon each future holder
of any Note and upon the Company whether or not such Note shall have been marked
to indicate such amendment or waiver. No such amendment or waiver shall extend
to or affect any obligation not expressly amended or waived or impair any right
related thereto.
10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
10.1 Form of Notes. The Notes initially delivered under this Agreement will
be in the form of five fully registered Notes in the form attached as Exhibit A.
The Notes are issuable only in fully registered form and in denominations of at
least $2,000,000 (or the remaining outstanding balance thereof, if less than
$2,000,000).
10.2 Note Register. The Company shall cause to be kept at its principal
office a register (the "Note Register") for the registration and transfer of the
Notes. The names and addresses of the holders of Notes, the transfer thereof and
the names and addresses of the transferees of the Notes shall be registered in
the Note Register. The Company may deem and treat the person in whose name a
Note is so registered as the holder and owner thereof for all purposes and shall
not be affected by any notice to the contrary, until due presentment of such
Note for registration of transfer as provided in this Section 10.
10.3 Issuance of New Notes upon Exchange or Transfer. Upon surrender for
exchange or registration of transfer of any Note at the office of the Company
designated for notices in accordance with Section 11.2, the Company shall
execute and deliver, at its expense, one or more new Notes of any authorized
denominations requested by the holder of the surrendered Note, each dated the
date to which interest has been paid on the Notes so surrendered (or, if no
interest has been paid, the date of such surrendered Note), but in the same
aggregate unpaid principal amount as such surrendered Note, and registered in
the name of such person or persons as shall be designated in writing by such
holder. Every Note surrendered for registration of transfer shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or by his attorney duly authorized in writing. The
Company may condition its issuance of any new Note in connection with a transfer
by any Person on compliance by the transferee with the representations required
under Section 3.2, by Institutional Holders on compliance with Section 2.5 and
on the payment to the Company of a sum sufficient to cover any
<PAGE>
stamp tax or other governmental charge imposed in respect of such transfer.
10.4 Replacement of Notes. Upon receipt of evidence satisfactory to the
Company of the loss, theft, mutilation or destruction of any Note, and in the
case of any such loss, theft or destruction upon delivery of a bond of indemnity
in such form and amount as shall be reasonably satisfactory to the Company or in
the event of such mutilation upon surrender and cancellation of the Note, the
Company, without charge to the holder thereof, will make and deliver a new Note,
of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. If any
such lost, stolen or destroyed Note is owned by you or any other Institutional
Holder, then the affidavit of an authorized officer of such owner setting forth
the fact of loss, theft or destruction and of its ownership of the Note at the
time of such loss, theft or destruction shall be accepted as satisfactory
evidence thereof, and no further indemnity shall be required as a condition to
the execution and delivery of a new Note, other than a written agreement of such
owner (in form reasonably satisfactory to the Company) to indemnify the Company.
11. MISCELLANEOUS
11.1 Expenses. Whether or not the purchase of Notes herein contemplated
shall be consummated, the Company agrees to pay directly all reasonable expenses
in connection with the preparation, execution and delivery of this Agreement and
the transactions contemplated by this Agreement, including, but not limited to,
out-of-pocket expenses, filing fees of Standard & Poor's Corporation in
connection with obtaining a private placement number, charges and disbursements
of special counsel, photocopying and printing costs and charges for shipping the
Notes, adequately insured, to you at your home office or at such other address
as you may designate, and all similar expenses (including the reasonable fees
and expenses of counsel) relating to any amendments, waivers or consents in
connection with this Agreement or the Notes, including, but not limited to, any
such amendments, waivers or consents resulting from any work-out, renegotiation
or restructuring relating to the performance by the Company of its obligations
under this Agreement and the Notes. The Company also agrees that it will pay
and save you harmless against any and all liability with respect to stamp and
other documentary taxes, if any, which may be payable, or which may be
determined to be payable in connection with the execution and delivery of this
Agreement or the Notes (but not in connection with a transfer of any Notes),
whether or not any Notes are then outstanding. The obligations of the Company
under this Section 11.1 shall survive the retirement of the Notes.
<PAGE>
11.2 Notices. Except as otherwise expressly provided herein, all
communications provided for in this Agreement shall be in writing and delivered
or sent by registered or certified mail, return receipt requested, or by
overnight courier (i) if to you, to the address set forth below your name in
Schedule I, or to such other address as you may in writing designate, (ii) if to
any other holder of the Notes, to such address as the holder may designate in
writing to the Company, and (iii) if to the Company, to Oneida Ltd., Kenwood
Avenue, Oneida, New York 13421, Attention: Edward W. Thoma, Senior Vice
President-Finance, or to such other address as the Company may in writing
designate.
11.3 Reproduction of Documents. This Agreement and all documents relating
hereto, including, without limitation, (i) consents, waivers and modifications
which may hereafter be executed, (ii) documents received by you at the closing
of the purchase of the Notes (except the Notes themselves), and (iii) financial
statements, certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process, and you may destroy
any original document so reproduced. The Company agrees and stipulates that any
such reproduction which is legible shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence;
provided that nothing herein contained shall preclude the Company from objecting
to the admission of any reproduction on the basis that such reproduction is not
accurate, has been altered or is otherwise incomplete.
11.4 Successors and Assigns. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns.
11.5 Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. No provision of this
Agreement may be waived, changed or modified, or the discharge thereof
acknowledged, orally, except by an agreement in writing signed by the party
against whom the enforcement of any waiver, change, modification or discharge is
sought.
11.6 Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
<PAGE>
11.7 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart or reproduction thereof permitted by Section
11.3.
11.8 Reliance on and Survival of Provisions. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant to this Agreement, whether or not in connection
with a closing, (i) shall be deemed to have been relied upon by you,
notwithstanding any investigation heretofore or hereafter made by you or on your
behalf and (ii) shall survive the delivery of this Agreement and the Notes.
11.9 Integration and Severability. This Agreement embodies the entire
agreement and understanding between you and the Company, and supersedes all
prior agreements and understandings relating to the subject matter hereof. In
case any one or more of the provisions contained in this Agreement or in any
Note, or application thereof, shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained in this Agreement and in any Note, and any other application thereof,
shall not in any way be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Agreement to be executed and delivered by their respective officer or officers
thereunto duly authorized.
ONEIDA LTD.
By: /s/ Edward W. Thoma
Title: Senior Vice President
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Patricia W. Wilson
By: /s/ Gary W. Fridley
Authorized Signatories
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By: /s/ Diane W. Dales
Title: Assistant Vice President
<PAGE>
SCHEDULE I
Principal Amount of Notes to be Purchased
Name and Address of Purchaser Principal Amount of Notes
Allstate Life Insurance Company $10,000,000
Allstate Plaza West
Northbrook, Illinois 60062
Attention: Investment Department -
Private Placement Division J2A
Address for all communications is as above. All payments are to be by bank
wire transfer of immediately available funds to:
Harris Trust and Savings Bank
ABA No. 0710-0028-8
Chicago, IL 60690
Attn: Trust Collection Dept. 5C
Custody Account #23-80522
PPN: 682505 B# 8
Each wire transfer shall identify such payment as "Oneida Ltd., 8.52%
Senior Notes due January 15, 2002."
Tax ID #36-2554642
<PAGE>
SCHEDULE I
Principal Amount of Notes to be Purchased
Name and Address of Purchaser Principal Amount of Notes
Allstate Life Insurance Company $5,000,000
Allstate Plaza West
Northbrook, Illinois 60062
Attention: Investment Department -
Private Placement Division J2A
Address for all communications is as above. All payments are to be by bank
wire transfer of immediately available funds to:
Harris Trust and Savings Bank
ABA No. 0710-0028-8
Chicago, IL 60690
Attn: Trust Collection Dept. 5C
Custody Account #23-83531
PPN: 682505 B# 8
Each wire transfer shall identify such payment as "Oneida Ltd., 8.52%
Senior Notes due January 15, 2002."
Tax ID #36-2554642
<PAGE>
SCHEDULE I
Principal Amount of Notes to be Purchased
Name and Address of Purchaser Principal Amount of Notes
Allstate Life Insurance Company $5,000,000
Allstate Plaza West
Northbrook, Illinois 60062
Attention: Investment Department -
Private Placement Division J2A
Address for all communications is as above. All payments are to be by bank
wire transfer of immediately available funds to:
Harris Trust and Savings Bank
ABA No. 0710-0028-8
Chicago, IL 60690
Attn: Trust Collection Dept. 5C
Custody Account #23-80524
PPN: 682505 B# 8
Each wire transfer shall identify such payment as "Oneida Ltd., 8.52%
Senior Notes due January 15, 2002."
Tax ID #36-2554642
<PAGE>
SCHEDULE I
Principal Amount of Notes to be Purchased
Name and Address of Purchaser Principal Amount of Notes
Pacific Mutual Life Insurance Company $5,000,000
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92658-9000
Attention: Fixed Income Securities Dept.
Address for all communications is as above, except notices of payment and
written confirmations of wire or inter-bank transfers. All payments are to be
by bank wire transfer of immediately available funds to:
Security Pacific National Bank
Los Angeles, California
ABA #122-000-043
Account #0014-043543 Business Services 0956
For Pacific Mutual Life Insurance Company
Account #33-7-lS510-0
Each wire transfer shall identify such payment as "Oneida Ltd., 8.52%
Senior Notes due January 15, 2002."
Notices of payment and written confirmations of wire or inter-bank transfers
shall be addressed to:
Pacific Mutual Life Insurance Company
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92658-9000
Attention: Investment Administration
All securities being purchased should be registered in the nominee name of
"EBENCO" and delivered to:
Sequor Group
333 South Hope Street
Los Angeles, California 90071
Ref. Sequor Group-Pasadena-Mona Milane
SPSTC Customer Account #33-7-15510-0
For Pacific Mutual Life Insurance Company
Attn: Custody/Sherry Welch HE-16 Level E
Tax ID #95-6025815
<PAGE>
SCHEDULE I
Principal Amount of Notes to be Purchased
Name and Address of Purchaser Principal Amount of Notes
Pacific Mutual Life Insurance Company $5,000,000
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92658-9000
Attention: Fixed Income Securities Dept.
Address for all communications is as above, except notices of payment and
written confirmations of wire or inter-bank transfers. All payments are to be
by bank wire transfer of immediately available funds to:
Security Pacific National Bank
Los Angeles, California
ABA #122-000-043
Account #0014-043543 Business Services 0956
For Pacific Mutual Life Insurance Company
Account #33-7-15510-0
Each wire transfer shall identify such payment as "Oneida Ltd., 8.52%
Senior Notes due January 15, 2002.
Notices of payment and written confirmations of wire or inter-bank
transfers shall be addressed to:
Pacific Mutual Life Insurance Company
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92658-9000
Attention: Investment Administration
All securities being purchased should be registered in the nominee name of
"EBNCO" and delivered to:
Sequor Group
333 South Hope Street
Los Angeles, California 90071
Ref. Sequor Group-Pasadena-Mona Milane
SPSTC Customer Account #33-7-15510-0
For Pacific Mutual Life Insurance Company
Attn: Custody/Sherry Welch HE-16 Level E
Tax ID #95-6025815
<PAGE>
ANNEX I
Restricted Subsidiaries of the Company
Restricted Place of Authorized to do
Subsidiaries Incorporation Business
Kenwood Silver Company, Inc. New York Alabama
Arizona
California
Colorado
Connecticut
Delaware
Florida
Georgia
Idaho
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Michigan
Missouri
Nevada
New Hampshire
New Jersey
New York
Oregon
Pennsylvania
S. Carolina
Tennessee
Texas
Vermont
Virginia
Washington
Camden Wire Co., Inc. New York Arkansas
Illinois
California
N. Carolina
Oneida Distribution
Services, Inc. New York Missouri
California
Washington
Georgia
Buffalo China, Inc. New York
Oneida International, Inc. Delaware
Oneida Foreign
Sales Corporation Virgin Islands
<PAGE>
Oneida Mexicana, S.A. Mexico
Oneida, S.A. Mexico
Oneida Canada, Limited Canada
Oneida Domestic
International Sales Corp. New York
Oneida Community, Limited New York
Employee Agency, Inc. New York
Heirloom, Inc. New York
Kenwood Advertising, Inc. New York
Simeon L. & George H.
Rogers Co., Inc. (U.S.) New York
Simeon L. & George H.
Rogers Co., Ltd. (Canada) Canada
Wm. A. Rogers, Limited New York
Canadian Wm. A.
Rogers, Ltd. Canada
D. J. Tableware, Inc. New York
Subsidiary of Buffalo China, Inc.
Ceramica De Juarez, S.A. Mexico
Subsidiary of Oneida International, Inc.
Sant'Andrea, Inc. Italy
<PAGE>
ANNEX II
ONEIDA LTD. & ITS RESTRICTED SUBSIDIARIES
FUNDED DEBT & CURRENT DEBT
FOR FISCAL PERIOD ENDED 1/25/92
1) FUNDED DEBT
Funded Debt at January 25, 1992 consisted of the following:
(Thousands)
9.42% senior notes due September 15, 1997, payable
$2,857,140 annually, commencing September 15, 1991 $17,143
Notes payable at various interest rates up to prime,
due through November 30, 1996 50,000
Industrial Revenue Bond, Chemical Bank Tax Exempt
Money Market Index rate, due February 1, 2005 9,000
Industrial Revenue Bond, 9-1/4%, due March 1, 2000,
payable in semi-annual installments of $193,607,
including interest 2,245
Industrial Revenue Bond, 9%, due March 1, 1995, payable
in semi-annual installments of $214,870, including
interest 1,266
Other debt at various rates due through 1997 1,715
81,369
Less amounts due currently 3,715
Total FUNDED DEBT $77,654
2) CURRENT DEBT
Current Debt at January 25, 1992 consisted of the following:
(Thousands)
Short term debt $36,000
Bankers acceptances 22,000
Current installments of long term debt 3,715
Total CURRENT DEBT $61,715
<PAGE>
ANNEX III
Description of Liens
None.
<PAGE>
ANNEX V
ONEIDA LTD.
RISK INSURANCE COVERAGE SUMMARY
Class of Insurance Insurance Company Risks Covered Limits
Property Damage, Industrial Risk All Risk coverage $502,018,000
Boiler/Machinery, Insurers including damage due to
Business Interruption earthquake and flood
Commercial General Utica Mutual Bodily Injury and $3,000,000
Liability Insurance Company property damage caused (Aggregate)
by ownership and $1,000,000
operation of premises; (Each
includes product Occurrence)
liability, broad
form vendors liability,
advertisers & contractual
liability
Commercial Liability New Hampshire Umbrella coverage over $10,000,000
Umbrella Insurance Company commercial general
liability and auto
liability policies
Excess Liability Fireman's Fund Excess coverage over $15,000,000
Insurance Company commercial liability
umbrella
Pension & Welfare Aetna Casualty & Breach of fiduciary $1,000,000
Fiduciary Liability Surety Company responsibility as Trustee
of employee benefit plans
Executive Liability Federal Insurance Co. Wrongful acts while $10,000,000
(Directors and (Chubb Group) acting in capacity as
Officers) director or officer
General Crime Lumbermans Mutual Comprehensive crime and $500,000
Casualty Company employee dishonesty;
(Kemper) includes ERISA compliance
for administration of
benefit plans
<PAGE>
EXHIBIT A
ONEIDA LTD.
8.52% SENIOR NOTE
Due January 15, 2002
THIS NOTE MAY BE SUBJECT TO A HOME OFFICE PAYMENT AGREEMENT AND ACCORDINGLY
ANY PROSPECTIVE PURCHASER SHOULD FIRST VERIFY THE UNPAID PRINCIPAL AMOUNT WITH
THE COMPANY.
Registered Note No. R-___________ January ___, 1992
$_________________
ONEIDA LTD., a New York corporation (the Company), for value received,
hereby promises to pay to _______________________ or registered assigns, on the
fifteenth day of January, 2002, the principal amount of __________________
Dollars ($_____________) and to pay interest (computed on the basis of a 360-
day year of twelve 30-day months) on the principal amount from time to time
remaining unpaid hereon at the rate of eight and fifty-two hundredths percent
(8.52) per annum from the date hereof until maturity, payable on the fifteenth
day of July and January in each year, commencing July 15, 1992, and at maturity,
and to pay interest on overdue principal, premium and (to the extent legally
enforceable) on any overdue installment of interest at the greater of (a) the
rate of interest publicly announced by Chemical Bank (or its successors or
assigns) as its Prime Rate plus one percent (1%) or (b) ten and fifty-two
hundredths percent (10.52%) per annum after maturity or the due date thereof,
whether by acceleration or otherwise, until paid. Payments of the principal of,
the premium, if any, and interest on this Note shall be made in lawful money of
the United States of America in the manner and at the place provided in Section
2.5 of the Note Agreement hereinafter defined.
This Note is issued under and pursuant to the terms and provisions of a Note
Agreement, dated as of January 1, 1992, entered into by the Company with the
Purchasers named in Schedule I thereto (the "Note Agreement), and this Note and
any holder hereof are entitled to all of the benefits and are bound by the terms
provided for by such Note Agreement or
<PAGE>
referred to therein. The provisions of the Note Agreement are incorporated in
this Note to the same extent as if set forth at length herein.
As provided in the Note Agreement, upon surrender of this Note for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder hereof or his attorney duly
authorized in writing, a new Note for a like unpaid principal amount will be
issued to, and registered in the name of, the transferee upon the payment of the
taxes or other governmental charges, if any, that may be imposed in connection
therewith. The Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
This Note may be declared due prior to its expressed maturity date,
voluntary prepayments may be made hereon and certain prepayments are required to
be made hereon all in the events, on the terms and in the manner as provided in
the Note Agreement. Such prepayments include certain required prepayments on
January 15 of each year beginning January 15, 1996 and ending January 15, 2001
and certain optional prepayments with a premium.
Should the indebtedness represented by this Note or any part thereof be
collected in any proceeding provided for in the Note Agreement or be placed in
the hands of attorneys for collection, the Company agrees to pay, in addition to
the principal, premium, if any, and interest due and payable hereon, all
reasonable costs of collecting this Note, including reasonable attorneys' fees
and expenses.
This Note and the Note Agreement are governed by and construed in accordance
with the laws of the State of Illinois.
ONEIDA LTD.
By:
Its:
<PAGE>
EXHIBIT B
LEGAL OPINIONS
A. The opinion of Gardner, Carton & Douglas, special counsel for the
Purchasers, shall be to the effect that:
1. The Company is a corporation organized and validly existing in good
standing under the laws of the State of New York, with all requisite corporate
power and authority to carry on its business as now conducted, to enter into and
perform the Agreement and to issue and sell the Notes.
2. The Agreement has been duly authorized by proper corporate action on
the part of the Company, has been duly executed and delivered by an authorized
officer of the Company and constitutes the legal, valid and binding agreement of
the Company, enforceable in accordance with its terms, except to the extent that
enforcement of the Agreement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.
3. The Notes have been duly authorized by proper corporate action on the
part of the Company, have been duly executed and delivered by an authorized
officer of the Company and constitute the legal, valid and binding obligations
of the Company, enforceable in accordance with their terms, except to the extent
that enforcement of the Notes may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.
4. Based upon the representations set forth in the Agreement, the
offering, sale and delivery of the Notes do not require the registration of the
Notes under the Securities Act of 1933, as amended, nor the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.
5. The issuance and sale of the Notes and compliance with the terms and
provisions of the Notes and the Agreement will not conflict with or result in
any breach of any of the provisions of the Certificate of Incorporation or By-
Laws of the Company.
The opinion of Gardner, Carton & Douglas also shall state that the opinion
of Shearman & Sterling, counsel for the Company,
<PAGE>
delivered to you pursuant to the Agreement, is satisfactory in form and scope to
Gardner, Carton & Douglas, and, in their opinion, the Purchasers and it are
justified in relying thereon and shall cover such other matters relating to the
sale of the Notes as the Purchasers may reasonably request. Gardner, Carton &
Douglas may rely, as to matters of New York law, on the opinion of Shearman &
Sterling.
B. The opinion of Shearman & Sterling, counsel for the Company, shall cover all
matters specified in clauses 1 through 6 set forth above and also shall be to
the effect that:
1. The Company has full corporate power and authority to conduct the
activities in which it is now engaged and own its property.
2. Each Subsidiary of the Company is a corporation duly organized and
validly existing in good standing under the laws of its jurisdiction of
incorporation, and each has all requisite corporate power and authority to carry
on its business as now conducted and own its property.
3. Each of the Company and its Subsidiaries is duly qualified or licensed
and in good standing as a foreign corporation authorized to do business in each
jurisdiction where the nature of the business transacted by it or the character
of its properties owned or leased makes such qualification or licensing
necessary except where failure to so qualify would not, individually or in the
aggregate, have a material adverse affect on its business, properties, or
condition, financial or otherwise.
4. No authorization, approval or consent of any governmental or regulatory
body is necessary or required in connection with the lawful execution and
delivery by the Company of the Agreement or the lawful offering, issuance and
sale of the Notes, and no designation, filing, declaration, registration and/or
qualification with any governmental authority is required by the Company in
connection with such offer, issuance and sale.
5. The issuance and sale of the Notes and the execution, delivery and
performance by the Company of the Agreement will not conflict with, or result in
any breach or violation of any of the provisions of, or constitute a default
under, or result in the creation of any Lien on the property of the Company or
any Subsidiary pursuant to, (i) the provisions of the Certificate of
Incorporation or other charter document or bylaws of the Company or any
Subsidiary or any loan agreement under which the Company or any Subsidiary is
bound, or other agreement or instrument known to such counsel (after due
inquiry) to which the Company or any Subsidiary is a party or by
<PAGE>
which any of them or their property is bound or (ii) any New York law (including
usury laws) or regulation, order, writ, injunction or decree of any court or
governmental authority applicable to the Company known to such counsel.
6. There are no actions, suits or proceedings pending or, to the best of
such counsel's knowledge after due inquiry, threatened against, or affecting the
Company or its Subsidiaries, at law or in equity or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which are likely to result,
either individually or in the aggregate, in any material adverse change in the
business, properties, operations or condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole.
7. All of the issued and outstanding shares of capital stock of each
Subsidiary have been duly and validly issued, are fully paid and nonassessable
and, to the knowledge of such counsel, are owned by the Company free and clear
of any Lien.
8. The issuance of the Notes and the use of the proceeds of the sale of
the Notes do not violate or conflict with Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System (12 C.F.R., Chapter II).
9. Neither the Company nor any Subsidiary is: (i) a public utility company
or a holding company, or an affiliate" or a subsidiary company of a holding
company, or an "affiliate" of such a "subsidiary company, as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility as defined in the Federal Power Act, as amended, or (iii) an
investment company or an "affiliated person" thereof or an affiliated person of
any such "affiliated person, as such terms are defined in the Investment Company
Act of 1940, as amended.
The opinion of Shearman & Sterling shall cover such other matters relating
to the sale of the Notes as the Purchasers may reasonably request. With respect
to matters of fact on which such opinion is based, such counsel shall be
entitled to rely on appropriate certificates of public officials and officers of
the Company and with respect to matters governed by the laws of any jurisdiction
other than the United States of America and the State of New York, such counsel
may rely upon the opinions of counsel deemed (and stated in their opinion to be
deemed) by them to be competent and reliable.
<PAGE>
EXHIBIT 4(a)
AMENDMENT NO. 1
TO
CREDIT AGREEMENT
This Amendment No. 1, dated as of September 25, 1996, is among THE CHASE
MANHATTAN BANK (successor to The Chase Manhattan Bank, N.A. and Chemical Bank)
(hereafter referred to as "Chase"), NATIONSBANK, N.A. ("NationsBank"), MARINE
MIDLAND BANK ("Marine"), THE CHASE MANHATTAN BANK (successor to The Chase
Manhattan Bank, N.A.), as agent under the Credit Agreement referred to below
("Agent"), and ONEIDA LTD., a New York corporation (the "Borrower").
RECITALS:
A. The Chase Manhattan Bank, N.A., Chemical Bank, NationsBank, Agent and
Borrower are parties to a Credit Agreement dated as of January 19, 1996 (the
"Credit Agreement") pursuant to which the Banks (as defined therein) agreed to
make loans to Borrower from time to time up to a maximum amount of $45,000,000
outstanding at any one time.
B. The Chase Manhattan Bank, N.A. and Chemical Bank have merged, and Chase
has succeeded to the entire interests of The Chase Manhattan Bank, N.A. and
Chemical Bank (including their respective Commitments) under the Credit
Agreement.
C. Pursuant to an Assignment and Assumption dated the date hereof (the
"Assignment"), Chase has assigned to Marine, and Marine has assumed, a portion
of Chase's Commitment under the Credit Agreement in the amount of $10,000,000.
Under the Assignment, Chase retained all of its rights under the Credit
Agreement with respect to all of Chase's Loans outstanding as of the date
hereof.
D. The parties desire to amend the Credit Agreement to increase the
Commitment of NationsBank, decrease the Commitment of Chase, and amend certain
other provisions of the Credit Agreement to reflect Marine's assumption of
$10,000,000 of Chase's Commitment
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. All capitalized terms used in this Amendment shall have the
meanings given to those terms in the Credit Agreement.
<PAGE>
2. Modification of Commitments.
(a) The aggregate Commitments of the Banks under the Credit
Agreement will remain at $45,000,000, but the amount of the respective
Commitments of the Banks is hereby amended as follows:
Name of Bank Amount of Commitment
Chase $20,000,000
NationsBank $ 15,000,000
Marine $ 10,000,000
(b) The modification to the Commitments of the Banks set forth above shall
not affect a Bank's right to receive any amount due under the Credit Agreement
with respect to Loans outstanding as of the date of this Amendment which are
described on the attached Schedule A (the "Outstanding Loans"). All payments
of principal, interest, and late charges with respect to Outstanding Loans and
all fees accrued through the date of this Amendment shall be apportioned by the
Agent among Chase and NationsBank ratably in accordance with the Commitments of
such Banks in effect at the dates the Outstanding Loans were made.
(c) All Base Rate Loans and all Eurodollar Loans made subsequent to the
date of this Amendment, and all fees accruing under Section 2.7 of the Credit
Agreement after the date hereof, will be apportioned among the Banks in
accordance with the Commitments as modified by subparagraph (a) above. It is
understood and agreed that the commitment fee accruing after the date hereof
under Section 2.7(a) of the Credit Agreement will be based upon the total unused
portion of the aggregate Commitments (including the Outstanding Loans) and
apportioned among the Banks in accordance with the revised Commitment amounts
set forth in subsection (a) above even though, until the Outstanding Loans have
been repaid, the total principal balance of the Loans (including the Outstanding
Loans) will not be allocated among the Banks in proportion to the revised
Commitments.
3. Addresses.
(a) With the merger of The Chase Manhattan Bank, N.A. and Chemical Bank,
the addresses for the Applicable Lending Office of Chase, and the Agency Office
of Chase and the address for notices to be sent to Chase (individually and in
its capacity as Agent) shall be the same addresses previously applicable to The
Chase Manhattan Bank, N.A. as set forth in the Credit Agreement unless
otherwise instructed by Chase in writing
(b) The addresses of the Applicable Lending Offices for Marine and the
addresses to which notices to Marine are to be sent, are as follows:
<PAGE>
Lending Office for all Loans:
360 S. Warren Street
Syracuse, New York 13202
Address for notices:
360 S. Warren Street
Syracuse, New York 13202
Attn.: Commercial Lending
4. Promissory Notes.
(a) Concurrently with the execution of this Amendment, Borrower shall
deliver the following Notes (hereafter referred to as the "New Notes") to the
respective Bank:
(i) Promissory Note in the principal amount of $10,000,000 payable to
Marine in substantially the form of Exhibit A to the Credit Agreement to
evidence all Base Rate Loans and Eurodollar Loans hereafter made by Marine;
(ii) Promissory Note in the principal amount of $45,000,000 payable to
Marine in substantially the form of Exhibit B to the Credit Agreement to
evidence all Competitive Bid Loans hereafter made by Marine.
(iii) Promissory Note in the principal amount of $20,000,000 payable to
Chase in substantially the form of Exhibit A to the Credit Agreement to evidence
all Base Rate Loans and Eurodollar Loans hereafter made by Chase;
(iv) Promissory Note in the principal amount of $45,000,000 payable to
Chase in substantially the form of Exhibit B to the Credit Agreement to evidence
all Competitive Bid Loans hereafter made by Chase;
(v) Promissory Note in the principal amount of $15,000,000 payable to
NationsBank in the substantially the form of Exhibit A to the Credit Agreement
to evidence all Base Rate Loans and Eurodollar Loans hereafter made by
NationsBank;
<PAGE>
(vi) Promissory note in the principal amount of $45,000,000 payable to
NationsBank in substantially the form of Exhibit B to the Credit Agreement to
evidence all Competitive Bid Loans hereafter made by NationsBank;
(b) The New Notes shall evidence all Loans made under the Credit
Agreement after the date hereof. All Outstanding Loans shall continue to be
evidenced by the Notes dated January 19, 1996 delivered to the Banks on the
Closing Date (the "Existing Notes"). When all amounts payable in respect of the
Outstanding Loans have been paid in full, the Existing Notes will be canceled
and surrendered to Borrower.
5. Ancillary Documents. Concurrently with the execution of this Amendment,
Borrower shall execute and deliver, or shall cause each of the Guarantors to
execute and deliver a written instrument executed by Guarantors and Borrower
confirming and acknowledging that (a) Marine Midland Bank shall be entitled to
the benefits of and to rely upon the Guarantee Agreements previously executed
by the Guarantors, and (b) such Guarantee Agreements and the Subordination
Agreement executed by Borrower in favor of all the Banks remain in full force
and effect after the amendments being made hereby.
6. Representations and Warranties. The Borrower represents and warrants to
the Banks that:
(a) Each of the representations and warranties made by the Borrower in the
Credit Agreement is true and correct on and as of the date of this Amendment
(except that Schedule E thereto does not reflect additional Liens, permitted
under the Credit Agreement, which were created after the date thereof);
(b) No Default or Event of Default has occurred and is continuing;
(c) This Amendment has been duly authorized and validly executed by
Borrower.
7. Confirmation of Credit Agreement. Except as amended by this Amendment, all
of the provisions of the Credit Agreement remain in full force and effect from
and after the date hereof, and the Borrower hereby ratifies and confirms the
Credit Agreement and each of its obligations thereunder. From and after the
date hereof, all references in the Credit Agreement to "this Agreement",
"hereof", "herein", or similar terms, shall mean and refer to the Credit
Agreement as amendment by this Amendment.
8. Counterparts. This Amendment may be signed in any number of counterparts,
all of which taken together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have. caused this Amendment to be duly
executed as of the day and year first above written.
ONEIDA LTD.
By: /s/ Edward W. Thoma
Edward W. Thoma
Senior Vice President
THE CHASE MANHATTAN BANK
(as Agent and as Bank)
By: /s/ Joseph H. Oddo, Jr.
Joseph H. Oddo, Jr.
Vice President
NATIONSBANK, N.A.
By: /s/ Patricia G. McCormack
Senior Vice President
MARINE MIDLAND BANK
By: /s/ John R. Pennisi
Vice President
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Schedule of Outstanding Loans
Chase NationsBank Total
<S> <C> <C> <C> <C>
Loans Maturing 9/30/96 $10,833,333.33 $4,166,666.67 $15,000,000
Loans Maturing 10/29/96 $ 7,222,222.22 $2,777,777.78 $10,000,000
Loans Maturing 11/29/96 $10,833,333.33 $4,166,666.67 $15,000,000
</TABLE>
<PAGE>
EXHIBIT 4(a)
AMENDMENT NO. 2
TO
CREDIT AGREEMENT
This Amendment No. 2, dated as of November 1, 1996, is among ONEIDA LTD., a
New York corporation (the "Borrower"), THE CHASE MANHATTAN BANK (successor to
The Chase Manhattan Bank, N.A.), as agent under the Credit Agreement
referred to below ("Agent"), and the banks which are or have become parties to
the Credit Agreement referred to below ("Banks").
RECITALS:
A. The Borrower, the Agent and the Banks are or have become parties to
a Credit Agreement dated as of January 19, 1996 which has been amended by
an Amendment No. 1 dated as of September 25, 1996 (as amended, hereafter
referred to as the "Credit Agreement").
B. Borrower has formed a new subsidiary named Oneida Community China,
Inc. which has entered into an Agreement to acquire substantially all of the
assets of THC Systems, Inc., a New York corporation which sells products under
the trademark "Rego China". Upon consummation of such acquisition, Borrower
intends to change the name of Oneida Community China, Inc. to THC Systems,
Inc. and to designate such subsidiary as a Restricted Subsidiary under the
Credit Agreement.
C. Oneida Community China, Inc. proposes to finance the acquisition
of THC Systems, Inc. through a private placement of debt securities and through
inter-company loans from Borrower.
D. Borrower has requested the Banks to amend the Credit Agreement
to modify certain covenants to accommodate the financing necessary to
consummate the proposed acquisition of THC Systems, Inc.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. All capitalized terms used in this Amendment shall have
the meanings given to those terms in the Credit Agreement.
2. Amendment of Credit Agreement. The Credit Agreement is hereby amended
as follows:
(a) The following definitions are added to Section 1.1 of the Credit
Agreement:
<PAGE>
"1992 Private Placement" - the private placement of debt
securities in the original face amount of $30,000,000 issued by Borrower
pursuant to a Note Agreement dated as of January 1, 1992.
"1996 Private Placement" - the private placement of debt
securities in the face amount of $35,000,000 issued or to be issued by Oneida
Community China, Inc. to one or more institutional investors to partially
finance the purchase of substantially all the assets of THC Systems, Inc.
"Noteholders" - collectively, the holders of the debt securities
issued in connection with the 1992 Private Placement and the 1996 Private
Placement.
(b) The definition of Guarantee Agreement is amended to read as
follows:
Guarantee Agreement - means a guarantee Agreement, substantially
in the form of Exhibit F annexed hereto, executed and delivered by each
Guarantor guaranteeing the payment of amounts due hereunder and the
Borrower's performance of its obligations required to be performed hereunder,
provided that (a) the Guarantee Agreement executed by Buffalo China, Inc.
shall be limited to a maximum liability of $10,000,000, (b) the Guarantee
Agreement executed by Camden Wire Co., Inc. shall be limited to a maximum
liability of $20,000,000, (c) the Guarantee Agreement executed by Oneida
Community China, Inc. shall be limited to a maximum liability of $15,000,000,
and (d) the Guarantee Agreement executed by each other Guarantor shall be
limited to an amount mutually acceptable to Borrower and the Banks, which
amount shall be not less than the greater of (i) 80% of the Tangible Net
Worth of such Guarantor, (ii) 35% of the Adjusted Tangible Assets of such
Guarantor, or (iii) the amount of the inter-company loan account, if any,
maintained by Borrower for the benefit of such Guarantor, all determined as
of the date the Guarantee Agreement is executed by such Guarantor.
(c) The definition of Guarantor is amended to read as follows:
Guarantor - each of Buffalo China, Inc., Camden Wire Co.,
Inc., Oneida Community China, Inc.
<PAGE>
and each Restricted Subsidiary created or acquired after the date of this
Agreement whose Adjusted Tangible Assets account for 5% or more of the
Consolidated Adjusted Tangible Assets of Borrower and its Restricted
Subsidiaries.
(d) Clause (iv) of the definition of Restricted Subsidiary is amended
to read as follows:
(iv) either (a) as of the Closing Date, is a Restricted
Subsidiary within the meaning of paragraphs (i), (ii) and (iii) above or (b)
is designated as a Restricted Subsidiary pursuant to Section 6.8(b) unless
such Subsidiary is subsequently designated as an Unrestricted Subsidiary
pursuant to Section 6.8(b); provided that Buffalo China, Inc., Camden Wire Co.,
Inc. and Oneida Community China, Inc. shall at all times remain a Restricted
Subsidiary under this Agreement.
(e) Section 6.2 is amended to read as follows:
Current Ratio. The Borrower will maintain Consolidated Assets at
not less than 150% of Consolidated Current Liabilities from November 4, 1996
to the earlier of January 24, 1997 or the closing of the 1996 Private
Placement, and at not less than 175 % of Consolidated Current
Liabilities at and all times thereafter.
(f) Section 6.3 is amended by adding the following proviso to the end
of the first sentence:
provided that each Guaranty by a Restricted Subsidiary in
favor of the Noteholders shall be limited in amount to the levels set
forth in the definition of Guarantee Agreement above.
(g) Section 6.5(b) is amended to read as follows:
Notwithstanding anything in Section 6.5(a) to the contrary, (i)
the aggregate amount of loans and advances by Borrower to, and accounts
receivable of Borrower from, any Guarantor shall not exceed (A) $10,000,000 in
the case of Buffalo China, Inc., (B) $20,000,000 in the case of Camden Wire
Co., Inc., (C) $15,000,000 in the case of Oneida Community China, Inc.
(provided that this
<PAGE>
limitation for Oneida Community China, Inc. shall be $50,000,000 from the date
hereof through the earlier of January 24, 1997 or the closing of the 1996
Private Placement, at which time it will revert to $15,000,000), and (D) the
maximum amount of the Guarantee Agreement in the case of any other Guarantor,
and (ii) Borrower shall not make or permit to exist any loans or advances by
Borrower to, or accounts receivable of Borrower from, Kenwood Silver Company,
Inc., except for accounts receivable consisting of accrued management fees owed
by Kenwood Silver Company, Inc. to Borrower for management services rendered by
Borrower in the ordinary course of business and in a manner consistent with
past practice.
(h) The first provision in Section 6.8(b) is amended to read as
follows:
...provided, however, that Buffalo China, Inc., Camden Wire Co.,
Inc., or Oneida Community China, Inc. may not be designated an Unrestricted
Subsidiary...
(i) Section 6.10 of the Credit Agreement is amended to read as
follows:
Net Worth. At the end of each of its fiscal quarters, Borrower
will maintain Consolidated Adjusted Tangible Net Worth of not less than
$70,000,000 plus 30% of Consolidated Adjusted Net Income accumulated after
July 27, 1996. The minimum Consolidated Adjusted Tangible Net Worth requirement
set forth in this Section shall be unaffected by and shall not be reduced as a
result of losses, if any, sustained by the Borrower or its consolidated
Subsidiaries after July 27, 1996.
(j) Section 6.17 is amended to read as follows:
(a) The ratio of Total Funded Debt of the Borrower and its
Restricted Subsidiaries to Consolidated Adjusted Tangible Net Worth shall not
exceed the following amounts at the end of any fiscal quarter:
<PAGE>
2.0 to 1.0 at the end of the 1996-97 fiscal year in January
1997 through the end of the third fiscal quarter in October 1997;
1.55 to 1.0 at the end of the 1997-98 fiscal year in January
1998 through the end of the third fiscal quarter in October 1998:
1.35 to 1.0 at the end of 1998-1999 fiscal year in January
1999 and at all times thereafter.
(b) Borrower shall not permit Buffalo China, Inc. to incur Total
Funded Debt in excess of $5,000,000, shall not permit Camden Wire Co., Inc.,
to incur Total Funded Debt in excess of $11,500,000 and shall not permit
Oneida Community China, Inc. to incur Total Funded Debt in excess of
$35,000,000, except in each case for (i) Total Funded Debt payable to the
Borrower and permitted by Section 6.5 and (ii) Guaranties of Total Funded
Debt incurred by Borrower or any Restricted Subsidiary, which Guaranties are
otherwise permitted by Section 6.3. Borrower shall not permit any other
Guarantor to incur Total Funded Debt (except Total Funded Debt payable to the
Borrower and permitted by Section 6.5 and Guaranties of Total Funded Debt
incurred by Borrower or any Restricted Subsidiary, which Guaranties are
otherwise permitted by Section 6.3) in excess of an amount agreed to by
Borrower and the Banks at the time the Guarantee Agreement of such other
Guarantor is delivered, which amount shall be determined on a basis
consistent with the limitations set forth in this Section 6.17(b) with respect
to Buffalo China, Inc., Camden Wire Co., Inc. and Oneida Community China, Inc.
(k) The list of Restricted Subsidiaries attached as Exhibit A to the
Officer's Certificate Designating Restricted Subsidiaries dated January 19,
1996 is amended to include Oneida Community China, Inc., a New York corporation
(to be known as THC Systems, Inc.)
3. Representations and Warranties. The Borrower represents and warrants to
the Banks that:
(a) Each of the representations and warranties made by the Borrower
in the Credit Agreement is true and correct on and as of the date of this
Amendment (except that Schedule E thereto does not reflect additional liens,
permitted under the Credit Agreement, which were created after the date
thereof.
<PAGE>
(b) No Default or Event of Default has occurred and is continuing;
(c) This Amendment has been duly authorized and validly executed by
Borrower.
4. Effectiveness. This Amendment shall not become effective until the
satisfaction of each of the following conditions:
(a) The Agent shall have received a duly executed counterpart of this
Amendment signed by each of the Borrower, each Bank and the Agent;
(b) Oneida Community China, Inc. shall have executed and delivered
to the Agent (i) a Guarantee Agreement substantially in the form of Exhibit F
to the Credit Agreement and limited in amount to $15,000,000, (ii) a Supplement
to Subordination Agreement substantially in the form of Exhibit A annexed
hereto, and (iii) a Certificate of its Secretary certifying the adoption
of resolutions by the Board of Directors authorizing the execution and delivery
of the Guarantee Agreement and Supplement to Subordination Agreement, certifying
the incumbency of the officer executing such documents, and certifying
copies of the Certificate of Incorporation and Bylaws of Oneida Community
China, Inc.
(c) Borrower shall have executed and delivered to the Agent a
Certificate of its Secretary certifying the adoption of resolutions by the
Board of Directors authorizing the execution and delivery of this Amendment and
certifying the incumbency of the officer executing this Amendment.
(d) The acquisition of substantially all of the assets of THC
Systems, Inc. by Oneida Community China, Inc. shall have been consummated.
5. Confirmation of Credit Agreement. Except as amended by this Amendment,
all of the provisions of the Credit Agreement remain in full force and effect
from and after the date hereof, and the Borrower hereby ratifies and confirms
the Credit Agreement and each of its obligations thereunder. From and after the
date hereof, all references in the Credit Agreement to "this Agreement",
"hereof", "herein", or similar terms, shall mean and refer to the Credit
Agreement as amended by this Amendment.
6. Counterparts. This Amendment may be signed in any number of
Counterparts, all of which taken together shall constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the day and year first above written.
THE CHASE MANHATTAN BANK
(as Agent and as Bank)
By: /s/ Joseph H. Oddo, Jr.
Joseph H. Oddo, Jr.
Vice President
NATIONSBANK, N.A.
By: /s/ Patricia G. McCormack
Patricia G. McCormack
Title: Senior Vice President
MARINE MIDLAND BANK
By: /s/ John R. Pennisi
John R. Pennisi
Title: Vice President
ONEIDA LTD.
By: /s/ Edward W. Thoma
Edward W. Thoma
Senior Vice President
<PAGE>
EXHIBIT 4(a)
THC SYSTEMS, INC. (the "Company")
ONEIDA LTD. (the "Guarantor")
NOTE AGREEMENT
Dated as of November 15, 1996
$35,000,000 Principal Amount
7.49% Senior Notes
Due November 1, 2008
<PAGE>
TABLE OF CONTENTS
Section Page
1. DESCRIPTION OF NOTES AND COMMITMENT 1
1.1. Description of Notes 1
1.2. Commitment; Closing Date 1
2. PREPAYMENT OF NOTES 2
2.1. Required Prepayments 2
2.2. Optional Prepayments 3
2.3. Notice of Prepayments 3
2.4. Surrender of Notes on Prepayment or Exchange 4
2.5. Direct Payment 4
2.6. Allocation of Payments 4
2.7. Payments Due on Saturdays, Sundays and Holidays 4
3. REPRESENTATIONS 5
3.1. Representations of the Guarantor and the Company 5
3.2. Representations of the Purchasers 12
4. CLOSING CONDITIONS 13
4.1. Representations and Warranties 13
4.2. Legal Opinions 14
4.3. Events of Default 14
4.4. Payment of Fees and Expenses 14
4.5. Legality of Investment 14
4.6. Private Placement Number 14
4.7. Sale of All Notes 14
4.8. THC Acquisition 14
4.9. Additional Agreements 14
4.10. Proceedings and Documents 14
5. INTERPRETATION OF AGREEMENT 15
5.1. Certain Terms Defined 15
5.2. Accounting Principles 24
5.3. Effect of FASB 106 24
5.4. Valuation Principles 24
5.5. Direct or Indirect Actions 24
6. AFFIRMATIVE COVENANTS 25
6.1. Corporate Existence 25
6.2. Insurance 25
6.3. Taxes, Claims for Labor and Materials 25
6.4. Maintenance of Properties 25
6.5. Maintenance of Records 25
6.6. Financial Information and Reports 26
6.7. Inspection of Properties and Records;
Confidentiality 28
6.8. ERISA 29
6.9. Compliance with Laws 30
<PAGE>
6.10. Acquisition of Notes 30
6.11. Private Placement Number 30
6.12. NAIC Filings 30
6.13. Company's Restricted Subsidiary Status 30
6.14. Bank Agreement. 30
6.15. Subsidiary Guarantees 30
6.16. Release of Camden Wire Subsidiary Guarantee 30
7. NEGATIVE COVENANTS 31
7.1. Net Worth 31
7.2. Current Ratio 31
7.3. Funded Debt 31
7.4. Priority Indebtedness of Restricted Subsidiaries 31
7.5. Interest Coverage Ratio 31
7.6. Liens 31
7.7. Long-Term Leases 33
7.8. Restricted Payments 33
7.9. Merger or Consolidation 34
7.10. Sale of Assets 34
7.11. Change in Business 35
7.12. Transactions with Affiliates 35
7.13. Consolidated Tax Returns 35
7.14. Pari Passu Position 35
7.15. Sharing Agreement 35
8. EVENTS OF DEFAULT AND REMEDIES THEREFOR 36
8.1. Nature of Events 36
8.2. Remedies on Default 38
8.3. Annulment of Acceleration of Notes 38
8.4. Other Remedies 38
8.5. Conduct No Waiver; Collection Expenses 39
8.6. Remedies Cumulative 39
8.7. Notice of Default 39
9. AMENDMENTS, WAIVERS AND CONSENTS 39
9.1. Matters Subject to Modification 39
9.2. Solicitation of Holders of Notes 40
9.3. Binding Effect 40
10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND
REPLACEMENT
10.1. Form of Notes 41
10.2. Note Register 41
10.3. Issuance of New Notes upon Exchange or Transfer 41
10.4. Replacement of Notes 41
11. MISCELLANEOUS 42
11.1. Expenses 42
11.2. Notices 42
11.3. Reproduction of Documents 42
<PAGE>
11.4. Successors and Assigns 43
11.5. Law Governing 43
11.6. Headings 43
11.7. Counterparts 43
11.8. Reliance on and Survival of Provisions 43
11.9. Integration and Severability 43
Annex I: Subsidiaries
Annex II: Existing Funded Debt and Current Debt
Annex III: Description of Liens
Annex IV: Schedule of Insurance
Exhibit A: Form of 7.49% Senior Notes, Due November 1, 2008
Exhibit B: Legal Opinions
Exhibit C: Form of Guaranty Agreement
Exhibit D: Form of Subsidiary Guarantee
Exhibit E: Form of Subordination Agreement
Exhibit F: Form of Sharing Agreement
<PAGE>
THC SYSTEMS, INC.
ONEIDA LTD.
NOTE AGREEMENT
Dated as of November 15, 1996
To the Purchasers Named in Schedule I Hereto
Ladies and Gentlemen:
Each of THC SYSTEMS, INC. (formerly named Oneida Community China, Inc.),
a New York corporation (the "Company") and ONEIDA LTD., a New York corporation
(the "Guarantor"), agrees with you as follows:
1. DESCRIPTION OF NOTES AND COMMITMENT
1.1 Description of Notes. (a) The Company has authorized the issuance and
sale of $35,000,000 aggregate principal amount of its Senior Notes (the
"Notes"), to be dated the date of issuance, to bear interest from such date at
the rate of 7.49% per annum prior to maturity, payable semi-annually on the
first day of November and May of each year, commencing May 1, 1997, and at
maturity, to bear interest on overdue principal (including any overdue required
or optional prepayment), premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest at the greater of (a)
the rate of interest publicly announced by The Chase Manhattan Bank (or its
successors or assigns) as its "prime rate" plus one percent (1%) or (b) 9.49%
per annum, to be expressed to mature on November 1, 2008 and to be
substantially in the form attached as Exhibit A. The term "Notes" as used
herein shall include each Note delivered pursuant to this Note Agreement (the
"Agreement") and each Note delivered in substitution or exchange therefor and,
where applicable, shall include the singular number as well as the plural. Any
reference to you in this Agreement shall in all instances be deemed to include
any nominee of yours or any separate account or other person on whose behalf you
are purchasing Notes. You are sometimes referred to herein as a "Purchaser"
and, together with the other Purchaser, as the "Purchasers."
(b) The obligations of the Company hereunder and under the Notes shall
be guaranteed by the Guarantor pursuant to the Guaranty Agreement and by
the Subsidiary Guarantors pursuant to the Subsidiary Guarantees.
1.2 Commitment; Closing Date. Subject to the terms and conditions hereof
and on the basis of the representations and warranties hereinafter set
forth, the Company agrees to issue and sell to you, and you agree to
purchase from the Company, Notes in the aggregate principal
<PAGE>
amount set forth opposite your name in the attached Schedule I at a price of
100% of the principal amount thereof.
Delivery of and payment for the Notes shall be made at the offices
of Gardner, Carton & Douglas, 321 North Clark Street, Quaker Tower, Chicago,
Illinois 60610, at 9:00 a.m., Chicago Time, on November 26, 1996, or at such
later time or on such later date, not later than 5:00 p.m. Chicago Time, on
November 30, 1996, as may be mutually agreed upon by the Company and the
Purchasers (the "Closing Date"). The Notes will be delivered to you in fully
registered form, issued in your name or in the name of your nominee. Delivery
of the Notes to you on the Closing Date shall be against payment of the purchase
price thereof in Federal Funds or other funds in U.S. dollars immediately
available at the principal office of Chase Manhattan Bank, New York, New York,
A.B.A. No. 02100002, Attention: Upstate New York-Syracuse, for deposit in the
Company's Account No. 8250073601, Attention: Patricia Janowski (315) 424-2763.
If on the Closing Date the Company shall fail to tender the Notes to you or
shall fail to meet the closing conditions set forth in Sections 4.1 through 4.10
hereof, you shall be relieved of all remaining obligations under this Agreement.
Nothing in the preceding sentence shall relieve the Company of any liability
occasioned by such failure to deliver the Notes. If on the Closing Date any
Purchaser shall fail to tender the purchase price of Notes set forth in Schedule
I hereto to the Company, the Company shall be relieved of all remaining
obligations under this Agreement. Nothing in the preceding sentence shall
relieve any Purchaser of any liability occasioned by its failure to deliver such
Funds. The obligations of each Purchaser shall be several and not joint and no
Purchaser shall be liable or responsible for the acts of any other Purchaser.
2. PREPAYMENT OF NOTES
2.1 Required Prepayments. (a) In addition to payment of all outstanding
principal of the Notes at maturity and regardless of the amount of Notes which
may be outstanding from time to time, the Company shall prepay and there shall
become due and payable on November 1 in each year, $3,890,000 of the principal
amount of the Notes or such lesser amount as would constitute payment in full on
the Notes, commencing November 1, 2000 and ending November 1, 2007 inclusive,
with the remaining principal payable on November 1, 2008. Each such prepayment
shall be at a price of 100% of the principal amount prepaid, together with
interest accrued thereon to the date of prepayment.
(b) (i) In the event of a Change of Control, the Guarantor shall,
immediately upon learning thereof, but in any event within five days after the
date of such Change of Control, give written notice to each holder of a Note
and to the Company of the Change of Control, accompanied by a certificate of
an authorized officer of the Guarantor describing in detail the nature of the
Change of Control and containing an offer by the Company to prepay the Notes on
the terms set forth in the following sentence (the "Change Notice"). Subject to
clause (ii) of this paragraph (b), the Company shall prepay, on a date specified
in such notice by the Company which shall be not less than 45 or more than 60
calendar days after the effective date
<PAGE>
of such Change in Control, the entire principal amount of the Notes held by each
holder at the price set forth in Section 2.2(b).
(ii) A holder of Notes may accept or reject the offer of the
Company to prepay Notes made pursuant to clause (i) of this paragraph (b) by
causing a notice of such acceptance or rejection to be delivered to the Company
not more than 30 calendar days following receipt of the Change Notice. A failure
by a holder of Notes to respond to an offer to prepay made pursuant to clause
(i) of this paragraph (b) shall be deemed to constitute an acceptance of such
offer by such holder.
2.2 Optional Prepayments. (a) Upon notice as provided in Section 2.3,
the Company may prepay the Notes, in whole or in part, at any time, in an
amount of not less than $1,000,000 or in integral multiples of $100,000 in
excess thereof at the price set forth in Section 2.2(b).
(b) Each prepayment made pursuant to Section 2.1(b), Section 7.10
(other than prepayments made in connection with a Camden Disposition pursuant to
such Section 7.10) or paragraph (a) of this Section 2.2 shall be at a price of
(i) 100% of the principal amount to be prepaid, plus interest accrued thereon
to the date of prepayment, if the Reinvestment Yield, on the applicable
Determination Date, equals or exceeds the interest rate payable on or in
respect of the Notes, or (ii) 100% of the principal amount to be prepaid, plus
interest accrued thereon to the date of prepayment, plus a premium, if the
Reinvestment Yield, on such Determination Date, is less than the interest
rate payable on or in respect of the Notes. The premium shall equal (x) the
aggregate present value of the amount of principal being prepaid (taking into
account the manner of application of such prepayment required by Section 2.2(c))
and the present value of the amount of interest (exclusive of interest accrued
to the date of prepayment) which would have been payable in respect of such
principal absent such prepayment, determined by discounting (semi-annually on
the basis of a 360-day year composed of twelve 30-day months) each such amount
utilizing an interest factor equal to the Reinvestment Yield, less (y) the
principal amount to be prepaid.
(c) Any prepayment pursuant to Section 2.2(a) or 7.10 of less than all
of the Notes outstanding shall be applied, to reduce, pro rata, each of the
prepayments and the final payment at maturity required by Section 2.1.
(d) Except as provided in Section 2.1, this Section 2.2 and Section
7.10, the Notes shall not be prepayable in whole or in part.
2.3 Notice of Prepayments. The Company shall give notice of any prepayment
of the Notes pursuant to Section 2.1(b) or Section 2.2(a) or Section 7.10 to
each holder of the Notes not less than 30 days nor more than 60 days before the
date fixed for prepayment, specifying (i) such date, (ii) the principal amount
of the holder's Notes to be prepaid on such date, (iii) the date as of
which the premium, if any, will be calculated and (iv) the accrued interest
applicable to the prepayment. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice, together
with the premium, if any, and accrued interest thereon shall become due and
payable on the prepayment date specified in such notice.
<PAGE>
The Company also shall give notice to each holder of the Notes by telecopy,
telegram, telex or other same-day written communication, as soon as practicable
but in any event not later than two business days prior to the prepayment date,
of the premium, if any, applicable to such prepayment and the details of
the calculations used to determine the amount of such premium.
2.4 Surrender of Notes on Prepayment or Exchange. Subject to Section 2.5,
upon any partial prepayment of a Note pursuant to this Section 2 or partial
exchange of a Note pursuant to Section 10.3, such Note may, at the option of the
holder thereof, (i) be surrendered to the Company pursuant to Section 10.3 in
exchange for a new Note equal to the principal amount remaining unpaid on the
surrendered Note, or (ii) be made available to the Company for notation
thereon of the portion of the principal so prepaid or exchanged. In case the
entire principal amount of any Note is prepaid or exchanged, such Note
shall, at the written request of the Company, be surrendered to the Company
for cancellation and shall not be reissued, and no Note shall be issued in lieu
of such Note.
2.5 Direct Payment. Notwithstanding any other provision contained in the
Notes or this Agreement, the Company will pay all sums becoming due on each Note
held by you or any subsequent Institutional Holder by wire transfer of
immediately available federal funds to such account as you or such subsequent
Institutional Holder has designated in Schedule I, or as you or such
subsequent Institutional Holder may otherwise designate by written notice to
the Company, in each case without presentment and without notations being
made thereon, except that any such Note so paid or prepaid in full
shall, at the written request of the Company, be surrendered to the Company
for cancellation. Any wire transfer shall identify such payment in the manner
set forth in Schedule I and shall identify the payment as principal, premium, if
any, and/or interest. You and any subsequent Institutional Holder of a Note to
which this Section 2.5 applies agree that, before selling or otherwise
transferring any such Note, you or it will make a notation thereon of the
aggregate amount of all payments of principal theretofore made and of the date
to which interest has been paid.
2.6 Allocation of Payments. If less than the entire principal amount of all
the Notes outstanding is to be paid, the Company will prorate the aggregate
principal amount to be paid among the outstanding Notes in proportion to
the unpaid principal.
2.7 Payments Due on Saturdays, Sundays and Holidays. In any case where the
date of any required prepayment of the Notes or any interest payment date on the
Notes or the date fixed for any other payment of any Note or exchange of any
Note is not a Business Day, then such payment, prepayment or exchange need not
be made on such date but may be made on the next preceding Business Day, with
the same force and effect as if made on the due date.
<PAGE>
3. REPRESENTATIONS
3.1 Representations of the Guarantor and the Company. As an inducement to,
and as part of the consideration for, your purchase of the Notes pursuant to
this Agreement, each of the Guarantor and the Company represents and warrants
to you as follows:
(a) Corporate Organization and Authority. Each of the Guarantor and
the Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York, has all requisite corporate
power and authority to own and operate its Properties, to carry on its
business as now conducted and as presently proposed to be conducted, to enter
into and perform the Agreement and the Subordination Agreement and, in the
case of the Company, to issue and sell the Notes as contemplated in the
Agreement and in the case of the Guarantor, to issue the Guaranty Agreement.
(b) Qualification to Do Business. Each of the Guarantor and the Company
is duly licensed or qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction where the nature of
the business transacted by it or the character of its Properties owned or
leased makes such qualification or licensing necessary.
(c) Subsidiaries. The Guarantor has no Subsidiaries, as defined
in Section 5.1, except those listed in Annex I, which correctly sets forth
whether such Subsidiary is a Restricted Subsidiary and the jurisdiction of
incorporation and the percentage of the outstanding Voting Stock or equivalent
interest of each Subsidiary which is owned, of record or beneficially, by the
Guarantor and/or one or more Subsidiaries. Each Subsidiary has been duly
organized and is validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization and is duly licensed or qualified
and in good standing as a foreign corporation in each other jurisdiction
where the nature of the business transacted by it or the character of its
Properties owned or leased makes such qualification or licensing necessary. A
list of those jurisdictions wherein each Subsidiary is qualified to do business
is set forth in Annex I. Each Subsidiary has full corporate power and
authority to own and operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted. Each Subsidiary Guarantor
has all requisite corporate power and authority to issue its Subsidiary
Guarantee and to execute the Subordination Agreement. The Guarantor or each
Subsidiary has good and marketable title to all of the shares it purports to own
of the capital stock of each Subsidiary, as the case may be, free and clear in
each case of any Lien or encumbrance, and all such shares have been duly issued
and are fully paid and nonassessable.
(d) Financial Statements. The consolidated balance sheets of the Guarantor
and its Restricted Subsidiaries as of January 27, 1996 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year ended January 27, 1996, accompanied by the report and unqualified opinion
of Coopers & Lybrand, L.L.P., independent certified public accountants, copies
of which have heretofore been delivered to you, were prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved (except as otherwise noted therein) and present fairly the
consolidated financial
<PAGE>
condition and consolidated results of operations and cash flows of the Guarantor
and its Restricted Subsidiaries for and as of the end of each of such years.
The consolidated balance sheets of the Guarantor and its Restricted Subsidiaries
as of July 27, 1996 and July 29, 1995 and the related unaudited consolidated
condensed statements of income, stockholders' equity and cash flows for the six
months ended July 27, 1996 and July 29, 1995, copies of which have heretofore
been delivered to you, were prepared in accordance with generally accepted
accounting principles and present fairly the consolidated financial condition
of the Guarantor and its Restricted Subsidiaries as of such dates and the
consolidated results of their operations and cash flows for the periods then
ended, subject to customary year-end adjustments.
(e) No Contingent Liabilities or Adverse Changes. Neither the Guarantor nor
any of its Subsidiaries has any contingent liabilities which are material to
the Guarantor and its Subsidiaries taken as a whole other than as indicated on
the financial statements described in the foregoing paragraph (d) of this
Section 3.1, and since January 27, 1996, there have been no material adverse
changes in the condition, financial or otherwise, of the Guarantor and its
Subsidiaries except those occurring in the ordinary course of business.
(f) No Pending Litigation or Proceedings. There are no actions, suits
or proceedings pending or threatened against or affecting the Guarantor or any
of its Subsidiaries, at law or in equity or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which might result, either
individually or in the aggregate, in any material adverse change in the
business, Properties, operations or condition, financial or otherwise, of the
Guarantor and its Subsidiaries taken as a whole or on the Company's ability to
perform its obligations under this Agreement or the Notes or the Subordination
Agreement or on the Guarantor's ability to perform its obligations under this
Agreement or the Guaranty Agreement or the Subordination Agreement or on any
Subsidiary Guarantor's ability to perform its obligations under its Subsidiary
Guarantee or the Subordination Agreement.
(g) Compliance with Law. (i) Neither the Guarantor nor any of its
Subsidiaries is: (x) in default with respect to any order, writ, injunction or
decree of any court to which it is a named party; or (y) in default under
any law, rule, regulation, ordinance or order relating to its or their
respective businesses, the sanctions and penalties resulting from which defaults
described in clauses (x) and (y) might have a material adverse effect on the
business, Properties, operations, assets or condition, financial or otherwise,
of the Guarantor and its Subsidiaries taken as a whole, or on the Company's
ability to perform its obligations under this Agreement or the Notes or the
Subordination Agreement or on the Guarantor's ability to perform its
obligations under this Agreement or the Guaranty Agreement or the
Subordination Agreement or on any Subsidiary Guarantor's ability to perform
its obligations under its Subsidiary Guarantee or the Subordination Agreement.
(ii) Neither the Guarantor nor any Subsidiary nor any Affiliate is
an entity defined as a "designated national" within the meaning of the Foreign
Assets Control Regulations, 31 C.F.R. Chapter V, or for any other reason,
subject to any restriction or prohibition under, or is in violation of, any
Federal statute or Presidential Executive Order, or
<PAGE>
any rules or regulations of any department, agency or administrative body
promulgated under any such statute or Order, concerning trade or other
relations with any foreign country or any citizen or national thereof or the
ownership or operation of any Property.
(h) Pension Reform Act of 1974. Based upon the representations of
the Purchasers set forth in Section 3.2, neither the purchase of the Notes by
you nor the consummation of any of the other transactions contemplated by this
Agreement is or will constitute a "prohibited transaction" within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or
Section 406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Internal Revenue Service has issued a favorable determination
letter with respect to each "employee pension benefit plan," as defined in
Section 3 of ERISA, established, maintained or contributed to by the
Guarantor or any Subsidiary (except for any Plan which is unfunded and
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees) (a "Plan") that the
same is qualified under Section 401(a) and related provisions of the Code and
that each related trust or custodial account is exempt from taxation under
Section 501(a) of the Code. All Plans of the Guarantor or any Subsidiary comply
in all material respects with ERISA and other applicable laws. There exist with
respect to the Guarantor or any Subsidiary no "multi-employer plans," as defined
in the Multi-employer Pension Plan Amendments Act of 1980, for which a
material withdrawal or termination liability may be incurred. There exist with
respect to all Plans or trusts established or maintained by the Guarantor or any
Subsidiary: (i) no material accumulated funding deficiency within the meaning of
ERISA; (ii) no termination of any Plan or trust which would result in any
material liability to the Pension Benefit Guaranty Corporation ("PBGC") or any
"reportable event," as that term is defined in ERISA, which is likely to
constitute grounds for termination of any Plan or trust by the PBGC; and
(iii) no "prohibited transaction," as that term is defined in ERISA, which is
likely to subject any Plan, trust or party dealing with any such Plan or trust
to any material tax or penalty on prohibited transactions imposed by Section
4975 of the Code.
(i) Title to Properties. The Guarantor and each Subsidiary has (i) good
title in fee simple or its equivalent under applicable law to all the real
Property owned by it and (ii) good title to all other Property owned by it, in
each case free from all Liens except (x) those securing Indebtedness of the
Guarantor or a Subsidiary, which are listed in the attached Annex III and (y)
other Liens that would be permitted pursuant to Section 7.6.
(j) Leases. The Guarantor and each Subsidiary enjoy peaceful and
undisturbed possession under all leases under which the Guarantor or such
Subsidiary is a lessee or is operating. None of such leases contains any
provision which might materially and adversely affect the operation or use of
the Property so leased. All of such leases are valid and subsisting and
neither the Guarantor nor any Subsidiary is in default with respect to any
such leases which are material to the business, Properties, operations or
condition, financial or otherwise, of the Guarantor and its Subsidiaries taken
as a whole.
(k) Franchises, Patents, Trademarks and Other Rights. The Guarantor and
each Subsidiary have all franchises, permits, licenses and other authority
necessary to carry on their
<PAGE>
businesses as now being conducted and as proposed to be conducted, and none is
in default under any of such franchises, permits, licenses or other authority
which are material to their respective businesses, Properties, operations or
condition, financial or otherwise. The Guarantor and each Subsidiary own or
possess all patents, trademarks, service marks, trade names, copyrights,
licenses and rights with respect to the foregoing necessary for the present
conduct of their businesses, without any known conflict with the rights of
others which might result in any material adverse change in their respective
businesses, Properties, operations or condition, financial or otherwise.
(l) Status of Notes and Sale of Notes. The Agreement, the Notes and
the Subordination Agreement have been duly authorized on the part of the
Company, have been duly executed and delivered by an authorized officer of the
Company and constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their terms, except to the extent that
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application relating to or
affecting the enforcement of the rights of creditors or by equitable principles,
regardless of whether enforcement is sought in equity or at law. The sale of
the Notes and compliance by the Company with all of the provisions of this
Agreement, of the Notes and of the Subordination Agreement (i) are within the
corporate powers of the Company, (ii) have been duly authorized by proper
corporate action, (iii) are legal, (iv) will not violate any provisions of any
law or regulation or order of any court, governmental authority or agency and
(v) will not result in any breach of any of the provisions of, or constitute a
default under, or result in the creation of any Lien on any Property of the
Guarantor or any Subsidiary under the provisions of, any charter document, by-
law, loan agreement or other agreement or instrument to which the Guarantor or
any Subsidiary is a party or by which any of them or their Property may be
bound.
(m) Guarantor Authorization. The Agreement, the Guaranty Agreement and
the Subordination Agreement have been duly authorized on the part of the
Guarantor, have been duly executed and delivered by an authorized officer of
the Guarantor and constitute the legal, valid and binding obligations of
the Guarantor, enforceable in accordance with their terms, except to the extent
that enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in equity or
at law. The compliance by the Guarantor with all of the provisions of this
Agreement, of the Guaranty Agreement and of the Subordination Agreement (i) are
within the corporate powers of the Guarantor, (ii) have been duly authorized
by proper corporate action, (iii) are legal, (iv) will not violate any
provisions of any law or regulation or order of any court, governmental
authority or agency and (v) will not result in any breach of any of the
provisions of, or constitute a default under, or result in the creation of any
Lien on any Property of the Guarantor or any Subsidiary under the provisions of,
any charter document, by-law, loan agreement or other agreement or instrument to
which the Guarantor or any Subsidiary is a party or by which any of them or
their Property may be bound.
(n) Subsidiary Guarantor Authorization. Each Subsidiary Guarantee and
the Subordination Agreement have been duly authorized on the part of each
Subsidiary
<PAGE>
Guarantor has been duly executed and delivered by an authorized officer of
such Subsidiary Guarantor and constitute the legal, valid and binding
obligations of such Subsidiary Guarantor, enforceable in accordance with its
terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application relating to or affecting the enforcement of the
rights of creditors or by equitable principles, regardless of whether
enforcement is sought in equity or at law. The compliance by each Subsidiary
Guarantor with all of the provisions of its Subsidiary Guarantee (i) is within
the corporate powers of each Subsidiary Guarantor, (ii) has authorized by proper
corporate action, (iii) is legal, (iv) will not violate any provisions of any
law or regulation or order of any court, governmental authority or agency and
(v) will not result in any breach of any of the provisions of, or constitute a
default under, or result in the creation of any Lien on any Property of the
Guarantor or any Subsidiary under the provisions of, any charter document, by-
law, loan agreement or other agreement or instrument to which each the Guarantor
or any Subsidiary is a party or by which any of them or their Property may be
bound.
(o) No Defaults. No event has occurred and no condition exists which, upon
the issuance of the Notes, or the execution and delivery of this Agreement, the
Guaranty Agreement, the Subordination Agreement or the Subsidiary Guarantees,
would constitute an Event of Default, or with the lapse of time or the giving of
notice or both would become an Event of Default, under this Agreement. Neither
the Guarantor nor any Subsidiary is in default under any charter document, by-
law, loan agreement or other material agreement or material instrument to which
it is a party or by which it or its Property may be bound, nor has the Guarantor
nor any Subsidiary obtained any waivers with respect to any defaults under any
loan agreements or other material agreements or instruments.
(p) Governmental Consent. Neither the nature of the Guarantor or any of
its Subsidiaries, their respective businesses or Properties, nor any
relationship between the Guarantor or any of its Subsidiaries and any other
Person, nor any circumstances in connection with the offer, issue, sale or
delivery of the Notes is such as to require a consent, approval or
authorization of, or withholding of objection on the part of, or filing,
registration or qualification with, any governmental authority on the part
of the Company or the Guarantor or any Subsidiary Guarantor in connection
with the execution and delivery of this Agreement or any Subsidiary
Guarantor or the Guaranty Agreement or the offer, issue, sale or delivery of
the Notes.
(q) Taxes. All tax returns required to be filed by the Guarantor or
any Subsidiary in any jurisdiction have been filed or appropriate extensions
have been filed with respect thereto, and all taxes, assessments, fees and
other governmental charges upon the Guarantor or any Subsidiary, or upon any of
their respective Properties, income or franchises, which are due and payable,
have been paid timely or within appropriate extension periods or are being
contested in good faith by appropriate proceedings. The Guarantor does not
know of any proposed additional tax assessment against it or any
Subsidiary for which adequate provision has not been made on its books. The
federal income tax liability of the Guarantor and its Subsidiaries has been
finally determined by the Internal Revenue Service and satisfied for all taxable
years up to and including the taxable year ended January 31, 1987 and no
material controversy in respect of additional taxes due since such date is
pending or to the Guarantor's knowledge threatened. The provisions
<PAGE>
for taxes on the books of the Guarantor and each Subsidiary are adequate for
all open years and for the current fiscal period.
(r) Status under Certain Statutes. Neither the Guarantor nor any Subsidiary
is: (i) a "public utility company" or a "holding company," or an "affiliate"
or a "subsidiary company" of a "holding company," or an "affiliate" of
such a "subsidiary company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii) a "public utility" as defined
in the Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act of 1940, as
amended.
(s) Private Offering. Neither the Guarantor nor the Company nor
Chase Securities Inc. (the only Person authorized or employed by the Guarantor
or the Company as agent, broker, dealer or otherwise in connection with the
offering of the Notes or any similar security of the Company or the Guarantor)
has offered any of the Notes or any similar security of the Company or the
Guarantor for sale to, or solicited offers to buy any thereof from, or
otherwise approached or negotiated with respect thereto with, any prospective
purchaser, other than not more than 3 institutional investors, including the
Purchasers, each of whom was offered all or a portion of the Notes at private
sale for investment. Neither the Company nor the Guarantor nor anyone acting on
its authorization will offer the Notes or any part thereof or any similar
securities for issue or sale to, or solicit any offer to acquire any of the
same from, anyone so as to bring the issuance and sale of the Notes within
the provisions of Section 5 of the Securities Act.
(t) Effect of Other Instruments. Neither the Guarantor nor any Subsidiary
is bound by any agreement or instrument or subject to any charter or other
corporate restriction which materially and adversely affects the business,
Properties, operations, or condition, financial or otherwise, of the
Guarantor and its Subsidiaries taken as a whole or the Company's ability to
perform its obligations under this Agreement or the Notes or the
Subordination Agreement or the Guarantor's ability to perform its
obligations under this Agreement or the Guaranty Agreement or the
Subordination Agreement or any Subsidiary Guarantor's ability to perform its
obligations under its Subsidiary Guarantee or the Subordination Agreement.
(u) Use of Proceeds. The Company will apply the proceeds from the sale of
the Notes to reimburse the Guarantor with respect to bank Indebtedness incurred
by the Guarantor and loaned to the Company to purchase substantially all of
the assets of a company formerly known as THC Systems, Inc. The Guarantor will
apply the proceeds paid by the Company to it pursuant to the preceding
sentence to repay the bank Indebtedness incurred in connection with the THC
Acquisition. None of the transactions contemplated in this Agreement
(including, without limitation thereof, the use of the proceeds from the sale
of the Notes) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulations issued pursuant thereto, including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System (12 C.F.R., Chapter II). Neither the Guarantor nor any
Subsidiary owns or intends to carry or purchase any "margin stock" within the
meaning of Regulation G, and none of the proceeds from the sale of the Notes
will be used to purchase or carry or refinance any
<PAGE>
borrowing the proceeds of which were used to purchase or carry any "margin
stock" or "margin security" in violation of Regulations G, T, U or X.
(v) Condition of Property. All of the facilities of the Guarantor and each
of its Subsidiaries are in sound operating condition and repair except
for facilities being repaired in the ordinary course of business or facilities
which individually or in the aggregate are not material to the business,
Properties, operations, or condition, financial or otherwise, of the
Guarantor and its Subsidiaries taken as a whole.
(w) Books and Records. The Guarantor and each of its Subsidiaries (i)
maintain books, records and accounts in reasonable detail which accurately and
fairly reflect their respective transactions and business affairs, and (ii)
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are executed in accordance with
management's general or specific authorization and to permit preparation of
financial statements in accordance with generally accepted accounting
principles.
(x) Full Disclosure. Neither the Private Placement Memorandum dated
October 1996 which has heretofore been delivered to you (including but not
limited to the Guarantor's Annual Report on Form 10-K for the year ended January
27, 1996, its Quarterly Reports on Form 10-Q for the periods ended July 27,
1996 and July 29, 1995, its Current Reports on Form 8-K dated August 29, 1996
and November 4, 1996 and its Annual Report to Stockholders for the year ended
January 27, 1996), the financial statements referred to in paragraph (d) of
this Section 3.1, the pro forma financial information provided to you dated
October 15, 1996 with respect to the possible sale of Camden Wire Co., Inc.,
nor this Agreement, nor any other statement or document furnished by the
Company or the Guarantor to you in connection with the negotiation of the
sale of the Notes, taken together, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained therein
or herein not misleading in light of the circumstances under which they were
made. There is no fact known, or which, with reasonable diligence would be
known, by the Guarantor or the Company which the Company or the Guarantor has
not disclosed to you in writing which has a material adverse effect on or, so
far as the Company or the Guarantor can now foresee, will have a material
adverse effect on the business, Property, operations or condition, financial
or otherwise, of the Guarantor and its Subsidiaries taken as a whole or the
ability of the Company to perform its obligations under and in respect of this
Agreement and the Notes or the ability of the Guarantor to perform its
obligations under and in respect of this Agreement and the Guaranty Agreement or
each Subsidiary Guarantor's ability to perform the obligations under its
Subsidiary Guarantee.
(y) Environmental Compliance. The Guarantor and each Subsidiary i) is in
compliance in all material respects with all applicable environmental,
transportation, health and safety statutes and regulations, including, without
limitation, regulations promulgated under the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. 6901 et seq., and (ii) has not acquired, incurred or
assumed, directly or indirectly, any material contingent liability in connection
with the release or storage of any toxic or hazardous waste or substance into
the environment. The Guarantor and its Subsidiaries have not acquired, incurred
or assumed, directly or indirectly, any material contingent liability in
connection with a release or other
<PAGE>
discharge of any hazardous, toxic or waste material, including petroleum, on,
in, under or into the environment surrounding any Property owned, used or leased
by any of them.
3.2 Representations of the Purchasers. (a) As an inducement to, and as part
of the Company's consideration for the sale of the Notes pursuant to this
Agreement, each of you represents, respectively, and in entering into this
Agreement the Company understands, that (i) you are an Institutional Holder,
(ii) you are acquiring Notes for the purpose of investment and for your own
account and not with a view to the distribution thereof; provided that the
disposition of your Property shall at all times be and remain within your
control, subject, however, to compliance with Federal securities laws. You
acknowledge that the Notes have not been registered under the Securities Act or
the laws of any state and you understand that the Notes must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. You have been advised that
the Company does not contemplate registering, and is not legally required to
register, the Notes under the Securities Act.
(b) Each of you represents that at least one of the following
statements is an accurate representation as to each source of funds (a "Source")
to be used by you to pay the purchase price of, or to be attributed to the
holding of, the Notes to be purchased by you hereunder:
(i) if you are an insurance company, the Source constitutes
assets allocated to any separate account maintained by you (A) in which no
employee benefit plan (or its related trust) has any interest or (B) which
is maintained solely in connection with your fixed contractual obligations under
which the amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in any
manner by the investment performance of the separate account; or
(ii) the Source is either (i) an insurance company pooled
separate account, within the meaning of Prohibited Transaction Exemption ("PTE")
90-1 (issued January 29, 1990), or (ii) a bank collective investment fund,
within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as you
have disclosed to the Company in writing pursuant to this paragraph (b), no
employee benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund, and the other
applicable conditions of PTEs 90-1 or 91-38 have been satisfied; or
(iii) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate (within
the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by
the same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM; all conditions of the QPAM Exemption
are satisfied; neither the QPAM nor a person controlling or controlled
<PAGE>
by the QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (A) the identity of
such QPAM and (B) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (iii); or
(iv) the Source is a governmental plan; or
(v) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to this
paragraph (v); or
(vi) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA; or
(vii) if you are an insurance company and the Source includes
assets of your general account, the acquisition of the Notes by you is exempt
under PTE 95-60 (issued July 12, 1995).
[In the event the Company reasonably determines that it is a party in interest
with respect to any employee benefit plan identified by you pursuant to
paragraph (ii) or paragraph (v) of this Section 3.2(b), no assets of such
employee benefit plan may be used by you to pay any portion of the purchase
price of the Notes to be purchased by you hereunder.]
As used in this Section 3.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA.
4. CLOSING CONDITIONS
Your obligation to purchase the Notes on the Closing Date shall be subject
to the performance by each of the Guarantor and the Company of its
agreements hereunder which are to be performed at or prior to the time of
delivery of the Notes, and to the following conditions to be satisfied on or
before the Closing Date:
4.1 Representations and Warranties. The representations and warranties
of the Guarantor and the Company contained in this Agreement or otherwise
made in writing in connection herewith shall be true and correct on or as of
the Closing Date and each of the Company and the Guarantor shall have
delivered to you a certificate to such effect, dated the Closing Date and
executed by the President or the chief financial officer of the Company and the
Guarantor, respectively.
<PAGE>
4.2 Legal Opinions. You shall have received from Gardner, Carton & Douglas,
who is acting as your special counsel in this transaction, and from
Catherine H. Suttmeier, General Counsel to the Company, the Guarantor and
the Subsidiary Guarantors and from Shearman & Sterling, special counsel for
the Company, the Guarantor and the Subsidiary Guarantors, their respective
opinions, dated as of such Closing Date, in form and substance
satisfactory to you and covering substantially the matters set forth or
provided in the attached Exhibit B.
4.3 Events of Default. No event shall have occurred and be continuing
on the Closing Date which would constitute an Event of Default, as
defined in Section 8.1, or with notice or lapse of time or both would become
such an Event of Default, and the each of the Company and the Guarantor shall
have delivered to you a certificate to such effect, dated the Closing Date and
executed by the President or the chief financial officer or the Senior Vice
President, Finance of the Company and the Guarantor, respectively.
4.4 Payment of Fees and Expenses. The Company shall have paid all
reasonable fees, expenses, costs and charges, including the fees and expenses
of your special counsel, incurred by you through the Closing Date and incident
to the proceedings in connection with, and transactions contemplated by, this
Agreement and the Notes.
4.5 Legality of Investment. Your acquisition of the Notes shall constitute
a legal investment as of the Closing Date under the laws and regulations
of each jurisdiction to which you may be subject (without resort to any
"basket" or "leeway" provision which permits the making of an investment
without restriction as to the character of the particular investment being
made), and such acquisition shall not subject you to any penalty or other
onerous condition in or pursuant to any such law or regulation.
4.6 Private Placement Number. A private placement number shall have been
obtained from Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners).
4.7 Sale of All Notes. Contemporaneously with the sale of the Notes to
you, the Company will complete and close the sale of Notes being purchased by
each of the Purchasers set forth in Schedule I hereto.
4.8 THC Acquisition. Prior to or contemporaneously with the sale of the
Notes, the Guarantor shall consummate the THC Acquisition and shall provide to
you evidence satisfactory to you and your special counsel of the
consummation of such acquisition.
4.9 Additional Agreements. The Company and the Guarantor will deliver to you
executed copies of (a) the Subsidiary Guarantees, (b) the Subordination
Agreement, (c) the Sharing Agreement and (d) the First Amendment to 1992 Note
Agreement dated as of October 15, 1996, each in form and substance satisfactory
to you and your counsel.
4.10 Proceedings and Documents. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary to the consummation
<PAGE>
of such transactions shall be satisfactory in form and substance to you and
your special counsel, and you and your special counsel shall have received
copies (executed or certified as may be appropriate) of all legal documents
or proceedings which you and they may reasonably request.
5. INTERPRETATION OF AGREEMENT
5.1 Certain Terms Defined. The terms hereinafter set forth when used in
this Agreement shall have the following meanings:
Affiliate - Any Person (other than a Subsidiary Guarantor) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Guarantor, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Guarantor or any Subsidiary or (iii) 5% or more of the Voting Stock (or in the
case of a Person which is not a corporation, 5% of the equity interest) of
which is beneficially owned or held by the Guarantor or a Subsidiary. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
Agreement - As defined in Section 1.1.
Bank Agreement - That Credit Agreement dated as of January 19, 1996,
among Oneida Ltd., The Chase Manhattan Bank, N.A., as Agent and the banks
signatory to such agreement, as such agreement may be from time to time amended.
The term "Bank Agreement" shall also include replacement or additional credit
agreements entered into by the Guarantor or any Restricted Subsidiary with
banks or other institutional lenders.
Banks - The bank lenders to the Guarantor pursuant to the Bank
Agreement.
Business Day - Any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York; Los Angeles, California; or
Chicago, Illinois are required or authorized to be closed.
Camden Disposition - The sale, lease, transfer or other disposition of
stock or assets of Camden Wire Co., Inc. prior to January 31, 1999 (i)
for cash consideration, net of any continuing or contingent liabilities equal
to book value of Camden Wire Co., Inc. at the time of such sale, plus or
minus ten percent (10%) and (ii) for all of the capital stock of Camden Wire
Co., Inc. or all of its assets, as the case may be.
Capitalized Lease - Any lease the obligation for Rentals with respect
to which, in accordance with generally accepted accounting principles, would be
required to be capitalized on a balance sheet of the lessee or for which the
amount of the asset and liability thereunder, as if so capitalized, would be
required to be disclosed in a note to such balance sheet.
<PAGE>
Change of Control - The occurrence of any one or more of the following:
(a) any Person (other than an Executive Officer) or a group of
Persons (other than a group of Persons consisting solely of Executive
Officers) shall purchase or otherwise acquire, directly or indirectly, in one or
more transactions, beneficial ownership of securities representing 20% or more
of the combined voting power of the Guarantor's Voting Stock, determined on the
date prior to the date of such purchase or acquisition (or, if there is more
than one transaction, the date of the last such purchase or acquisition);
(b) the Guarantor shall convey, transfer, lease or otherwise
dispose of all or substantially all Consolidated Total Assets to any Person
(other than a Majority-Owned Restricted Subsidiary);
(c) there shall occur, in any consecutive twenty-four month
period, a replacement of or change in a majority of the members of the Board of
Directors of the Guarantor, and such replacement shall not have been initiated
by the Board of Directors which is incumbent at the time of commencement of such
twenty-four month period;
(d) the Guarantor shall merge or consolidate into any other
corporation other than into a Majority-Owned Restricted Subsidiary (and the
Company shall not be the surviving corporation) in a transaction in which more
than 20% of the voting power of the Guarantor's Voting Stock (determined on the
date prior to the date of the consummation of such transaction) is exchanged;
(e) the Guarantor or any Restricted Subsidiary shall purchase or
otherwise acquire, directly or indirectly, in one or more transactions,
beneficial ownership of Voting Stock of the Guarantor, if, after giving
effect to such purchase or acquisition, the Guarantor (together with all
Restricted Subsidiaries) shall have acquired, during any period of twelve
consecutive months, beneficial ownership of an aggregate of 30% or more of the
Voting Stock of the Guarantor outstanding on the date immediately prior to the
last such purchase or acquisition during such period (or, if there is more
than one transaction, the date of the last such purchase or acquisition); or
(f) the Guarantor shall make a distribution of cash, securities
or other Properties (other than regular periodic cash dividends at a rate which
is substantially consistent with past practice, including with respect to
increases in dividends, and other than Common Stock or rights to acquire Common
Stock) to holders of capital stock (including by means of dividend,
reclassification, recapitalization or otherwise) which, together with all other
such distributions during the 365-day period preceding the date of such
distribution, has an aggregate fair market value in excess of an amount equal
to 30% of the fair market value of the Voting Stock of the Guarantor
outstanding on the date immediately prior to such distribution.
Closing Date - As defined in Section 1.2.
<PAGE>
Code - As defined in Section 3.1(h).
Consolidated Adjusted Net Income - For any period, the gross revenues
of the Guarantor and its Restricted Subsidiaries for such period less all
expenses and other proper charges (including taxes on income), determined on a
consolidated basis after eliminating earnings or losses attributable to
outstanding minority interests, but excluding in any event:
(a) (i) any gains or losses on the sale or other disposition of
Investments and (ii) any gains or losses on the sale or other disposition of
plant, Property and equipment which gains or losses exceed, in the aggregate,
$100,000 during any fiscal year and any taxes on such excluded gains and
any tax deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary accrued
prior to the date it became a Restricted Subsidiary;
(d) net earnings and losses of any corporation (other than a
Restricted Subsidiary), substantially all the assets of which have been
acquired in any manner by the Guarantor or any Restricted Subsidiary, realized
by such corporation prior to the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Restricted Subsidiary) with which the Guarantor or a Restricted Subsidiary
shall have consolidated or which shall have merged into or with the
Guarantor or a Restricted Subsidiary prior to the date of such consolidation
or merger;
(f) net earnings of any business entity (other than a Restricted
Subsidiary) in which the Guarantor or any Restricted Subsidiary has an ownership
interest unless such net earnings shall have actually been received by the
Guarantor or such Restricted Subsidiary in the form of cash distributions or
readily marketable securities;
(g) any portion of the net earnings of any Restricted Subsidiary
which for any reason is unavailable for payment of dividends to the Guarantor
or any other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(j) any gain arising from the acquisition of any securities of
the Guarantor or any Restricted Subsidiary;
<PAGE>
(k) any reversal of any contingency reserve, except to the
extent that provision for such contingency reserve shall have been made from
income arising during such fiscal period or during the period consisting of the
four consecutive fiscal quarters immediately following the end of such fiscal
period; and
(l) any other extraordinary gain.
Consolidated Current Assets and Consolidated Current Liabilities - As
of the date of any determination thereof, such assets and liabilities of the
Guarantor and its Restricted Subsidiaries as shall be determined on a
consolidated basis in accordance with generally accepted accounting principles
to constitute current assets and current liabilities, respectively.
Consolidated Income Available for Interest Charges - For any period,
the sum (without duplication) of (i) Consolidated Adjusted Net Income for such
period, plus (ii) (to the extent deducted in determining Consolidated Adjusted
Net Income), all provisions for any federal, state, or other income taxes made
by the Guarantor and its Subsidiaries during such period and (iii) Consolidated
Interest Charges for such period.
Consolidated Interest Charges - For any period, the interest expense on
all Indebtedness (including the interest component of Rentals under Capitalized
Leases and capitalized interest), of the Guarantor and its
Restricted Subsidiaries on a consolidated basis for such period.
Consolidated Tangible Assets - Consolidated Total Assets less the sum
of (i) deferred assets, determined in accordance with generally accepted
accounting principles on a consolidated basis, other than prepaid insurance,
prepaid taxes, deferred taxes and deferred pension expense, (ii) all goodwill,
trade names, trademarks, patents, organization expense, unamortized debt
discount and expense and other similar intangibles properly classified as
intangibles in accordance with generally accepted accounting principles and
(iii) Restricted Investments.
Consolidated Tangible Net Worth - Stockholders' equity of the Guarantor
and its Restricted Subsidiaries on a consolidated basis, determined in
accordance with generally accepted accounting principles less the sum of (i) all
goodwill, trade names, trademarks, patents, organization expense, unamortized
debt discount and similar intangibles properly classified as intangibles
in accordance with generally accepted accounting principles and (ii) Restricted
Investments.
Consolidated Total Assets - The consolidated total assets of the
Guarantor and its Restricted Subsidiaries determined in accordance with
generally accepted accounting principles.
Consolidated Total Capitalization - The sum of (i) Consolidated
Tangible Net Worth and (ii) Funded Debt of the Guarantor and its Restricted
Subsidiaries.
<PAGE>
Current Debt - All Indebtedness which by its terms matures on demand or
one year or less from the date of creation thereof, including current maturities
of Funded Debt.
Determination Date - The day 2 Business Days before the date fixed for
a prepayment pursuant to a notice required by Sections 2.2(b) or 2.3 or the day
2 Business Days before the date of declaration pursuant to Section 8.2.
ERISA - As defined in Section 3.1(h).
Event of Default - As defined in Section 8.1.
Exchange Act - The Securities Exchange Act of 1934, as amended, and as
it may be further amended from time to time.
Executive Officers - The Persons listed as "executive officers" in the
most recent Form 10-K of the Guarantor filed pursuant to the Exchange Act.
Funded Debt - All Indebtedness owed or guaranteed which by its terms
matures more than one year from its date of creation or which may be renewed or
extended at the option of the obligor for more than a year from such date,
whether or not theretofore renewed or extended, excluding current maturities of
such obligations.
Guaranties - All obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) of
a Person guaranteeing or, in effect, guaranteeing any Indebtedness, dividend
or other obligation, of any other Person in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any Property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of
such Indebtedness or obligation, (y) to maintain working capital or other
balance sheet condition or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, (iii) to lease Property
or to purchase securities or other Property or services primarily for the
purpose of assuring the owner of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation against loss
in respect thereof. For the purposes of all computations made under this
Agreement, a Guaranty in respect of any Indebtedness for borrowed money
shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed, and a Guaranty
in respect of any other obligation or liability or any dividend shall be deemed
to be Indebtedness equal to the maximum aggregate amount
of such obligation, liability or dividend.
Guaranty Agreement - The Guaranty Agreement dated as of November 26,
1996 between the Guarantor and the Purchasers substantially in the form
attached hereto as Exhibit C.
<PAGE>
Indebtedness - (i) All items of borrowed money, including Capitalized
Leases, which in accordance with generally accepted accounting principles
would be included in determining total liabilities as shown on the liability
side of a balance sheet as of the date at which Indebtedness is to be
determined, (ii) all Guaranties (other than Guaranties of Indebtedness of the
Guarantor by a Restricted Subsidiary Guarantor in accordance with Section 7.15
or of a Restricted Subsidiary Guarantor by the Guarantor), letters of credit
and endorsements (other than of notes, bills and checks presented to banks for
collection or deposit in the ordinary course of business), in each case to
support Indebtedness of other Persons; and (iii) all items of borrowed money
secured by any mortgage, pledge or Lien existing on Property owned subject to
such mortgage, pledge, or Lien, whether or not the borrowed money secured
thereby shall have been assumed by the Guarantor or any Restricted
Subsidiary. Indebtedness of the Guarantor and its Restricted Subsidiaries at
November 26, 1996 is set forth in Annex II hereto.
Institutional Holder - Any bank, trust company, insurance company,
pension fund, mutual fund or other similar financial institution, including,
without limiting the foregoing, any "qualified institutional buyer" within
the meaning of Rule 144A under the Securities Act, which is or becomes a holder
of any Note.
Investments - All investments made, in cash or by delivery of Property,
directly or indirectly, in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or securities or by loan,
advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in Property to be
used or consumed in the ordinary course of business.
Lien - Any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to file any financing statement under
the Uniform Commercial Code of any jurisdiction in connection with any of the
foregoing.
Long-Term Lease - Any lease of real or personal Property (other than
a Capitalized Lease) having an original term of more than three years,
including any period for which the lease may be renewed at the option of
the lessor, whether or not theretofore renewed.
Majority-Owned - When applied to a Restricted Subsidiary, any
Restricted Subsidiary 80% of the Voting Stock of which is owned by the Guarantor
and/or its Majority-Owned Restricted Subsidiaries.
1992 Note Agreement - That Note Agreement dated as of January 1, 1992
between the Guarantor and the Purchasers which are signatories thereto.
1992 Notes - The senior notes issued pursuant to the 1992 Note
Agreement.
Noteholder - Any holder of a Note.
<PAGE>
Notes - As defined in Section 1.1.
PBGC - As defined in Section 3.1(h).
Plan - As defined in Section 3.1(h).
Person - Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Priority Indebtedness - Without duplication (i) Funded Debt and Current
Debt of Restricted Subsidiaries (except to the Guarantor or a Majority-Owned
Restricted Subsidiary Guarantor) in each case unsecured by Liens, (ii) the
aggregate amount of Guaranties by Restricted Subsidiaries (except of
Indebtedness of the Guarantor in accordance with Section 7.15 or a Majority-
Owned Restricted Subsidiary in accordance with Section 7.15), (iii) Funded Debt
and Current Debt of the Guarantor and its Restricted Subsidiaries (except to
the Guarantor or a Majority-Owned Restricted Subsidiary Guarantor) secured by
any Lien on the Property of the Guarantor or any Restricted Subsidiary and (iv)
the redemption or liquidation value (whichever is higher) of all equity
securities of Restricted Subsidiaries (other than common stock) which are not
legally and beneficially owned by the Guarantor or its Restricted Subsidiaries.
Property - Any real or personal or tangible or intangible asset.
Reinvestment Yield - The sum of (i) the yield set forth on page "USD"
of the Bloomberg Financial Markets Service at 11:00 a.m., Central Time on the
Determination Date opposite the maturity of the U.S. Treasury
Security corresponding to the Weighted Average Life to Maturity, rounded to
the nearest month, of the principal amount of the Notes to be prepaid, plus
(ii) .50 of 1% with respect to Notes to be prepaid pursuant to Section 2.2(a)
or (b) or Notes the payment of which has been accelerated with premium
pursuant to Section 8.2. If no maturity exactly corresponding to such
rounded Weighted Average Life to Maturity shall appear therein, yields for
the two most closely corresponding published maturities (one of which occurs
prior and the other subsequent to the Weighted Average Life to Maturity)
shall be calculated pursuant to the foregoing sentence and the Reinvestment
Yield shall be interpolated from such yields on a straight-line basis
(rounding in each of such relevant periods, to the nearest month).
Rentals - As of the date of any determination thereof, all fixed
payments (including all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the Property) payable by
the Guarantor or a Restricted Subsidiary, as lessee or sublessee under a lease
of real or personal Property, but exclusive of any amounts required to be paid
by the Guarantor or a Restricted Subsidiary (whether or not designated as
rents or additional rents) on account of maintenance, repairs, insurance,
taxes, assessments, amortization and similar charges. Fixed rents under any
so-called "percentage leases" shall be
<PAGE>
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
Restricted Investments - Any Investment, except for:
(a) Investments in Restricted Subsidiary Guarantors;
(b) Investments made in the ordinary course of business in
Property and assets to be used in the ordinary course of business of the
Guarantor and its Restricted Subsidiaries;
(c) Investments in Current Assets arising from the sale of goods
and services in the ordinary course of business of the Guarantor and its
Restricted Subsidiaries;
(d) advances to and Guaranties of loans to employees of the
Guarantor and its Restricted Subsidiaries for expenses incurred in the ordinary
course of business;
(e) Investments in direct obligations of the United States or
any instrumentality thereof, provided that such obligations have a final
maturity not in excess of one year from the date of acquisition thereof;
(f) Investments in certificates of deposit maturing within one
year from the date of acquisition thereof issued by (i) Chase Manhattan Bank or
(ii) in the case of any other bank, a bank organized under the laws of the
United States or any state thereof, having capital, surplus and undivided
profits aggregating at least $100,000,000 and whose long-term corporate debt
is, at the time of acquisition thereof by the Guarantor or any Subsidiary,
accorded a rating of "A" or better by Moody's Investors Service, Inc., or "A" or
better by Standard & Poor's Ratings Group;
(g) Investments in commercial paper maturing no more than 270
days from the date of issuance issued by any corporation organized under the
laws of the United States or any state thereof, rated in the highest category
by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group;
(h) Investments in money market funds registered under the
Investment Company Act of 1940 which invest in securities which, in the
aggregate, have an average rating of "A" or better (or an equivalent) by Moody's
Investors Services, Inc. or Standard & Poor's Rating Group;
(i) Investments in tax-exempt municipal bonds maturing not more
than one year from the date of issue and which bear at least a MIG-1 rating; and
(j) Guaranties by the Guarantor or the Company of Long-Term
Leases of Majority-Owned Restricted Subsidiaries.
<PAGE>
Restricted Subsidiary - Any Subsidiary (i) which is organized under the
laws of the United States, Puerto Rico, Mexico, Canada or a member of the
European Union or a jurisdiction thereof, (ii) which conducts substantially all
of its business and payments within the United States, Puerto Rico, Canada,
Mexico or any member of the European Union, (iii) a majority of each class of
capital stock of which is legally and beneficially owned by the Guarantor or a
Restricted Subsidiary or (iv) which is designated as a "Restricted Subsidiary in
Annex I hereto or in a written notice provided to each Noteholder. The Company
and each Restricted Subsidiary which issues a Subsidiary Guarantee shall, as
long as such Subsidiary Guarantee remains in effect, at all times remain a
Restricted Subsidiary.
Restricted Subsidiary Guarantor. Any Subsidiary Guarantor which is a
Restricted Subsidiary.
Securities Act - The Securities Act of 1933, as amended, and as it may
be further amended from time to time.
Sharing Agreement - The Sharing Agreement dated as of November 26, 1996
between the Banks and the Purchasers substantially in the form attached
hereto as Exhibit F.
Subordination Agreement - That Subordination Agreement dated as of
November 26, 1996 providing that all Indebtedness owed by each Subsidiary
Guarantor to the Parent is subordinated to the prior payment of
Indebtedness owed to the Noteholders under this Agreement and the Subsidiary
Guarantees substantially in the form attached hereto as Exhibit E.
Subsidiary - Any corporation of which more than 50% of the outstanding
shares of Voting Stock are owned or controlled by the Guarantor or one or
more Subsidiaries.
Subsidiary Guarantees - The Guarantee Agreements substantially in the
form attached as Exhibit D hereto executed by each Subsidiary Guarantor.
Subsidiary Guarantors - Each of Buffalo China, Inc., Camden Wire Co.,
Inc. and each Restricted Subsidiary created or acquired after January 19,
1996, which becomes a "Guarantor" as such term is defined in the Bank Agreement
or which is required to issue a Subsidiary Guarantee Agreement pursuant to
Section 7.14.
THC Acquisition - The acquisition by the Company of assets of a
company formerly known as THC Systems, Inc. pursuant to that Asset Purchase
Agreement dated August 29, 1996.
Voting Stock - Capital stock of any class of a corporation having power
to vote for the election of members of the board of directors of such
corporation, or persons performing similar functions (whether or not at the
time stock of any class shall have or might have special voting powers or
rights by reason of the happening of any contingency).
<PAGE>
Weighted Average Life to Maturity - As applied to any prepayment of
principal of the Notes, at any date, the number of years obtained by dividing
(a) the then outstanding principal amount of the Notes to be prepaid into (b)
the sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity, or other required payment,
including payment at final maturity, foregone by such prepayment by (ii) the
number of years (calculated to the nearest 1/12th) which will elapse between
such date and the making of such payment.
Wholly-Owned Restricted Subsidiary - When applied to a Restricted
Subsidiary, any Restricted Subsidiary 100% of the Voting Stock of which is
owned by the Guarantor or its Wholly-Owned Restricted Subsidiaries.
Terms which are defined in other Sections of this Agreement shall have
the meanings specified therein.
5.2 Accounting Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with
generally accepted accounting principles in force at the time of determination,
except where such principles are inconsistent with the requirements of this
Agreement.
5.3 Effect of FASB 106. In computing compliance with the covenants set forth
in this Agreement, any accrual of liabilities for unfunded post-retirement
medical benefit plans of the Guarantor and its Restricted Subsidiaries on a
consolidated basis resulting from the Statement of Financial Accounting
Standards Board FAS No. 106 shall be disregarded.
5.4 Valuation Principles. Except where indicated expressly to the contrary
by the use of terms such as "fair value," "fair market value" or "market
value," each asset, each liability and each capital item of any Person, and
any quantity derivable by a computation involving any of such assets,
liabilities or capital items, shall be taken at the net book value thereof
for all purposes of this Agreement. "Net book value", for purposes of Section
7.10 hereof, with respect to any asset, liability or capital item of any Person
shall mean the amount at which the same is recorded or, in accordance with
generally accepted accounting principles, should have been recorded in the books
of account of such Person, as reduced by any reserves which have been or, in
accordance with generally accepted accounting principles, should have been set
aside with respect thereto, without giving effect to any write-up, write-down
or write-off, relating thereto which was made after the date of this Agreement.
5.5 Direct or Indirect Actions. Where any provision in this Agreement refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
<PAGE>
6. AFFIRMATIVE COVENANTS
Each of the Company and the Guarantor agrees that, for so long as any
amount remains unpaid on any Note:
6.1 Corporate Existence. The Guarantor will maintain and preserve, and
will cause each Subsidiary to maintain and preserve, its corporate existence and
right to carry on its business and use, and cause each Subsidiary to use, its
best efforts to maintain, preserve, renew and extend all of its rights,
powers, privileges and franchise necessary to the proper conduct of its
business; provided, however, that the foregoing shall not prevent any
transaction permitted by Sections 7.9 or 7.10.
6.2 Insurance. The Guarantor will insure and keep insured at all times all
of its Properties and all of its Subsidiaries' Properties which are of an
insurable nature and of the character usually insured by companies
operating similar Properties, against loss or damage by fire and from other
causes customarily insured against by companies engaged in similar businesses
in such amounts as are usually insured against by such companies. The Guarantor
also will maintain for itself and its Subsidiaries at all times with
financially sound and reputable insurers adequate insurance against loss or
damage from such hazards and risks to the person and Property of others as are
usually insured against by companies operating Properties similar to the
Properties of the Guarantor and its Subsidiaries. All such insurance shall
be carried with financially sound and reputable insurers accorded a rating of
A-XII or better by A.M. Best Company, Inc. A summary of insurance presently in
force is contained in the attached Annex IV.
6.3 Taxes, Claims for Labor and Materials. The Guarantor will pay and
discharge when due, and will cause each Subsidiary to pay and discharge when
due, all taxes, assessments and governmental charges or levies imposed upon
it or its Property or assets, or upon Properties leased by it (but only to
the extent required to do so by the applicable lease), prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien upon its Property or assets, provided that neither the
Guarantor nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim, the payment of which is being contested in
good faith and by proper proceedings that will stay the forfeiture or sale
of any Property and with respect to which adequate reserves are maintained in
accordance with generally accepted accounting principles.
6.4 Maintenance of Properties. The Guarantor will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
Properties (whether owned in fee or a leasehold interest) in good repair and
working order, ordinary wear and tear excepted, and from time to time will
make all necessary repairs, replacements, renewals and additions.
6.5 Maintenance of Records. The Guarantor will keep, and will cause
each Subsidiary to keep, at all times proper books of record and account in
which full, true and correct entries will be made of all dealings or
transactions of or in relation to the business and affairs of
<PAGE>
the Guarantor or such Subsidiary, in accordance with generally accepted
accounting principles consistently applied throughout the period involved
(except for such changes as are disclosed in such financial statements or in the
notes thereto and concurred in by the independent certified public accountants),
and the Guarantor will, and will cause each Subsidiary to, provide reasonable
protection against loss or damage to such books of record and account.
Financial Information and Reports. The Guarantor will furnish to you and to
any other Institutional Holder (in duplicate if you or such other holder so
request), the following:
(a) As soon as available and in any event within 45 days after the end
of each of the first three quarterly accounting periods of each fiscal year of
the Guarantor, a consolidated balance sheet of the Guarantor and its
Restricted Subsidiaries as of the end of such period and consolidated statements
of earnings and cash flows of the Guarantor and its Restricted Subsidiaries for
the periods beginning on the first day of such fiscal year and the first
day of such quarterly accounting period and ending on the date of such balance
sheet, setting forth in comparative form the corresponding consolidated
figures for the corresponding periods of the preceding fiscal year, all in
reasonable detail prepared in accordance with generally accepted accounting
principles consistently applied throughout the period involved (except for
changes disclosed in such financial statements or in the notes thereto and
concurred in by the Guarantor's independent certified public accountants) and
certified by the chief financial officer or chief accounting officer or
Senior Vice President, Finance of the Guarantor (i) outlining the basis of
presentation, and (ii) stating that the information presented in such
statements presents fairly the financial condition of the Guarantor and its
Subsidiaries and the results of operations for the period, subject to customary
year-end audit adjustments; provided that so long as the Guarantor shall file a
quarterly report on Form 10-Q or any similar form with the Securities and
Exchange Commission or any successor agency which contains the information set
forth in this paragraph (a), the requirements of this paragraph (a) shall be
satisfied by forwarding Form 10-Q to the holder of the Notes within such 45-day
period;
(b) As soon as available and in any event within 90 days after the
last day of each fiscal year a consolidated and a consolidating balance
sheet of the Guarantor and its Restricted Subsidiaries as of the end of such
fiscal year and the related audited consolidated and consolidating
statements of earnings, stockholders' equity and cash flows for such fiscal
year, in each case setting forth in comparative form figures for the
preceding fiscal year, all in reasonable detail, prepared in accordance
with generally accepted accounting principles consistently applied
throughout the period involved (except for changes disclosed in such
financial statements or in the notes thereto and concurred in by independent
certified public accountants) and accompanied by a report as to the
consolidated balance sheet and the related consolidated statements of
Coopers & Lybrand or any firm of independent public accountants of recognized
national standing selected by the Guarantor to the effect that such financial
statements have been prepared in conformity with generally accepted
accounting principles and present fairly, in all material respects, the
financial condition of the Guarantor and its Restricted Subsidiaries and
that the examination of such financial statements by such accounting firm has
been made in accordance with generally accepted auditing standards; provided
that so long as the Guarantor shall file an annual report on Form 10-K or any
similar form with the Securities
<PAGE>
and Exchange Commission or any successor agency which contains the information
set forth in this paragraph (b), the requirements of this paragraph (b) shall be
satisfied by forwarding Form 10-K to the holder of the Notes within such 90-day
period;
(c) Together with the financial statements delivered pursuant
to paragraphs (a) and (b) of this Section 6.6, a certificate of the chief
financial officer or chief accounting officer or Senior Vice President, Finance
of each of the Guarantor and the Company, (i) to the effect that such
officer has re-examined the terms and provisions of this Agreement and that at
the date of such certificate, during the periods covered by such financial
reports and as of the end of such periods, the Company and the Guarantor,
respectively, is not, or was not, in default in the fulfillment of any of the
terms, covenants, provisions and conditions of this Agreement or, in the case of
the Guarantor, this Agreement or the Guaranty Agreement, and that no Event of
Default, or event which, with the lapse of time or the giving of notice, or
both, would become an Event of Default, is occurring or has occurred as of the
date of such certificate, during such periods and as of the end of such
periods, or if the signer is aware of any such default, event or Event of
Default, such signer shall disclose in such statement the nature thereof, its
period of existence and what action, if any, the Company or the Guarantor has
taken or proposes to take with respect thereto, and (ii) stating whether the
Guarantor is in compliance with Sections 7.1 through 7.15 and setting forth, in
sufficient detail, the information and computations required to establish
whether or not the Guarantor was in compliance with the requirements of
Sections 7.1 through 7.11 during the periods covered by the financial reports
then being furnished and as of the end of such periods;
(d) Together with the financial reports delivered pursuant to
paragraph (b) of this Section 6.6, a certificate of the independent certified
public accountants (i) stating that in making the examination necessary for
expressing an opinion on such financial statements, nothing came to their
attention that caused them to believe that there is in existence or has
occurred any Event of Default hereunder, or any event (the occurrence of
which is ascertainable by accountants in the course of normal audit procedures)
which, with the lapse of time or the giving of notice, or both, would become an
Event of Default hereunder or, if such accountants shall have obtained knowledge
of any such event or Event of Default, describing the nature thereof and the
length of time it has existed and (ii) acknowledging that holders of the
Notes may rely on their opinion on such financial statements;
(e) Within 15 days after the Guarantor obtains knowledge thereof,
notice of any litigation not fully covered by insurance or any governmental
proceeding pending against the Guarantor or any Subsidiary in which the
damages sought exceed $5,000,000 or which might otherwise materially
adversely affect the business, Property, operations or condition, financial
or otherwise, of the Guarantor and its Subsidiaries taken as a whole;
(f) As soon as available, copies of each financial statement, notice,
report and proxy statement which the Guarantor shall furnish to its
stockholders; copies of all press releases; copies of each registration
statement and periodic report which the Guarantor may file with the Securities
and Exchange Commission, and any other similar or successor agency of the
Federal government administering the Securities Act, the Exchange Act or the
Trust Indenture Act of
<PAGE>
1939, as amended; copies of each report relating to the Guarantor or its
securities which the Guarantor may file with any securities exchange on which
any of the Guarantor's securities may be registered; copies of any orders in any
material proceedings to which the Guarantor or any of its Subsidiaries is a
party, issued by any governmental agency, Federal or state, having jurisdiction
over the Guarantor or any of its Subsidiaries; and, except at such times as
the Guarantor is a reporting company under Section 13 or 15(d) of the Exchange
Act or has complied with the requirements for the exemption from registration
under the Exchange Act set forth in Rule 12g-3-2(b), such financial or other
information as any holder of the Notes may reasonably determine is required to
permit such holder to comply with the requirements of Rule 144A under the
Securities Act in connection with the resale by it of the Notes;
(g) As soon as available, a copy of each other report submitted to
the Guarantor or any Subsidiary by independent accountants retained by the
Guarantor or any Subsidiary in connection with any interim or special audit
made by them of the books of the Guarantor or any Subsidiary; and
(h) Such additional information as you or such other Institutional
Holder of the Notes may reasonably request concerning the Guarantor and its
Subsidiaries.
6.7 Inspection of Properties and Records; Confidentiality. The Guarantor
will allow, and will cause each Subsidiary to allow, any representative of you
or any other Institutional Holder, so long as you or such other Institutional
Holder holds any Note, at your expense, to visit and inspect any of its
Properties, to examine its books of record and account and to discuss its
affairs, finances and accounts with its officers and its public accountants
(and by this provision the Guarantor authorizes such accountants to discuss
with you or such Institutional Holder its affairs, finances and accounts), all
at such reasonable times and as often as you or such Institutional Holder may
reasonably request. So long as an Event of Default or an event which, with
the passage of time or the giving of notice, or both, would become an Event of
Default has occurred and is continuing, the Guarantor agrees to pay the costs
of any inspections made pursuant to this Section 6.7. Each Noteholder
covenants and agrees to treat as confidential all nonpublic information
furnished to it pursuant to the provisions of Sections 6.6 and this 6.7 which
has been designated in writing as confidential by an officer of the Guarantor;
provided that each Noteholder reserves the right to make such disclosure to (i)
such Noteholder's directors, officers, employees, auditors, financial advisers,
rating agencies and attorneys, (ii) any other Noteholder, (iii) any Person to
which such Noteholder offers to sell such Note or any part thereof or a
participation in all or any part of such Note, (iv) any Federal or state
regulatory authority having jurisdiction over such Noteholder, (v) the
National Association of Insurance Commissioners or any similar organization,
(vi) effect compliance with any law, rule, regulation or order applicable to
you or any other Institutional Holder, (vii) in response to any subpoena or
other legal process, (viii) in connection with any litigation to which you
or any other Institutional Holder are a party, or (ix) if an Event of Default
has occurred and is continuing, to the extent you or any other Institutional
Holder may reasonably determine such delivery and disclosure to be necessary or
appropriate in the enforcement or for the protection of the rights and
remedies under the Notes, this Agreement the Subsidiary Guarantees or the
Subordination Agreement. The confidentiality restrictions contained in this
Section 6.7 shall not apply to information which (a)
<PAGE>
is or becomes generally available to the public other than as a result of a
disclosure by any Noteholder or its representatives or (b) becomes available to
any Noteholder on a nonconfidential basis from a source other than the
Guarantor or one of its agents.
6.8 ERISA. (a) The Guarantor agrees that all assumptions and methods used
to determine the actuarial valuation of employee benefits, both vested and
unvested, under any Plan of the Guarantor or any Subsidiary, and each such
Plan, whether now existing or adopted after the date hereof, will comply
in all material respects with ERISA and other applicable laws.
(b) The Guarantor will not at any time permit any Plan established,
maintained or contributed to by it or any Subsidiary or "affiliate" (as defined
in Section 407(d)(7) of ERISA) to:
(i) engage in any "prohibited transaction" as such term is
defined in Section 4975 of the Code or in Section 406 of ERISA;
(ii) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA, whether or not waived; or
(iii) be terminated under circumstances which are likely to result
in the imposition of a lien on the Property of the Guarantor or any Subsidiary
pursuant to Section 4068 of ERISA, if and to the extent such termination is
within the control of the Guarantor;
if the event or condition described in clauses (i), (ii) or (iii) above is
likely to subject the Guarantor or any Subsidiary or ERISA affiliate to a
liability which, in the aggregate, is material in relation to the business,
Property, operations, or condition, financial or otherwise, of the
Guarantor and its Subsidiaries taken as a whole.
(c) Upon the request of you or any other Institutional Holder, the
Guarantor will furnish a copy of the annual report of each Plan (Form 5500)
required to be filed with the Internal Revenue Service. Copies of annual
reports shall be delivered no later than 30 days after the later of the date
such report has been filed with the Internal Revenue Service or the date the
copy is requested.
(d) Promptly upon the occurrence thereof, the Guarantor will give you
and each other Institutional Holder written notice of (i) a reportable event
with respect to any Plan; (ii) the institution of any steps by the Guarantor,
any Subsidiary, any ERISA affiliate, the PBGC or any other person to terminate
any Plan; (iii) the institution of any steps by the Guarantor, any Subsidiary,
or any ERISA affiliate to withdraw from any Plan; (iv) a prohibited transaction
in connection with any Plan; (v) any material increase in the contingent
liability of the Guarantor or any Subsidiary with respect to any post-
retirement welfare liability; or (vi) the taking of any action by the Internal
Revenue Service, the Department of Labor or the PBGC with respect to any of the
foregoing which, in any of the events specified above, would result in any
material liability of the Guarantor or any of its Subsidiaries.
<PAGE>
6.9 Compliance with Laws. The Guarantor will comply, and will cause
each Subsidiary to comply, with all laws, rules and regulations relating to
its or their respective businesses, other than laws, rules and regulations the
failure to comply with which or the sanctions and penalties resulting therefrom,
individually or in the aggregate, would not have a material adverse effect on
the business, Property, operations, or condition, financial or otherwise, of
the Guarantor or such Subsidiary, and would not result in the creation of a
Lien which, if incurred in the ordinary course of business, would not be
permitted by Section 7.6 on any of the Property of the Guarantor or any
Subsidiary; provided, however, that the Guarantor and its Subsidiaries shall not
be required to comply with laws, rules and regulations the validity or
applicability of which are being contested in good faith and by appropriate
proceedings; provided that the failure to comply with such laws, rules or
regulations would not have a material adverse effect on the business,
Properties, operations, assets or condition, financial or otherwise, of the
Guarantor and its Subsidiaries taken as a whole.
6.10 Acquisition of Notes. The Company will forthwith cancel any Notes in
any manner or at any time acquired by the Company or the Guarantor or any
Subsidiary or Affiliate and such Notes shall not be deemed to be outstanding for
any of the purposes of this Agreement or the Notes.
6.11 Private Placement Number. The Company and the Guarantor consent to
the filing of copies of this Agreement with Standard & Poor's CUSIP Service
Bureau and the National Association of Insurance Commissioners to obtain a
private placement number.
6.12 NAIC Filings. The Guarantor shall, on the date it provides its audited
financial statements to the Noteholders pursuant to Section 6.6(b),
simultaneously provide such statements to the National Association of Insurance
Commissioners, Securities Valuation Office, 195 Broadway, New York, New York
10007.
6.13 Company's Restricted Subsidiary Status. The Guarantor shall at all
times own 100% of the Voting Stock of the Company.
6.14 Bank Agreement. The Guarantor shall promptly notify the holders of the
Notes of any amendment to or other modification of or replacement of the Bank
Agreement and shall promptly provide copies to the Noteholders of such
amendment or modification or replacement documentation.
6.15 Subsidiary Guarantees. In the event that the Guarantor or any
Restricted Subsidiary acquires a Person which complies with the definition
herein of a Restricted Subsidiary Guarantor, the Guarantor shall, within 10
days following such acquisition, provide the Noteholders with a Subsidiary
Guarantee from such new Restricted Subsidiary Guarantor.
6.16 Release of Camden Wire Subsidiary Guarantee. The Noteholders shall
release and discharge Camden Wire Co., Inc. from its obligations under its
Subsidiary Guarantee if (i) the capital stock or assets of Camden Wire Co., Inc.
are sold in compliance with Section 7.10
<PAGE>
hereof and (ii) prior to or simultaneously with such release and discharge by
the Noteholders, the Banks release Camden Wire Co., Inc. from all guarantee
obligations of Camden Wire Co., Inc. to the Banks.
7. NEGATIVE COVENANTS
Each of the Company and the Guarantor agrees that, for so long as any
amount remains unpaid on any Note:
7.1 Net Worth. The Guarantor will not at any time permit its
Consolidated Tangible Net Worth to be less than $85,000,000.
7.2 Current Ratio. The Guarantor will not at any time permit the ratio
of Consolidated Current Assets to Consolidated Current Liabilities to be less
than 1.75 to 1.0.
7.3 Funded Debt. The Guarantor will not, and will not permit any
Restricted Subsidiary to, create, assume, incur, guarantee or otherwise become
liable for, directly or indirectly, any Funded Debt, unless, after giving
effect thereto and the application of the proceeds thereof, Funded Debt of
the Guarantor and its Restricted Subsidiaries on a consolidated basis then
outstanding would not exceed 55% of Consolidated Total Capitalization.
7.4 Priority Indebtedness of Restricted Subsidiaries. The Guarantor will
not permit any Restricted Subsidiary to permit to exist, create, assume,
incur, guarantee or otherwise be or become liable, directly or indirectly, in
respect of any Priority Indebtedness, (a) except the Notes and (b) except
additional Priority Indebtedness (excluding fifty percent (50%) of the then
outstanding principal amount of all tax-exempt Indebtedness of Restricted
Subsidiaries issued at or prior to January 26, 1991) which, after giving effect
thereto and the application of proceeds thereof, does not result in aggregate
outstanding Indebtedness (including the Notes) incurred by Restricted
Subsidiaries when added to aggregate Indebtedness incurred (without duplication)
pursuant to Section 7.6(f), exceeding 20% of Consolidated Tangible Net Worth.
7.5 Interest Coverage Ratio. The Guarantor will not, as of the end of any
fiscal quarter, permit the ratio of Consolidated Income Available for Interest
Charges to Consolidated Interest Charges for the four preceding consecutive
fiscal quarters to be less than 1.5 to 1.0.
7.6 Liens. Neither the Guarantor nor any Restricted Subsidiary will cause
or permit or hereafter agree or consent to cause or permit in the future (upon
the happening of a contingency or otherwise), any of its Property, whether now
owned or subsequently acquired, to be subject to a Lien except:
(a) Liens securing the payment of taxes, assessments or governmental
charges or levies or the demands of suppliers, mechanics, repairmen, workmen,
materialmen, carriers, warehousers, landlords and other like Persons, or
similar statutory Liens, provided that (i) such
<PAGE>
Liens do not in the aggregate materially reduce the value of any Properties
subject to the Liens or materially interfere with their use in the ordinary
conduct of the Guarantor's or any Restricted Subsidiaries business, (ii) all
claims which such Liens secure are not delinquent or are being actively
contested in good faith and by appropriate proceedings and (iii) adequate
reserves have been established therefor on the books of the Guarantor;
(b) Liens incurred or deposits made in the ordinary course of business
(i) in connection with worker's compensation, unemployment insurance, social
security and other like laws, or (ii) to secure the performance of letters
of credit, bids, tenders, sales contracts, leases, statutory obligations,
surety, appeal and performance bonds and other similar obligations, in each
case not incurred in connection with the borrowing of money, the obtaining of
advances or the payment of the deferred purchase price of Property otherwise
than permitted by paragraph (f) below;
(c) Attachment, judgment and other similar Liens arising in connection
with court proceedings, provided that (i) execution and other
enforcement are effectively stayed, (ii) all claims which the Liens secure
are being actively contested in good faith and by appropriate proceedings
and (iii) adequate reserves have been established therefor on the books
of the Guarantor, if required by generally accepted accounting principles;
(d) Liens on Property of a Restricted Subsidiary, provided that such
Liens secure only obligations owing between the Guarantor and any Restricted
Subsidiary Guarantor or between Majority-Owned Restricted Subsidiary Guarantors;
(e) Liens existing as of January 30, 1992, which Liens are set forth
in Annex III hereto;
(f) Other Liens solely on real estate, plant equipment and supplies
not otherwise permitted under subparagraphs (a) through (e) above securing
Indebtedness; provided that the Indebtedness secured by such Liens does not
exceed the lesser of the cost or fair market value of the Property; and
provided, further, that the aggregate amount of such Indebtedness secured
by Liens permitted by this subparagraph (f), when added to the aggregate amount
of other Indebtedness of Restricted Subsidiaries incurred (without duplication)
pursuant to Section 7.4 (but excluding, solely in connection with the issuance
of the Notes, the Notes), does not exceed twenty percent (20%) of Consolidated
Tangible Net Worth;
(g) Liens resulting from extension, refunding, renewal or replacement
of the Indebtedness secured by Liens described in subparagraphs (d), (e) and (f)
above, up to the amount outstanding under such Indebtedness at the time of
such extension, refunding, renewal or replacement; provided that any new Lien
attaches only to the same Property theretofore subject to such earlier Lien; and
(h) In the event that the Guarantor or any Restricted Subsidiary
creates, assumes, incurs or permits to exist any Lien not otherwise permitted
by this Section 7.6, the Company will make or cause to be made provision
whereby the Notes will be secured equally and ratably
<PAGE>
with all other obligations secured by such Liens, and in any case the Notes
shall have the benefit, to the full extent that, and with such priority as,
the holders may be entitled thereto under applicable law, of an equitable
Lien on such Property securing the Notes. Any violation of this Section 7.6
shall constitute an Event of Default whether or not any such provision is made
for equal and ratable security pursuant to this subparagraph (h).
7.7 Long-Term Leases. The Guarantor will not, and will not permit any
Restricted Subsidiary to, become obligated, as lessee under any Long-Term Lease
unless, at the time of entering into such Long-Term Lease and after giving
effect thereto, the average aggregate annual Rentals payable by the Guarantor
and its Restricted Subsidiaries on a consolidated basis during the term of
such Long-Term Lease pursuant to Long-Term Leases will not exceed 10% of
Consolidated Tangible Net Worth, determined as of the end of the Guarantor's
prior fiscal quarter.
7.8 Restricted Payments. The Guarantor will not, and will not permit
any Restricted Subsidiary to, except as hereinafter provided:
(a) declare or pay any dividends (other than to the Guarantor), either
in cash or Property, on any shares of its capital stock of any class (except
dividends or other distributions payable solely in shares of capital stock of
the Guarantor);
(b) directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock or any class or any warrants,
rights or options to purchase or acquire any shares of its capital stock (other
than in exchange for the same or similar securities or out of the net cash
proceeds from the issuance or sale of other shares of capital stock of the
Guarantor);
(c) make any other payment or distribution (other than to the
Guarantor), either directly or indirectly or through any Subsidiary, in
respect of its capital stock; or
(d) make any Restricted Investment;
(all such declarations, payments, purchases, redemptions, retirements,
distributions and investments being herein collectively called "Restricted
Payments") if, after giving effect thereto (i) the Guarantor could not incur
an additional $1.00 of Funded Debt pursuant to Section 7.3, (ii) an Event of
Default pursuant to Section 8.1 shall have occurred and (iii) the aggregate
amount of all Restricted Payments made during the period from and after January
28, 1996, to and including the date of the Restricted Payment in question
would exceed the sum of:
(x) $12,500,000, plus
(y) 75% (or minus 100% in the case of a deficit) of Consolidated
Net Income for such period (computed on a cumulative basis for the entire period
from January 28, 1996).
<PAGE>
The Guarantor will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after its date of declaration. Any
dividend which complies with the provisions of this Section 7.8 on the
date of its declaration shall be deemed to comply on its date of payment,
provided that any intervening event giving rise to non-compliance is not the
result of a Restricted Payment.
7.9 Merger or Consolidation. The Guarantor will not, and will not permit
any Restricted Subsidiary to, merge or consolidate with any other Person,
except that:
(a) The Guarantor may consolidate with or merge into any Person or
permit any other Person to merge into it, provided that immediately after
giving effect thereto,
(i) The Guarantor is the successor corporation or, if the
Guarantor is not the successor corporation, the successor
corporation is a corporation organized under the laws of a state of the United
States of America or the District of Columbia and shall expressly assume in
writing the Guarantor's obligations under the Notes and this Agreement and the
Guaranty Agreement;
(ii) There shall exist no Event of Default or event which, with
the passage of time or giving of notice, or both, would constitute an Event of
Default; and
(iii) The Guarantor or such successor corporation could incur at
least $1.00 of additional Funded Debt pursuant to Section 7.3;
(b) Any Restricted Subsidiary (except the Company) may (i) merge into
the Guarantor or another Majority-Owned Restricted Subsidiary Guarantor or (ii)
sell, transfer or lease all or any part of its assets to the Guarantor or to
another Majority-Owned Restricted Subsidiary Guarantor or (iii) merge into
any Person which, as a result of such merger, concurrently becomes a
Restricted Subsidiary, provided in each such instance that there shall exist
no Event of Default or event which, with the passage of time or giving of
notice, or both, would constitute an Event of Default;
(c) The Company may merge into the Guarantor.
7.10 Sale of Assets. During any fiscal year, the Guarantor will not, and
will not permit any Restricted Subsidiary to, sell, lease, transfer or
otherwise dispose of any assets, in one or a series of transactions, other than
in the ordinary course of business, to any Person, other than the Guarantor or,
in the case of the Company, to a Wholly-Owned Restricted Subsidiary Guarantor
or, in the case of all other Restricted Subsidiaries, to a Majority-Owned
Restricted Subsidiary Guarantor (collectively a "Disposition"), if after giving
effect to such Disposition, the aggregate book value of all Dispositions made
during such fiscal year would exceed ten percent (10%) of Consolidated Tangible
Assets as of the end of the immediately preceding fiscal year. Notwithstanding
the foregoing, the Guarantor may make a Disposition in excess of the aforesaid
percentage if the Guarantor shall, within 180 days after such Disposition, (a)
use pro rata the net proceeds from the sale of such assets exceeding ten percent
(10%) to invest in other tangible
<PAGE>
Property and of at least equivalent value for use in the business of the
Guarantor and its Restricted Subsidiaries or (b) with respect to the net
proceeds from Dispositions exceeding ten percent (10%) derived other than from a
Camden Disposition, to prepay Funded Debt, including the Notes, on a pro rata
basis among all issuers of such Funded Debt, including the Noteholders (subject
to the right, to which the Company agrees, of any Noteholders to elect not to be
so prepaid), subject to the prepayment requirements of Section 2.2(a) and at the
price set forth in Section 2.2(b). With respect to a Camden Disposition
occurring prior to March 1, 1997, such Camden Disposition shall not constitute a
Disposition for purposes of this Section 7.10. With respect to a Camden
Disposition occurring after March 1, 1997, the net proceeds of such Camden
Disposition, plus proceeds of other Dispositions made during the same fiscal
year which exceed in the aggregate, ten percent (10%) of Consolidated Tangible
Net Assets as of the end of the immediately preceding fiscal year, shall be used
to prepay Funded Debt, including the Notes, on a pro rata basis among all
issuers of such Funded Debt, including the Noteholders (subject to the right, to
which the Company agrees, of any Noteholder to elect not to be so prepaid),
subject to the prepayment requirements of Section 2.2(a) and a price equal to
100% of the principal amount to be prepaid, plus interest accrued to the date
of prepayment.
7.11 Change in Business. Neither the Guarantor nor any Restricted
Subsidiary (whether now existing or hereafter acquired or organized) will
engage in any business if, giving effect thereto, less than 80% of the
Consolidated Tangible Assets of the Guarantor at the most recently ended
fiscal quarter would be attributable to the current business of the
Guarantor and its Restricted Subsidiaries taken as a whole, including, but
not limited to, the manufacturing, advertising, sales, distribution, of
industrial wire, household and foodservice products and related businesses.
7.12 Transactions with Affiliates. The Guarantor will not, and will not
permit any Subsidiary to, enter into any transaction (including the furnishing
of goods or services) with an Affiliate except in the ordinary course of
business as presently conducted and on terms and conditions no less favorable to
the Guarantor or such Subsidiary than would be obtained in a comparable arm's-
length transaction with a Person not an Affiliate.
7.13 Consolidated Tax Returns. The Guarantor will not file, or consent to
the filing of, any consolidated Federal income tax return with any Person other
than a Restricted Subsidiary, except to the extent that the Guarantor is
required under the Code to do otherwise.
7.14 Pari Passu Position. Each of the Company and the Guarantor agrees that
it will not grant or provide, and at no time will it allow to exist, be created
or granted, any Liens or security interests in favor of, or Guaranties by
Restricted Subsidiaries for the benefit of, any of the Banks, unless in the
case of the giving of any guaranty by Restricted Subsidiaries, the
Noteholders shall simultaneously be provided with a Subsidiary Guarantee.
7.15 Sharing Agreement. The Guarantor shall not permit any Restricted
Subsidiary to incur Priority Indebtedness or to issue a Restricted
Subsidiary Guarantee without requiring that the lender of such Indebtedness or
beneficiary of such Restricted Subsidiary Guarantee execute the Sharing
Agreement at the time of such incurrence of Indebtedness.
<PAGE>
8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1 Nature of Events. An "Event of Default" shall exist if any one or more
of the following occurs:
(a) Default in the payment of interest on any of the Notes which continues
for a period of three (3) days following the date such payment is due;
(b) Default in the payment of the principal of any of the Notes or the
premium thereon, if any, at maturity, upon acceleration of maturity or at any
date fixed for prepayment;
(c) Default shall occur (i) in the payment of the principal of, premium,
or interest on any other Indebtedness of the Guarantor or its
Subsidiaries, aggregating in excess of $1,000,000 as and when due and payable
(whether by lapse of time, declaration, call for redemption or otherwise), (ii)
under any mortgage, agreement or other instrument of the Guarantor or any
Subsidiary securing such Indebtedness or under or pursuant to which such
Indebtedness aggregating in excess of $1,000,000 is issued, (iii) under any
leases other than Capitalized Leases of the Guarantor or any Subsidiary, with
aggregate Rentals in excess of $1,000,000 or (iv) with respect to any
combination of the foregoing involving Indebtedness and/or Rentals aggregating
in excess of $1,000,000 regardless of whether such defaults would be Events of
Default hereunder, and any such defaults with respect to the payment of money
shall continue, unless waived, beyond the period of grace, if any, allowed with
respect thereto;
(d) Default in the observance or performance of Sections 6.13, 6.15, 7.1,
7.3, 7.4, 7.5, 7.7, 7.8, 7.9, 7.10, 7.11, 7.14 or 7.15.
(e) Default in the observance or performance of any other covenant or
provision of this Agreement which default is not remedied within 30 days after
the earlier of the date (a) management of the Guarantor knew of such default or
(b) on which written notice of such default is provided to the Guarantor by any
Noteholder;
(f) Any representation or warranty made by the Company or the Guarantor in
this Agreement, or made by the Company or the Guarantor in any written
statement or certificate furnished by the Company or the Guarantor in connection
with the issuance and sale of the Notes or furnished by the Company or the
Guarantor pursuant to this Agreement or furnished by the Guarantor pursuant to
the Guaranty Agreement or furnished by any Subsidiary Guarantor pursuant to any
Subsidiary Guarantee, proves incorrect in any material respect as of the date
of the issuance or making thereof;
(g) Any judgments, writs or warrants of attachment or any similar
processes individually or in the aggregate in excess of $1,500,000 shall be
entered or filed against the Guarantor or any Subsidiary or against any
Property or assets of either and remain unpaid,
<PAGE>
unvacated, unbonded or unstayed (through appeal or otherwise) for a period of 60
days after the Guarantor or any Subsidiary receives notice thereof;
(h) The Guarantor or any Subsidiary shall incur a "Distress Termination"
(as defined in Title IV of ERISA) of any Plan or any trust created thereunder
which results in material liability to the PBGC, the PBGC shall institute
proceedings to terminate any Plan or any trust created thereunder, or a trustee
shall be appointed by a United States District Court pursuant to Section 4042(b)
of ERISA to administer any Plan or any trust created thereunder;
(i) (A) Guarantor or any Subsidiary Guarantor shall be in default of or
fail to comply with any term, covenant, or agreement contained in the Guaranty
Agreement or any Subsidiary Guarantee or the Subordination Agreement or (B) the
Guaranty Agreement or any Subsidiary Guarantee or the Subordination Agreement
shall cease to be in full force and effect; or
(j) The Guarantor or any Subsidiary shall
(i) generally not pay its debts as they become due or admit
in writing its inability to pay its debts generally as they become due;
(ii) file a petition in bankruptcy or for reorganization or
for the adoption of an arrangement under the Federal Bankruptcy Code, or any
similar applicable bankruptcy or insolvency law, as now or in the future amended
(herein collectively called "Bankruptcy Laws"), or an answer or other pleading
admitting or failing to deny the material allegations of such a petition or
seeking, consenting to or acquiescing in relief provided for under the
Bankruptcy Laws;
(iii) make an assignment of all or a substantial part of its
Property for the benefit of its creditors;
(iv) seek or consent to or acquiesce in the appointment of a
receiver, liquidator, custodian or trustee of it or for all or a substantial
part of its Property;
(v) be finally adjudicated a bankrupt or insolvent;
(vi) be subject to the entry of a court order, which shall
not be vacated, set aside or stayed within 30 days from the date of entry,
appointing a receiver, liquidator, custodian or trustee of it or for all or a
substantial part of its Property, or entering of an order for relief pursuant
to an involuntary case, or effecting an arrangement in, bankruptcy or for a
reorganization pursuant to the Bankruptcy Laws or for any other judicial
modification or alteration of the rights of creditors; or
(vii) be subject to the assumption of custody or
sequestration by a court of competent jurisdiction of all or a substantial
part of its Property, which custody or sequestration shall not be suspended or
terminated within 30 days from its inception.
<PAGE>
8.2 Remedies on Default. When any Event of Default described in paragraphs
(a) through (i) of Section 8.1 has happened and is continuing, the holder or
holders of at least 25% in principal amount of the Notes then outstanding may by
notice to the Company declare the entire principal, together with the premium
set forth below, and all interest accrued on all Notes to be, and such Notes
shall thereupon become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are expressly
waived. Notwithstanding the foregoing, when (i) any Event of Default described
in paragraphs (a) or (b) of Section 8.1 has happened and is continuing, any
holder may by notice to the Company declare the entire principal, together
with the premium set forth below, and all interest accrued on the Notes then
held by such holder to be, and such Notes shall thereupon become, forthwith
due and payable, without any presentment, demand, protest or other notice of
any kind, all of which are expressly waived and (ii) any Event of Default
described in paragraph (j) of Section 8.1 has happened, then all outstanding
Notes shall immediately become due and payable without presentment, demand or
notice of any kind. Upon the Notes or any of them becoming due and payable as
aforesaid, the Company will forthwith pay to the holders of such Notes the
entire principal of and interest accrued on such Notes, plus a premium in the
event that the Reinvestment Yield shall, on the Determination Date, be less
than the interest rate payable on or in respect of the Notes. Such premium
shall equal (x) the aggregate present value of the principal so accelerated and
the aggregate present value of the interest which would have been payable in
respect of such principal absent such accelerated payment, determined by
discounting (semi-annually on the basis of a 360-day year composed of twelve
30-day months) each such amount utilizing an interest factor equal to the
Reinvestment Yield, less (y) the principal amount to be accelerated.
8.3 Annulment of Acceleration of Notes. The provisions of Section 8.2
are subject to the condition that if the principal of and accrued interest on
the Notes have been declared immediately due and payable by reason of the
occurrence of any Event of Default described in paragraphs (a) through (i),
inclusive, of Section 8.1, the holder or holders of 66-2/3% in aggregate
principal amount of the Notes then outstanding may, by written instrument
furnished to the Company, rescind and annul such declaration and the
consequences thereof, provided that (i) at the time such declaration is
annulled and rescinded no judgment or decree has been entered for the payment of
any monies due pursuant to the Notes or this Agreement, (ii) all arrears of
interest upon all the Notes and all other sums payable under the Notes and
under this Agreement (except any principal, interest or premium on the Notes
which has become due and payable solely by reason of such declaration under
Section 8.2) and under the Guaranty Agreement and under the Subsidiary
Guarantees shall have been duly paid and (iii) each and every other Event of
Default shall have been cured or waived; and provided further, that no such
rescission and annulment shall extend to or affect any subsequent default or
Event of Default or impair any right consequent thereto.
8.4 Other Remedies. Subject to the provisions of Section 8.3, if any Event
of Default shall be continuing, any holder of Notes may enforce its rights by
suit in equity, by action at law, or by any other appropriate proceedings,
whether for the specific performance (to the extent permitted by law) of any
covenant or agreement contained in this Agreement, in the Notes or in the
Guaranty Agreement or in the Subsidiary Guarantees or in aid of the exercise of
any power
<PAGE>
granted in this Agreement, and may enforce the payment of any Note held by such
holder and any of its other legal or equitable rights.
8.5 Conduct No Waiver; Collection Expenses. No course of dealing on the
part of any holder of Notes, nor any delay or failure on the part of any holder
of Notes to exercise any of its rights, shall operate as a waiver of such rights
or otherwise prejudice such holder's rights, powers and remedies. If the
Company fails to pay, when due, the principal of, or the interest on, any Note,
or if the Company or the Guarantor fail to comply with any other provision
of this Agreement, the Company and the Guarantor will pay to each holder, to
the extent permitted by law, on demand, such further amounts as shall be
sufficient to cover the reasonable cost and expenses, including but not
limited to reasonable attorneys' fees, incurred by such holders of the Notes
in collecting any sums due on the Notes or in otherwise enforcing any of their
rights.
8.6 Remedies Cumulative. No right or remedy conferred upon or reserved to
any holder of Notes under this Agreement, the Guaranty Agreement, and the
Subsidiary Guarantees is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to every
other right or remedy given under this Agreement or the Guaranty Agreement or
now or hereafter existing under any applicable law. Every right and
remedy given by this Agreement or by applicable law to any holder of Notes
may be exercised from time to time and as often as may be deemed expedient by
such holder, as the case may be.
8.7 Notice of Default. With respect to Events of Default or claimed
defaults, the Guarantor will give the following notices:
(a) The Guarantor promptly will furnish to each holder of a Note
notice in writing by registered or certified mail, return receipt requested, of
the occurrence of an Event of Default or an event which, with the lapse of
time or the giving of notice, or both, would become an Event of Default. Such
notice shall specify the nature of such default, the period of existence
thereof and what action the Guarantor has taken or is taking or proposes to
take with respect thereto.
(b) If the holder of any Note or of any other evidence of Indebtedness
of the Guarantor or any Subsidiary gives any notice or takes any other
action with respect to a claimed default, the Guarantor will forthwith give
written notice to the extent of the Guarantor's knowledge thereof to each
holder of the then outstanding Notes, describing the notice or action and the
nature of the claimed default.
9. AMENDMENTS, WAIVERS AND CONSENTS
9.1 Matters Subject to Modification. Any term, covenant, agreement or
condition of this Agreement or the Guaranty Agreement may, with the consent of
the Company and the Guarantor, be amended, or compliance therewith may be
waived (either generally or in a particular instance and either retroactively or
prospectively), if the Company and the Guarantor
<PAGE>
shall have obtained the consent in writing of the holder or holders of at least
66-2/3% in aggregate principal amount of outstanding Notes; provided, however,
that, without the written consent of the holder or holders of all of the
Notes then outstanding, no such waiver, modification, alteration or amendment
shall be effective which will (i) change the time of payment (including any
required prepayment) of the principal of or the interest on any Note, (ii)
reduce the principal amount thereof or the premium, if any, or reduce the rate
of interest thereon, (iii) change any provision of any instrument affecting the
preferences between holders of the Notes or between holders of the Notes and
other creditors of the Company, and the Guarantor or (iv) change any of the
provisions of Section 8.1, Section 8.2, Section 8.3 or this Section 9.
For the purpose of determining whether holders of the requisite principal
amount of Notes have made or concurred in any waiver, consent, approval, notice
or other communication under this Agreement or the Guaranty Agreement, Notes
held in the name of, or owned beneficially by, the Guarantor, the Company, or
any Subsidiary or any Affiliate thereof, shall not be deemed outstanding.
9.2 Solicitation of Holders of Notes. The Company and the Guarantor
will not solicit, request or negotiate for or with respect to any proposed
waiver or amendment of any of the provisions of this Agreement or the Notes
unless each holder of the Notes (irrespective of the amount of Notes then owned
by it) shall concurrently be informed thereof by the Company and the
Guarantor shall be afforded the opportunity of considering the same and
shall be supplied by the Company and the Guarantor with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver or consent effected pursuant
to the provisions of this Section 9 shall be delivered by the Company and the
Guarantor to each holder of outstanding Notes forthwith following the date on
which the same shall have been executed and delivered by the holder or
holders of the requisite percentage of outstanding Notes. Neither the Company
nor the Guarantor will, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any holder of the Notes as consideration for or as an
inducement to the entering into by any holder of the Notes of any waiver or
amendment of any of the terms and provisions of this Agreement unless such
remuneration is concurrently paid, on the same terms, ratably to each holder
of the then outstanding Notes.
9.3 Binding Effect. Any such amendment or waiver shall apply equally to
all the holders of the Notes and shall be binding upon them, upon each future
holder of any Note and upon the Company and the Guarantor whether or not such
Note shall have been marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right related thereto.
<PAGE>
10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
10.1 Form of Notes. The Notes initially delivered under this Agreement will
be in the form of six fully registered Notes in the form attached as Exhibit A.
The Notes are issuable only in fully registered form and in denominations of at
least $2,000,000 (or the remaining outstanding balance thereof, if less than
$2,000,000).
10.2 Note Register. The Company shall cause to be kept at its principal
office a register (the "Note Register") for the registration and transfer of
the Notes. The names and addresses of the holders of Notes, the transfer
thereof and the names and addresses of the transferees of the Notes shall be
registered in the Note Register. The Company may deem and treat the person in
whose name a Note is so registered as the holder and owner thereof for all
purposes and shall not be affected by any notice to the contrary, until due
presentment of such Note for registration of transfer as provided in this
Section 10.
10.3 Issuance of New Notes upon Exchange or Transfer. Upon surrender for
exchange or registration of transfer of any Note at the office of the Company
designated for notices in accordance with Section 11.2, the Company shall
execute and deliver, at its expense, one or more new Notes of any authorized
denominations requested by the holder of the surrendered Note, each dated the
date to which interest has been paid on the Notes so surrendered (or, if no
interest has been paid, the date of such surrendered Note), but in the
same aggregate unpaid principal amount as such surrendered Note, and
registered in the name of such person or persons as shall be designated in
writing by such holder. Every Note surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument of transfer
duly executed, by the holder of such Note or by such holder's attorney duly
authorized in writing. The Company may condition its issuance of any new Note
in connection with a transfer by any Person on compliance by the transferee with
the representations required under Section 3.2, by Institutional Holders on
compliance with Section 2.5 and on the payment to the Company of a sum
sufficient to cover any stamp tax or other governmental charge imposed in
respect of such transfer.
10.4 Replacement of Notes. Upon receipt of evidence satisfactory to the
Company of the loss, theft, mutilation or destruction of any Note, and in the
case of any such loss, theft or destruction upon delivery of a bond of
indemnity in such form and amount as shall be reasonably satisfactory to the
Company or in the event of such mutilation upon surrender and cancellation of
the Note, the Company, without charge to the holder thereof, will make and
deliver a new Note, of like tenor in lieu of such lost, stolen, destroyed or
mutilated Note. If any such lost, stolen or destroyed Note is owned by you or
any other Institutional Holder, then the affidavit of an authorized officer of
such owner setting forth the fact of loss, theft or destruction and of its
ownership of the Note at the time of such loss, theft or destruction shall be
accepted as satisfactory evidence thereof, and no further indemnity shall be
required as a condition to the execution and delivery of a new Note, other than
a written agreement of such owner (in form reasonably satisfactory to the
Company) to indemnify the Company.
<PAGE>
11. MISCELLANEOUS
11.1 Expenses. Whether or not the purchase of Notes herein contemplated
shall be consummated, the Company and the Guarantor agree to pay directly all
reasonable expenses in connection with the preparation, execution and
delivery of this Agreement and the transactions contemplated by this
Agreement, including, but not limited to, out-of-pocket expenses, filing fees
of Standard & Poor's Corporation in connection with obtaining a private
placement number, charges and disbursements of special counsel, photocopying
and printing costs and charges for shipping the Notes, adequately insured, to
you at your home office or at such other address as you may designate, and all
similar expenses (including the reasonable fees and expenses of counsel)
relating to any amendments, waivers or consents in connection with this
Agreement or the Notes or the Guaranty Agreement or the Subsidiary Guarantees or
the Subordination Agreement or the Sharing Agreement or any agreement entered
into by the Noteholders and the Company, the Guarantor or any Subsidiary
Guarantor, including, but not limited to, any such amendments, waivers or
consents resulting from any work-out, renegotiation or restructuring relating
to the performance by the Company of its obligations under this Agreement and
the Notes, the performance by the Guarantor under this Agreement, the
Subordination Agreement and the Guaranty Agreement and the performance by
the Subsidiary Guarantors under the Subsidiary Guarantees and the Subordination
Agreement. The Company and the Guarantor also agree that they will pay and save
you harmless against any and all liability with respect to stamp and other
documentary taxes, if any, which may be payable, or which may be determined
to be payable in connection with the execution and delivery of this Agreement
or the Notes (but not in connection with a transfer of any Notes), whether or
not any Notes are then outstanding. The obligations of the Company under
this Section 11.1 shall survive the retirement of the Notes.
11.2 Notices. Except as otherwise expressly provided herein, all
communications provided for in this Agreement shall be in writing and
delivered or sent by registered or certified mail, return receipt requested,
or by overnight courier (i) if to you, to the address set forth below your name
in Schedule I, or to such other address as you may in writing designate, (ii) if
to any other holder of the Notes, to such address as the holder may designate in
writing to the Company, and (iii) if to the Company, to Oneida Ltd., 163
Kenwood Avenue, Oneida, New York 13421, Attention: Edward W. Thoma, Senior
Vice President-Finance, or to such other address as the Company may in
writing designate.
11.3 Reproduction of Documents. This Agreement and all documents relating
hereto, including, without limitation, (i) consents, waivers and modifications
which may hereafter be executed, (ii) documents received by you at the
closing of the purchase of the Notes (except the Notes themselves), and
(iii) financial statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process, and you may destroy any original document so reproduced. The Company
and Guarantor agree and stipulate that any such reproduction which is legible
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by you in the regular course of
business) and that any enlargement,
<PAGE>
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence; provided that nothing herein contained shall preclude
the Company and the Guarantor from objecting to the admission of any
reproduction on the basis that such reproduction is not accurate, has been
altered or is otherwise incomplete.
11.4 Successors and Assigns. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns.
11.5 Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. No provision of this
Agreement may be waived, changed or modified, or the discharge thereof
acknowledged, orally, except by an agreement in writing signed by the
party against whom the enforcement of any waiver, change, modification or
discharge is sought.
11.6 Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
11.7 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart or reproduction thereof permitted by Section
11.3.
11.8 Reliance on and Survival of Provisions. All covenants,
representations and warranties made by the Company and the Guarantor herein and
in any certificates delivered pursuant to this Agreement, the Guaranty
Agreement and the Subsidiary Guarantees, whether or not in connection with a
closing, (i) shall be deemed to have been relied upon by you,
notwithstanding any investigation heretofore or hereafter made by you or on
your behalf and (ii) shall survive the delivery of this Agreement, the Notes,
the Guaranty Agreement and the Subsidiary Guarantees.
11.9 Integration and Severability. This Agreement and the Exhibits
hereto (including but not limited to the Guaranty Agreement, the Subsidiary
Guarantees, and the Subordination Agreement) embody the entire agreement and
understanding between you, the Guarantor, the Company, and supersedes all prior
agreements and understandings relating to the subject matter hereof. In case
any one or more of the provisions contained in this Agreement, the Guaranty
Agreement, the Subsidiary Guarantee, the Subordination Agreement or in any Note,
or application thereof, shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained in this Agreement, the Guaranty Agreement, the Subsidiary
Guarantees, the Subordination Agreement and in any Note, and any other
application thereof, shall not in any way be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the Company, the Guarantor and the Purchasers
have caused this Agreement to be executed and delivered by their respective
officer or officers thereunto duly authorized.
THC SYSTEMS, INC.
By: /s/ Glenn B. Kelsey
Title: Vice President-Finance
ONEIDA LTD.
By: /s/ Edward W. Thoma
Title: Senior Vice President - Finance
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Patricia W. Wilson
By: /s/ Steven M. Laude
Authorized Signatories
ALLSTATE INSURANCE COMPANY
By: /s/ Patricia W. Wilson
By: /s/ Steven M. Laude
Authorized Signatories
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By: /s/ Diane W. Dales
Title: Assistant Vice President
By: /s/ Peter S. Fiek
Title: Assistant Secretary
<PAGE>
Schedule A-1
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
Allstate Insurance Company (1) $10,000,000
3075 Sanders Road, STE G4A (2) $5,000,000
Northbrook, Illinois 60062-7127
Attention: Investment Operations Private Placements
Telephone: (847) 402-8709
Telecopy: (847)402-7331
All notices of scheduled payments and written confirmations of such wire
transfer should be sent to the address above. All payments by Fedwire
transfer of immediately available funds, identifying the name of the Issuer
(and the Credit, if any), the Private Placement Number preceded by "DPP" and
the payment as principal, interest or premium, in the format as follows:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = THC Systems, Inc.
OBI = DPP (PPN: 87252@ AA 8)
L___________ (Enter Lease Number, if any)
Payment Due Date (MM/DD/YY) -
P___________ (Enter "P" and amount of
principal being remitted, for example,
P5000000.00) -
I____________ (Enter "I" and amount of
interest being remitted, for example,
I225000.00)
<PAGE>
Securities to be delivered to:
Citibank, Federal Savings Bank
Citicorp Center
500 West Madison Street
4th Floor, Zone 6
Chicago, Illinois 60661-2591
Attention: Misty Gniadek
For Allstate Life Insurance Company/
Safekeeping Account No. 846627
All financial reports, compliance certificates and all other written
communications, including notice of prepayments, to be sent to:
Allstate Life Insurance Company
Private Placements Department
3075 Sanders Road, STE G3A
Northbrook, IL 60062-7127
Telephone: (847) 402-4394
Telecopy: (847) 402-3092
Tax ID #36-2554642
<PAGE>
Schedule A-2
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
Allstate Insurance Company $7,500,000
3075 Sanders Road, STE G4A
Northbrook, Illinois 60062-7127
Attention: Investment Operations Private Placements
Telephone: (847) 402-8709
Telecopy: (847)402-7331
All notices of scheduled payments and written confirmations of such wire
transfer should be sent to the address above. All payments by Fedwire
transfer of immediately available funds, identifying the name of the Issuer
(and the Credit, if any), the Private Placement Number preceded by "DPP" and
the payment as principal, interest or premium, in the format as follows:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Insurance Company
Collection Account #168-114-7
ORG = THC Systems, Inc.
OBI = DPP (PPN: 87252@ AA 8)
L__________ (Enter Lease Number, if any)
Payment Due Date (MM/DD/YY) -
P__________ (Enter "P" and amount of
principal being remitted, for example,
P5000000.00) -
I__________ (Enter "I" and amount of
interest being remitted, for example,
I225000.00)
<PAGE>
Securities to be delivered to:
Citibank, Federal Savings Bank
Citicorp Center
500 West Madison Street
4th Floor, Zone 6
Chicago, Illinois 60661-2591
Attention: Misty Gniadek
For Allstate Insurance Company/
Safekeeping Account No. 846626
All financial reports, compliance certificates and all other written
communications, including notice of prepayments, to be sent to:
Allstate Life Insurance Company
Private Placements Department
3075 Sanders Road, STE G3A
Northbrook, IL 60062-7127
Telephone: (847) 402-4394
Telecopy: (847) 402-3092
Tax ID #36-0719665
<PAGE>
Schedule A-3
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
Pacific Mutual Life Insurance Company (1) $5,000,000
700 Newport Center Drive (2) $5,000,000
P.O. Box 9000 (3) $2,500,000
Newport Beach, California 92660
Attention: Fixed Income Securities Dept.
Address for all communications is as above, except notices of payment and
written confirmations of wire or inter-bank transfers. All payments are to be
by bank wire transfer of immediately available funds to:
The Chase Manhattan Bank, N.A.
ABA #021-000-021
A/C = 900-9-002206
BBK = Chase Manhattan Bank, N.A.
A/C Name: General Account
A/C Number: 89930705
For Pacific Mutual Life Insurance Company
PPN: 87252@ AA 8
Each wire transfer shall identify such payment as "THC Systems, Inc.,
7.49% Senior Notes due November 1, 2008."
Principal and interest payments:
The Chase Manhattan Bank, N.A.
ABA #021-000-021
A/C = 900-9-002206
BBK = Chase Manhattan Bank/SSTO
A/C Name: Pacific Mutual Gen. Acct.
Sub A/C Number: 47363300
Regarding: "THC Systems, Inc., 7.49% Senior Notes due
November 1, 2008 (PPN: 87252@ AA 8)"
<PAGE>
Notices of payment and written confirmations of wire or inter-bank
transfers shall be addressed to:
Pacific Mutual Life Insurance Company
700 Newport Center Drive
P.O. Box 9000
Newport Beach, California 92660
Attention: Investment Administration
All securities being purchased should be registered in the nominee
name of "Atwell & Co" and delivered to:
The Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
New York, NY 10004
Attention: Lillian Gonzalas
A/C Name: General Account
A/C Number: 89930705
General Tax ID #: 95-1079000
Private Placement Tax ID #: 13-6065575
<PAGE>
ANNEX I
Restricted Subsidiaries of the Company
Restricted Place of Authorized to do
Subsidiaries Incorporation Business
Kenwood Silver Company, Inc. New York Alabama
Arizona
California
Colorado
Connecticut
Delaware
Florida
Georgia
Idaho
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Michigan
Missouri
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
Tennessee
Texas
Virginia
Washington
West Virginia
Wisconsin
<PAGE>
Camden Wire Co. Inc. New York Arkansas
California
Illinois
North Carolina
Texas
Oneida Distribution
Services, Inc. New York California
Georgia
Buffalo China, Inc. New York
Oneida International, Inc. Delaware
Oneida Foreign
Sales Corporation Virgin Islands
THC Systems, Inc. New York North Carolina
Oneida Mexicana, S.A. Mexico
Oneida Canada, Limited Canada
Oneida Domestic
International Sales Corp. New York
Oneida Community, Limited New York
Employee Agency, Inc. New York
Heirloom, Inc. New York
Kenwood Advertising, Inc. New York
Simeon L. & George H.
Rogers Co., Ltd. (Canada) Canada
<PAGE>
William A. Rogers, Limited New York
Canadian Wm. A. Rogers, Ltd. Canada
Oneida Ltd. owns 100% of the outstanding shares of each of the
above subsidiaries except Buffalo China, Inc. and Oneida International, Inc.
which are 93% and 80% owned, respectively.
Subsidiary of Buffalo China, Inc.
Ceramica De Juarez, S.A. Mexico
Subsidiary of Oneida International, Inc.
Sant'Andrea, Inc. Italy
<PAGE>
ANNEX II
ONEIDA LTD. & ITS RESTRICTED SUBSIDIARIES
FUNDED DEBT & CURRENT DEBT
FOR FISCAL PERIOD ENDED 10/26/96
1) FUNDED DEBT
Funded Debt at October 26, 1996 consisted of the following:
(Thousands)
Senior notes, 8.52% due January 15, 2002, payable
$4,285,710 annually $25,714
Notes payable at various interest rates due February
20, 2001 40,000
Industrial Revenue Bond, Chemical Bank Tax Exempt Money
Market Index rate, due February 1, 2005 9,000
Industrial Revenue Bond, Marine Midland Bank, 9.25%
due March 1, 2000 1,136
Industrial Revenue Bond, NationsBank Tax Exempt Market
Index rate, due March 20, 2016 6,500
Other debt at various rates due through 1999 297
Total 82,647
Less amounts due currently 4,702
Long-term debt $77,945
2) CURRENT DEBT
Current Debt at October 26, 1996 consisted of the following:
(Thousands)
Short term debt $12,500
Bankers acceptances 19,000
Current installments of long term debt 4,702
Total CURRENT DEBT $36,202
<PAGE>
ANNEX III
Description of Liens
None.
<PAGE>
ANNEX IV
ONEIDA LTD.
RISK INSURANCE COVERAGE SUMMARY
Class of Insurance Insurance Company Risks Covered Limits
Property Damage, Industrial Risk All Risk coverage $624,658,000
Boiler/Machinery, Insurers including damage due to
Business Interruption earthquake and flood
Commercial General Royal Insurance Bodily Injury and $3,000,000
Liability Property damage caused (Aggregate)
by ownership and $1,000,000
operation of premises; (Each
includes product Occurrence)
liability, broad form
vendors liability,
advertisers & contractual
liability
Commercial Federal Insurance Umbrella coverage over $25,000,000
Liability Co. commercial general liability
Umbrella and auto liability policies
Pension & Welfare Aetna Casualty & Breach of fiduciary $1,000,000
Fiduciary Liability Surety Company responsibility as Trustee
of employee benefit plans
Executive Liability CNA Wrongful acts while $15,000,000
(Directors and acting in capacity as
Officers) director or officer
General Crime Lumbermans Mutual Comprehensive crime and $ 500,000
Casualty Company employee dishonesty;
(Kemper) includes ERISA compliance
for administration of
benefit plans
<PAGE>
EXHIBIT A
THC SYSTEMS, INC.
7.49% SENIOR NOTE
Due November 1, 2008
THIS NOTE MAY BE SUBJECT TO A HOME OFFICE PAYMENT AGREEMENT AND ACCORDINGLY
ANY PROSPECTIVE PURCHASER SHOULD FIRST VERIFY THE UNPAID PRINCIPAL AMOUNT WITH
THE COMPANY.
Registered Note No. R-____ November __, 1996
$__________
THC SYSTEMS, INC., a New York corporation (the "Company), for value
received, hereby promises to pay to ______________________ or registered
assigns, on the first day of November, 2008, the principal amount of
_______________ Dollars ($__________) and to pay interest (computed on the
basis of a 360-day year of twelve 30-day months) on the principal amount
from time to time remaining unpaid hereon at the rate of seven and forty-nine
hundredths percent (7.49%) per annum from the date hereof until maturity,
payable on the first day of November and May in each year, commencing May 1,
1997, and at maturity, and to pay interest on overdue principal, premium and
(to the extent legally enforceable) on any overdue installment of interest at
the greater of (a) the rate of interest publicly announced by The Chase
Manhattan Bank (or its successors or assigns) as its "prime rate" plus one
percent (1%) or (b) nine and forty-nine hundredths percent (9.49%) per annum
after maturity or the due date thereof, whether by acceleration or otherwise,
until paid. Payments of the principal of, the premium, if any, and interest on
this Note shall be made in lawful money of the United States of America in the
manner and at the place provided in Section 2.5 of the Note Agreement
hereinafter defined.
This Note is issued under and pursuant to the terms and provisions of a
Note Agreement, dated as of November 15, 1996, entered into by the Company and
Oneida Ltd. (The "Guarantor") with the Purchasers named in Schedule I thereto
(the "Note Agreement"), and this Note and any holder hereof are entitled to
all of the benefits and are bound by the terms provided for by such Note
Agreement or referred to therein. The provisions of the Note Agreement are
incorporated in this Note to the same extent as if set forth at length herein.
<PAGE>
As provided in the Note Agreement, upon surrender of this Note for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder hereof or his attorney duly
authorized in writing, a new Note for a like unpaid principal amount will be
issued to, and registered in the name of, the transferee upon the payment of
the taxes or other governmental charges, if any, that may be imposed in
connection therewith. The Company may treat the person in whose name this Note
is registered as the owner hereof for the purpose of receiving payment and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
This Note may be declared due prior to its expressed maturity date,
voluntary prepayments may be made hereon and certain prepayments are required
to be made hereon all in the events, on the terms and in the manner as
provided in the Note Agreement. Such prepayments include certain required
prepayments on November 1 of each year beginning November 1, 2000 and ending
November 1, 2007 and certain optional prepayments with a premium.
Should the indebtedness represented by this Note or any part thereof
be collected in any proceeding provided for in the Note Agreement or be placed
in the hands of attorneys for collection, the Company and the Guarantor agree
to pay, in addition to the principal, premium, if any, and interest due and
payable hereon, all reasonable costs of collecting this Note, including
reasonable attorneys' fees and expenses.
This Note and the Note Agreement are governed by and construed in
accordance with the laws of the State of Illinois.
THE SYSTEMS, INC.
By:___________________________________
Its:
<PAGE>
GUARANTY ENDORSEMENT
Payment of principal, interest and premium, if any, with respect to this
Note is guaranteed pursuant to the terms of the Guaranty Agreement and
Subsidiary Guarantees dated as of November __, 1996 of, respectively, Oneida
Ltd., Camden Wire Co., Inc. and Buffalo China, Inc. Subject to the terms of
such Guaranty Agreement which terms are incorporated herein by reference,
each of the undersigned guarantees the prompt payment when due of the principal
of, premium, if any, and interest on this Note and all payments due under the
Note Agreement.
ONEIDA LTD.
By:____________________________________
Title:
CAMDEN WIRE CO., INC.
By:____________________________________
Title:
BUFFALO CHINA, INC.
By:____________________________________
Title:
<PAGE>
EXHIBIT B
LEGAL OPINIONS
A. The opinion of Gardner, Carton & Douglas, special counsel for the
Purchasers, shall be to the effect that:
1. The Company is a corporation organized and validly existing in
good standing under the laws of the State of New York, with all requisite
corporate power and authority to carry on its business as now conducted, to
enter into and perform the Agreement and to issue and sell the Notes.
2. The Guarantor is a corporation organized and validly existing in
good standing under the laws of the State of New York, with all requisite
corporate power and authority to carry on its business as now conducted, to
enter into and perform the Agreement and to issue and sell the Notes.
3. The Agreement has been duly authorized by proper corporate action
on the part of the Company and the Guarantor, has been duly executed and
delivered by an authorized officer of the Company and the Guarantor and
constitutes the legal, valid and binding agreement of the Company and the
Guarantor, enforceable in accordance with its terms, except to the extent that
enforcement of the Agreement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.
4. The Guaranty Agreement and the Subordination Agreement and the
First Amendment to the 1992 Agreement have been duly authorized by proper
corporate action on the part of the Guarantor, have been duly executed and
delivered by an authorized officer of Guarantor and constitute the legal,
valid and binding obligations of the Guarantor, enforceable in accordance
with their respective terms, except to the extent that enforcement of the
Notes may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by equitable principles, regardless
of whether enforcement is sought in a proceeding in equity or at law.
5. The Subsidiary Guarantees and the 1992 Subsidiary Guarantees have
been duly authorized by proper corporate action on the part of the Subsidiary
Guarantors have been duly executed and delivered by an authorized officer of
each of the Subsidiary Guarantors that are a party thereto and constitute the
legal, valid and binding obligations of the Subsidiary Guarantors, enforceable
in accordance with their respective terms, except to the extent that
enforcement of the Subsidiary Guarantors may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or
<PAGE>
affecting the enforcement of the rights of creditors or by equitable
principles, regardless of whether enforcement is sought in a proceeding in
equity or at law.
6. The Notes have been duly authorized by proper corporate action on
the part of the Company, have been duly executed and delivered by an authorized
officer of the Company and constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with their terms, except
to the extent that enforcement of the Notes may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law.
7. Based upon the representations set forth in the Agreement, the
offering, sale and delivery of the Notes and the delivery of the Guaranty do not
require the registration of the Notes under the Securities Act of 1933, as
amended, nor the qualification of an indenture under the Trust Indenture Act
of 1939, as amended.
8. The issuance of the Guaranty Agreement and compliance with the
terms and provisions of the Agreement and the Guaranty Agreement will not
conflict with or result in any breach of any of the provisions of the
Certificate of Incorporation or By-Laws of the Guarantor or its Subsidiaries.
9. The issuance of each of the Subsidiary Guarantees, the 1992
Subsidiary Guarantees, the Subordination Agreement and the First Amendment
to the 1992 Agreement and compliance with the terms and provisions will not
conflict with or result in any breach of any of the provisions of the
Certificate of Incorporation or By-Laws of the Guarantor or its Subsidiaries.
10. The issuance and sale of the Notes and compliance with the terms
and provisions of the Notes, the Agreement and the Subordination Agreement will
not conflict with or result in any breach of any of the provisions of the
Certificate of Incorporation or By-Laws of the Guarantor or its Subsidiaries.
The opinion of Gardner, Carton & Douglas also shall state that the
opinion of Shearman & Sterling, counsel for the Company, delivered to you
pursuant to the Agreement, is satisfactory in form and scope to Gardner, Carton
& Douglas, and, in their opinion, the Purchasers and it are justified in relying
thereon and shall cover such other matters relating to the sale of the Notes as
the Purchasers may reasonably request. Gardner, Carton & Douglas may rely,
as to matters of New York law, on the opinion of Shearman & Sterling.
B. The opinion of Shearman & Sterling, counsel for the Company, shall
cover all matters specified in clauses 1 through 6 set forth above and also
shall be to the effect that:
1. Each of the Company and the Guarantor has full corporate power and
authority to conduct the activities in which it is now engaged and own its
Property.
<PAGE>
2. Each Subsidiary of the Guarantor is a corporation duly organized
and validly existing in good standing under the laws of its jurisdiction of
incorporation, and each has all requisite corporate power and authority to carry
on its business as now conducted and own its Property.
3. Each of the Guarantor and its Subsidiaries is duly qualified or
licensed and in good standing as a foreign corporation authorized to do business
in each jurisdiction where the nature of the business transacted by it or the
character of its Properties owned or leased makes such qualification or
licensing necessary except where failure to so qualify would not, individually
or in the aggregate, have a material adverse affect on its business,
Properties, or condition, financial or otherwise.
4. No authorization, approval or consent of any governmental or
regulatory body is necessary or required in connection with the lawful execution
and delivery by the Company of the Agreement or the lawful offering, issuance
and sale of the Notes by the Guarantor of the Agreement and the Guaranty
Agreement, and no designation, filing, declaration, registration and/or
qualification with any governmental authority is required by the Company in
connection with such offer, issuance and sale.
5. No authorization, approval or consent of any governmental or
regulatory body is necessary or required in connection with the lawful execution
and delivery by the Guarantor of the Agreement or the Guaranty Agreement or the
Subordination Agreement or the First Amendment to the 1992 Agreement and
no designation, filing, declaration, registration and/or qualification with
any governmental authority is required by the Guarantor in connection with
such execution and delivery.
6. No authorization, approval or consent of any governmental or
regulatory body is necessary or required in connection with the lawful execution
and delivery by the Subsidiary Guarantors of the Subsidiary Guarantees or the
1992 Subsidiary Guarantees or the Subordination Agreement and no designation,
filing, declaration, registration and/or qualification with any governmental
authority is required by the Subsidiary Guarantors in connection with such
execution and delivery.
7. The (i) issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Agreement and (ii) the execution, delivery
and performance by the Guarantor of the Agreement, the Guaranty Agreement,
the Subordination Agreement and the First Amendment to the 1992 Agreement, and
(iii) the execution, delivery and performance by the Subsidiary Guarantors
of the Subsidiary Guarantees and the Subordination Agreement will not conflict
with, or result in any breach or violation of any of the provisions of, or
constitute a default under, or result in the creation of any Lien on the
Property of the Company or the Guarantor or any Subsidiary pursuant to, (i)
the provisions of the Certificate of Incorporation or other charter document or
by-laws of the Company or the Guarantor or any Subsidiary or any loan agreement
under which the Company or the Guarantor or any Subsidiary is bound, or other
agreement or instrument known to such counsel (after due inquiry) to which the
Company or the Guarantor or any Subsidiary is a party or by which any of
<PAGE>
them or their Property is bound or (ii) any New York law (including usury laws)
or regulation, order, writ, injunction or decree of any court or governmental
authority applicable to the Company or the Guarantor known to such counsel.
8. There are no actions, suits or proceedings pending or, to the best
of such counsel's knowledge after due inquiry, threatened against, or affecting
the Guarantor or its Subsidiaries, at law or in equity or before or by any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which are likely to
result, either individually or in the aggregate, in any material adverse change
in the business, Properties, operations or condition, financial or otherwise,
of the Guarantor and its Subsidiaries taken as a whole.
9. All of the issued and outstanding shares of capital stock of each
Subsidiary have been duly and validly issued, are fully paid and nonassessable
and, to the knowledge of such counsel, are owned by the Guarantor free and
clear of any Lien.
10. The issuance of the Notes and the use of the proceeds of the sale
of the Notes do not violate or conflict with Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System (12 C.F.R., Chapter II).
11. Neither the Guarantor nor any Subsidiary is: (i) a "public
utility company" or a "holding company," or an "affiliate" or a "subsidiary
company" of a "holding company," or an "affiliate" of such a "subsidiary
company," as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended, or (ii) a "public utility" as defined in the Federal Power
Act, as amended, or (iii) an "investment company" or an "affiliated person"
thereof or an "affiliated person" of any such "affiliated person," as such terms
are defined in the Investment Company Act of 1940, as amended.
The opinion of Shearman & Sterling shall cover such other matters relating
to the sale of the Notes as the Purchasers may reasonably request. With
respect to matters of fact on which such opinion is based, such counsel shall
be entitled to rely on appropriate certificates of public officials and
officers of the Guarantor and with respect to matters governed by the laws
of any jurisdiction other than the United States of America and the State of
New York, such counsel may rely upon the opinions of counsel deemed (and
stated in their opinion to be deemed) by them to be competent and reliable.
<PAGE>
EXHIBIT C
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of November 26, 1996 (the "Guaranty"),
is made and given by ONEIDA LTD., a New York corporation (the "Guarantor"),
in favor of Allstate Life Insurance Company, Allstate Insurance Company and
Pacific Mutual Life Insurance Company (and their respective successors,
assignees or transferees) (the "Purchasers").
RECITALS
A. THC Systems, Inc., a New York corporation (the "Issuer"), and
the Purchasers have entered into a Note Agreement dated as of November 15, 1996
(as the same may hereafter be amended, restated, or otherwise modified from
time to time, the "Agreement") pursuant to which the Purchasers have agreed to
purchase from the Issuer Senior Notes due November 1, 2008 in the principal
amount of $35,000,000 (the "Notes").
B. It is a condition precedent to the obligation of the Purchasers to
purchase the Notes pursuant to the terms of the Agreement that this Guaranty be
executed and delivered by the Guarantor.
C. The Guarantor expects to derive benefits from the consummation of the
purchase of the Notes and finds it advantageous, desirable and in its best
interests to execute and deliver this Guaranty to the Purchasers.
NOW, THEREFORE, in consideration of the purchase of the Notes and
for other good and valuable consideration, the Guarantor hereby covenants and
agrees with the Purchasers as follows
Section l. Defined Terms. As used in this Guaranty, the following terms
shall have the meaning indicated:
"Obligations" shall mean all indebtedness, liabilities and obligations of
the Issuer to the Purchasers of every kind, nature or description under the
Agreement and the Notes.
"Person" shall mean any individual, limited liability company,
corporation, partnership, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
Section 2. The Guaranty. The Guarantor hereby absolutely and
unconditionally guarantees to the Purchasers the payment when due (whether at a
stated maturity or earlier by reason of acceleration or otherwise) and
performance of the Obligations.
Section 3. Guaranty Absolute. The Guarantor acknowledges and agrees that
Obligations may be created and continued in any amount, without affecting or
impairing the
<PAGE>
liability of the Guarantor hereunder, and the Purchasers may pay (or allow for
the payment of) Obligations out of any sums received by or available to the
Purchasers on account of Obligations from the Issuer or any other Person (except
the Guarantor), from the properties of the Issuer or such other Persons, out
of collateral security or from any other source, and such payment (or
allowance) shall not reduce, affect or impair the liability of the Guarantor
hereunder. The liability of the Guarantor shall be a continuing liability and
shall not be affected by (nor shall anything herein contained be deemed a
limitation upon) the amount of credit which may be extended to the Issuer, the
number of transactions with the Issuer, repayments by the Issuer, or the
allocation by the Purchasers of repayments by the Issuer, it being the
understanding of the Guarantor that the Guarantor's liability shall continue
hereunder so long as there are any Obligations outstanding. Any payment made by
the Guarantor hereunder shall be effective to reduce or discharge such
liability only if accompanied by a written transmittal document. received by
the Purchasers, advising the Purchasers that such payment is made under this
Guaranty for such purpose.
Section 4. Continuing Guaranty. This Guaranty is an absolute, unconditional,
complete and continuing guaranty of payment and performance of the
Obligations, and the obligations of the Guarantor hereunder shall not be
released, in whole or in part, by any action or thing which might, but for this
provision of this Guaranty, be deemed a legal or equitable discharge of a surety
or guarantor, other than irrevocable payment and performance in full of the
Obligations. No notice of the Obligations to which this Guaranty may apply,
or of any renewal or extension thereof need be given to the Guarantor and none
of the foregoing acts shall release the Guarantor from liability hereunder. The
Guarantor hereby expressly waives (a) demand of payment, presentment,
protest, notice of dishonor, nonpayment or nonperformance on any and all forms
of the Obligations; (b) notice of acceptance of this Guaranty and notice of
any liability to which it may apply; (c) all other notices and demands of any
kind and description relating to the Obligations now or hereafter provided for
by any agreement, statute, law, rule or regulation; and (d) any and all defenses
of the Issuer pertaining to the Obligations except for the defense of
discharge by payment. The Guarantor shall not be exonerated with respect to
the Guarantor's liabilities under this Guaranty by any act or thing except
irrevocable payment and performance of the Obligations, it being the purpose
and intent of this Guaranty that the Obligations constitute the direct and
primary obligations of the Guarantor and that the covenants, agreements and
all obligations of the Guarantor hereunder be absolute, unconditional and
irrevocable. The Guarantor shall be and remain liable for any deficiency
remaining after foreclosure of any mortgage, deed of trust or security
agreement securing all or any part of the Obligations, whether or not the
liability of the Issuer or any other Person for such deficiency is discharged
pursuant to statute, judicial decision or otherwise. The acceptance of this
Guaranty by the Purchasers is not intended to, and does not release any
liability previously existing of any other guarantor or surety of an
indebtedness of the Issuer to the Purchasers.
Section 5. Other Transactions. Each of the Purchasers is expressly
authorized (a) to exchange, surrender or release with or without consideration
any or all collateral and security which may at any time be placed with them
or their agent by the Issuer or by any other Person, or to forward or deliver
any or all such collateral and security directly to the Issuer for collection
and remittance or for credit, or to collect the same in any other manner
without notice to the Guarantor, and (b) to amend, modify, extend or
supplement the Agreement, the Notes or other
<PAGE>
instrument evidencing the Obligations or any part thereof and any other
agreement with respect to the Obligations, waive compliance by the Issuer or
any other Person with the respective terms thereof and settle or compromise
any of the Obligations without notice to the Guarantor and without in any
manner affecting the absolute liabilities of the Guarantor hereunder. No
invalidity, irregularity or unenforceability of all or any part of the
Obligations or of any security therefor or other recourse with respect
thereto shall affect, impair or be a defense to this Guaranty. The
liabilities of the Guarantor hereunder shall not be affected or impaired by any
failure, delay, neglect or omission on the part of the Purchasers to realize
upon any of the Obligations, or upon any collateral or security for any or all
of the Obligations, nor by the taking by the Purchasers of (or the failure to
take) any other guaranty or guaranties to secure the Obligations, nor by the
taking by the Purchasers of (or the failure to take or the failure to perfect
its security interest in or other Lien on) collateral or security of any kind.
No act or omission of the Purchasers, whether or not such action or failure to
act varies or increases the risk of, or affects the rights or remedies of the
Guarantor, shall affect or impair the obligations of the Guarantor hereunder.
The Guarantor acknowledges that this Guaranty is in effect and binding without
reference to whether this Guaranty is signed by any other Person or Persons,
that possession of this Guaranty by the Purchasers shall be conclusive evidence
of due delivery hereof by the Guarantor and that this Guaranty shall continue in
full force and effect, both as to the Obligations then existing and/or
thereafter created, notwithstanding the release of or extension of time to any
other guarantor of the Obligations or any part thereof.
Section 6. Actions Not Required. The Guarantor hereby waives any and all
right to cause a marshaling of the assets of the Issuer or any other action by
any court or other governmental body with respect thereto or to cause the
Purchasers to proceed against any security for the Obligations or any other
recourse which the Purchasers may have with respect thereto and further waives
any and all requirements that any Purchaser institutes any action or
proceeding at law or in equity, or obtain any judgment, against the Issuer or
any other Person, or with respect to any collateral security for the
Obligations, as a condition precedent to making demand on or bringing an action
or obtaining and/or enforcing a judgment against, the Guarantor upon this
Guaranty. The Guarantor further acknowledges that time is of the essence with
respect to the Guarantor's obligations under this Guaranty. Any remedy or right
hereby granted which shall be found to be unenforceable as to any Person
or under any circumstance, for any reason, shall in no way limit or prevent the
enforcement of such remedy or right as to any other Person or circumstance,
nor shall such unenforceability limit or prevent enforcement of any other
remedy or right hereby granted.
Section 7. No Subrogation. Notwithstanding any payment or payments made by
the Guarantor hereunder or any setoff or application of funds of the Guarantor
by the Purchasers, the Guarantor shall not be entitled to be subrogated to any
of the rights of the Purchasers against the Issuer or any other guarantor or any
collateral security or guaranty or right of offset held by the Purchasers for
the payment of the Obligations, nor shall the Guarantor seek or be entitled to
seek any contribution or reimbursement from the Issuer or any other guarantor in
respect of payments made by the Guarantor hereunder.
Section 8. Application of Payments. Any and all payments upon the
Obligations made by the Guarantor or by any other Person, and/or the proceeds
of any or all collateral or
<PAGE>
security for any of the Obligations, may be applied by the Purchasers on such
items of the Obligations as the Purchasers may elect.
Section 9. Recovery of Payment. If any payment received by the Purchasers
and applied to the Obligations is subsequently set aside, recovered, rescinded
or required to be returned for any reason (including, without limitation, the
bankruptcy, insolvency or reorganization of the Issuer or any other obligor),
the Obligations to which such payment was applied shall for the purposes of this
Guaranty be deemed to have continued in existence, notwithstanding such
application, and this Guaranty shall be enforceable as to such Obligations as
fully as if such application had never been made. References in this Guaranty
to amounts "irrevocably paid" or to "irrevocable payment" refer to payments that
cannot be set aside, recovered, rescinded or required to be returned for any
reason.
Section 10. Issuers' Financial Condition. The Guarantor is familiar with
the financial condition of the Issuer, and the Guarantor has executed and
delivered this Guaranty based on the Guarantor's own judgment and not in
reliance upon any statement or representation of the Purchasers. The
Purchasers shall have no obligation to provide the Guarantor with any advice
whatsoever or to inform the Guarantor at any time of the Purchasers' actions,
evaluations or conclusions on the financial condition or any other matter
concerning the Issuer.
Section 11. Remedies. All remedies afforded to the Purchasers by reason of
this Guaranty are separate and cumulative remedies and it is agreed that no one
of such remedies, whether or not exercised by the Purchasers, shall be
deemed to be in exclusion of any of the other remedies available to the
Purchasers and shall in no way limit or prejudice any other legal or equitable
remedy which the Purchasers may have hereunder and with respect to the
Obligations. Mere delay or failure to act shall not preclude the exercise or
enforcement of any rights and remedies available to the Purchasers.
Section 12. Bankruptcy of the Issuer. The Guarantor expressly agrees that
the liabilities and obligations of the Guarantor under this Guaranty shall not
in any way be impaired or otherwise affected by the institution by or
against the Issuer or any other Person of any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or any other similar
proceedings for relief under any bankruptcy law or similar law for the relief
of debtors and that any discharge of any of the Obligations pursuant to any
such bankruptcy or similar law or other law shall not diminish, discharge or
otherwise affect in any way the obligations of the Guarantor under this
Guaranty, and that upon the institution of any of the above actions, such
obligations shall be enforceable against the Guarantor.
Section 13. Costs and Expenses. The Guarantor will pay or reimburse the
Purchasers on demand for all out-of-pocket expenses (including in each case
all reasonable fees and expenses of counsel) incurred by the Purchasers arising
out of or in connection with the enforcement of this Guaranty against the
Guarantor or arising out of or in connection with any failure of the
Guarantor to fully and timely perform the obligations of the Guarantor
hereunder.
Section 14. Waivers and Amendments. This Guaranty can be waived, modified,
amended, terminated or discharged only explicitly in a writing signed by the
Purchasers. A
<PAGE>
waiver so signed shall be effective only in the specific instance and for the
specific purpose given.
Section 15. Notices. Any notice or other communication to any party in
connection with this Guaranty shall be in writing and shall be sent by manual
delivery, facsimile transmission (with a confirming copy sent by United States
mail (postage prepaid)), overnight courier or United States mail (postage
prepaid) addressed to such party at the address specified on the signature page
hereof, or at such other address as such party shall have specified to the
other party hereto in writing. All periods of notice shall be measured from
the date of delivery thereof if manually delivered, from the date of sending
thereof if sent by facsimile transmission, from the first business day after
the date of sending if sent by overnight courier, or from four days after the
date of mailing if mailed.
Section 16. Guarantor Acknowledgments. The Guarantor hereby acknowledges
that (a) counsel has advised the Guarantor in the negotiation, execution
and delivery of this Guaranty, (b) the Purchasers have no fiduciary relationship
to the Guarantor, the relationship being solely that of debtor and creditor,
and (c) no joint venture exists between the Guarantor and the Purchasers.
Section 17. Representations and Warranties. The Guarantor hereby
represents and warrants to the Purchasers that:
(a) The Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority and the legal right to
own and operate its properties and to conduct the business in which it is
currently engaged.
(b) The Guarantor has the corporate power and authority and the legal
right to execute and deliver, and to perform its obligations under, this
Guaranty and has taken all necessary corporate action to authorize such
execution, delivery and performance.
(c) This Guaranty constitutes its legal, valid and binding
obligation enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law).
(d) The execution, delivery and performance of this Guaranty will not
(i) violate any provision of any law, statute, rule or regulation or any order,
writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to
the Guarantor, (ii) violate or contravene any provision of its Articles of
Incorporation or bylaws, or (iii) result in a breach of or constitute a default
under any indenture, loan or credit agreement or any other agreement, lease or
instrument to which it is a party or by which it or any of its properties
may be bound or result in the creation of any lien thereunder. The Guarantor
is not in default under or in violation of any such law, statute, rule or
regulation, order, writ, judgment, injunction, decree, determination or award
or any such indenture, loan or
<PAGE>
credit agreement or other agreement, lease or instrument in any case in which
the consequences of such default or violation could have a material adverse
effect on its business, operations, properties, assets or condition (financial
or otherwise).
(e) No order, consent, approval, license, authorization or validation
of, or filing recording or registration with, or exemption by, any
governmental or public body or authority is required on the part of the
Guarantor to authorize, or is required in connection with the execution,
delivery and performance of, or the legality, validity, binding effect or
enforceability of, this Guaranty.
(f) There are no actions, suits or proceedings pending or, to the
knowledge of the Guarantor, threatened against or affecting it or any of its
properties before any court or arbitrator, or any governmental department,
board, agency or other instrumentality which, if determined adversely to the
Guarantor, would have a material adverse effect on its business, operations,
property or condition (financial or otherwise) or on its ability to perform its
obligations hereunder.
(g) The Guarantor expects to derive benefits from the transactions
resulting in the creation of the Obligations. The Purchasers may rely
conclusively on the continuing warranty, hereby made, that the Guarantor
continues to be benefited by the Purchasers' extension of credit accommodations
to the Issuer and the Purchasers shall have no duty to inquire into or
confirm the receipt of any such benefits, and this Guaranty shall be effective
and enforceable by the Purchasers without regard to the receipt, nature
or value of any such benefits.
Section 18. Covenants. Until such time that the Obligations are paid in
full, unless the Purchasers shall otherwise consent in writing:
(a) Corporate Existence. The Guarantor will maintain its corporate
existence in good standing under the laws of its jurisdiction of
incorporation and its qualification to transact business in each jurisdiction
where failure so to qualify would permanently preclude the Guarantor from
enforcing its rights with respect to any material asset or would expose such the
Guarantor to any material liability.
(b) Insurance. The Guarantor shall maintain with financially sound and
reputable insurance companies such insurance as may be required by law and such
other insurance in such amounts and against such hazards as is customary in the
case of reputable firms engaged in the same or similar business and similarly
situated.
(c) Payment of Taxes and Claims. The Guarantor shall file all tax
returns and reports which are required by law to be filed by it and will pay
before they become delinquent all taxes, assessments and governmental charges
and levies imposed upon it or its property and all claims or demands of any
kind (including but not limited to those of suppliers, mechanics, carriers,
warehouses, landlords and other like Persons) which, if unpaid, might result
in the creation of a lien upon its property; provided that the foregoing items
need not be paid if they are being contested in good faith by appropriate
proceedings, and as long as the Guarantor's title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its
<PAGE>
business is not materially interfered with and adequate reserves with respect
thereto have been set aside on the Guarantor's books in accordance with GAAP.
(d) Inspection. The Guarantor shall permit any Person designated by
the Purchasers to visit and inspect any of the properties, corporate books
and financial records of the Guarantor, to examine and to make copies of the
books of accounts and other financial records of the Guarantor, and to discuss
the affairs, finances and accounts of the Guarantor with, and to be advised as
to the same by, its officers at such reasonable times and intervals as the
Purchasers may designate.
(e) Maintenance of Properties. The Guarantor will maintain its
properties used or useful in the conduct of its business in good condition,
repair and working order, and supplied with all necessary equipment, and
make all necessary repairs, renewals, replacements, betterments and improvements
thereto, all as may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
(f) Books and Records. The Guarantor will keep adequate and proper
records and books of account in which full and correct entries will be made of
its dealings, business and affairs.
(g) Compliance. The Guarantor will comply in all material respects
with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject, provided, however, that failure so
to comply shall not be a breach of this covenant if such failure does not
have, or is not reasonably expected to have, a materially adverse effect on
the properties, business, prospects or condition (financial or otherwise) of
the Guarantor and the Guarantor is acting in good faith and with reasonable
dispatch to cure such noncompliance.
(h) Environmental Matters Reporting. The Guarantor will observe and
comply with, all laws, rules, regulations and orders of any government or
government agency relating to health, safety, pollution, hazardous materials or
other environmental matters to the extent non-compliance could result in a
material adverse effect on the Guarantor. The Guarantor will give the Purchasers
prompt written notice of any violation as to any environmental matter by
the Guarantor and of the commencement of any judicial or administrative
proceeding relating to health, safety or environmental matters (a) in which an
adverse determination or result could result in the revocation of or have a
material adverse effect on any operating permits, air emission permits, water
discharge permits, hazardous waste permits or other permits held by the
Guarantor which are material to the operations of such Guarantor, or (b) which
will or threatens to impose a material liability on such Guarantor to any Person
or which will require a material expenditure by the Guarantor to cure any
alleged problem or violation.
(i) Merger. The Guarantor will not merge or consolidate or enter into
any analogous reorganization or transaction with any Person or liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution) provided,
however, the Guarantor may be merged with or liquidated into another Person in
accordance with the terms of the Agreement.
<PAGE>
(j) Sale of Assets. The Guarantor will not sell, transfer, lease or
otherwise convey all or any substantial part of its assets except for sales
and leases of inventory in the ordinary course of business and except for
sales or other transfers permitted by the terms of the Agreement.
(k) Negative Pledge. The Guarantor will not enter into any agreement,
bond, note or other instrument with or for the benefit of any Person other than
the Purchasers and the banks which are lenders to the Guarantor pursuant to that
Credit Agreement dated as of January 19, 1996 which would prohibit the
Guarantor from granting, or otherwise limit the ability of the Guarantor to
grant to the Purchasers a Lien on any assets or properties of the Guarantor.
Section 19. Continuing Guaranty; Assignments under Agreement. This Guaranty
shall (a) remain in full force and effect until irrevocable payment in
full of the Obligations, (b) be binding upon the Guarantor, its successors
and assigns and (c) inure to the benefit of, and be enforceable by, the
Purchasers and its respective successors, transferees, and assigns. Without
limiting the generality of the foregoing clause (c), the Purchasers may
sell, assign or otherwise transfer all or any portion of its rights and
obligations under the Agreement to any other Persons to the extent and in the
manner provided in the Agreement and may similarly transfer all or any portion
of its rights under this Guaranty to such Persons.
Section 20. Revocation. Notwithstanding any other provision hereof, the
Guarantor may revoke this Guaranty prospectively as to future transactions by
written notice to that effect actually received by the Purchasers. No such
revocation shall release, impair or affect in any manner any liability hereunder
with respect to Obligations created, contracted, assumed or incurred prior to
receipt by the Purchasers of written notice of revocation, or Obligations
created, contracted, assumed or incurred after receipt of such notice pursuant
to any contract entered into by the Purchasers prior to receipt of such notice,
or any renewals or extensions thereof, theretofore or thereafter made, or all
other costs, expenses and attorneys' fees arising from such Obligations.
Section 21. Governing Law and Construction. THE VALIDITY, CONSTRUCTION
AND ENFORCEABILITY OF THIS GUARANTY SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF ILLINOIS, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Whenever possible, each provision of this Guaranty and any other statement,
instrument or transaction contemplated hereby or relating hereto shall be
interpreted in such manner as to be effective and valid under such applicable
law, but, if any provision of this Guaranty or any other statement, instrument
or transaction contemplated hereby or relating hereto shall be held to
be prohibited or invalid under such applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Guaranty or any other statement, instrument or transaction contemplated
hereby or relating hereto.
Section 22. Consent to Jurisdiction. AT THE OPTION OF THE PURCHASERS, THIS
GUARANTY MAY BE ENFORCED IN ANY FEDERAL COURT OR ILLINOIS STATE COURT SITTING
IN CHICAGO, ILLINOIS; AND THE GUARANTOR CONSENTS TO THE JURISDICTION AND VENUE
OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT
CONVENIENT. IN THE EVENT
<PAGE>
THE GUARANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY
TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS GUARANTY, THE PURCHASERS
AT THEIR OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT
BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 23. Counterparts. This Guaranty may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
Section 24. General. All representations and warranties contained in this
Guaranty or in any other agreement between the Guarantor and the Purchasers
shall survive the execution, delivery and performance of this Guaranty and
the creation and payment of the Obligations. Captions in this Guaranty are for
reference and convenience only and shall not affect the interpretation or
meaning of any provision of this Guaranty.
<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date
first above written.
ONEIDA LTD.
By: /s/ Edward W. Thoma
Title: Senior Vice President, Finance
Address for the Purchasers: Address for the Guarantor:
Allstate Life Insurance Company Oneida Ltd.
Private Placements Department 163 Kenwood Avenue
3075 Sanders Road, G3A Oneida, New York 13421
Northbrook, IL 60062-7127
Allstate Insurance Company
Private Placements Department
3075 Sanders Road, G3A
Northbrook, IL 60062-7127
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
<PAGE>
EXHIBIT D
SUBSIDIARY GUARANTEE AGREEMENT
To: Allstate Life Insurance Company ("Allstate") ("Noteholder")
3075 Sanders Road
Northbrook, IL 60062-7127
Allstate Insurance Company ("Allstate Insurance") ("Noteholder")
3075 Sanders Road
Northbrook, IL 60062-7127
Pacific Mutual Life Insurance Company ("Pacific Mutual") ("Noteholder")
700 Newport Center
Newport Beach, CA 92660
November 26, 1996
DEFINITIONS
In this Agreement, the words we, our, us, ours and Guarantor shall mean the
corporation executing and delivering this Agreement. The words you, your and
yours mean each of the Noteholders to whom this Agreement is addressed, and each
transferee or assignee of any Noteholder. All capitalized terms not defined
herein shall have the meanings given to those terms in such Note Agreement.
GUARANTEE
For value received and in order to induce you to purchase senior notes
of THC Systems, Inc., a New York corporation ("Borrower"), Guarantor
hereby absolutely and unconditionally, jointly with any other party and
severally, guarantees unto each of you, your successors and assigns, the
payment whenever due, by acceleration or otherwise, of any and all
debts, liabilities and obligations of Borrower to you under a Note Agreement
dated as of November 15, 1996 among Borrower, Oneida Ltd., Allstate Life
Insurance Company, Allstate Insurance Company and Pacific Mutual Life
Insurance Company (the "Note Agreement"), without deduction by reason of
setoff, defense or counterclaim, without regard to the enforcement of any
other guarantee or any other obligations or security, and whether or not such
debts, liabilities or obligations are now existing or hereafter incurred,
including any extensions and renewals thereof or a part thereof, together with
interest, premium, fees, charges, expenses and costs of
<PAGE>
enforcement or collection (including reasonable attorney's fees of both outside
counsel and the allocated costs of in-house counsel) (the "Liabilities");
provided, however, that the liability of Guarantor under this Agreement shall
not exceed the Subsidiary Guarantee Amount as defined below, together with
expenses and the costs of enforcement (including reasonable attorney's fees).
You may make loans to, purchase debt of or extend credit to Borrower in excess
of this limit without affecting the liability of Guarantor hereunder, but the
liability of Guarantor shall not exceed this limitation.
The following terms as used herein shall be defined as follows:
Subsidiary Guarantee Amount - The maximum liability of Guarantor, as required
by the Banks pursuant to the Bank Agreement.
Bank Agreement - That Credit Agreement dated as of January 19, 1996, among
Oneida Ltd. The Chase Manhattan Bank, N.A., as Agent and the banks signatory
to such Agreement, as such Agreement may be from time to time amended. The
term "Bank Agreement" shall also include replacement or additional credit
agreements entered into by the Guarantor or any subsidiary with banks or other
institutional lender
Banks - The bank lenders to the Guarantor pursuant to the Bank Agreement.
Subsidiary Guarantors - Each of Buffalo China, Inc. and Camden Wire Co., Inc.
and each Restricted Subsidiary created or acquired after January 19, 1996,
which becomes a "Guarantor" as such term is defined in the Bank Agreement.
All payments required to be made by Guarantor under this Agreement shall be
made to the Noteholders or their transferees or assignees at the addresses set
forth in the Note Agreement.
YOUR RIGHTS
You may at any time without notice or demand of any kind, the receipt
of which is expressly waived, without regard to any demands or requests
by Guarantor and without thereby impairing Guarantor's obligations
hereunder, releasing Guarantor hereunder or incurring any liability to
Guarantor:
1. Change the rate of interest, the time for repayment, the amount
outstanding or any other provisions with respect to any of the Liabilities,
grant any extension, compromise, settlement, release or discharge (in whole or
in part) to Borrower or any other party liable with Borrower, and sell,
exchange, release, impair or compromise, or fail to perfect or omit to collect
or enforce, any collateral security or other guarantee held by you, or exchange,
substitute, deal with or take any additional collateral security;
2. Realize on and apply any sums of money or other collateral held by you,
whether or not deposited by Guarantor, to such obligation or obligations as you
may elect, whether
<PAGE>
guaranteed hereby or not, without regard to any rights of Guarantor, or any of
them, in respect to the application thereof;
3. Waive, release, delay in the exercise of, or refrain from
exercising, any of your rights (and the single or partial exercise of any such
right or rights shall not preclude any other or further exercise thereof);
4. Fail to give notice to Guarantor of an event of default in the terms
and conditions of the Liabilities; or
5. Take any other action, or engage in a course of conduct, which might
constitute a legal or equitable discharge or defense of a surety or
guarantor or which might otherwise limit recourse against Guarantor.
RIGHT TO SET OFF
All sums to the credit of the Guarantor and any property of
the Guarantor in your possession at any time shall be deemed held by you as
security for the Liabilities and Guarantor hereby gives you the right, without
notice to Guarantor, to set off such sums against any obligation of Guarantor
hereunder.
Your books and records showing the account and amounts outstanding
between you and the Borrower shall he admissible in evidence in any action
or proceeding, and shall constitute prima facie proof thereof. You may take
or refrain from taking any of the actions authorized under this Guarantee
without notice of any kind to Guarantor.
NATURE OF GUARANTEE
Guarantor hereby waives any and all defenses based on the Liabilities and
any right to assert any defenses that Borrower may have in connection with the
Liabilities. No invalidity, irregularity or unenforceability of all or any part
of the Liabilities or of the interest and penalties thereon, expenses of
collection thereof, or of any collateral security therefor, shall affect, impair
or be a defense to this Guarantee, and this Guarantee shall be enforceable as
to all of the Liabilities, despite any petition in bankruptcy brought by or
against the Borrower or despite adjustment of all or any part of the
Liabilities in insolvency proceedings or pursuant to some other compromise with
creditors.
Guarantor's liability hereunder is in addition to and independent of any
other liabilities which Guarantor has incurred or assumed, or may hereafter
incur or assume, by way of endorsement, separate guarantee agreement, or in
any other manner, with respect to all or any part of the Liabilities
guaranteed hereby. This Guarantee does not supersede nor limit any such other
liabilities of Guarantor and your rights and remedies under and pursuant to
this Guarantee and any such other liabilities are cumulative and may be
exercised singly or concurrently.
<PAGE>
Guarantor waives notice of protest and any right to notice of
any action you take with respect to the Liabilities. This Guarantee is a
guarantee of payment and not of collection. As a condition of payment or
performance by Guarantor, you are not required to enforce any remedies against
the Borrower or any other party liable to you on account of the Liabilities;
nor are you required to seek to enforce or resort to any remedies with respect
to any security interest, lien or encumbrance granted to you by the Borrower or
any other party. This Agreement remains fully enforceable irrespective of any
defenses Borrower may assert on the Liabilities, including, but not limited
to, failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction, and usury.
Guarantor hereby waives and renounces any and all rights that it has or may
have for subrogation, indemnity, reimbursement or contribution against the
Borrower for amounts paid by the Guarantor pursuant to this Guarantee.
This waiver is expressly intended to prevent the existence of any claim in
respect to such reimbursement by the Guarantor against the estate of the
Borrower within the meaning of Section 101 of the Bankruptcy Code, and to
prevent the Guarantor from constituting a creditor of the Borrower in respect
of such reimbursement under Section 547(b) of the Bankruptcy Code in the event
of a subsequent case involving the Borrower. Notwithstanding the foregoing, if
it is clearly established, by an amendment to the Bankruptcy Code or by a
final, non-appealable court decision binding on the Bankruptcy Court for the
Northern District of New York, that a right of subrogation, indemnity,
reimbursement or contribution in favor of Guarantor against the Borrower
for amounts paid by Guarantor pursuant to this Guarantee would not render
Guarantor a creditor of Borrower under the Bankruptcy Code, the foregoing waiver
in this paragraph shall become ineffective.
REPAYMENT OR RECOVERY OF CLAIMS
If claim is ever made upon you for repayment or recovery of any amount
or amounts received by you in payment or on account of any of the
Liabilities, and you repay all or part of said amount by reason of (a) any
judgment, decree or order of any court or administrative body, or (b) any
settlement or compromise of any such claim effected by you with any such
claimant (including Borrower), then and in such event Guarantor agrees that
any such judgment, decree, order, settlement or compromise shall be binding
upon Guarantor, notwithstanding any termination hereof or the cancellation
of any such Liabilities, and Guarantor shall be and remain liable to you
hereunder for the amounts so repaid or recovered to the same extent as if
such amount had never originally been received by you.
ORGANIZATION AND AUTHORITY OF GUARANTOR
Guarantor does hereby represent and warrant that:
1. Guarantor is a corporation duly organized, validity existing and
in good standing under the laws of its jurisdiction of incorporation;
<PAGE>
2. Guarantor has all requisite corporate power and authority and all
necessary licenses and permits to own and operate its assets and to carry on its
business as now conducted and as presently proposed to be conducted;
3. Guarantor is duly qualified and is authorized to do business and
is in good standing as a foreign corporation in each jurisdiction where
the character of its assets or the nature of its activities makes such
qualification necessary (including, without limitation, New York);
4. Guarantor has the lawful authority to enter into this Agreement and by
proper corporate action, where applicable, has been duly authorized to execute,
deliver and perform this Agreement;
5. Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or
compliance with the provisions of this Agreement will conflict with or result in
a breach of or violate any provision of law, any order of any court or other
agency of government, the Certificate of Incorporation or By-Laws of Guarantor,
or any of the terms, conditions or provisions of any corporate restriction or
any agreement or instrument to which Guarantor is a party or by which it or
any of its assets are bound, or will constitute a default under any of the
foregoing, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the assets of Guarantor under
the terms of any such instrument or agreement;
6. There are no actions, suits or proceedings pending, or, to the
knowledge of Guarantor, threatened against or affecting Guarantor or any of its
property or rights in any court or by or before any governmental authority or
arbitration board, tribunal or governmental instrumentality or agency which
involve the possibility of materially and adversely affecting the condition
(financial or otherwise) of Guarantor, or the ability of Guarantor to execute,
deliver or perform this Agreement; Guarantor is not in default with respect
to any applicable order of any court, governmental authority or arbitration
board or tribunal;
7. Guarantor has heretofore furnished all requested financial statements
or information requested by the Noteholders in connection with this
transaction; said statements and information are correct and complete, and
present fairly the financial condition of Guarantor on the dates thereof and
the results of its operations for the periods then ended, and show all known
liabilities, direct or contingent, of Guarantor as of the date thereof, and
each financial statement referred to herein was prepared in accordance with
generally accepted accounting principles, consistently applied;
8. There has been no material adverse change in the business, assets,
condition (financial or otherwise) of Guarantor since the date of the above
described financial statements; and
9. Guarantor and Borrower are engaged in business as an integrated group
the operation of which requires financing on a consolidated basis. The
Guarantor (a) is not and has
<PAGE>
not been rendered by the incurrence of its obligations hereunder unable to
pay its indebtedness and obligations (including the Liabilities hereunder) as
and when they mature, and (b) has assets with a book value which exceeds
the total amount of its liabilities on existing obligations (including the
Liabilities hereunder). To the best of Guarantor's knowledge, there is
nothing which would indicate that the book value of its assets does not
approximate the fair market value of such assets.
MISCELLANEOUS
1. Guarantor agrees that any action involving this Guarantee may be
brought by you in any Federal or New York State Court in Onondaga County in the
State of New York, and in any such action Guarantor consents that service of
process upon Guarantor shall be effective if mailed to Guarantor by registered
or certified mail, return receipt requested, at 658 Bailey Avenue, Buffalo, New
York 14204 or if service is otherwise made at that address. The Guarantor
hereby voluntarily and irrevocably waives any right to a trial by jury in any
action, suit or proceeding instituted by or against the Guarantor arising out
of or in connection with this Agreement.
2. This instrument shall be binding upon Guarantor's successors and
assigns and shall inure to your benefit. Your rights and benefits hereunder
shall, if you so direct, inure to any party acquiring any interest in the
Liabilities or any part thereof.
3. This instrument contains the entire agreement between you and
Guarantor and cannot be changed orally. Guarantor expressly disclaims any
reliance on any oral representation made by you. No failure by you to exercise
any right hereunder shall be deemed a waiver thereof, nor shall any single or
partial exercise by you of any right hereunder preclude any other or further
exercise thereof, and no waiver by you of any right hereunder shall operate as
a waiver of any other right.
4. This Agreement and the transactions evidenced thereby shall be
construed under the laws of the State of New York.
5. If any provision of this Agreement is unenforceable in whole or in part
for any reason, the remaining provisions shall continue to be effective.
<PAGE>
IN WITNESS WHEREOF, Guarantor has signed this instrument on the date first
hereinabove written.
BUFFALO CHINA, INC.
By: /s/ William D. Matthews
Title: Chairman of the Board
STATE OF NEW YORK ) ss:
COUNTY OF MADISON)
On this day of November 19, 1996, before me personally appeared William
D. Matthews to me personally known, did depose and say that he/she is the
Chairman of Buffalo China, the corporation described in and which executed the
foregoing instrument, and that he/she executed the same by order of the Board of
Directors of said corporation
/s/ Donna G. McCorduck
Notary Public
<PAGE>
EXHIBIT D
SUBSIDIARY GUARANTEE AGREEMENT
To: Allstate Life Insurance Company ("Allstate") ("Noteholder")
3075 Sanders Road
Northbrook, IL 60062-7127
Allstate Insurance Company ("Allstate Insurance") ("Noteholder")
3075 Sanders Road
Northbrook, IL 60062-7127
Pacific Mutual Life Insurance Company ("Pacific Mutual") ("Noteholder")
700 Newport Center
Newport Beach, CA 92660
November 26, 1996
DEFINITIONS
In this Agreement, the words we, our, us, ours and Guarantor shall mean the
corporation executing and delivering this Agreement. The words you, your and
yours mean each of the Noteholders to whom this Agreement is addressed, and each
transferee or assignee of any Noteholder. All capitalized terms not defined
herein shall have the meanings given to those terms in such Note Agreement.
GUARANTEE
For value received and in order to induce you to purchase senior notes
of THC Systems, Inc., a New York corporation ("Borrower"), Guarantor
hereby absolutely and unconditionally, jointly with any other party and
severally, guarantees unto each of you, your successors and assigns, the
payment whenever due, by acceleration or otherwise, of any and all
debts, liabilities and obligations of Borrower to you under a Note Agreement
dated as of November 15, 1996 among Borrower, Oneida Ltd., Allstate Life
Insurance Company, Allstate Insurance Company and Pacific Mutual Life
Insurance Company (the "Note Agreement"), without deduction by reason of
setoff, defense or counterclaim, without regard to the enforcement of any
other guarantee or any other obligations or security, and whether or not such
debts, liabilities or obligations are now existing or hereafter incurred,
including any extensions and renewals thereof or a part thereof, together with
interest, premium, fees, charges, expenses and costs
<PAGE>
of enforcement or collection (including reasonable attorney's fees of both
outside counsel and the allocated costs of in-house counsel) (the
"Liabilities"); provided, however, that the liability of Guarantor under this
Agreement shall not exceed the Subsidiary Guarantee Amount as defined below,
together with expenses and the costs of enforcement (including reasonable
attorney's fees). You may make loans to, purchase debt of or extend credit to
Borrower in excess of this limit without affecting the liability of Guarantor
hereunder, but the liability of Guarantor shall not exceed this limitation.
The following terms as used herein shall be defined as follows:
Subsidiary Guarantee Amount - The maximum liability of Guarantor, as required
by the Banks pursuant to the Bank Agreement.
Bank Agreement - That Credit Agreement dated as of January 19, 1996, among
Oneida Ltd. The Chase Manhattan Bank, N.A., as Agent and the banks signatory
to such Agreement, as such Agreement may be from time to time amended. The
term "Bank Agreement" shall also include replacement or additional credit
agreements entered into by the Guarantor or any subsidiary with banks or
other institutional lenders.
Banks - The bank lenders to the Guarantor pursuant to the Bank Agreement.
Subsidiary Guarantors - Each of Buffalo China, Inc. and Camden Wire Co., Inc.
and each Restricted Subsidiary created or acquired after January 19, 1996,
which becomes a "Guarantor" as such term is defined in the Bank Agreement.
All payments required to be made by Guarantor under this Agreement shall be
made to the Noteholders or their transferees or assignees at the addresses set
forth in the Note Agreement.
YOUR RIGHTS
You may at any time without notice or demand of any kind, the receipt
of which is expressly waived, without regard to any demands or requests
by Guarantor and without thereby impairing Guarantor's obligations
hereunder, releasing Guarantor hereunder or incurring any liability to
Guarantor:
1. Change the rate of interest, the time for repayment, the amount
outstanding or any other provisions with respect to any of the Liabilities,
grant any extension, compromise, settlement, release or discharge (in whole or
in part) to Borrower or any other party liable with Borrower, and sell,
exchange, release, impair or compromise, or fail to perfect or omit to collect
or enforce, any collateral security or other guarantee held by you, or exchange,
substitute, deal with or take any additional collateral security;
2. Realize on and apply any sums of money or other collateral held by you,
whether
<PAGE>
or not deposited by Guarantor, to such obligation or obligations as you may
elect, whether guaranteed hereby or not, without regard to any rights of
Guarantor, or any of them, in respect to the application thereof;
3. Waive, release, delay in the exercise of, or refrain from
exercising, any of your rights (and the single or partial exercise of any such
right or rights shall not preclude any other or further exercise thereof);
4. Fail to give notice to Guarantor of an event of default in
the terms and conditions of the Liabilities; or
5. Take any other action, or engage in a course of conduct, which might
constitute a legal or equitable discharge or defense of a surety or
guarantor or which might otherwise limit recourse against Guarantor.
RIGHT TO SET OFF
All sums to the credit of the Guarantor and any property of the
Guarantor in your possession at any time shall be deemed held by you as security
for the Liabilities and Guarantor hereby gives you the right, without notice
to Guarantor, to set off such sums against any obligation of Guarantor
hereunder.
Your books and records showing the account and amounts outstanding
between you and the Borrower shall he admissible in evidence in any action
or proceeding, and shall constitute prima facie proof thereof You may take
or refrain from taking any of the actions authorized under this Guarantee
without notice of any kind to Guarantor.
NATURE OF GUARANTEE
Guarantor hereby waives any and all defenses based on the Liabilities and
any right to assert any defenses that Borrower may have in connection with the
Liabilities. No invalidity, irregularity or unenforceability of all or any part
of the Liabilities or of the interest and penalties thereon, expenses of
collection thereof, or of any collateral security therefor, shall affect, impair
or be a defense to this Guarantee, and this Guarantee shall be enforceable as
to all of the Liabilities, despite any petition in bankruptcy brought by or
against the Borrower or despite adjustment of all or any part of the
Liabilities in insolvency proceedings or pursuant to some other compromise with
creditors.
Guarantor's liability hereunder is in addition to and independent of any
other liabilities which Guarantor has incurred or assumed, or may hereafter
incur or assume, by way of endorsement, separate guarantee agreement, or in
any other manner, with respect to all or any part of the Liabilities
guaranteed hereby. This Guarantee does not supersede nor limit any such other
liabilities of Guarantor and your rights and remedies under and pursuant to
this Guarantee and any such other liabilities are cumulative and may be
exercised singly or concurrently.
<PAGE>
Guarantor waives notice of protest and any right to notice of any
action you take with respect to the Liabilities. This Guarantee is a guarantee
of payment and not of collection. As a condition of payment or performance
by Guarantor, you are not required to enforce any remedies against the Borrower
or any other party liable to you on account of the Liabilities; nor are you
required to seek to enforce or resort to any remedies with respect to any
security interest, lien or encumbrance granted to you by the Borrower or any
other party. This Agreement remains fully enforceable irrespective of any
defenses Borrower may assert on the Liabilities, including, but not
limited to, failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction and
usury.
Guarantor hereby waives and renounces any and all rights that it has or may
have for subrogation, indemnity, reimbursement or contribution against the
Borrower for amounts paid by the Guarantor pursuant to this Guarantee.
This waiver is expressly intended to prevent the existence of any claim in
respect to such reimbursement by the Guarantor against the estate of the
Borrower within the meaning of Section 101 of the Bankruptcy Code, and to
prevent the Guarantor from constituting a creditor of the Borrower in respect
of such reimbursement under Section 547(b) of the Bankruptcy Code in the event
of a subsequent case involving the Borrower. Notwithstanding the foregoing, if
it is clearly established, by an amendment to the Bankruptcy Code or by a
final, non-appealable court decision binding on the Bankruptcy Court for the
Northern District of New York, that a right of subrogation, indemnity,
reimbursement or contribution in favor of Guarantor against the Borrower
for amounts paid by Guarantor pursuant to this Guarantee would not render
Guarantor a creditor of Borrower under the Bankruptcy Code, the foregoing waiver
in this paragraph shall become ineffective.
REPAYMENT OR RECOVERY OF CLAIMS
If claim is ever made upon you for repayment or recovery of any amount or
amounts received by you in payment or on account of any of the Liabilities, and
you repay all or part of said amount by reason of (a) any judgment, decree or
order of any court or administrative body, or (b) any settlement or compromise
of any such claim effected by you with any such claimant (including Borrower),
then and in such event Guarantor agrees that any such judgment, decree,
order, settlement or compromise shall be binding upon Guarantor,
notwithstanding any termination hereof or the cancellation of any such
Liabilities, and Guarantor shall be and remain liable to you hereunder for
the amounts so repaid or recovered to the same extent as if such amount had
never originally been received by you.
ORGANIZATION AND AUTHORITY OF GUARANTOR
Guarantor does hereby represent and warrant that:
1. Guarantor is a corporation duly organized, validity existing and
in good standing under the laws of its jurisdiction of incorporation;
<PAGE>
2. Guarantor has all requisite corporate power and authority and all
necessary licenses and permits to own and operate its assets and to carry on its
business as now conducted and as presently proposed to be conducted;
3. Guarantor is duly qualified and is authorized to do business and is in
good standing as a foreign corporation in each jurisdiction where the
character of its assets or the nature of its activities makes such
qualification necessary (including, without limitation, New York);
4. Guarantor has the lawful authority to enter into this Agreement and by
proper corporate action, where applicable, has been duly authorized to execute,
deliver and perform this Agreement;
5. Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment
of or compliance with the provisions of this Agreement will conflict with or
result in a breach of or violate any provision of law, any order of any court or
other agency of government, the Certificate of Incorporation or By-Laws of
Guarantor, or any of the terms, conditions or provisions of any corporate
restriction or any agreement or instrument to which Guarantor is a party or by
which it or any of its assets are bound, or will constitute a default under any
of the foregoing, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the assets of Guarantor under
the terms of any such instrument or agreement;
6. There are no actions, suits or proceedings pending, or, to the
knowledge of Guarantor, threatened against or affecting Guarantor or any of its
property or rights in any court or by or before any governmental authority or
arbitration board, tribunal or governmental instrumentality or agency which
involve the possibility of materially and adversely affecting the condition
(financial or otherwise) of Guarantor, or the ability of Guarantor to execute,
deliver or perform this Agreement; Guarantor is not in default with respect
to any applicable order of any court, governmental authority or arbitration
board or tribunal;
7. Guarantor has heretofore furnished all requested financial
statements or information requested by the Noteholders in connection with this
transaction; said statements and information are correct and complete, and
present fairly the financial condition of Guarantor on the dates thereof and the
results of its operations for the periods then ended, and show all known
liabilities, direct or contingent, of Guarantor as of the date thereof, and
each financial statement referred to herein was prepared in accordance with
generally accepted accounting principles, consistently applied;
8. There has been no material adverse change in the business, assets,
condition (financial or otherwise) of Guarantor since the date of the above
described financial statements; and
9. Guarantor and Borrower are engaged in business as an integrated group
the operation of which requires financing on a consolidated basis. The
Guarantor (a) is not and has
<PAGE>
not been rendered by the incurrence of its obligations hereunder unable to
pay its indebtedness and obligations
(including the Liabilities hereunder) as and when they mature, and (b) has
assets with a book value which exceeds the total amount of its
liabilities on existing obligations (including the Liabilities hereunder). To
the best of Guarantor's knowledge, there is nothing which would indicate
that the book value of its assets does not approximate the fair market value
of such assets.
MISCELLANEOUS
1. Guarantor agrees that any action involving this Guarantee may be
brought by you in any Federal or New York State Court in Onondaga County in the
State of New York, and in any such action Guarantor consents that service of
process upon Guarantor shall be effective if mailed to Guarantor by registered
or certified mail, return receipt requested, at 658 Bailey Avenue, Buffalo, New
York 14204 or if service is otherwise made at that address. The Guarantor
hereby voluntarily and irrevocably waives any right to a trial by jury in any
action, suit or proceeding instituted by or against the Guarantor arising out
of or in connection with this Agreement.
2. This instrument shall be binding upon Guarantor's successors and
assigns and shall inure to your benefit. Your rights and benefits hereunder
shall, if you so direct, inure to any party acquiring any interest in the
Liabilities or any part thereof.
3. This instrument contains the entire agreement between you and
Guarantor and cannot be changed orally. Guarantor expressly disclaims any
reliance on any oral representation made by you. No failure by you to exercise
any right hereunder shall be deemed a waiver thereof, nor shall any single or
partial exercise by you of any right hereunder preclude any other or further
exercise thereof, and no waiver by you of any right hereunder shall operate as
a waiver of any other right.
4. This Agreement and the transactions evidenced thereby shall be
construed under the laws of the State of New York.
5. If any provision of this Agreement is unenforceable in whole or in part
for any reason, the remaining provisions shall continue to be effective.
<PAGE>
IN WITNESS WHEREOF, Guarantor has signed this instrument on the
date first hereinabove written.
CAMDEN WIRE CO., INC.
By: /s/ George L. Miller III
Title: Vice President
STATE OF NEW YORK ) ss:
COUNTY OF MADISON)
On this day of November 26, 1996, before me personally appeared George L.
Miller to me personally known, did depose and say that he/she is the Vice
President of Camden Wire, the corporation described in and which executed the
foregoing instrument, and that he/she executed the same by order of the Board of
Directors of said corporation.
/s/ Catherine H. Suttmeier
Notary Public
<PAGE>
EXHIBIT E
SUBORDINATION AGREEMENT
This Subordination Agreement (the "Agreement"), dated as of November 26,
1996, is among ONEIDA LTD., a New York corporation ("Parent"), BUFFALO CHINA,
INC. ("Buffalo"), THC SYSTEMS, NC. ("THC"), and CAMDEN WIRE CO., INC.
("Camden"), each a New York corporation and the holders of the Notes
referred to below (collectively referred to herein as the "Noteholders").
RECITALS
A. Allstate Life Insurance Company, Allstate Insurance Company, and
Pacific Mutual Life Insurance Company (collectively, the "1996 Noteholders") and
the Parent and THC are parties to a Note Agreement dated as of November 15,
1996 (the "1996 Note Agreement") pursuant to which the 1996 Noteholders
purchased Senior Notes issued by THC and guaranteed by the Parent in the
aggregate principal amount of $35,000,000 (the "1996 Notes") in accordance with
the terms of the 1996 Note Agreement.
B. Allstate Life Insurance Company and Pacific Mutual Life Insurance
Company (collectively, the "1992 Noteholders"), and the Parent are parties to
a Note Agreement dated as January 1, 1992 (the "1992 Note Agreement") pursuant
to which the 1992 Noteholders purchased Senior Notes issued by the Parent in
the aggregate principal amount of $30,000,000 (the "1992 Notes") in accordance
with the terms of the 1992 Note Agreement. (The 1992 Note Agreement and the
1996 Note Agreement, as such agreements may be from time to time amended,
modified or supplemented, are hereinafter collectively referred to as the
"Note Agreements" and the 1992 Notes and the 1996 Notes are hereinafter
collectively referred to as the "Notes").
C. Buffalo, Camden and THC are Restricted Subsidiaries (as such term
is defined in the Note Agreements). Each of Buffalo, Camden and THC has
executed and delivered to the 1992 Noteholders a Subsidiary Guarantee Agreement
dated as of November 1, 1996 (the "1992 Guarantee Agreement") guaranteeing
repayment of the 1992 Notes and other obligations owed pursuant to the 1992 Note
Agreement.
D. Buffalo and Camden have executed and delivered to the 1996
Noteholders a Subsidiary Guarantee Agreement dated as of November 26, 1996 (the
"1996 Guarantee Agreement") guaranteeing repayment of the 1996 Notes and other
obligations owed pursuant to the 1996 Note Agreement.
E. Parent from time to time extends credit to the Guarantors in the form
of notes, advances, accounts receivable, administrative services and
expenses, and other inter-company accommodations made by the Parent to the
Guarantors.
<PAGE>
F. The 1996 Noteholders, as a condition to entering into the 1996 Note
Agreement and purchasing Notes thereunder, and the 1992 Noteholders, as a
condition to granting a Waiver dated as of November 1, 1996 with respect to
certain covenants in the 1992 Note Agreement, have required the Parent and the
Guarantors to execute and deliver this Agreement.
NOW, THEREFORE, in order to induce the Noteholders, and the 1992
Noteholders, as a condition to granting a Waiver dated as of November l, 1996
with respect to certain covenants in the 1992 Note Agreement, to purchase the
1996 Notes and in consideration thereof, the Parent and the Guarantors agree
as follows:
l. Definitions. As used herein, the following terms shall have the
following meanings:
1.1 "Event of Default" shall mean an Event of Default as defined in
the Note Agreements (after giving effect to any applicable cure period) which is
not waived in writing by the Noteholders.
1.2 "Loan Documents" shall mean all credit accommodations, notes, note
agreements, and any other agreements and documents, now or hereafter existing,
creating, evidencing, guarantying, securing or relating to any or all of the
Senior Liabilities, together with all amendments, modifications, renewals, or
extensions thereof.
1.3 "Obligation" shall mean, (a) in the case of the 1992 Notes, the
Parent and (b) the in the case of the 1996 Notes, THC, and (c) with respect to
the 1992 Notes and the 1996 Notes, each and every maker, endorser, guarantor,
or surety of or for any or all of the Senior Liabilities.
1.4 "Senior Liabilities" shall mean all liabilities of the
Guarantors to the Noteholders under the Guarantee Agreements, including, without
limitation, the principal amount of all Notes guaranteed thereby and all
interest payable in respect thereof, together with all fees, late charges,
premiums, costs and expenses payable under the Guarantee Agreements.
1.5 "Subordinated Liabilities" shall mean all liabilities of each of
the Guarantors to the Parent for notes, advances, accounts receivable,
administrative services and expenses, and all other inter-company
accommodations, including, without limitation, all amounts in the inter-company
account maintained by Parent on behalf of each of the Guarantors.
1.6 "Subordinated Loan Documents" shall mean all credit
accommodations, notes, loan agreements and any other agreements and documents,
now or hereafter existing, creating, evidencing, guarantying, securing
or relating to any or all of the Subordinated Liabilities, together with
all amendments, modifications, renewals or extensions thereof.
<PAGE>
2. Subordination.
2.1 Subordination to Senior Liabilities. Except as set forth in
Section 2.2 of this Agreement or as the Noteholders may hereinafter otherwise
expressly consent in writing, the payment of all Subordinated Liabilities
shall be postponed and subordinated to the payment in full of all Senior
Liabilities, and no payments or other distributions whatsoever, including,
without limitation, payments of interest in respect of any Senior Liabilities,
shall be made, nor shall any property or assets of the Guarantor be applied
to the purchase or other acquisition or retirement of any Subordinated
Liabilities, nor given as collateral security to secure repayment of same.
2.2 Permitted Payments. Notwithstanding anything in Section 2.1 to
the contrary, until such time as an Event of Default occurs, Guarantors may
make, and the Parent may receive, payments of principal and interest on account
of Subordinated Liabilities in a manner consistent with past practice. Upon
the occurrence of an Event of Default, all payments on account of
Subordinated Liabilities shall automatically cease, and Guarantors shall not
make, and the Parent shall not receive, any such payments unless the
Noteholders shall expressly consent thereto in writing.
2.3 Rights of Noteholders to Collect Subordinated Liabilities. In
the event of, and commencing with the date thereof, any dissolution, winding
up, liquidation, reorganization or other similar proceedings relating to any
of the Guarantors or to their creditors or their property (whether voluntary or
involuntary, partial or complete, and whether in bankruptcy, insolvency or
receivership, or upon an assignment for the benefit of creditors, or any other
marshaling of the assets and liabilities of any of the Guarantors, or any sale
of all or substantially all of the assets of any of the Guarantors), the Senior
Liabilities shall first be paid in full before the Parent shall be entitled
to receive and/or to retain any payment or distribution in respect of the
Subordinated Liabilities, and in order to implement the foregoing: (i) all
payments and distributions of any kind or character in respect of the
Subordinated Liabilities to which the Parent would be entitled but for the
provisions of this Agreement will be made directly to the Noteholders; and
(ii) the Parent shall promptly file a claim or claims, in the form required in
such proceedings, for the full outstanding amount of the Subordinated
Liabilities, and shall cause said claim or claims to be approved and all
payments and other distributions in respect thereof to be made directly to the
Noteholders.
2.4 Protection of Noteholders' Rights in Subordinated Liabilities.
In the event that, after the occurrence of an Event of Default, the Parent
receives any payment or other distribution of any kind or character from any
Guarantor or any other source whatsoever in respect of any of the Subordinated
Liabilities, other than as expressly permitted by the terms of this Agreement,
such payment or other distribution shall be received in trust for the
Noteholders and promptly turned over by the Parent to the Noteholders. The
Parent will cause to be clearly inserted in any promissory note or other
instrument which at any time evidences any of the Subordinated Liabilities a
statement to the effect that the payment thereof is subordinated in
accordance with the terms of this Agreement. The Parent will execute such
further documents and instruments and take such further action as the
Noteholders may from time to time
<PAGE>
reasonably request to carry out the intent of this Agreement. The Parent
hereby irrevocably appoints the Noteholders its attorney in fact, such
appointment being coupled with an interest, to execute such further documents
and instruments and take such further action on behalf of the Parent as the
Noteholders may from time to time deem reasonable to carry out the intent of
this Agreement, including, without limitation, the actions set forth in Section
2.3 hereof.
2.5 Treatment of Payment of Subordinated Liabilities. All payments
and distributions received by the Noteholders in respect of the Subordinated
Liabilities, to the extent received in or converted into cash, may be applied by
the Noteholders first to the payment of any and all expenses (including
attorneys' fees and disbursements and the allocated fees, expenses and cost of
in-house counsel) paid or incurred by the Noteholders or the Noteholders in
enforcing this Agreement or in endeavoring to collect or realize upon any of
the Subordinated Liabilities, and any balance thereof shall be applied by the
Noteholders toward the payment of the Senior Liabilities remaining unpaid by
allocating the balance among the Noteholders rata in accordance with the
respective unpaid principal amounts of the Notes then outstanding under the
Note Agreements.
2.6 Prohibition On Changes in Subordinated Liabilities. The Parent
will not, without the prior written consent of the Noteholders: (i) cancel,
waive, or forgive any Subordinated Liabilities or any rights in respect
thereof; or (ii) convert any Subordinated Liabilities into stock in the
Guarantors.
2.7 Continuing Agreement. This Agreement shall in all respects be a
continuing agreement and shall remain in full force and effect until all Senior
Liabilities have been paid in full.
2.8 Permitted Changes in Senior Liabilities. The Noteholders may,
from time to time, take any or all of the following actions without affecting
the subordination set forth in this Agreement: (i) retain or obtain a security
interest in any property to secure any of the Senior Liabilities; (ii)
retain or obtain the primary or secondary obligation of any other Obligor or
Obligors with respect to any of the Senior Liabilities; (iii) extend, renew,
alter or exchange any of the Senior Liabilities; (iv) release or compromise any
obligation of any nature of any Obligor with respect to any of the Senior
Liabilities; and (v) release any security interest or lien in, allow a
security interest or lien to be unperfected, surrender, release or permit any
substitution or exchange for, all or any part of any property securing any of
the Senior Liabilities, or extend, renew or release, compromise, alter or
exchange any obligations of any nature of any Obligor with respect to any such
property.
3. Representations and Warranties. Each of the Parent and the
Guarantors hereby represents and warrants that: (i) it has the necessary power
and capacity to make and perform this Agreement and such making and performance
have been duly authorized by all necessary corporate action; (ii) the making
and performance of this Agreement does not and will not violate any provision of
law or regulation or result in the breach of, or constitute a default or
require any consent under, any indenture or other agreement or instrument to
which it is a party
<PAGE>
or by which any of its properties may be bound; and (iii) this Agreement is the
legal, valid and binding obligation of each of the Parent and Guarantors,
enforceable in accordance with its terms.
4. Additional Subordinated Liabilities. If, under the terms of
the 1992 Note Agreement or the 1996 Note Agreement, any other Restricted
Subsidiary of Parent (as that term is defined in the 1992 Note Agreement and the
1996 Note Agreement) becomes obligated to deliver to the Noteholders a written
guarantee of amounts due under the Note Agreements, the Parent agrees to
subordinate all liabilities of such Restricted Subsidiary to the Parent for
notes, advances, accounts receivable, administrative services and expenses and
other inter-company accommodations to the prior payment of the such Restricted
Subsidiary's liability under the written guarantee. Parent agrees to execute,
and to cause such Restricted Subsidiary to execute, a subordination agreement
in form and substance similar to this Agreement.
5. Miscellaneous.
5.1 Remedies Cumulative; No Waiver. The rights, powers and
remedies of the Noteholders provided in this Agreement and in the Note
Agreements are cumulative and not exclusive of any right, power or remedy
provided by law or equity. No failure or delay on the part of the
Noteholders in the exercise of any right, power or remedy shall operate as a
waive thereof, nor shall any single or partial exercise preclude any other or
further exercise thereof, or the exercise of any other right, power or remedy.
5.2 Notices. Notices and communications under this Agreement shall be
in writing and shall be given as provided in Section 11.2
of the Note Agreements.
5.3 Governing Law. This Agreement shall be construed in accordance
with and governed by the substantive laws of the State of Illinois without
reference to conflict of laws principles.
5.4 Integration; Amendment. This Agreement and the other Loan
Documents constitute the sole agreement of the parties with respect to the
subject matter hereof and thereof and supersede all oral negotiations and
prior writings with respect to the subject matter hereof and thereof. No
amendment of this Agreement, and no waiver of any one or more of the provisions
hereof, shall be effective unless set forth in writing and signed by the
parties hereto.
5.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective heirs, executors,
administrators, successors and permitted assigns; provided, however, that the
Guarantors and the Parent may not assign their rights or obligations hereunder
or any interest herein without the prior written consent of the Noteholders, and
any such assignment or attempted assignment shall be void and of no effect with
respect to the Noteholders. The Noteholders may from time to time sell or
assign, in whole or in part, or grant participation in the Notes, the Senior
Liabilities, this Agreement and/or the obligations evidenced thereby.
<PAGE>
5.6 Severability. The illegality, unenforceability or inconsistency
of any provision of this Agreement shall not affect or impair the legality,
enforceability or consistency of the remaining provisions of this Agreement.
5.7 Judicial Proceeding; Waivers. The parties acknowledge and agree
that any suit, action or proceeding, whether claim or counterclaim, brought or
instituted by the Noteholders and the Parent or any successor or assign of
the Noteholders and the Parent, on or with respect to this Agreement or the
dealings of the parties with respect hereto or thereto, shall be tried only by a
court and not by a jury.
5.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the date set forth above.
ONEIDA LTD.
By: /s/ Edward W. Thoma
Edward W. Thoma, Senior Vice President
BUFFALO CHINA, INC.
By: /s/ William D. Matthews
CAMDEN WIRE CO., INC.
By: /s/ George L. Miller III
Vice President
THC SYSTEMS, INC.
By: /s/ Glenn B. Kelsey
Vice President - Finance
ALLSTATE LIFE INSURANCE COMPANY
By: /s/
By: /s/ Steven M. Laude
Authorized Signatories
ALLSTATE INSURANCE COMPANY
By: /s/
By: /s/ Steven M. Laude
Authorized Signatories
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By: /s/ Diane W. Daleo
By: /s/ Peter S. Fiek
<PAGE>
EXHIBIT F
SHARING AGREEMENT
SHARING AGREEMENT dated as of November 26, 1996 among The
Chase Manhattan Bank, as Agent (the "Agent"), The Chase Manhattan Bank, Marine
Midland Bank and NationsBank, N.A. (each bank is referred to herein as a
"Lender" and the banks, together with the Agent, are collectively referred to
herein as "Lenders") and Allstate Life Insurance Company, Allstate Insurance
Company and Pacific Mutual Life Insurance Company (each institution is
referred to herein either as a "1992 Noteholder" (as defined in Recital A
below) or a "1996 Noteholder" (as defined in Recital A below)) and the 1992
Noteholders and the 1996 Noteholders and the Lenders are individually
referred to herein as a "Creditor" and are collectively referred to herein as
the "Creditors").
RECITALS:
A. Under and pursuant to a Note Agreement dated as of November
15, 1996 (as such agreement may be modified, amended, renewed or replaced, the
"1996 Note Agreement"), between THC Systems, Inc., a New York corporation,
Oneida Ltd., a New York corporation (the "Parent"), and Allstate Life Insurance
Company, Allstate Insurance Company and Pacific Mutual Life Insurance Company
(the "1996 Noteholders"), THC Systems, Inc. has issued and sold to the 1996
Noteholders $35,000,000 aggregate principal amount of its 7.49% Senior Notes due
November 1, 2008 (the "1996 Notes"). Under and pursuant to a Note Agreement
dated as of January 1, 1992 (as such agreement may be modified, amended,
renewed or replaced, the "1992 Note Agreement") between the Parent, Allstate
Life Insurance Company and Pacific Mutual Life Insurance Company (the "1992
Noteholders"), the Parent has issued and sold to the 1992 Noteholders
$30,000,000 principal amount of its 8.52% Senior Notes due January 15, 2002
(the "1992 Notes") (the 1992 Note Agreement and the 1996 Note Agreement
being collectively referred to as the "Note Agreements" and the 1992 Notes and
the 1996 Notes being hereinafter collectively referred to as the "Notes").
B. Under and pursuant to that certain Credit Agreement dated as of January
19, 1996 (as such agreement may be modified, amended, renewed or
replaced, including any increase in the amount thereof, the "Bank Credit
Agreement") among the Parent and the Lenders, the Lenders have made available
to the Parent certain credit facilities in a current aggregate principal amount
up to $45,000,000 (all amounts outstanding in respect of said credit
facilities being hereinafter collectively referred to as the "Loans").
C. In connection with the execution of the Bank Credit Agreement and
as support for the Loans made thereunder, THC Systems, Inc., Buffalo China,
Inc. and Camden Wire Co., Inc., each of which are wholly-owned subsidiaries
of the Parent (together with any other subsidiaries of the Parent required from
time to time to execute and deliver a subsidiary guarantee pursuant to the
provisions of the 1992 Note Agreement, the 1996 Note Agreement or the Bank
Credit Agreement, collectively, the "Subsidiary Guarantors") have guaranteed
to the Lenders
<PAGE>
the payment of the Loans and all other obligations of the Parent arising
in connection with the transactions contemplated by the Bank Credit Agreement
under certain subsidiary guarantees (as such guarantees may be modified,
amended, renewed or replaced, including any increase in the amount thereof, and
together with any other subsidiary guarantee executed and delivered from time
to time pursuant to the provisions of the Bank Credit Agreement,
collectively, the "Lender Guaranty").
D. The Subsidiary Guarantors have entered into subsidiary guarantees dated
as of November 1, 1996 with respect to the 1992 Notes and November 26, 1996 with
respect to the 1996 Notes (as such subsidiary guarantees may be modified,
amended, renewed or replaced and, together with any other subsidiary guarantee
executed and delivered from time to time pursuant to the provisions of the
Note Agreements, collectively, the "Noteholder Guaranty") pursuant to which (a)
Camden Wire Co., Inc. and Buffalo China, Inc. have guaranteed to the holders of
the 1996 Notes the payment of the principal of, premium, if any, and interest on
the 1996 Notes and the payment of all other obligations of THC Systems, Inc.
arising in connection with the transactions contemplated by the 1996 Note
Agreement and (b) Camden Wire Co., Inc., Buffalo China, Inc. and THC Systems,
Inc. have guaranteed to the holders of the 1992 Notes the payment of the
principal of, premium, if any, and interest on the 1992 Notes and the payment
of all other obligations of the Parent arising in connection with the
transactions contemplated by the 1992 Note Agreement. The Lender Guaranty and
the Noteholder Guaranty are each hereinafter referred to as a "Subsidiary
Guarantee".
E. In consideration of the mutual benefit to be provided hereby and
intending to be legally bound, the Lenders and the Noteholders have
agreed to enter into this Agreement.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. DEFINITIONS.
The following terms shall have the meanings assigned to them below in this
1 or in the provisions of this Agreement referred to below:
"Bank Credit Agreement" shall have the meaning assigned thereto in the
Recitals hereof.
"Bankruptcy Proceeding" shall mean, with respect to any person,
a general assignment of such person for the benefit of its creditors, or
the institution by or against such person of any proceeding seeking relief as
debtor, or seeking to adjudicate such person as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of such person
or its debts, under any law relating to bankruptcy, insolvency, reorganization
or relief of debtors, or seeking appointment of a receiver, trustee, custodian
or other similar official for such person or for any substantial part of its
property.
"Creditor" shall have the meaning assigned thereto in the introductory
paragraph hereto.
<PAGE>
"Excess Sharing Payment" shall mean as to any Creditor an amount equal
to the Sharing Payment received by such Creditor less the Pro Rata Share
of Sharing Payments to which such Creditor is then entitled.
"Lender" shall have the meaning assigned thereto in the introductory
paragraph hereto.
"Lender Guaranty" shall have the meaning assigned thereto in the
Recitals hereof.
"Loans" shall have the meaning assigned thereto in the Recitals hereof.
"1992 Notes" shall have the meaning assigned thereto in the Recitals
hereof.
"1992 Note Agreement" shall have the meaning assigned thereto in the
Recitals hereof.
"1996 Notes" shall have the meaning assigned thereto in the Recitals
hereof.
"1996 Note Agreement" shall have the meaning assigned thereto in the
Recitals hereof.
"Noteholder" shall have the meaning assigned thereto in the
introductory paragraph hereto.
"Noteholder Guaranty" shall have the meaning assigned thereto in
the Recitals hereof.
"Notes" shall have the meaning assigned thereto in the Recitals hereof.
"Parent" shall have the meaning assigned thereto in the Recitals
hereof.
"Pro Rata Share of Sharing Payments" shall mean as of the date of any
Sharing Payment to a Creditor an amount equal to the product obtained by
multiplying (x) the amount of all Sharing Payments made to all Creditors
concurrently with the payments to such Creditors in connection with the
collection of such Sharing Payments by (y) fraction, the numerator of which
shall be the Specified Amount owing to such Creditor, and the denominator of
which is the aggregate amount of all outstanding Subject Obligations (without
giving effect in the denominator to the application of any such Sharing
Payments).
"Receiving Creditor" shall have the meaning assigned thereto in 2.
"Sharing Payment" shall have the meaning assigned thereto in 2.
"Specified Amount" shall mean as to any Creditor the aggregate amount
of the Subject Obligations owed to such Creditor.
"Subject Obligations" shall mean all principal of premium, if any, and
any interest on, the Notes and the Loans and all other obligations of THC
Systems, Inc. or the Parent under or in respect of the Notes and the Loans and
under the Note Agreements and the Bank Credit Agreement; provided that any
amount of such Subject Obligations which is not allowed as a
<PAGE>
claim enforceable against the Parent or THC Systems, Inc. in a Bankruptcy
Proceeding under applicable law shall be excluded from the computation of
"Subject Obligations" hereunder.
"Subsidiary Guarantors" shall have the meaning assigned thereto in the
Recitals hereof.
"Subsidiary Guarantee" shall have the meaning assigned thereto in
the Recitals hereof.
Section 2. SHARING OF RECOVERIES.
Each Creditor hereby agrees with each other Creditor that (a) payments made
pursuant to terms of a Subsidiary Guarantee or (b) payments (other than
regularly scheduled payments of principal and interest) made with respect to the
1996 Notes by THC Systems, Inc. (collectively, "Sharing Payments"
or individually, a "Sharing Payment") (x) within 90 days prior to the
commencement of a Bankruptcy Proceeding or at any time thereafter with respect
to any Subsidiary Guarantor or THC Systems, Inc. (with respect to the 1996 Note
Agreement) or the Parent or (y) following the acceleration of the 1992 Notes or
the 1996 Notes or the Loans, shall be shared so that each Creditor shall
receive its Pro Rata Share of Sharing Payments. Accordingly, each Creditor
hereby agrees that in the event (a) an event described in clauses (x) or (y)
above shall have occurred, (b) any Creditor shall receive a Sharing Payment (a
"Receiving Creditor"), and (c) any other Creditor shall not concurrently
receive its Pro Rata Share of Sharing Payments from the same Subsidiary
Guarantor or THC Systems, Inc. in connection with Sharing Payments made
pursuant to clause (b) above, then the Receiving Creditor shall promptly remit
the Excess Sharing Payment to each other Creditor who shall then be entitled
thereto so that after giving effect to such payment (and any other payments
then being made by any other Receiving Creditor pursuant to this 2) each
Creditor shall have received its Pro Rata Share of Sharing Payments.
Any such payments shall be deemed to be and shall be made in
consideration of the purchase for cash at face value, but without recourse,
ratably from the other Creditors of such amount of the 1992 Notes or the 1996
Notes or Loans (or interest therein), as the case may be, to the extent
necessary to cause such Creditor to share such Excess Sharing Payment with the
other Creditors as hereinabove provided; provided, however, that if any such
purchase or payment is made by any Receiving Creditor and if such Excess Sharing
Payment or part thereof is thereafter recovered from such Receiving Creditor by
any Subsidiary Guarantor or by THC Systems, Inc. in connection with Sharing
Payments made pursuant to clause (b) of the preceding paragraph
(including, without limitation, by any trustee in bankruptcy of any
Subsidiary Guarantor or any creditor thereof), the related purchase from
the other Creditors shall be rescinded ratably and the purchase price
restored as to the portion of such Excess Sharing Payment so recovered, but
without interest; and provided further nothing herein contained shall
obligate any Creditor to resort to any setoff, application of deposit balance
or other means of payment or avail itself of any recourse by resort to any
property of THC Systems, Inc. or the Parent or any Subsidiary Guarantor, the
taking of any such action to remain within the absolute discretion of such
Creditor without obligation of any kind to other Creditors to take any such
action.
<PAGE>
Section 3. AGREEMENTS AMONG THE CREDITORS.
Section 3.1. Independent Actions by Creditors. Nothing contained in this
Agreement shall prohibit any Creditor from accelerating the maturity of, or
demanding payment from any Subsidiary Guarantor on, any Subject Obligation of
the Parent or THC Systems, Inc. to such Creditor or from instituting
legal action against THC Systems, Inc. or the Parent or any Subsidiary
Guarantor or THC Systems, Inc. in connection with a Sharing Payment to obtain a
judgment or other legal process in respect of such Subject Obligation, but any
funds received from any Subsidiary Guarantor or THC Systems, Inc. in
connection with a Sharing Payment in connection with any recovery therefrom
shall be subject to the terms of this Agreement.
Section 3.2. Relation of Creditors. This Agreement is entered into solely
for the purpose set forth herein, and no Creditor assumes any responsibility to
any other party hereto to advise such other party of information known to
such other party regarding the financial condition of the Parent, THC Systems,
Inc. or any Subsidiary Guarantor or of any other circumstances bearing
upon the risk of nonpayment of any Subject Obligation. Each Creditor
specifically acknowledges and agrees that nothing contained in this Agreement
is or is intended to be for the benefit of THC Systems, Inc. or the Parent or
any Subsidiary Guarantor and nothing contained herein shall limit or in any way
modify any of the obligations of THC Systems, Inc. or the Parent or any
Subsidiary Guarantor to the Creditors.
Section 3.3. Acknowledgment of Guaranties. The Lenders hereby expressly
acknowledge and consent to the execution and delivery of the
Noteholder Guaranty and the Noteholders hereby expressly acknowledge
the existence of the Lender Guaranty.
SECTION 4. MISCELLANEOUS
Section 4.1. Entire Agreement. This Agreement represents the entire
Agreement among the Creditors and, except as otherwise provided, this
Agreement may not be altered, amended or modified except in a writing executed
by all parties to this Agreement.
Section 4.2. Notices. Notices hereunder shall be given to the Creditors at
their addresses as set forth in the Note Agreements or the Bank Credit
Agreement, as the case may be, or at such other address as may be designated by
each in a written notice to the other parties hereto.
Section 4.3. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of each of the Creditors and their respective
successors and assigns (including, without limitation, any holder of a
participation interest in any Subject Obligation), whether so expressed or not,
and, in particular, shall inure to the benefit of and be enforceable by any
future holder or holders of any Subject Obligations, and the term "Creditor"
shall include any such subsequent holder of Subject Obligations, wherever the
context permits.
Section 4.4. Governing law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
<PAGE>
Section 4.5. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one Agreement,
and any of the parties hereto may execute this Agreement by signing any such
counterpart.
Section 4.6. Sale of Interest No Creditor will sell, transfer or otherwise
dispose of any interest in the Subject Obligations unless such purchaser or
transferee shall agree, in writing, to be bound by the terms of this Agreement.
Section 4.7. Severability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal, or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date set forth above.
ALLSTATE INSURANCE COMPANY
By: /s/
By: /s/ Steven M. Laude
Authorized Signatories
ALLSTATE INSURANCE COMPANY
By: /s/
By: /s Steven M. Laude
Authorized Signatories
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By: /s/ Diane W. Dales
By: /s/ Peter S. Fiek
<PAGE>
THE CHASE MANHATTAN BANK
(as Agent and Bank)
By: /s/ Joseph H. Oddo, Jr.
Joseph H. Oddo, Jr.
Vice President
MARINE MIDLAND BANK
By: /s/ John R. Pennisi
Vice President
NATIONSBANK, N.A.
By: /s/ C. A. Lauher
Vice President
<PAGE>
EXHIBIT 4(a)
FIRST AMENDMENT TO NOTE AGREEMENT
Reference is hereby made to that Note Agreement dated as of January 1, 1992
(the "Original Agreement"), as amended hereby (the "Agreement"), between
Oneida, Ltd. (the "Company"), Allstate Life Insurance Company, and Pacific
Mutual Life Insurance Company (collectively, the "Purchasers"). This First
Amendment to Note Agreement is hereinafter referred to as the "Amendment."
WHEREAS, the Purchasers have agreed to purchase $35,000,000 aggregate
principal amount of 7.49% senior notes issued by THC Systems, Inc. and
guaranteed by the Company (the "1996 Notes"); and
WHEREAS, as a condition to the purchase of the 1996 Notes by the
Purchasers and the granting of a Waiver dated as of November 1, 1996 by the
Purchasers with respect to compliance by the Company with certain covenants of
the Original Agreement, certain of the Company's Subsidiaries have provided
guarantees with respect to the Notes.
IT IS THEREFORE AGREED THAT:
1. Definitions.
(a) All defined terms used herein shall have the meanings assigned to
such terms in the Original Agreement.
(b) Section 5.1 of the Original Agreement shall be amended by adding
thereto the following definitions:
Bank Agreement - That Credit Agreement dated as of January 19,
1996, among the Company, The Chase Manhattan Bank, N.A., as Agent and the banks
signatory to such agreement, as such agreement may be from time to time
amended. The term "Bank Agreement" shall also include replacement or
additional credit agreements entered into by the Company or any Restricted
Subsidiary with banks or other institutional lenders.
Banks - The bank lenders to the Company pursuant to the Bank
Agreement.
Business Day - Any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York; Los Angeles, California; or
Chicago, Illinois are required or authorized to be closed
Camden Disposition - The sale, lease, transfer or other
disposition of stock or assets of Camden Wire Co., Inc. prior to January 31,
1999 (i) for cash consideration, net of any continuing or contingent
liabilities, equal to book value of Camden Wire Co., Inc. at the time of such
sale,
<PAGE>
us or minus ten percent (10%) and (ii) for all of the capital stock of Camden
Wire Co., Inc. or 1 of its assets, as the case may be.
1996 Note Agreement - That Note Agreement dated as of November
15, 1996 between Systems, Inc., the Company and the Purchasers which are
signatories thereto.
1996 Notes - The senior notes issued pursuant to the terms of the
1996 Note Agreement.
Restricted Subsidiary Guarantor - Any Subsidiary Guarantor
which is a Restricted Subsidiary.
Sharing Agreement - The Sharing Agreement dated as of November 26,
1996 between the Banks and the Purchasers substantially in the form attached
hereto as Exhibit A-1.
Subordination Agreement - That Subordination Agreement dated as of
November 26, 1996 providing that all Indebtedness owed by each Subsidiary
Guarantor to the Parent is subordinated to the prior payment of
Indebtedness owed to the Noteholders under this Agreement and the Subsidiary
Guarantees substantially in the form attached hereto as Exhibit 2.
Subsidiary Guarantees - The Guarantee Agreements substantially in
the form attached as Exhibit A-3 hereto executed by each Subsidiary Guarantor.
Subsidiary Guarantors - Each of Buffalo China, Inc., Camden Wire
Co., Inc., THC Systems, Inc. (successor to Oneida Community China, Inc.) and
each Restricted Subsidiary created or acquired after January 19, 1996, which
becomes a "Guarantor" as such term is defined in the Bank Agreement or which is
required to issue a Subsidiary Guaranty pursuant to Section 7.14.
Wholly-Owned Restricted Subsidiary - When applied to a
Restricted Subsidiary, any Restricted Subsidiary 100% of the Voting Stock of
which is owned by the Company or its Wholly-Owned Restricted Subsidiaries.
(c) Section 5.1 of the Original Agreement shall be amended by deleting
therefrom the following definitions: Affiliate; Determination Date;
Indebtedness; Person; Priority Indebtedness; Restricted Investments (but solely
paragraphs (a), (f), (g) and (h) thereof); and Restricted Subsidiary and
inserting in lieu thereof the following:
"Affiliate - Any Person (other than a Subsidiary Guarantor) (i)
which directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, the Company,
(ii) which beneficially owns or holds 5% or more of any class of the Voting
Stock of the Company or any Subsidiary or (iii) 5% or more of the Voting Stock
(or in the case of a Person which is not a corporation, 5% of the equity
interest) of which is beneficially owned or held by the Company or a Subsidiary.
The term "control" means the possession, directly or indirectly, of the power
to direct or cause
<PAGE>
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Determination Date - The day 2 Business Days before the date fixed
for a prepayment pursuant to a notice required by Sections 2.2(b) or 2.3 or the
day 2 Business Days before the date of declaration pursuant to Section 8.2.
Indebtedness - (i) All items of borrowed money, including
Capitalized Leases, which in accordance with generally accepted accounting
principles would be included in determining total liabilities as shown on the
liability side of a balance sheet as of the date at which Indebtedness is to be
determined, (ii) all Guaranties (other than Guaranties of Indebtedness of the
Company by a Restricted Subsidiary Guarantor in accordance with Section 7.15
or of a Restricted Subsidiary Guarantor by the Company), letters of credit and
endorsements (other than of notes, bills and checks presented to banks for
collection or deposit in the ordinary course of business), in each case to
support Indebtedness of other Persons; and (iii) all items of borrowed money
secured by any mortgage, pledge or Lien existing on Property owned subject to
such mortgage, pledge, or Lien, whether or not the borrowed money secured
thereby shall have been assumed by the Company or any Restricted Subsidiary.
Indebtedness of the Company and its Restricted Subsidiaries at January 25,
1992 is set forth in Annex II hereto.
Person - Any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
Priority Indebtedness - Without duplication (i) Funded Debt and
Current Debt of Restricted Subsidiaries (except to the Company or a
Majority-Owned Restricted Subsidiary Guarantor) in each case unsecured by
Liens, (ii) the aggregate amount of Guaranties by Restricted Subsidiaries
(except of Indebtedness of the Company in accordance with Section 7.15 or a
Majority-Owned Restricted Subsidiary in accordance with Section 7.15), (iii)
Funded Debt and Current Debt of the Company and its Restricted Subsidiaries
(except to the Company or a Majority-Owned Restricted Subsidiary Guarantor)
secured by any Lien on the Property of the Company or any Restricted
Subsidiary and (iv) the redemption or liquidation value (whichever is higher) of
all equity securities of Restricted Subsidiaries (other than common stock) which
are not legally and beneficially owned by the Company or its Restricted
Subsidiaries.
Restricted Investments - Any Investment, except for:
(a) Investments in Restricted Subsidiary Guarantors;
(f) Investments in certificates of deposit maturing within
one year from the date of acquisition thereof issued by (i) Chase Manhattan
Bank, or (ii) in the case of any other bank, a bank organized under the laws of
the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $100,000,000
<PAGE>
and whose long-term corporate debt is, at the time of acquisition thereof by
the Company or any Subsidiary, accorded a rating of "A" or better by Moody's
Investors Service, Inc., or "A" or better by Standard & Poor's Ratings Group;
(g) Investments in commercial paper maturing no more than
270 days from the date of issuance issued by any corporation organized
under the laws of the United States or any state thereof, rated in the highest
category by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group;
(h) Investments in money market funds registered under the
Investment Company Act of 1940 which invest in securities which, in the
aggregate, have an average rating of "A" or better (or an equivalent) by
Moody's Investors Services, Inc. or Standard & Poor's Ratings Group;
Restricted Subsidiary - Any Subsidiary (i) which is organized
under the laws of the United States, Puerto Rico, Mexico, Canada or a
member of the European Union or a jurisdiction thereof, (ii) which conducts
substantially all of its business and payments within the United States, Puerto
Rico, Canada, Mexico or any member of the European Union, (iii) a majority of
each class of capital stock of which is legally and beneficially owned by the
Company or a Restricted Subsidiary or (iv) which is designated as a
"Restricted Subsidiary" in Annex I hereto or in a written notice provided to
each Noteholder. The Company and each Restricted Subsidiary which issues a
Subsidiary Guarantee shall, as long as such Subsidiary Guarantee remains in
effect, at all times remain a Restricted Subsidiary."
2. Amendments.
The Purchasers and the Company hereby amend the Original Agreement
as follows:
(a) A new final sentence is added to Section 1.1 as follows:
"The obligations of the Company hereunder and under the Notes
shall be guaranteed by the Subsidiary Guarantors pursuant to the Subsidiary
Guarantees.
(b) Section 2.1(b) of the Original Agreement is amended by
deleting such Section in its entirety and inserting in lieu thereof the
following:
"(b) (i) In the event of a Change of Control, the Company shall,
immediately upon learning thereof, but in any event within five days after the
date of such Change of Control, give written notice to each holder of a Note of
the Change of Control, accompanied by a certificate of an authorized officer of
the Company describing in detail the nature of the Change of Control and
containing an offer by the Company to prepay the Notes on the terms set forth
in the following sentence (the "Change Notice"). Subject to clause (ii) of
this paragraph (b), the Company shall prepay, on a date specified in such notice
by
<PAGE>
the Company which shall be not less than 45 or more than 60 calendar days after
the effective date of such Change in Control, the entire principal amount of
the Notes held by each holder at the price set forth in Section 2.2(b).
(ii) A holder of Notes may accept or reject the offer of the
Company to prepay Notes made pursuant to clause (i) of this paragraph (b) by
causing a notice of such acceptance or rejection to be delivered to the
Company not more than 30 calendar days following receipt of the Change Notice.
A failure by a holder of Notes to respond to an offer to prepay made pursuant
to clause (i) of this paragraph (b) shall be deemed to constitute an acceptance
of such offer by such holder."
(c) Section 2.2(b) of the Original Agreement is amended by adding
after the words "Section 7.10" in the second line the parenthetical clause
"(other than prepayments made in connection with a Camden Disposition pursuant
to such Section 7.10)".
(d) Section 2.7 of the Original Agreement is amended by deleting such
Section in its entirety and inserting in lieu thereof the following:
"2.7 Payments Due on Saturdays, Sundays and Holidays. In any case
where the date of any required prepayment of the Notes or any interest payment
date on the Notes or the date fixed for any other payment of any Note or
exchange of any Note is not a Business Day, then such payment, prepayment or
exchange need not be made on such date but may be made on the next preceding
Business Day, with the same force and effect as if made on the due date."
(e) A new Section 5.5 shall be added to the Original Agreement as
follows:
"Wherever the word "property" is used in this Agreement, the lower
case "p" is changed to the upper case "P"."
(f) A new Section 5.6 shall be added to the Original Agreement as
follows:
Whenever the phrase "chief financial officer" or "chief
accounting officer" is used, the phrase "or Senior Vice President, Finance"
shall be added.
(g) Section 6.6(c) of the Original Agreement is amended by
changing the Section reference "7.13" in the nineteenth line to the Section
reference "7.15".
(h) Section 6.7 of the Original Agreement is amended by adding to the
third sentence thereof the following new clauses (vi), (vii), (viii) and (ix):
"(vi) effect compliance with any law, rule, regulation or order
applicable to you or any other Institutional Holder, (vii) in response to any
subpoena or other legal process, (viii) in connection with any litigation to
which you or any other
<PAGE>
Institutional Holder are a party, or (ix) if an Event of Default has occurred
and is continuing, to the extent you or any other Institutional Holder may
reasonably determine such delivery and disclosure
to be necessary or appropriate in the enforcement or for the protection of
the rights and remedies under the Notes, this Agreement, the Subsidiary
Guarantees or the Subordination Agreement."
(i) A new Section 6.13 shall be added to the Original Agreement as
follows:
"6.13. Company's Restricted Subsidiary Status. The Company shall
at all times own 100% of the Voting Stock of THC Systems, Inc."
(j) A new Section 6.14 shall be added to the Original Agreement as
follows:
"6.14. Bank Agreement. The Company shall promptly notify the
holders of the Notes of any amendment to or other modification of or
replacement of the Bank Agreement and shall promptly provide copies to the
Noteholders of such amendment or modification or replacement documentation."
(k) A new Section 6.15 shall be added to the Original Agreement as
follows:
"6.15. Subsidiary Guarantees. In the event that the Company or
any Restricted Subsidiary acquires a Person which complies with the definition
herein of a Restricted Subsidiary Guarantor, the Company shall, within 10 days
following such acquisition, provide the Noteholders with a Subsidiary
Guarantee from such new Restricted Subsidiary Guarantor."
(l) A new Section 6.16 shall be added to the Original Agreement as
follows:
"6.16 Release of Camden Wire Subsidiary Guarantee. The
Noteholders shall release and discharge Camden Wire Co., Inc. from its
obligations under its Subsidiary Guarantee if (i) the capital stock or assets
of Camden Wire Co., Inc. are sold in compliance with Section 7.10 hereof and
(ii) prior to or simultaneously with such release and discharge by the
Noteholders, the Banks release Camden Wire Co., Inc. from all guarantee
obligations of Camden Wire Co., Inc. to the Rank "
(m) Section 7.4 of the Original Agreement is amended by deleting such
Section in its entirety and inserting in lieu thereof the following:
"7.4. Priority Indebtedness of Restricted Subsidiaries. The
Company will not permit any Restricted Subsidiary to permit to exist, create,
assume, incur, guarantee or otherwise be or become liable, directly or
indirectly, in respect of any Priority Indebtedness, (a) except the 1996 Notes
and (b) except additional Priority Indebtedness (excluding fifty percent
(50%) of the then outstanding principal amount of all tax-exempt
Indebtedness of Restricted Subsidiaries issued at or
<PAGE>
prior to January 26, 1991) which, after giving effect thereto and the
application of proceeds thereof, does not result in aggregate outstanding
Indebtedness (including the 1996 Notes) incurred by Restricted Subsidiaries,
when added to aggregate Indebtedness incurred (without duplication) pursuant to
Section 7.6(f), exceeding, 20% of Consolidated Tangible Net Worth."
(n) Section 7.6 of the Original Agreement is amended by deleting
paragraphs (d) and (f) thereof and inserting in lieu thereof the following:
"(d) Liens on Property of a Restricted Subsidiary, provided
that such Liens secure only obligations owing between the Company and any
Restricted Subsidiary Guarantor or between Majority-Owned Restricted
Subsidiary Guarantors;
(f) Other Liens solely on real estate, plant equipment and
supplies not otherwise permitted under subparagraphs (a) through (e) above
securing Indebtedness; provided that the Indebtedness secured by such Liens does
no exceed the lesser of the cost or fair market value of the Property;
and provided further, that the aggregate amount of such Indebtedness
secured by Liens permitted by this subparagraph (f), when added to the
aggregate amount of other Indebtedness of Restricted Subsidiaries incurred
(without duplication) pursuant to Section 7.4 (but excluding, solely in
connection with the issuance of the 199, Notes, the 1996 Notes), does not exceed
twenty percent (20%) of Consolidated Tangible Net Worth;"
(o) Section 7.8 of the Original Agreement is amended by deleting such
Section in its entirety and inserting in lieu thereof the following:
"7.8. Restricted Payments. The Company will not, and will not
permit any Restricted Subsidiary to, except as hereinafter provided:
(a) declare or pay any dividends (other than to the
Company), either in cash or Property, on any shares of its capital stock of any
class (except dividends or other distributions payable solely in shares of
capital stock of the Company);
(b) directly or indirectly, or through any Subsidiary,
purchase, redeem, or retire any shares of its capital stock or any class or any
warrants, rights or options to purchase or acquire any shares of its capital
stock (other than in exchange for the same or similar securities or out of
the net cash proceeds from the issuance or sale of other shares of capital
stock of the Company);
(c) make any other payment or distribution (other than to
Company), either directly or indirectly or through any Subsidiary, in
respect of its capital stock; or
<PAGE>
(d) make any Restricted Investment;
(all such declarations, payments, purchases, redemptions,
retirements, distributions and investments being herein collectively
called "Restricted Payments") if, after giving effect thereto (i) the Company
could not incur an additional $1.00 of Funded Debt pursuant to Section 7.3,
(ii) an Event of Default pursuant to Section 8.1 shall have occurred and (iii)
the aggregate amount of all Restricted Payments made during the period from and
after January 28, 1996, to and including the date of the Restricted Payment in
question would exceed the sum of:
(x) $12,500,000, plus
(y) 75% (or minus 100% in the case of a deficit) of
Consolidated Net Income for such period (computed on a cumulative basis for the
entire period from January 28, 1996).
The Company will not declare any dividend which
constitutes a Restricted Payment payable more than 60 days after its date of
declaration. Any dividend which complies with the provisions of this Section
7.8 on the date of its declaration shall be deemed to comply on its date of
payment, provided that any intervening event giving rise to non-compliance is
not the result of a Restricted Payment."
(p) Section 7.9 of the Original Agreement is amended by
deleting paragraph (b) in such Section in its entirety and inserting in lieu
thereof the following new paragraphs (b) and (c):
"(b) Any Restricted Subsidiary (except THC Systems, Inc.) may
(i) merge into the Company or another Majority-Owned Restricted Subsidiary
Guarantor or (ii) sell, transfer or lease all or any part of its assets to the
Company or to another Majority-Owned Restricted Subsidiary Guarantor or (iii)
merge into any Person which, as a result of such merger, concurrently becomes
a Restricted Subsidiary, provided in each such instance that there shall exist
no Event of Default or event which, with the passage of time or giving of
notice, or both, would constitute an Event of Default;
(c) THC Systems, Inc. may merge into the Company."
(q) Section 7.10 of the Original Agreement is amended by deleting
such Section in its entirety and inserting in lieu thereof the following:
"7.10 Sale of Assets. During any fiscal year, the Company will
not, and will not permit any Restricted Subsidiary to, sell, lease, transfer
or otherwise dispose of any assets, in one or a series of transactions,
other than in the ordinary course of business, to any Person, other than the
Company or, in the case of the
<PAGE>
THC Systems, Inc., to a Wholly-Owned Restricted Subsidiary Guarantor or, in
the case of all other Restricted Subsidiaries, to a Majority-Owned Restricted
Subsidiary Guarantor (collectively a "Disposition"), if after giving effect to
such Disposition, the aggregate book value of all Dispositions made during such
fiscal year would exceed ten percent (10%) of Consolidated Tangible Assets as
of the end of the immediately preceding fiscal year. Notwithstanding the
foregoing, the Company may make a Disposition in excess of the aforesaid
percentage if the Company shall, within 180 days after such Disposition, (a)
use pro rata the net proceeds from the sale of such assets exceeding ten percent
(10%) to invest in other tangible Property and of at least equivalent value
for use in the business of the Company and its Restricted Subsidiaries or
(b) with respect to the net proceeds from Dispositions exceeding ten percent
(10%) derived other than from a Camden Disposition, to prepay Funded Debt,
including the Notes, on a pro rata basis among all issuers of such Funded Debt,
including the Noteholders (subject to the right, to which the Company
agrees, of any Noteholders to elect not to be so prepaid), subject to the
prepayment requirements of Section 2.2(a) and at the price set forth in Section
2.2(b). With respect to a Camden Disposition occurring prior to March 1, 1997,
such Camden Disposition shall not constitute a Disposition for purposes of this
Section 7.10. With respect to a Camden Disposition occurring after March 1,
1997, the net proceeds of such Camden Disposition, plus proceeds of other
Dispositions made during the same fiscal year which exceed in the aggregate, ten
percent (10%) of Consolidated Tangible Net Assets as of the end of the
immediately preceding fiscal year, shall be used to prepay Funded Debt,
including the Notes, on a
pro rata basis among all issuers of such Funded Debt, including the
Noteholders (subject to the right, to which the Company agrees, of any
Noteholder to elect not to be so prepaid), subject to the prepayment
requirements of Section 2.2(a) and a price equal to 100% of the principal
amount to be prepaid, plus interest accrued to the date of prepayment."
(r) A new Section 7.14 shall be added to the Original Agreement as
follows:
"7.14 Pari Passu Position. The Company agrees that it will not
grant or provide, and at no time will it allow to exist, be created or granted,
any Liens or security interests in favor of, or Guarantees by Restricted
Subsidiaries for the benefit of, any of the Banks, unless in the case of the
giving of any guaranty by Restricted Subsidiaries, the Noteholders shall
simultaneously be provided with a Subsidiary Guarantee."
(s) A new Section 7.15 shall be added to the Original Agreement as
follows:
"7.15 Sharing Agreement. The Company shall not permit any
Restricted Subsidiary to incur Priority Indebtedness or to issue a Restricted
Subsidiary Guarantee without requiring that the lender of such
Indebtedness or beneficiary of such Restricted Subsidiary Guarantee execute the
Sharing Agreement at the time of such incurrence of Indebtedness."
<PAGE>
(t) Section 8.1 of the Original Agreement is amended by:
(i) deleting paragraphs (c), (d) and (f) in their entirety and
by inserting in lieu thereof the following new paragraphs (c), (d) and (f):
"(c) Default shall occur (i) in the payment of the principal
of, premium, or interest on any other Indebtedness of the Company or its
Subsidiaries, aggregating in excess of $1,000,000 as and when due and
payable (whether by lapse of time, declaration, call for redemption
or otherwise), (ii) under any mortgage, agreement or other instrument of the
Company or any Subsidiary securing such Indebtedness or under or pursuant to
which such Indebtedness aggregating in excess of $1,000,000 is issued, (iii)
under any leases other than Capitalized Leases of the Company or any
Subsidiary, with aggregate Rentals in excess of $1,000,000 or (iv) with respect
to any combination of the foregoing involving Indebtedness and/or Rentals
aggregating in excess of $1,000,000 regardless of whether such defaults would be
Events of Default hereunder, and any such defaults with respect to the payment
of money shall continue, unless waived, beyond the period of grace, if any,
allowed with respect thereto;
(d) Default in the observance or performance of Sections
6.13, 6.15, 7.1, 7.3, 7.4, 7.5, 7.7, 7.8, 7.9, 7.10, 7.11, 7.14 or 7.15.
(f) Any representation or warranty made by the Company in
this Agreement, or made by the Company in any written statement or
certificate furnished by the Company in connection with the issuance and sale of
the Notes or furnished by the Company pursuant to this Agreement or
furnished by any Subsidiary Guarantor pursuant to any Subsidiary Guarantee,
proves incorrect in any material respect as of the date of the issuance or
making thereof;"
(ii) and by redesignating paragraph (i) of the Original Agreement
as paragraph (j) and inserting a new paragraph (i), as follows:
"(i) (A) Any Subsidiary Guarantor shall be in default of
or fail to comply with any term, covenant, or agreement contained in any
Subsidiary Guarantee or the Subordination Agreement or (B) any Subsidiary
Guarantee or the Subordination Agreement shall cease to be in full force and
effect; or"
(u) Section 8.2 of the Original Agreement is amended by changing
the paragraph reference to "(h)" in the second line thereof to the
paragraph reference "(i)" and by changing the paragraph reference to
"(i)" in the nineteenth line thereof to the paragraph reference "(j)".
(v) Section 8.3 of the Original Agreement is amended by adding in the
sixteenth line thereof after the parenthetical the clause "and under the
Subsidiary Guarantees".
<PAGE>
(w) Section 8.4 of the Original Agreement is amended by adding in the
seventh line thereof after the word "Notes" the clause "or in the Subsidiary
Guarantees".
(x) Section 8.6 of the Original Agreement is amended by adding in the
second line thereof after the word "Agreement" the clause "and the Subsidiary
Guarantees".
(y) Section 11.1 of the Original Agreement is amended by adding in the
fourteenth line thereof after the word "Notes" the clause "or the Subsidiary
Guarantees or the Subordination Agreement or the Sharing Agreement or any
agreement entered into by the Noteholders and the Company or any Subsidiary
Guarantor" and by adding after the word "Notes" in the eighteenth line the
clause "and the performance by the Subsidiary Guarantors under the Subsidiary
Guarantees and the Subordination Agreement".
3. Representations and Warranties.
(a) In order to induce the Purchasers to enter into this First
Amendment to Note Agreement, the Company confirms that each of
the representations and warranties set forth in the Original Agreement is true
and correct as of the date hereof to the extent such representation or
warranty stated is stated to relate solely to an earlier date, in which
case such representation or warranty was true and correct as of such earlier
date and that no Event of Default (which has not been cured pursuant to
amendments made hereunder) has occurred and is continuing.
(b) The Company represents and warrants that it has the
requisite corporate power and authority to enter into this Agreement and to
otherwise carry out the transactions contemplated by this Amendment.
(c) The Company represents and warrants that this Amendment has been
duly authorized by all necessary corporate action on the part of the Company
and that this Amendment has been executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
4. Counterparts.
This First Amendment to Note Agreement may be executed by the parties
hereto individually, or in any combination of the parties hereto in several
counterparts, all of which taken together shall constitute one and the same
First Amendment to Note Agreement.
5. Conditions to Effectiveness.
The effectiveness of the Purchasers' agreement to this Amendment
is subject to the satisfaction on or prior to the date hereof of each of
the following conditions:
(a) Delivery to the Purchasers of each of the following documents:
<PAGE>
(i) Sharing Agreement;
(ii) Subordination Agreement;
(iii) Subsidiary Guarantees; and,
(iv) such other documents and instruments as the Purchaser shall
reasonably request.
6. Ratification and Acknowledgment.
All of the representations, warranties, provisions, covenants,
terms and conditions of the Original Agreement shall remain unaltered and in
full force and effect and, as amended, the Original Agreement is in all
respects agreed to, ratified and confirmed by the Company. The Company
acknowledges and agrees that the amendments granted herein shall not be
construed as establishing a course of conduct on the part of the Purchasers
upon which the Company may rely at any time
in the future.
7. Reference to and Effect on the Agreement.
Upon the effectiveness of this First Amendment to Note Agreement, each
reference in the Agreement and in other documents describing or referencing this
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like
import referring to the Agreement, shall mean and be a reference
to the Agreement, as amended hereby.
<PAGE>
Dated as of this 26th day of November, 1996.
ONEIDA LTD.
By: /s/ Edward W. Thoma
Senior Vice President - Finance
ALLSTATE LIFE INSURANCE COMPANY
By: /s/
By: /s Steven M. Laude
Authorized Signatories
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By: /s/ Diane W. Dales
Its: Assistant Vice President
By: /s/ Peter S. Fiek
Its: Assistant Secretary
<PAGE>
EXHIBIT 4(a)
CONSENT AND AMENDMENT NO. 3
TO
CREDIT AGREEMENT
This Consent and Amendment No. 3 ("Amendment"), dated as of January 24,
1997, is among ONEIDA, LTD., a New York corporation (the "Borrower"), THE CHASE
MANHATTAN BANK (successor by merger to The Chase Manhattan Bank, N.A. and
Chemical Bank), as agent under the Credit Agreement referred to below
("Agent"), and the Banks which are or have become parties to the Credit
Agreement referred to below ("Banks").
RECITALS
A. The Borrower, the Agent and the Banks are or have become parties to a
Credit Agreement dated as of January 19, 1996 which has been amended by
Amendment No. 1 dated as of September 25, 1996 and Amendment No. 2 dated as of
November 1, 1996 (as amended, hereafter referred to as the "Credit Agreement").
B. The Borrower's obligations under the Credit Agreement have been
guaranteed by Borrower's subsidiary, Camden Wire Co., Inc. ("Camden Wire"),
pursuant to a Limited Corporate Guarantee Agreement dated January 21, 1994
("Camden Wire Guarantee").
C. Borrower and Camden Wire have entered into a Stock Purchase Agreement
dated as of January 2, 1997 with International ire Group, Inc.
("International Wire") pursuant to which Borrower has agreed to sell to
International Wire all of the outstanding capital stock of Camden Wire.
D. Borrower has requested that the Banks consent to the sale of Camden
Wire and release Camden Wire from its obligations under the Camden Wire
Guarantee.
E. The parties also desire to amend the Credit Agreement and to add
certain additional covenants.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. All capitalized terms used in this Amendment which are
not otherwise defined shall have the meanings given to those terms in the
Credit Agreement.
2. Consent. The Banks hereby consent to the sale of Camden Wire
to International Wire Group, Inc. pursuant to the terms set forth in the
Stock Purchase Agreement dated as of January 2, 1997. Following the sale, Camden
Wire shall cease being a Restricted Subsidiary under the Credit Agreement.
<PAGE>
3. Release of Guaranty. The Banks agree to release Camden Wire from
its obligations under the Camden Wire Guarantee and to terminate the Camden
Wire Guarantee, such release and termination to be effective upon consummation
of the sale of Camden Wire to International Wire. Each of the Banks agrees
to execute the Release of Guarantee in the form attached as Exhibit A
4. Amendment of Credit Agreement.
(a) Section 6.17(a) of the Credit Agreement is amended to read as
follows:
The ratio of Total Funded Debt of the Borrower and its Restricted
Subsidiaries to Consolidated Adjusted Tangible Net Worth shall not exceed the
following amounts at the end of any fiscal quarter;
1.75 to 1.0 at the end of the fiscal year ending January 25, 1997;
1.50 to 1.0 at the end of the next three fiscal quarters;
1.35 to 1.0 at the end of the fiscal year ending in January,
1998 and at the end of each subsequent fiscal quarter.
(b) The Credit Agreement is amended to add the following new Sections
6.21 and 6.22:
6.21 Pari Passu Position. The Borrower agrees that it will not,
and will not permit any Restricted Subsidiary to, grant or permit to exist any
Lien in favor of the Noteholders. Borrower further agrees that it will not
permit a Restricted Subsidiary to give any Guaranty in favor of or for the
benefit of the Noteholders unless such Restricted Subsidiary simultaneously
shall guaranty Borrower's obligations hereunder by executing and delivering to
the Banks a Guarantee Agreement substantially in the form of Exhibit F.
6.22 Sharing Agreement. Borrower shall not permit any
Restricted Subsidiary to incur Total Funded Debt or to issue a Guaranty in
favor of any lender without requiring that the lender of such Total
Funded Debt or beneficiary of such Guaranty execute a Sharing Agreement
substantially in the form of the Sharing Agreement dated as of November 26,
1996 among the Banks, the Agent and the Noteholders.
<PAGE>
5. Representations and Warranties. The Borrower represents and warrants to
the Banks that:
(a) Each of the representations and warranties made by the Borrower in
the Credit Agreement is true and correct on and as of the date of this
Amendment (except that Schedule E thereto does not reflect additional liens,
permitted under the Credit Agreement, which were created after the date thereof;
(b) No Default or Event of Default has occurred and is continuing;
(c) This Amendment has been validly executed by Borrower and
constitutes the legal, valid and binding obligation of Borrower enforceable in
accordance with its terms.
6. Effectiveness. This Amendment shall become effective upon the
Agent's receipt of (a) a duly executed counterpart of this Amendment signed by
each of the Borrower, each Bank and the Agent, and (b) evidence that the
Noteholders have consented to the sale of Camden Wire and have released Camden
Wire from all obligations under each guaranty executed by Camden Wire in
favor of the Noteholders.
7. Confirmation of Credit Agreement. Except as amended by this Amendment,
all of the provisions of the Credit Agreement (as previously amended) remain
in full force and effect from and after the date hereof, and the Borrower
hereby ratifies and confirms the Credit Agreement and each of its
obligations thereunder. From and after the date hereof, all references in
the Credit Agreement to "this Agreement", "hereof", "herein", or similar terms,
shall mean and refer to the Credit Agreement as amended by this Amendment.
Delivery of an executed signature page to this Amendment by facsimile
transmission shall be as effective as delivery of a manually signed counterpart.
8. Counterparts. This Amendment may be signed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the day and year first above written.
THE CHASE MANHATTAN BANK
(as Agent and as Bank)
By: /s/ Joseph H. Oddo, Jr.
Joseph H. Oddo, Jr.
Vice President
NATIONSBANK, N.A.
By: /s/ Patricia G. McCormack
Patricia G. McCormack
Title: Senior Vice President
MARINE MIDLAND BANK
By: /s/ John R. Pennisi
John R. Pennisi
Title: Vice President
ONEIDA LTD.
By: /s/ Edward W. Thoma
Edward W. Thoma
Senior Vice President
<PAGE>
EXHIBIT A
RELEASE OF GUARANTY
Subject to the consummation of the Sale referenced below, the
undersigned hereby release Camden Wire Co., Inc. ("Camden Wire") from all
obligations under the Limited Corporate Guarantee Agreement dated January 21,
1994 ("Guarantee Agreement"), and agree that the Guarantee Agreement shall be
terminated and that Camden Wire shall have no further obligation or liability
thereunder.
This Release of Guaranty shall be effective upon the closing of the sale
(the "Sale") of Camden Wire to International Wire Group, Inc.
("International Wire"), pursuant to a Stock Purchase Agreement dated as of
January 2, 1997 among Oneida Ltd., International Wire and Camden Wire. The
Guarantee Agreement shall remain in effect until such Sale is consummated. In
the event the Sale of Camden Wire to International Wire is not consummated for
any reason, this Release of Guaranty shall be null and void and the Guarantee
Agreement shall remain in effect in accordance with its terms.
This Release may be signed in any number of counterparts, all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Release of Guaranty to be
duly executed as of the 24th day of January, 1997.
THE CHASE MANHATTAN BANK (successor to
The Chase Manhattan Bank, N.A. and Chemical Bank)
By: /s/ Joseph H. Oddo, Jr.
Joseph H. Oddo, Jr.
Vice President
NATIONSBANK, N.A.
By: /s/ Patricia G. McCormack
Patricia G. McCormack
Title: Senior Vice President
MARINE MIDLAND BANK
By: /s/ John R. Pennisi
John R. Pennisi
Title: Vice President
<PAGE>
EXHIBIT 4(a)
AMENDMENT
AMENDMENT, dated as of February 12, 1997, to the MODIFIED AND RESTATED
LETTER OF CREDIT, BOND PURCHASE AND GUARANTY AGREEMENT (the "Letter of Credit
Agreement"), dated as of August 1, 1995, among CAMDEN WIRE CO., INC., a New
York corporation ("Camden"), ONEIDA LTD., a New York corporation ("Oneida"),
and THE CHASE MANHATTAN BANK (formerly known as Chemical Bank, "Chase"), as
amended by Amendment No. 1 dated as of November 1, 1996.
WITNESSETH:
WHEREAS, Camden, Oneida and Chase are parties to the Letter of Credit
Agreement; and
WHEREAS, International Wire Group, Inc. ("International Wire"),
International Wire Holding Company ("Holding"), the lenders from time to time
parties thereto, Chase, as Company, as documentation agent are parties to the
Amended and restated Credit Agreement, dated as of February 12, 1997 (as
amended, supplemented or otherwise modified prior tot he date hereof, the
"Credit Agreement"); and
WHEREAS, pursuant to the Stock Purchase Agreement, International Wire has
agreed to use its best efforts to have Oneida released from its obligations
under the Letter of Credit Agreement; and
WHEREAS, Chase has agreed to release Oneida from its obligations under the
Letter of Credit Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
1. Release of Oneida. The parties hereto agree that Oneida is hereby
releases from all of its obligations under the Letter of Credit Agreement and
the Letter of Credit Agreement is hereby amended to delete Article Three
thereof in its entirety and to delete all references to Oneida contained in
the Letter of Credit Agreement. In the event Chase purchases the Bonds under
Section 2.1(b) of the Letter of Credit Agreement other than in a
fiduciary or similar capacity, Chase agrees, in its capacity as holder of the
Bonds, not to initiate or pursue, and to instruct the Trustee not to initiate
or pursue, any actions or remedy against Oneida under the Guaranty Agreement
dated as of August 1, 1985 executed by Oneida in favor of the Trustee.
<PAGE>
2. Deletion of Sections 2.3, 2.4 and 2.7. Sections 2.3, 2.4 and 2.7 of
the Letter of Credit Agreement are hereby deleted in their entirety.
3. Miscellaneous.
(a) Effect. Except as is expressly amended hereby, all of the
representations, warranties, terms, covenants and conditions of the Letter of
Credit Agreement shall remain unamended and not waived and shall continue to be
in full force in effect.
(b) Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
(c) Severability. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(d) Integration. This Amendment represents the entire agreement of the
credit parties with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the parties hereto
relative to the subject matter hereof not expressly set forth or referred to
herein.
(e) GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS ANDS OBLIGATIONS OF
THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
CAMDEN WIRE CO., INC.
By: /s/ Ellen Lipsitz
Title: Vice President
ONEIDA LTD.
By: /s/ Edward W. Thoma
Title: Senior Vice President
THE CHASE MANHATTAN BANK
By: /s/
Title:
<PAGE>
TRI-PARTY AGREEMENT
THIS TRI-PARTY AGREEMENT (this "Agreement") is made as of this 12th day of
February, 1997 by and among INTERNATIONAL WIRE GROUP, INC., a Delaware
corporation ("International Wire"), CAMDEN WIRE CO., INC., a New York
corporation ("Camden"), and ONEIDA LTD., a New York corporation ("Oneida").
RECITALS:
A. Pursuant to the terms of (a) that certain Indenture of Trust dated as
of August 1, 1985 (the "Indenture"), by and between the City of Pine Bluff,
Arkansas, a political subdivision of the State of Arkansas (the "Issuer") and
Simmons First National Bank of Pine Bluff, a national banking association, as
trustee (together with any successor thereto, the "Trustee"), and (b) that
certain Installment Sale Agreement dated as of August 1, 1985 (the "Installment
Agreement"), by and between the Issuer and Camden, the Issuer issued its
Variable Rate Demand Industrial Development Refunding and Construction Revenue
Bonds (Camden Wire Project), Series 1985 (the "Bonds"), in the aggregate
principal amount of $9,500,000 the proceeds of which were used, in part, o
refund a prior bond issue and, in part, to finance the construction of certain
additional project facilities located in Jefferson County, Arkansas (the
"Project".
B. As a condition precedent to the issuance of the Bonds and the sale and
financing of the Project pursuant to the terms of the Installment
Agreement, the Issuer required that Camden deliver or cause to be delivered to
the Trustee, for the benefit of the holders of the Bonds, an irrevocable,
transferable, stand-by letter of credit to secure the payment of the principal
of and interest on the Bonds and the payment of the purchase price of the Bonds
in accordance with the terms of the Indenture.
C. In connection with the issuance of the Bonds, Oneida executed and
delivered that certain Guaranty Agreement dated as of August 1, 1985 in favor
of the Trustee, for the benefit of the holders of the Bonds, guaranteeing the
payment of principal of, premium, if any, and interest on he Bonds (the
"Guaranty Agreement").
<PAGE>
D. Pursuant to and in accordance with that certain Modified and Restated
Letter of Credit, Bond Purchase and Guaranty Agreement dated as of August 1,
1995 (as heretofore amended, the "Reimbursement Agreement") by and among
Camden, Oneida and The Chase Manhattan Bank (formerly known as Chemical Bank)
(the "Bank"), the Bank issued its irrevocable, stand-by letter of credit to the
Trustee, for the account of Camden (said letter of credit, as heretofore
modified and/or amended, the "Letter of Credit").
E. Pursuant to the terms of that certain Stock Purchase Agreement dated
January 2, 1997 by and between International wire, Camden and Oneida (the "Stock
Purchase Agreement"), Oneida agreed to sell and International Wire agreed
to purchase all of the issued and outstanding shares of common stock of Camden
in accordance with the terms and provisions thereof.
F. In connection with the transfer of the stock of Camden to
International ire as contemplated under the Stock Purchase Agreement, the Bank,
Camden and Oneida have executed and delivered that certain Amendment dated as
of February 12, 1997 pursuant to which Oneida has been released from all of its
guaranty obligations under the Reimbursement Agreement. As of the date hereof,
however, Oneida remains obligated to the Trustee under the terms of the
Guaranty Agreement.
NOW, THEREFORE, in consideration of the sum of TEN DOLLARS ($10.00) and
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Recitations. Each and all of the foregoing recitals are true and
correct and are incorporated herein by reference and made a part hereof
for all purposes.
2. Release of Oneida. On or prior to August 13, 1997, Camden and
International Wire hereby agree to either (i) cause the Guaranty Agreement to
be terminated or released by the Trustee, or (ii) cause to be prepaid Camden's
obligations under the Installment Agreement, thereby causing the Bonds to have
been redeemed or defeased in accordance with the terms of the Indenture (the
foregoing obligations of Camden and International Wire are hereinafter
sometimes collectively referred to as the "Release Obligations"). In the event
that, on or prior August 13, 1997, Camden has failed to satisfy the Release
Obligations,
<PAGE>
Oneida shall have the right, on behalf of and in the name of Camden, to
submit to the Trustee and the Issuer, at any time after August 13, 1997, a
notice of exercise of Camden's option to complete the purchase of the Project
Facilities in accordance with the terms of Sections 8.01 and 8.03 of the
Installment Agreement (such notice to be delivered by Oneida in accordance with
the terms hereof being hereinafter referred to as the "Oneida/Camden
Exercise Notice"), and direct the Trustee to redeem the Bonds in whole on the
date of closing specified in the Oneida/Camden Exercise Notice (the "Scheduled
Redemption Date"). Camden hereby grants Oneida a power of attorney to execute
the Oneida/Camden Exercise Notice on behalf of and in the name of Camden and to
deliver same to the Trustee and the Issuer in accordance with the terms of the
Indenture and the Installment Agreement.
3. Indemnification of Oneida. Subject to the terms hereof, International
Wire hereby agrees to indemnify Oneida with respect to any claim made by the
Trustee against Oneida under the Guaranty Agreement (individually, a "Guaranty
Claim" and collectively, the "Guaranty Claims") including, without limitation, a
claim for the payment of principal or interest on the Bonds (individually, a
"P&I Guaranty Claim" and collectively, the "P&I Guaranty Claims""). Upon receipt
of written notice from Oneida that the Trustee has made a Guaranty Claim
against Oneida, International Wire and/or Camden shall make payment directly
to the Trustee in the amount of such Guaranty Claim within two (2)
Business Days following the date of receipt of such written notice from
Oneida. If such Guaranty Claim is a P&I Guaranty Claim and International Wire
and/or Camden has failed to make payment directly to the Trustee in
satisfaction of such P&I Guaranty Claim within such two-Business Day period,
then Oneida shall have the right to draw on the Security Letter of Credit for
payment of the P&I Guaranty Claim and shall direct that the proceeds of such
drawing be forwarded directly to the Trustee in satisfaction of such P&I
Guaranty Claim. Under no circumstances shall Oneida be entitled to retain any
proceeds of a drawing on the Security Letter of Credit unless, and then only
to the extent that, Oneida has advanced funds to the Trustee in payment of a
P&I Guaranty Claim. In the event that Oneida is in receipt of any proceeds
of a drawing on the Security Letter of Credit which are required by the terms
hereof to be delivered to the Trustee in satisfaction of a P&I Guaranty Claim,
Oneida shall be deemed to be holding such proceeds in trust for International
Wire. In addition, Oneida shall have the
<PAGE>
right to make a draw upon the Security Letter of Credit on the Scheduled
Redemption Date, if any, provided that it shall direct that the proceeds of
such draw be forwarded to the Trustee for deposit into the Bond Fund (as such
term is defined in the Indenture) to be used for the payment of principal and
accrued interest on the Bonds on such Scheduled Redemption Date. International
Wire's indemnification obligations hereunder shall be expressly conditioned
upon the performance
by Oneida of its obligations hereunder including, without limitation, the
performance of its obligations under the Guaranty Agreement in accordance
with the terms thereof. The term "Business Day" as used herein shall mean any
day other than a Saturday or Sunday or a day on which national banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
4. Compliance with Guaranty Agreement. Oneida hereby agrees to comply
with each of the terms, covenants, conditions and provisions of the
Guaranty Agreement and any other documents, certificates and agreements
executed and delivered by Oneida in connection therewith, if any,
including, without limitation, any financial covenants or restriction. Further,
Oneida shall not grant any consents or approvals or take any action
whatsoever, as guarantor under the Guaranty Agreement, without the prior
written consent of Camden and International Wire, except to the extent required
in order to enable Oneida to comply with the terms of the Guaranty Agreement.
5. Oneida's Cooperation. Oneida hereby agrees to cooperate with Camden
and International Wire in their efforts to satisfy the Release Obligations
and shall, upon request by International Wire or Camden, execute and deliver
any consents, approvals, statements, affidavits, certificates and/or such
documents or agreements or take any other action as may be reasonably
necessary or desirable, a determined by International Wire or Camden, in
satisfying the Release Obligations or otherwise in connection with the
Project, the Bonds or any documents, instruments or agreements relating
thereto or executed and delivered in connection therewith; provided, however,
that Oneida shall not be required to expend any monies or undertake any
liabilities or obligations, other than as contemplated hereunder, in
connection with any such requests from International wire or Camden.
<PAGE>
6. Security Letter of Credit. Simultaneously with the execution and
delivery of this Agreement, International Wire has caused to be delivered to
Oneida a documentary letter of credit in the initial stated amount of
$9,560,958.90 issued by Chase Manhattan Bank Delaware in the form attached
hereto as Exhibit "A" (the " Credit"), to provide a source of payment to the
Trustee of any P&I Guaranty Claims made against Oneida in the event that such
claims have not otherwise been paid by International Wire or Camden in
accordance with Section 2 hereof and to provide, if necessary, a source of
payment for the outstanding principal and accrued interest on the Bonds to be
redeemed on the Scheduled Redemption Date, if any. Promptly upon the
satisfaction of the Release Obligations, Oneida shall return the Security
Letter of Credit to International for cancellation.
7. Indemnification by Oneida. Oneida hereby agrees to indemnify and
hold International Wire and Camden harmless from and against any losses,
damages, costs, expenses, claims or liabilities arising or resulting from
or in connection with or otherwise occasioned by Oneida's failure to comply
with its obligations under this Agreement, including, without limitation, its
obligation to comply with the terms of the Guaranty Agreement.
8. Binding Upon Successors and Assigns. This Agreement shall inure to
the benefit of, and shall be binding upon, the parties hereto and their
respective successors and assigns.
9. Materiality. All covenants, agreements and provisions made in
this Agreement shall be deemed material and relied upon by the party in whose
favor they run and shall survive the execution and delivery of this Agreement
and the other documents executed in connection herewith.
10. Headings. he headings of the articles, sections and subsections of
this Agreement are for convenience and reference only and shall not be
considered a part hereof nor shall they be deemed to limit or otherwise affect
any of the terms or provisions hereof.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one agreement. It shall not be necessary for the same counterpart to
be signed by all of the parties in order for this instrument to
<PAGE>
be fully binding upon any party signing at least one counterpart.
12. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York
without regard to the principles of conflicts of law.
13. Severability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable
law, but in the event that any term, provision, covenant or condition hereof or
any application thereof should be held by a court of competent jurisdiction to
be invalid, void or unenforceable, all terms, provisions, covenants and
conditions hereof, and all applications thereof not held invalid, void or
unenforceable shall continue in full force and effect and shall in no way
be affected, impaired or invalidated thereby.
14. Notice. All notices, elections, consents, approvals, demands,
objections, requests or other communications which any party hereto may be
required or desire to give pursuant to, under or by virtue of this Agreement
must be in writing and sent by (a) first class U.S. certified or registered
mail, return receipt requested, with postage prepaid, or (b) telecopier
(with receipt confirmed), or (c) express mail or courier (next day delivery),
in each case addressed as follows:
If to International Wire: International Wire Group, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: Ellen L. Lipsitz
Telecopier: (314) 746-2251
With a copy to: Glenn D. West, Esq.
Weil, Gotshal & Manges LLP
l00 Crescent Court
Suite 1300
Dallas, Texas 15201-6950
Telecopier: (214) 746-7777
<PAGE>
If to Camden: Camden Wire Co., Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention: Ellen L . Lipsitz
Telecopier: (314) 746-2251
With a copy to: Glenn D. West, Esq.
Weil, Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201-6950
Telecopier: (214) 746-7777
If to Oneida: Oneida Ltd.
Kenwood Avenue
Oneida, New York 13421
Attention: Catherine H. Suttmeier
Telecopier: (315) 361-700
With a copy to: Ronald C. Berger, Esq.
Bond, Schoeneck & King, LLP
One Lincoln Center
Syracuse, New York 13202-1355
Telecopier: (315) 422-3598
Any party may designate another addressee or change its address for notices
and other communications hereunder by a notice given to the other in the
manner provided in this Section. A notice or other communication sent in
compliance with the provisions of this Section shall be deemed given and
received on (i) the third Business Day following the date it is deposited in
the U.S. mail, or (ii) the date it is received by the other party if sent
by express mail, telecopier, courier or personal delivery.
15. Construction; Exhibits All references to the singular or plural number
or masculine, feminine or neuter gender shall, as the context requires,
include all others. All references to sections, paragraphs, and exhibits are
to this Agreement unless otherwise specifically noted. The use of the words
"hereof", "hereunder", "herein" and words of similar import shall refer to
this entire Agreement and not to any particular section, paragraph or
portion of this
<PAGE>
Agreement unless otherwise specifically noted. All exhibits attached hereto are
by this reference made a part of this Agreement for all purposes.
16. Assignment. This Agreement may not e assigned by any party hereto to
any other party without the prior written consent of each of the other
parties hereto.
17. Authority. Each individual executing this Agreement on behalf of any
party to the Agreement represents and warrants that he or she is authorized to
enter into this Agreement on behalf of that party and that this Agreement binds
that party.
18. Other Agreements Superseded: Amendments. This Agreement supersedes
all prior agreements or understandings, written or oral, of the parties
hereto relating to the subject matter hereof, and, together with the Stock
Purchase Agreement and the other documents executed and delivered in
connection therewith, incorporates the entire understanding of the transactions
contemplated hereby. This Agreement may be amended or supplemented only by a
written instrument signed by the party against whom the amendment or supplement
is sought to be enforced.
19. Judicial Interpretation. Should any provision of this Agreement
require judicial interpretation, it is agreed that a court interpreting or
construing the same shall not apply a presumption that the terms hereof shall
be more strictly construed against any party by reason of the rule of
construction that a document is to be construed more strictly against the
party who itself or through its agent prepared the same, it being agreed
that all parties hereto have participated in the preparation of this Agreement.
20. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY, UNCONDITIONALLY, IRREVOCABLY AND INTENTIONALLY FOREVER
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PERSON OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS
UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED AND DELIVERED IN
CONNECTION HEREWITH OR IN ANY WAY ARISING OUT OF OR RELATED IN ANY MANNER
WITH THE PROJECT (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR
CANCEL THIS
<PAGE>
AGREEMENT AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AGREEMENT WAS
FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE); THIS WAIVER BEING A
MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
INTERNATIONAL WIRE GROUP, INC.
a Delaware corporation
By: /s/ Ellen Lipsitz
Name: Ellen L. Lipsitz
Title: Vice President
CAMDEN WIRE CO., INC.,
a New York corporation
By: /s/ Ellen Lipsitz
Name: Ellen L. Lipsitz
Title: Vice President
ONEIDA LTD.,
a New York corporation
By: /s/ Edward W. Thoma
Name: Edward W. Thoma
Title: Senior Vice President
<PAGE>
EXHIBIT "A"
Form of Security Letter of Credit
CHASE MANHATTAN BANK DELAWARE
LETTER OF CREDIT DEPARTMENT
1201 MARKET STREET / P.O. BOX 8840, RODNEY SQUARE,
WILMINGTON DELAWARE 19899
DATE FEBRUARY 12, 1997
IRREVOCABLE STANDBY OUR NO.
LETTER OF CREDIT 70927
ADVISING BANK APPLICANT
INTERNATIONAL WIRE GROUP, INC.
101 SOUTH HANLEY ROAD
ST. LOUIS, MO 63105
BENEFICIARY AMOUNT
ONEIDA LTD. US $9,560,958.90*****
KENWOOD AVENUE
ONEIDA, NY 13421 EXPIRY
OCTOBER 1, 1997*****
SIR OR MADAM: WE HEREBY ISSUE IN YOUR FAVOR OUR IRREVOCABLE STANDBY LETTER
OF CREDIT NO. 70927 IN AN AMOUNT NOT TO EXCEED IN THE AGGREGATE US
$9,560,958.90, EFFECTIVE IMMEDIATELY AND EXPIRING AT OUR OFFICE AT 1201 NORTH
MARKET STREET, 9TH FLOOR, WILMINGTON, DELAWARE 19801 WITH OUR CLOSE OF BUSINESS
ON OCTOBER 1, 1997.
FUNDS UNDER THIS LETTER OF CREDIT ARE AVAILABLE TO YOU FROM TIME TO TIME
UPON OUR RECEIPT OF YOUR SIGHT DRAFT DRAWN ON US ACCOMPANIED BY THE FOLLOWING:
A DATED STATEMENT SIGNED BY AN OFFICIAL OF ONEIDA LTD. STATING EITHER OF
THE FOLLOWING:
(A) "THE AMOUNT OF THIS DRAWING USD _____ UNDER CHASE MANHATTAN BANK
DELAWARE IRREVOCABLE LETTER OF CREDIT NO. 70927 REPRESENTS FUNDS DUE US AS WE
HAVE BEEN CALLED UPON AS GUARANTOR TO MAKE PAYMENT TO THE TRUSTEE UNDER THAT
CERTAIN AGREEMENT DATED AUGUST 1, 1985 (THE "GUARANTY") BY ONEIDA LTD., AS
GUARANTOR, AND SIMMONS FIRST NATIONAL BANK OF PINE BLUFF, AS TRUSTEE (THE
"TRUSTEE"). WE FURTHER CERTIFY THAT THE AMOUNT DRAWN REPRESENTS THE PRINCIPAL
AMOUNT OF USD _____ AND OR THE INTEREST AMOUNT OF USD $___________ PAID TO THE
TRUSTEE."
-OR-
(B) "THE RELEASE OBLIGATIONS DESCRIBED IN SECTION 2 OF A TRI-PARTY
AGREEMENT DATED AS OF FEBRUARY 12, 1997 AMONG INTERNATIONAL WIRE GROUP, INC.
("INTERNATIONAL WIRE"), ONEIDA LTD. ("ONEIDA") AND CAMDEN WIRE CO., INC.
("CAMDEN") WERE NOT SATISFIED BY AUGUST 13, 1997. A NOTICE (THE "NOTICE") TO
THE CITY OF PINE BLUFF, ARKANSAS ("ISSUER") AND THE SIMMONS FIRST NATIONAL BANK
OF PINE BLUFF ("TRUSTEE") WAS SENT ON OR AFTER AUGUST 13, 1997 BY ONEIDA LTD.,
AS ATTORNEY-IN-FACT FOR CAMDEN, STATING THAT CAMDEN INTENDS TO PREPAY ITS
OBLIGATION UNDER THE INSTALLMENT SALE AGREEMENT DATED AS OF AUGUST 1, 1985
BETWEEN CAMDEN AND THE ISSUER, AND DIRECTING THE TRUSTEE TO REDEEM THE CITY OF
PINE BLUFF VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REFUNDING AND
CONSTRUCTION REVENUE BONDS (CAMDEN WIRE PROJECT) SERIES 1985 (THE "BONDS")
ISSUED PURSUANT TO AN INDENTURE OF TRUST DATED AS OF AUGUST 1, 1985
("INDENTURE"). THE AMOUNT OF THIS DRAWING USD _____ UNDER CHASE MANHATTAN BANK
DELAWARE OF IRREVOCABLE STANDBY LETTER OF CREDIT NO. 70927, DATED FEBRUARY
12, 1997 IRREVOCABLE LETTER OF CREDIT NO. 70927 REPRESENTS THE OUTSTANDING
PRINCIPAL, PREMIUM (IF ANY), AND INTEREST ON THE BONDS ACCRUED THROUGH THE
REDEMPTION DATE SPECIFIED IN THE NOTICE, AND IS TO BE PAID DIRECTLY TO THE
TRUSTEE, ON [INSERT DATE OF REDEMPTION SPECIFIED IN INITIAL CAP NOTICE] FOR
DEPOSIT INTO THE BOND FUND (AS DEFINED IN THE INDENTURE) TO BE USED FOR THE
REDEMPTION OF THE BONDS."
ANY AND ALL BANKING CHARGES ASSOCIATED WITH THIS LETTER OF CREDIT ARE FOR
THE ACCOUNT OF THE APPLICANT.
IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE
REDUCED AUTOMATICALLY AND WITHOUT AMENDMENT, FROM TIME TO TIME IN THE FOLLOWING
MANNER:
A) BY ANY AMOUNT CLAIMED BY YOU UNDER THIS LETTER OF CREDIT; OR
B) UPON OUR RECEIPT OF A WRITTEN STATEMENT PURPORTEDLY SIGNED BY AN
OFFICIAL OF INTERNATIONAL WIRE GROUP, INC. AND ONEIDA LTD. STATING THAT OUR
LETTER OF CREDIT CAN BE REDUCED BY A STATED AMOUNT AS A RESULT OF A REDUCTION
TO THE AMOUNT OF THE GUARANTOR'S OBLIGATIONS UNDER THE GUARANTY.
IT IS FURTHER A CONDITION THAT THIS LETTER OF CREDIT SHALL BE REINSTATED BY
THE AMOUNT OF THE REDUCTION INDICATED IN (B) ABOVE, WITHOUT AMENDMENT UPON
OUR RECEIPT OF A WRITTEN ADVICE PURPORTEDLY SIGNED BY AN OFFICIAL OF
INTERNATIONAL WIRE GROUP, INC. AND ONEIDA LTD. CERTIFYING THAT THERE HAS BEEN A
CORRESPONDING REINSTATEMENT OF THE AMOUNT OF THE GUARANTOR'S OBLIGATIONS UNDER
THE GUARANTY.
THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING.
SUCH UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED OR AMPLIFIED BY
REFERENCE TO ANY DOCUMENTS OR INSTRUMENT REFERRED TO HEREIN OR IN WHICH THIS
LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES AND
ANY SUCH REFERENCE SHALL NOT BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY
DOCUMENT OR INSTRUMENT.
WE HEREBY ENGAGE WITH YOU THAT YOUR CLAIMS PRESENTED HEREUNDER IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT, WILL BE
DULY HONORED UPON RECEIPT ON OR BEFORE THE ABOVE STATED EXPIRATION DATE.
THIS LETTER OF CREDIT IS SUBJECT TO UNIFORM CUSTOMS AND PRACTICE
FOR DOCUMENTARY CREDITS (1993 REVISION) INTERNATIONAL CHAMBER OF COMMERCE
PUBLICATION NO. 500.
SHOULD YOU HAVE AN OCCASION TO COMMUNICATE WITH US REGARDING THIS
CREDIT, KINDLY DIRECT YOUR COMMUNICATION TO THE ATTENTION OF OUR LETTER OF
CREDIT DEPARTMENT, (302) 428-3353, MAKING SPECIFIC REFERENCE TO OUR LETTER OF
CREDIT NO. 70927.
/s/ Michael P. Handago
AUTHORIZED SIGNATURE
<PAGE>
EXHIBIT 10(a)
February 28, 1996
Mr. J. Peter Fobare
130 Kenwood Avenue
Oneida, New York 13421
Dear Mr. Fobare:
Oneida Ltd. (the "Company") considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors of the Company (the
"Board") recognizes that the possibility of a change in control of the Company
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from any possible
change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event that your employment with the Company
is terminated subsequent to a Change in Control (as defined in Section 2).
1. Term of Agreement. The term of this Agreement (the "Term") shall
commence on the Operative Date (as hereinafter defined) and end on the fifth
anniversary of the Operative Date, provided that it has not been terminated in
accordance with its terms. In the event, however, that you attain the age of
sixty-five (65) during the Term, then this Agreement shall terminate on the last
day of the month in which you attain the age of sixty-five (65). For purposes of
this Agreement, the term "Operative Date" shall mean the date on which a Change
in Control occurs, provided that (i) you are then in the employ of the Company
and (ii) such Change in Control occurs before you reach age sixty-five (65).
2. Change in Control. No benefits shall be payable hereunder unless there
shall have been a Change in Control. For purposes of this Agreement, a "Change
in Control" shall be deemed to have occurred if:
<PAGE>
(A) any "Person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of sock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities;
(B) during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (A), (C) or (D) of this
Section) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(C) the stockholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction in which no "person" (as
hereinabove defined) acquires more than 20% of the combined voting power of the
Company's then outstanding securities; or
(D) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or Substantially all of the Company's assets.
3. Termination Following Change in Control. If a Change in Control shall
have occurred, you shall be entitled to the benefits provided in Subsection 4(D)
upon the subsequent termination of your employment during the Term unless such
termination is because of your death or retirement, by the Company for cause or
disability, or by you other than for good reason. In the event your employment
with the Company is terminated for any reason prior to the Operative Date, you
shall not be entitled to any benefits hereunder.
(A) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written Notice of Termination (as defined in
Subsection 3(D)) is given you shall not have returned to the
<PAGE>
full-time performance of your duties, the Company may terminate your employment
for "Disability." Any question as to the existence of your Disability upon
which you and the Company cannot agree shall be determined by a qualified
independent physician selected by you (or, if you are unable to make such
selection, it shall be made by any adult member of your immediate family), and
approved by the Company. The determination of such physician made in writing to
the Company and to you shall be final and conclusive for all purposes of this
Agreement. Termination of your employment based on "Retirement" shall mean your
voluntary termination of employment on a Retirement Date as defined in the
Retirement Plan for Employees of Oneida Ltd. or any successor plan thereto (the
"Pension Plan") as in effect immediately prior to the occurrence of a Change in
Control (whether or not you are a participant in the Pension Plan) or in
accordance with any retirement arrangement established with your consent with
respect to you.
(B) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (i) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or from your
Retirement or any such actual or anticipated failure resulting from termination
by you for Good Reason (as hereinafter defined after a written demand for
substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially performed your duties, or (ii) the willful engaging by you in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Subsection, no act or failure to
act on your part shall be deemed "willful" unless done, or omitted to be done,
by you in other than good faith and without reasonable belief that your action
or omission was in the best interests of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board (after reasonable notice to
you and an opportunity for you, together with your counsel, to be heard before
the Board), finding that in the good faith opinion of the Board you were guilty
of conduct set forth above in clause (i) or (ii) of the first sentence of this
Subsection and specifying the particulars thereof in detail.
(C) Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of any of the following circumstances:
(i) Inconsistent Duties. A meaningful and detrimental
alteration in your position or in the nature or status of your responsibilities
(including those as a director of the Company, if any) from those in effect
immediately prior to the Change in Control;
(ii) Reduced Salary or Failure to Increase Salary. A reduction by
the Company in your annual base salary as in effect on the date hereof or as the
same may be increased from time to time; a failure by the Company to increase
your salary at a rate commensurate with that of other key executives of the
Company; or a failure by the Company to increase your salary on an annual basis
to reflect the percentage increase in the cost of living (as determined in
accordance with such statistics or indices as the Board shall reasonably
consider appropriate for such purposes).
<PAGE>
(iii) Relocation. The relocation of the office of the Company
where you are employed at the time of the Change in Control (the "CIC Location")
to a location which in your good faith assessment is an area not generally
considered conducive to maintaining the executive offices of a company such as
the Company because of hazardous or undesirable conditions, including, without
limitation, a high crime rate or inadequate facilities, or to a location which
is more than twenty-five (25) miles away from the CIC Location or the Company's
requiring you to be based more than twenty-five (25) miles away from the CIC
Location (except for required travel on the Company's business to an extent
substantially consistent with your present business travel obligations);
(iv) Compensation Plans. The failure by the Company to continue in
effect any material compensation, benefit or profit sharing plan in which you
were participating immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute or alternative plan)
on at least as favorable a basis, both in terms of the amount of benefits
provided and the level of your participation relative to other participants, as
existed immediately prior to the Change in Control;
(v) Benefits and Perquisites. The failure by the Company to
continue to provide you with benefits at least as favorable as those enjoyed by
you under any of the Company's pension, life insurance, medical, health and
accident, disability or savings plans in which you were participating
immediately prior to the Change in Control; the taking of any action by the
Company which would directly or indirectly materially reduce any of such
benefits or deprive you of any material benefit or perquisite enjoyed by you
immediately prior to the Change in Control; or the failure by the Company to
provide you with the number of paid vacation days to which you are entitled on
the basis of years of service with the Company in accordance with the Company's
normal vacation policy in effect immediately prior to the Change in Control;
(vi) No Assumption by Successor. The failure of the Company to
obtain a satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5 hereof or, if the business
of the Company for which your services are principally performed is sold at any
time after a Change in Control, the failure of the purchaser of such business to
agree to provide you with the same or a comparable position, duties,
compensation, benefits and perquisites (as described in clauses (iv) and (v)
above) as provided to you by the Company immediately prior to the Change in
Control; or
(vii) No Notice. Any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the requirements
of Subsection
<PAGE>
(D) below (and, if applicable, the requirements of Subsection (B) above), which
purported termination shall not be effective for purposes of this Agreement.
(D) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. For
purposes of his Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(E) Date of Termination, Etc. For purposes of this Agreement, "Date
of Termination" shall mean (i) if your employment is terminated for
Disability, thirty (30) days after a Notice of Termination is given (provided
that you shall not have returned to the full-time performance of your duties
during such thirty (30) day period), and (ii) if your employment is terminated
pursuant to Subsection (B) or (C) above or for any other reason (other than
Disability), the date specified in the Notice of Termination (which, in the
case of a termination pursuant to Subsection B) above shall not be less than
thirty (30) days from the date such Notice of Termination is given, and in the
case of a termination pursuant to Subsection (C) above shall not be less than
thirty (30) nor more than sixty (60) days from the date such Notice of
Termination is given); provided, however, that if within thirty (30) days after
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court
of competent jurisdiction (which is not appealable or the time for appeal
therefrom having expired and no appeal having been perfected); Provided
further, however, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay you your full compensation in effect when the notice giving rise to the
dispute was given and continue you as a participant in all compensation,
benefit and insurance plans and perquisites in which you were participating
when the notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this Subsection. Amounts paid under this
Subsection are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement and shall not be reduced by any compensation earned by you as the
result of employment by another employer.
4. Compensation Upon Termination or During Disability. Following a Change
in Control, you shall be entitled to the following benefits during a period
of Disability, or upon termination of your employment, as the case may be,
provided that such period or termination occurs during the Term:
<PAGE>
(A) Disability. During any period that you fail to perform your full-
time duties with the Company as a result of your Disability, you shall continue
to receive your base salary at the rate in effect at the commencement of any
such period, together with compensation payable to you under the Company's
disability insurance coverage or other plan during such period, until your
employment is terminated pursuant to Subsection 3(A). Thereafter, your benefits
shall be determined in accordance with the Company's insurance programs and
other benefit or pension plans then in effect in accordance with the terms of
such programs and plans.
(B) Termination for Other than Good Reason or for Cause. If your
employment shall be terminated by the Company for Cause or by you other than
for Good Reason, death or Retirement, the Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given, plus all other amounts to which you are
entitled pursuant to the Company's benefit and pension plans then in effect,
and the Company shall have no further obligations to you under this Agreement.
(C) Retirement; Death. If your employment shall be terminated for
Retirement, or by reason of your death, your benefits shall be determined in
accordance with the Company's benefit and pension plans then in effect.
(D) Breach by the Company. If your employment by the Company shall
be terminated by the Company other than for Cause, Retirement or
Disability or by you for Good Reason, then you shall be entitled to the
benefits provided below:
(i) Base Salary. The Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the time the Notice
of Termination is given;
(ii) Severance Payment. In lieu of any further salary payments to
you for periods subsequent to the Date of Termination, the Company shall pay as
severance pay to you, not later than the tenth (10th) business day following the
Date of Termination, a lump sum severance payment equal to 2.99 times the
average of the annual compensation which was payable to you by the Company (or
any corporation affiliated with the Company within the meaning of section 1504
of the Internal Revenue Code of 1986, as amended (the "Code"), determined
without regard to section 1504(b) of the Code) and includable in your gross
income for Federal income tax purposes for the five (5) taxable years preceding
your taxable year in which a Change in Control occurred. The amount of your
average annual compensation shall be determined in accordance with the
regulations (including proposed regulations) promulgated under section 280G(d)
of the Code; provided, however, that (a) notwithstanding any provision of such
regulations to the contrary, the amount of your average annual compensation
shall be determined by including as compensation any contribution (a "401(k)
Contribution") pursuant to any cash or deferred arrangement (as described in
section 401(k) of the Code) maintained by the Company which is not includable
in your gross income under section 402(a)(8) of the Code and (b) the amount of
any such
<PAGE>
401(k) Contribution shall be treated as includable in your gross income in
the taxable year such contribution is made for purposes of the preceding
sentence.
(iii) Legal Fees and Expenses. The Company shall also pay to you
all legal fees and expenses incurred by you as a result of such termination,
including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement (other than any such fees or expenses
incurred in connection with any such claim which is determined to be
frivolous).
(iv) Insurance Benefits for 36 Months. For a thirty-six (36)
month period after such termination, the Company shall arrange to provide you
with life, disability, accident and health insurance benefits substantially
similar to and at no greater cost to you than those which you were receiving
immediately prior to the Notice of Termination. Benefits otherwise receivable
by you pursuant to this Subsection 4(D)(iv) shall be reduced to the extent
comparable benefits are actually received by you during the thirty-six (36)
month period following your termination, and any such benefits actually
received by you shall be reported to the Company.
(v) Supplemental Pension. In addition to the Pension
benefits to which you are entitled under the Pension Plan, the Company shall
pay you in one sum in cash on the tenth (10th) business day following the Date
of Termination, a lump sum equal to the actuarial equivalent of the excess of
(1) the retirement pension (determined as a straight life annuity commencing at
age 65) which you would have accrued under the terms of the Pension Plan and
any other pension benefit program (without regard to any amendment to such
Pension Plan or other pension benefit program made subsequent to the Change in
Control and on or prior to the Date of Termination, which amendment adversely
affects in any manner the computation of pension benefits thereunder),
determined as if you were fully vested thereunder and had accumulated (after
the Date of Termination thirty-six (36) additional months of service credit
thereunder at your highest annual rate of compensation (the "Compensation
Rate") during the twelve (12) months immediately preceding the Date of
Termination (but in no event shall you be deemed to have accumulated additional
months of service credit after your sixty-fifth (65th) birthday), over (2) the
retirement pension (determined as a straight life annuity commencing at age
sixty-five (65)) which you had then accrued pursuant to the provisions of the
Pension Plan and any other pension benefit program. For purposes of clause (1)
above, the Compensation Rate shall be deemed to include amounts payable
pursuant to Subsection 4(D)(ii) hereof, and amounts payable pursuant to
Subsection 4(D)(ii) hereof shall be deemed to represent thirty-six (36) months
of compensation (or such lesser number of months of compensation to your
sixty-fifth (65th) birthday) for purposes of determining benefits under the
Pension Plan. For purposes of this Subsection, "actuarial equivalent" shall be
determined using the same methods and assumptions utilized under the Pension
Plan immediately prior to the Change in Control.
<PAGE>
(vi) Employee Benefit Plans. You shall be entitled to receive
all benefits payable to you under the Company's benefit and pension plans,
not otherwise specifically provided for in this Subsection 4(D).
(E) No Mitigation. You shall not be required to mitigate the amount
of any payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer or by pension benefits after the Date of
Termination, or otherwise except as specifically provided in this Section 4.
(F) Reduction of Payments In Certain Cases. Notwithstanding anything
herein to the contrary, if any amounts due to you under this Agreement and any
other plan or program of the Company constitute a "parachute payment," as such
term is defined in Section 280G(b)(2) of the Code (the "Parachute Payment"), and
the amount of the Parachute Payment, reduced by all federal, state and local
taxes applicable thereto, including the excise tax imposed pursuant to Section
4999 of the Code, is less than the amount you would receive if you were paid
three times your "base amount," as defined in Section 280G(b)(3) of the
Code, less $1.00, reduced by all federal, state and local taxes applicable
thereto, then the aggregate of the amounts constituting the Parachute Payment
shall be reduced to an amount that will equal three times your base amount
less $1.00. The determinations to be made with respect to this Subsection 4(F)
shall be made by an accounting firm (the "Auditor") jointly selected by the
Company and you and paid by the Company. The Auditor shall be a nationally
recognized United States public accounting firm that has not during the two
years preceding the date of its selection acted in any way on behalf of the
Company or any of its subsidiaries. If you and the Company cannot agree on the
accounting firm to serve as the Auditor, then you and the Company shall each
select one accounting firm, which two firms shall jointly select the
accounting firm to serve as the Auditor. If the Auditor determines that a
reduction in the aggregate of the amounts constituting the Parachute Payment is
required by this Subsection (F), you shall have the right to specify the
portion of such reduction, if any, that will be made under this Agreement and
each applicable plan or program of the Company, respectively. If you do not so
specify within, 60 days following the date of a determination by the Auditor
pursuant to the preceding sentence, the Company shall determine, in its sole
discretion, the portion of such reduction, if any, to be made under this
Agreement and each applicable plan or program of the Company, respectively.
5. Successors; Binding Agreement. (A) Assumption By Successor. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
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 you
to compensation from the Company in the same amount and on the same terms as
you would be entitled hereunder if you had terminated your employment for Good
Reason following a Change in
<PAGE>
Control, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "the Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(B) Enforceability By Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or, if there is no such designee, to
your estate.
6. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective parties as follows:
If to the Company: Secretary
Oneida Ltd.
Oneida, New York 13421
If to you: J. Peter Fobare
130 Kenwood Avenue
Oneida, New York 13421
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other arty shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement, and this Agreement
shall supersede all Prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, with respect
to the subject matter hereof. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York.
<PAGE>
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
conducted in the State of New York in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
you shall be entitled to seek specific performance of your right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
11. Contract of Employment. Nothing in this Agreement shall be
construed as giving you any right to be retained in the employ of the Company.
12. Headings. The headings contained in this Agreement are intended solely
for convenience and shall not affect the rights of the parties to this
Agreement.
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will
then constitute our agreement on this subject.
Sincerely,
ONEIDA LTD.
By: /s/ William D. Matthews
William D. Matthews
Title: Chairman of the Board
Agreed to this 28th day of February, 1996
/s/ J. Peter Fobare
J. Peter Fobare
<PAGE>
February 28, 1996
Mr. Peter J. Kallet
552 Main Street
Oneida, New York 13421
Dear Mr. Kallet:
Oneida Ltd. (the "Company") considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, the Board of Directors of the Company (the
"Board') recognizes that the possibility of a change in control of the Company
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of
the Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from
any possible change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event that your employment with the Company
is terminated subsequent to a Change in Control (as defined in Section 2).
1. Term of Agreement. The term of this Agreement (the "Term") shall
commence on the Operative Date (as hereinafter defined) and end on the fifth
anniversary of the Operative Date, provided that it has not been terminated in
accordance with its terms. In the event, however, that you attain the age of
sixty-five (65) during the Term, then this Agreement shall terminate on the
last day of the month in which you attain the age of sixty-five (65). For
purposes of this Agreement, the term "Operative Date" shall mean the date on
which a Change in Control occurs, provided that (i) you are then in the employ
of the Company and (ii) such Change in Control occurs before you reach age
sixty-five (65).
2. Change in Control. No benefits shall be payable hereunder unless there
shall have been a Change in Control. For purposes of this Agreement, a "Change
in Control" shall be deemed to have occurred if:
<PAGE>
(A) any "Person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of sock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities;
(B) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (A), (C) or (D) of
this Section) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(C) the stockholders of the Company approve a merger or
consolidation of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction in which no
''person" (as hereinabove defined) acquires more than 20% of the combined
voting power of the Company's then outstanding securities; or
(D) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or Substantially all of the Company's assets.
3. Termination Following Change in Control. If a Change in Control shall
have occurred, you shall be entitled to the benefits provided in Subsection
4(D) upon the subsequent termination of your employment during the Term unless
such termination is because of your death or retirement, by the Company for
cause or disability, or by you other than for good reason. In the event your
employment with the Company is terminated for any reason prior to the Operative
Date, you shall not be entitled to any benefits hereunder.
(A) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written Notice of Termination (as defined in
Subsection 3(D)) is given you shall not have returned to the
<PAGE>
full-time performance of your duties, the Company may terminate your
employment for "Disability." Any question as to the existence of your
Disability upon which you and the Company cannot agree shall be determined by
a qualified independent physician selected by you (or, if you are unable to
make such selection, it shall be made by any adult member of your immediate
family), and approved by the Company. The determination of such physician made
in writing to the Company and to you shall be final and conclusive for all
purposes of this Agreement. Termination of your employment based on
"Retirement" shall mean your voluntary termination of employment on a
Retirement Date as defined in the Retirement Plan for Employees of Oneida Ltd.
or any successor plan thereto (the "Pension Plan") as in effect immediately
prior to the occurrence of a Change in Control (whether or not you are a
participant in the Pension Plan) or in accordance with any retirement
arrangement established with your consent with respect to you.
(B) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (i) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or from
your Retirement or any such actual or anticipated failure resulting from
termination by you for Good Reason (as hereinafter defined after a written
demand for substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board believes that you
have not substantially performed your duties, or (ii) the willful engaging by
you in conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Subsection, no act or failure to
act on your part shall be deemed ''willful'' unless done, or omitted to be
done, by you in other than good faith and without reasonable belief that your
action or omission was in the best interests of the Company. Notwithstanding
the foregoing, you shall not be deemed to have been terminated for Cause unless
and until there shall have been delivered to you a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board (after reasonable
notice to you and an opportunity for you, together with your counsel, to be
heard before the Board), finding that in the good faith opinion of the Board
you were guilty of conduct set forth above in clause (i) or (ii) of the first
sentence of this Subsection and specifying the particulars thereof in detail.
(C) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of any of the following circumstances:
(i) Inconsistent Duties. A meaningful and detrimental
alteration in your position or in the nature or status of your responsibilities
(including those as a director of the Company, if any) from those in effect
immediately prior to the Change in Control;
(ii) Reduced Salary or Failure to Increase Salary. A reduction by
the Company in your annual base salary as in effect on the date hereof or as the
same may be increased from time to time; a failure by the Company to
increase your salary at a rate commensurate with that of other key executives
of the Company; or a failure by the Company to increase your salary on an
annual basis to reflect the percentage increase in the cost of living (as
determined in accordance with such statistics or indices as the Board shall
reasonably consider appropriate for such purposes).
<PAGE>
(iii) Relocation. The relocation of the office of the Company
where you are employed at the time of the Change in Control (the "CIC
Location") to a location which in your good faith assessment is an area not
generally considered conducive to maintaining the executive offices of a
company such as the Company because of hazardous or undesirable conditions,
including, without limitation, a high crime rate or inadequate facilities, or
to a location which is more than twenty-five (25) miles away from the CIC
Location or the Company's requiring you to be based more than twenty-five (25)
miles away from the CIC Location (except for required travel on the Company's
business to an extent substantially consistent with your present business
travel obligations);
(iv) Compensation Plans. The failure by the Company to continue
in effect any material compensation, benefit or profit sharing plan in which
you were participating immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute or alternative plan)
on at least as favorable a basis, both in terms of the amount of benefits
provided and the level of your participation relative to other participants, as
existed immediately prior to the Change in Control;
(v) Benefits and Perquisites. The failure by the Company to
continue to provide you with benefits at least as favorable as those enjoyed by
you under any of the Company's pension, life insurance, medical, health and
accident, disability or savings plans in which you were participating
immediately prior to the Change in Control; the taking of any action by the
Company which would directly or indirectly materially reduce any of such
benefits or deprive you of any material benefit or perquisite enjoyed by you
immediately prior to the Change in Control; or the failure by the Company to
provide you with the number of paid vacation days to which you are entitled on
the basis of years of service with the Company in accordance with the Company's
normal vacation policy in effect immediately prior to the Change in Control;
(vi) No Assumption by Successor. The failure of the Company to
obtain a satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5 hereof or, if the business
of the Company for which your services are principally performed is sold at any
time after a Change in Control, the failure of the purchaser of such business to
agree to provide you with the same or a comparable position, duties,
compensation, benefits and perquisites (as described in clauses (iv) and (v)
above) as provided to you by the Company immediately prior to the Change in
Control; or
(vii) No Notice. Any purported termination of your employment that
is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection
<PAGE>
(D) below (and, if applicable, the requirements of Subsection (B) above),
which purported termination shall not be effective for purposes of this
Agreement.
(D) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 6. For
purposes of his Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(E) Date of Termination, Etc. For purposes of this Agreement, "Date
of Termination" shall mean (i) if your employment is terminated for
Disability, thirty (30) days after a Notice of Termination is given (provided
that you shall not have returned to the full-time performance of your duties
during such thirty (30) day period), and (ii) if your employment is terminated
pursuant to Subsection (B) or (C) above or for any other reason (other than
Disability), the date specified in the Notice of Termination (which, in the
case of a termination pursuant to Subsection B) above shall not be less than
thirty (30) days from the date such Notice of Termination is given, and in the
case of a termination pursuant to Subsection (C) above shall not be less than
thirty (30) nor more than sixty (60) days from the date such Notice of
Termination is given); provided, however, that if within thirty (30) days after
any Notice of Termination is given, the party receiving such Notice of
Termination. notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court
of competent jurisdiction (which is not appealable or the time for appeal
therefrom having expired and no appeal having been perfected); Provided
further, however, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay you your full compensation in effect when the notice giving rise to the
dispute was given and continue you as a participant in all compensation,
benefit and insurance plans and perquisites in which you were participating
when the notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this Subsection. Amounts paid under this
Subsection are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement and shall not be reduced by any compensation earned by you as the
result of employment by another employer.
4. Compensation Upon Termination or During Disability. Following a Change
in Control, you shall be entitled to the following benefits during a period
of Disability, or upon termination of your employment, as the case may be,
provided that such period or termination occurs during the Term:
<PAGE>
(A) Disability. During any period that you fail to perform your full-
time duties with the Company as a result of your Disability, you shall
continue to receive your base salary at the rate in effect at the commencement
of any such period, together with compensation payable to you under the
Company's disability insurance coverage or other plan during such period, until
your employment is terminated pursuant to Subsection 3(A). Thereafter, your
benefits shall be determined in accordance with the Company's insurance
programs and other benefit or pension plans then in effect in accordance with
the terms of such programs and plans.
(B) Termination for Other than Good Reason or for Cause. If your
employment shall be terminated by the Company for Cause or by you other than
for Good Reason, death or Retirement, the Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the time the
Notice of Termination is given, plus all other amounts to which you are
entitled pursuant to the Company's benefit and pension plans then in effect,
and the Company shall have no further obligations to you under this Agreement.
(C) Retirement; Death. If your employment shall be terminated for
Retirement, or by reason of your death, your benefits shall be determined in
accordance with the Company's benefit and pension plans then in effect.
(D) Breach by the Company. If your employment by the Company shall
be terminated by the Company other than for Cause, Retirement or
Disability or by you for Good Reason, then you shall be entitled to the
benefits provided below:
(i) Base Salary. The Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the time the Notice
of Termination is given;
(ii) Severance Payment. In lieu of any further salary payments to
you for periods subsequent to the Date of Termination, the Company shall pay as
severance pay to you, not later than the tenth (10th) business day following the
Date of Termination, a lump sum severance payment equal to 2.99 times the
average of the annual compensation which was payable to you by the Company (or
any corporation affiliated with the Company within the meaning of section 1504
of the Internal Revenue Code of 1986, as amended (the "Code"), determined
without regard to section 1504(b) of the Code) and includable in your gross
income for Federal income tax purposes for the five (5) taxable years preceding
your taxable year in which a Change in Control occurred. The amount of your
average annual compensation shall be determined in accordance with the
regulations (including proposed regulations) promulgated under section 280G(d)
of the Code; provided, however, that (a) notwithstanding any provision of such
regulations to the contrary, the amount of your average annual compensation
shall be determined by including as compensation any contribution (a "401(k)
Contribution") pursuant to any cash or deferred arrangement (as described in
section 401(k) of the Code) maintained by the Company which is not includable
in your gross income under section 402(a)(8) of the Code and (b) the amount of
any such
<PAGE>
401(k) Contribution shall be treated as includable in your gross income in
the taxable year such contribution is made for purposes of the preceding
sentence.
(iii) Legal Fees and Expenses. The Company shall also pay to you
all legal fees and expenses incurred by you as a result of such termination,
including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement (other than any such fees or expenses
incurred in connection with any such claim which is determined to be frivolous).
(iv) Insurance Benefits for 36 Months. For a thirty-six (36)
month period after such termination, the Company shall arrange to provide you
with life, disability, accident and health insurance benefits substantially
similar to and at no greater cost to you than those which you were receiving
immediately prior to the Notice of Termination. Benefits otherwise receivable
by you pursuant to this Subsection 4(D)(iv) shall be reduced to the extent
comparable benefits are actually received by you during the thirty-six (36)
month period following your termination, and any such benefits actually
received by you shall be reported to the Company.
(v) Supplemental Pension. In addition to the Pension
benefits to which you are entitled under the Pension Plan, the Company shall
pay you in one sum in cash on the tenth (10th) business day following the Date
of Termination, a lump sum equal to the actuarial equivalent of the excess of
(1) the retirement pension (determined as a straight life annuity commencing at
age 65) which you would have accrued under the terms of the Pension Plan and
any other pension benefit program (without regard to any amendment to such
Pension Plan or other pension benefit program made subsequent to the Change in
Control and on or prior to the Date of Termination, which amendment adversely
affects in any manner the computation of pension benefits thereunder),
determined as if you were fully vested thereunder and had accumulated (after
the Date of Termination thirty-six (36) additional months of service credit
thereunder at your highest annual rate of compensation (the "Compensation
Rate") during the twelve (12) months immediately preceding the Date of
Termination (but in no event shall you be deemed to have accumulated additional
months of service credit after your sixty-fifth (65th) birthday), over (2) the
retirement pension (determined as a straight life annuity commencing at age
sixty-five (65)) which you had then accrued pursuant to the provisions of the
Pension Plan and any other pension benefit program. For purposes of clause (1)
above, the Compensation Rate shall be deemed to include amounts payable
pursuant to Subsection 4(D)(ii) hereof, and amounts payable pursuant to
Subsection 4(D)(ii) hereof shall be deemed to represent thirty-six (36) months
of compensation (or such lesser number of months of compensation to your
sixty-fifth (65th) birthday) for purposes of determining benefits under the
Pension Plan. For purposes of this Subsection, "actuarial equivalent" shall be
determined using the same methods and assumptions utilized under the Pension
Plan immediately prior to the Change in Control.
<PAGE>
(vi) Employee Benefit Plans. You shall be entitled to receive
all benefits payable to you under the Company's benefit and pension plans,
not otherwise specifically provided for in this Subsection 4(D).
(E) No Mitigation. You shall not be required to mitigate the amount
of any payment provided for in this Section 4 by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for
in this Section 4 be reduced by any compensation earned by you as the result
of employment by another employer or by pension benefits after the Date of
Termination, or otherwise except as specifically provided in this Section 4.
(F) Reduction of Payments In Certain Cases. Notwithstanding anything
herein to the contrary, if any amounts due to you under this Agreement and any
other plan or program of the Company constitute a "parachute payment," as such
term is defined in Section 280G(b)(2) of the Code (the "Parachute Payment"), and
the amount of the Parachute Payment, reduced by all federal, state and local
taxes applicable thereto, including the excise tax imposed pursuant to Section
4999 of the Code, is less than the amount you would receive if you were paid
three times your "base amount," as defined in Section 280G(b)(3) of the
Code, less $1.00, reduced by all federal, state and local taxes applicable
thereto, then the aggregate of the amounts constituting the Parachute Payment
shall be reduced to an amount that will equal three times your base amount
less $1.00. The determinations to be made with respect to this Subsection 4(F)
shall be made by an accounting firm (the "Auditor") jointly selected by the
Company and you and paid by the Company. The Auditor shall be a nationally
recognized United States public accounting firm that has not during the two
years preceding the date of its selection acted in any way on behalf of the
Company or any of its subsidiaries. If you and the Company cannot agree on the
accounting firm to serve as the Auditor, then you and the Company shall each
select one accounting firm, which two firms shall jointly select the
accounting firm to serve as the Auditor. If the Auditor determines that a
reduction in the aggregate of the amounts constituting the Parachute Payment is
required by this Subsection (F), you shall have the right to specify the
portion of such reduction, if any, that will be made under this Agreement and
each applicable plan or program of the Company, respectively. If you do not so
specify within, 60 days following the date of a determination by the Auditor
pursuant to the preceding sentence, the Company shall determine, in its sole
discretion, the portion of such reduction, if any, to be made under this
Agreement and each applicable plan or program of the Company, respectively.
5. Successors; Binding Agreement. (A) Assumption By Successor. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
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 you
to compensation from the Company in the same amount and on the same terms as
you would be entitled hereunder if you had terminated your employment for Good
Reason following a Change in Control,
<PAGE>
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "the Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
(B) Enforceability By Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or, if there is no such designee, to
your estate.
6. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective parties as follows:
If to the Company: Secretary
Oneida Ltd.
Oneida, New York 13421
If to you: Peter J. Kallet
552 Main Street
Oneida, New York 13421
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other arty shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement, and this Agreement
shall supersede all Prior agreements, negotiations, correspondence, undertakings
and communications of the parties, oral or written, with respect to the
subject matter hereof. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York.
<PAGE>
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
conducted in the State of New York in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that you
shall be entitled to seek specific performance of your right to be paid until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
11. Contract of Employment. Nothing in this Agreement shall be construed as
giving you any right to be retained in the employ of the Company.
12. Headings. The headings contained in this Agreement are intended solely
for convenience and shall not affect the rights of the parties to this
Agreement.
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will
then constitute our agreement on this subject.
Sincerely,
ONEIDA LTD.
By: /s/ William D. Matthews
William D. Matthews
Title: Chairman of the Board
Agreed to this 28th day of February, 1996
/s/ Peter J. Kallet
Peter J. Kallet
<PAGE>
EXHIBIT 10(c)
August 1, 1996
At a meeting of the Board of Directors held on July 31, 1996, the following
action was taken:
WHEREAS, the Company has adopted the Oneida Ltd. 1987 Stock Option Plan
("Plan"); and,
WHEREAS, the Company desires to amend the Plan to allow the purchase of
options by tendering previously acquired shares by attestation;
NOW THEREFORE, upon motion duly made, seconded and adopted it is
RESOLVED, the Board of Directors of the Company hereby authorizes an
amendment to the Plan, which shall be effective July 1, 1996. The Plan shall be
amended by adding the following language at the end of paragraph 6(f), "The
exchange of Common Stock of the Company previously acquired by the person may be
tendered by attestation, provided the optionee makes the attestation in a form
approved by the Committee"; and be it,
FURTHER RESOLVED, that the appropriate officer or officers of the Company
be, and each of them is hereby authorized and directed to execute and deliver
such documents and take such other action as each of them may deem advisable to
carry out the intent and purpose of the foregoing resolution.
/s/ Catherine H. Suttmeier
Secretary
<PAGE>
<TABLE>
EXHIBIT 11
ONEIDA LTD.
AND CONSOLIDATED SUBSIDIARIES
TABULATION OF AVERAGE NUMBER OF COMMON SHARES FOR COMPUTATION OF PRIMARY AND
FULLY DILUTED EARNINGS PER SHARE
Common Shares
(in thousands)
<CAPTION>
Primary Earnings Fully Diluted
Per Share Earnings Per Share
Actual Used in Actual Used in
Number Average Number Average
<S> <C> <C> <C> <C>
Year Ended JANUARY 28, 1995:
Shares outstanding
beginning 10,498 10,498 10,498 10,498
Shares issued under:
Stock purchase plan 110 110
Stock option plan 40 40
ESOP shares allocated to
participants 212 193 212 193
Common share equivalents
under employee stock
purchase, stock option
and dividend reinvestment
plans 93 93
TOTAL 10,902 10,784 10,902 10,784
Year Ended JANUARY 27, 1996:
Shares outstanding
beginning 10,902 10,902 10,902 10,902
Shares issued under:
Stock purchase plan 47 47
Treasury stock - net 3 3
Stock option plan 81 81
Purchase of ESOP shares (34) 15 (34) 15
Common share equivalents
under employee stock
purchase, stock option
and dividend reinvestment
plans 132 133
TOTAL 10,999 11,019 10,999 11,020
Year Ended JANUARY 25, 1997:
Shares outstanding
beginning 10,999 10,999 10,999 10,999
Shares issued under:
Stock purchase plan 123 123
Treasury stock - net (94) (94)
Stock option plan 38 39 38 39
ESOP shares allocated to
participants 27 27
participants ...........
Common share equivalents
under employee stock
purchase, stock option
and dividend reinvestment
plans 100 100
TOTAL 11,093 11,138 11,093 11,138
</TABLE>
<PAGE>
<TABLE>
ONEIDA LTD.
AND CONSOLIDATED SUBSIDIARIES
Calculation of Earnings Per Share
(Thousands except per share amounts)
<CAPTION>
January 25, 1997 January 27, 1996 January 28, 1995
<S> <C> <C> <C>
Net income $16,972 $18,088 $13,493
Less preferred dividends 133 134 134
Net income for primary and
fully diluted earnings
per share $16,839 $17,954 $13,359
Average common shares:
Primary 11,138 11,019 10,784
Fully diluted 11,138 11,020 10,784
Earnings per share:
Primary $1.51 $1.63 $1.24
Fully diluted 1.51 1.63 1.24
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 13
CONSOLIDATED STATEMENT OF OPERATIONS
ONEIDA LTD.
For the years ended January 1997, 1996 and 1995
(Thousands except per share amounts)
<CAPTION>
Year ended in January 1997 1996 1995
<S> <C> <C> <C>
NET SALES $376,923 $363,811 $355,831
COST OF SALES 243,934 236,560 222,639
GROSS MARGIN 132,989 127,251 113,192
OPERATING EXPENSES:
Selling, advertising
and distribution 67,868 66,693 64,873
General and administrative 29,231 27,350 24,408
Total 97,099 94,043 89,281
INCOME FROM OPERATIONS 35,890 33,208 23,911
OTHER EXPENSE 832 762 596
INTEREST EXPENSE 6,503 6,877 5,922
INCOME FROM CONTINUING
OPERATIONS
BEFORE INCOME TAXES 28,555 25,569 17,393
PROVISION FOR INCOME TAXES 11,279 10,144 7,306
INCOME FROM CONTINUING
OPERATIONS 17,276 15,425 10,087
INCOME (LOSS) FROM DIS-
CONTINUED OPERATIONS (304) 2,663 3,406
NET INCOME $16,972 $18,088 $13,493
EARNINGS PER SHARE OF
COMMON STOCK
Continuing operations $1.54 $1.39 $.92
Discontinued operations (.03) .24 .32
Net income 1.51 1.63 1.24
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
ONEIDA LTD.
(Thousands)
<CAPTION>
ASSETS January 25, 1997 January 27, 1996
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,183 $ 2,847
Receivables 50,246 42,333
Inventories 124,293 126,043
Other current assets 13,291 8,585
Net assets of discontinued
operations 33,762 32,122
Total current assets 224,775 211,930
PROPERTY, PLANT AND EQUIPMENT:
Land and buildings 45,502 42,625
Machinery and equipment 149,927 143,012
Total 195,429 185,637
Less accumulated depreciation 116,283 105,957
Property, plant and
equipment - net 79,146 79,680
OTHER ASSETS:
Cost in excess of net assets
acquired - net 30,940
Deferred income taxes 12,716 12,341
Other 2,651 2,617
TOTAL $350,228 $306,568
<PAGE>
(Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY January 25, 1997 January 27, 1996
CURRENT LIABILITIES:
Short-term debt $15,593 $24,067
Accounts payable 14,176 13,362
Accrued liabilities 37,082 29,646
Current installments of long-
term debt 29,703 4,749
Total current liabilities 96,554 71,824
LONG-TERM DEBT 68,126 63,129
OTHER LIABILITIES:
Accrued postretirement liability 52,273 50,932
Accrued pension liability 5,666 5,209
Other liabilities 9,291 9,174
Total 67,230 65,315
STOCKHOLDERS' EQUITY:
Cumulative 6% preferred stock-
$25 par value; authorized
95,660 shares, issued 88,624
and 88,989 shares, respectively;
callable at $30 per share 2,216 2,225
Common stock-$l.00 par value;
authorized 24,000,000 shares,
issued 11,867,806 and 11,706,224
shares, respectively 11,868 11,706
Additional paid-in capital 83,103 81,150
Retained earnings 39,893 28,936
Equity adjustment from translation (8,468) (8,614)
Less cost of common stock held
in treasury; 766,241 and
672,617 shares, respectively (10,156) (8,563)
Less unallocated ESOP shares of
common stock of 8,531 and
34,347, respectively (138) (540)
Stockholders' equity 118,318 106,300
TOTAL $350,228 $306,568
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
ONEIDA LTD.
for the years ended January 1997, 1996 and 1995
(Thousands)
<CAPTION>
Year ended in January 1997 1996 1995
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $17,276 $15,425 $10,087
Net income (loss) from
discontinued operations (304) 2,663 3,406
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 11,455 10,615 9,712
ESOP shares allocated to
participants 2,753
Deferred taxes and other
non-cash charges 2,021 (1,274) (2,976)
Decrease (increase) in
operating assets:
Receivables (2,409) (1,110) (3,488)
Inventories 11,276 (13,055) (6,552)
Other current assets (2,452) (12) (112)
Other assets 582 216 557
Increase (decrease) in accounts
payable (1,383) 1,558 (1,050)
Increase in accrued liabilities 7,452 5,118 4,017
Discontinued operations 3,228 13,309 (2,224)
Net cash provided by
operating activities 46,742 33,453 14,130
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of THC Systems, Inc. (46,600)
Property, plant and equipment
expenditures (11,540) (13,431) (12,785)
Retirement of property,
plant and equipment 645 827 1,134
Other, net (528) 67 211
Discontinued operations (11,319) (6,753) 5,640
Net cash used in investing
activities (69,342) (19,290) (17,080)
CASH FROM FINANCING ACTIVITIES:
Proceeds from issuance of
common stock 2,105 1,530 1,451
Purchase of treasury
stock, net (1,593) 11 528
Net purchase/allocation
of ESOP Shares 402 (540)
Net payments under short-
term debt (8,474) (3,488) (631)
Proceeds from issuance of
long-term debt 35,388 5,000 7,000
Payment of long-term debt (5,436) (10,423) (899)
Dividends paid (6,015) (5,407) (5,367)
Discontinued operations 6,500
Net cash provided by
(used in) financing
activities (22,877) (13,317) (2,082)
EFFECT OF EXCHANGE RATE CHANGES
ON CASH 59 (206) (152)
NET INCREASE (DECREASE) IN CASH 336 640 (1,020)
CASH AT BEGINNING OF YEAR 2,847 2,207 3,227
CASH AT END OF YEAR $ 3,183 $ 2,847 $ 2,207
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 6,575 $ 8,825 $ 6,868
Income taxes paid 9,842 9,941 8,805
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries. The Company uses a 52-53 week fiscal year ending on the last
Saturday in January. The financial statements of certain foreign subsidiaries
are consolidated with those of the parent on the basis of years ending in
December.
The financial statements reflect the acquisition of THC Systems, Inc. as of
November 4, 1996. The financial statements also reflect the operations of
Camden Wire Company, Inc. which have been shown as discontinued operations as of
October 26, 1996. Camden was sold on February 12, 1997. The notes to the
financial statements contain information pertaining to the continuing operations
of the Company. See Notes 2 and 3 for information pertaining to the acquisition
and disposition of these subsidiaries. Prior periods have been restated to
reflect the tableware businesses as continuing operations. In addition, certain
reclassifications have been made to the financial statements for prior years to
conform to the presentation for 1997.
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 at the dates of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
Foreign Currency Translation
Assets and liabilities of foreign subsidiaries are translated principally at
year-end rates of exchange and revenue and expense accounts are translated at
average rates of exchange during the year. Net transaction gains and losses
reflected in the statement of operations were not material.
Earnings Per Share
Earnings per share are based on the weighted average number of shares of common
stock outstanding. The weighted average number of shares for earnings per share
includes the potentially dilutive effect of shares issuable under the employee
stock purchase, stock option and dividend reinvestment plans. No fully diluted
earnings per share are presented, as the difference between primary and fully
diluted earnings per share is not significant.
Inventories
Inventories are valued at the lower of cost or market. Approximately 48% of
inventories are valued under the last-in, first-out (LIFO) method, with the
remainder valued under the first-in, first-out (FIFO) method.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is provided over
the estimated useful lives of the related assets, generally using the straight-
line method.
Interest relating to the cost of acquiring certain fixed assets is capitalized
and amortized over the asset's estimated useful life.
Fair Value of Financial Instruments
The estimated fair market values of the Company's financial instruments
approximate their recorded values.
2. ACQUISITION OF THC SYSTEMS, INC. (REGO CHINA)
On November 4, 1996, the Company purchased the net assets of THC Systems, Inc.
(Rego China) a leading importer of institutional china for the foodservice
industry.
The acquisition has been accounted for as a purchase and, accordingly, the
purchase price was allocated to the net assets acquired based on their book
values at the date of acquisition. Allocation of the cost to acquire Rego China
is summarized as follows:
<TABLE>
<CAPTION>
(Thousands)
<S> <C>
Working Capital $12,800
Cost in excess of net assets acquired 33,800
Total costs to acquire Rego China $46,600
</TABLE>
The cost in excess of net assets acquired is being amortized on a straight-line
basis over a period of 15 years. Amortization charged to continuing operations
for the current year amounted to $561,000.
The financial statements included the results of operations of Rego China from
the date of acquisition. On a pro forma basis, assuming the acquisition had
occurred at the beginning of the year ended January 27, 1996 and based on
unaudited amounts for Rego China for the periods involved, the consolidated
results of operations of the Company for the last two years would have been as
follows:
<PAGE>
<TABLE>
<CAPTION>
(Thousands except per share amounts)
1997 1996
<S> <C> <C>
Net sales $402,867 $395,979
Net income 16,194 16,733
Net income per share of common stock 1.45 1.51
The pro forma information given above does not purport to be indicative of the
results that actually would have been obtained if the operations were combined
during the periods presented, and is not intended to be a projection of future
results or trends.
3. DISPOSITION OF CAMDEN WIRE CO., INC.
In October 1996, the Company adopted a plan of disposal of its Camden Wire Co.,
Inc. (Camden) subsidiary. Accordingly, the Company reflected the operating
results of Camden prior to the adoption of the plan as a discontinued operation.
On February 12, 1997, Camden was sold to an unrelated third party for
$43,500,000 in cash. Fourth quarter losses of Camden (subsequent to the plan of
disposal) have been deferred and will be recognized as part of the ultimate gain
realized on the sale of Camden in the first quarter of fiscal 1998.
The components of net assets of discontinued operations included in the balance
sheet, including debt to be assumed by the buyer, are as follows:
</TABLE>
<TABLE>
<CAPTION>
(Thousands)
1997 1996
<S> <C> <C>
Working capital $18,517 $18,043
Property, plant and equipment, net 41,738 35,519
Debt (15,500) (9,000)
Other liabilities (10,829) (11,411)
Deferred losses and expenses (164) (1,029)
Total $33,762 $32,122
</TABLE>
Revenues from Camden for 1997, 1996 and 1995 were $137,960,000, $149,988,000 and
$157,122,000 respectively.
4. INCOME TAXES
The Company accounts for taxes in accordance with Statement of Financial
Accounting Standards (FAS) No. 109, Accounting for Income Taxes, which requires
the use of the liability method of computing deferred income taxes. Under the
liability method, deferred income taxes are based on the tax effect of temporary
differences between the financial statement and tax bases of assets and
liabilities and are adjusted for tax rate changes as they occur.
The components of the deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
(Thousands)
1997 1996
<S> <C> <C>
Deferred Income Taxes:
Postretirement Benefits $20,081 $20,401
Employee Benefits 8,060 7,320
Other 578 (176)
Total Deferred Tax Assets 28,719 27,545
Depreciation (9,746) (10,652)
Total 18,973 16,893
Current Deferred 6,257 4,552
Non-Current Deferred $12,716 $12,341
</TABLE>
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
(Thousands)
1997 1996 1995
<S> <C> <C> <C>
Current tax expense:
U.S. Federal $10,097 $11,005 $6,202
Foreign 2,621 2,079 599
State 641 610 617
13,359 13,694 7,418
Deferred tax expense (2,080) (3,550) (112)
Total $11,279 $10,144 $7,306
</TABLE>
The income tax provision differed from the total income tax expense as computed
by applying the statutory U.S. Federal income tax rate to income before income
taxes. The reasons for the differences are as follows:
<TABLE>
<CAPTION>
(Thousands)
1997 1996 1995
<S> <C> <C> <C>
Statutory U.S. Federal taxes $ 9,994 $8,949 $6,087
Difference due to:
Foreign taxes 153 (37)
State taxes 354 393 402
Other 778 802 854
Provision for taxes $11,279 $10,144 $7,306
</TABLE>
The following presents the U.S. and non-U.S. components of income before income
taxes.
<TABLE>
<CAPTION>
(Thousands)
1997 1996 1995
<S> <C> <C> <C>
U.S. income $21,682 $19,685 $14,782
Non - U.S. income 6,873 5,884 2,611
Income from continuing
operations $28,555 $25,569 $17,393
</TABLE>
Discontinued operations are shown net of income tax (benefit) expense of
$(280,000), $1,538,000 and $2,034,000 for 1997, 1996 and 1995, respectively.
<PAGE>
5. RECEIVABLES
Receivables by major classification are as follows:
<TABLE>
<CAPTION>
(Thousands)
1997 1996
<S> <C> <C>
Accounts receivable $47,384 $41,762
Other accounts and notes 4,659 1,969
receivable
Less allowance for doubtful (1,797) (1,398)
accounts
Receivables $50,246 $42,333
</TABLE>
6. INVENTORIES
Inventories by major classification are as follows:
<TABLE>
<CAPTION>
(Thousands)
1997 1996
<S> <C> <C>
Finished goods $ 93,339 $ 93,827
Goods in process 14,798 17,120
Raw materials and supplies 16,156 15,096
Total $124,293 $126,043
Excess of replacement cost over
LIFO value of inventories $ 25,000 $ 27,800
</TABLE>
7. LEASES
The Company leases numerous factory stores, warehouses and office facilities.
Lease expense charged to operations was $5,973,000, $6,314,000 and $6,008,000,
for 1997, 1996 and 1995, respectively.
Future minimum lease payments and related sublease income for all non-cancelable
operating leases having a remaining term in excess of one year at January 1997
are as follows:
<TABLE>
<CAPTION>
(Thousands)
Lease Sublease
Commitment Income
<S> <C> <C>
1998 $ 5,872 $ 1,290
1999 5,741 1,287
2000 4,580 1,273
2001 3,361 1,016
2002 2,697 818
Remainder through 2008 13,251 1,159
Total $35,502 $6,843
</TABLE>
Under the provisions of some leases, the Company pays taxes, maintenance,
insurance and other operating expenses related to leased premises. Sublease
income relates to an office facility for which the Company has currently sublet
all of the facility.
8. SHORT-TERM DEBT AND COMPENSATING BALANCES
The Company has been granted lines of credit to borrow at interest rates up to
the prime rate from various banks. Certain credit lines call for the maintenance
of compensating balances of up to 1.14% of the credit line or fees in lieu
thereof. At January 1997, the Company had lines of credit of $86,000,000 of
which $71,000,000 was available.
The average outstanding balances of short-term debt for the fiscal years ending
January 1997 and January 1996 were $35,793,000 and $35,109,000, respectively,
computed by using daily balances and the weighted interest rates of 5.9% in 1997
and 6.5% in 1996.
9. ACCRUED LIABILITIES
Accrued liabilities by major classification are as follows:
<TABLE>
<CAPTION>
(Thousands)
1997 1996
<S> <C> <C>
Accrued vacation pay $ 6,205 $ 5,949
Accrued wage incentive 7,440 6,764
Accrued wages and commissions 5,408 4,465
Accrued income taxes 4,847 3,221
Dividends payable 1,476 1,357
Other accruals 11,706 7,890
Total $37,082 $29,646
</TABLE>
10. LONG-TERM DEBT
Long-term debt at January 1997 and 1996 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Senior notes, 8.52% due January
15, 2002, payable $4,285,710
annually $21,428 $25,714
Senior notes, 7.49% due November
1, 2008, payable $3,890,000
annually beginning November
1, 2000 $35,000
Notes payable at various
interest rates (6.20% - 6.38%),
due February 20, 2001 40,000 40,000
Other debt at various interest
rates (5.44% -9.25%) due
through 2000 1,401 2,164
Total 97,829 67,878
Less amounts currently due 29,703 4,749
Long-term debt $68,126 $63,129
</TABLE>
<PAGE>
Certain note agreements restrict borrowings, business investments, acquisition
of the Company's stock and payment of cash dividends. The Company is
contractually obligated to pay $4,703,000 of long-term debt during fiscal 1998.
Upon receipt of the proceeds from the sale of Camden, the Company made advance
payments of $25,000,000 on its $40,000,000 notes payable, due February 20, 2001.
The aggregate amounts of long-term maturities due each year are as follows:
<TABLE>
<CAPTION>
(Thousands)
<S> <C>
1998 $29,703
1999 4,738
2000 4,632
2001 8,361
2002 23,176
After 27,219
Total $97,829
</TABLE>
Total interest costs incurred by the Company are presented net of capitalized
interest of $276,000, $413,000, and $347,000 for 1997, 1996 and 1995,
respectively.
11. RETIREMENT BENEFIT AND EMPLOYEE SECURITY PLANS
Pension Plans
The Company maintains defined contribution and benefit plans covering
substantially all employees in the United States and Canada. Employees of the
Silversmiths Division are covered by both an Employee Stock Ownership Plan
(ESOP), and a defined benefit floor plan. Dividends on all ESOP shares are added
to participant accounts. Future contributions to the ESOP will be primarily in
the form of cash.
The Company also maintains salary deferral 401(k) plans covering substantially
all employees.
The net periodic pension cost for the Company's various defined benefit plans
for 1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
(Thousands)
1997 1996 1995
<S> <C> <C> <C>
Service cost-benefits earned
during the year $1,913 $1,509 $1,031
Interest cost on projected
benefit obligation 2,537 2,243 1,501
Actual return on plan assets (2,715) (3,090) 278
Net amortization and deferral 901 1,627 (1,448)
Net periodic pension cost $2,636 $2,289 $1,362
</TABLE>
Plan assets consist primarily of stocks, bonds, and cash equivalents. The
following table presents a reconciliation of the funded status of the plans and
assumptions used at January 1997 and 1996.
<TABLE>
<CAPTION>
(Thousands)
U.S. PLANS FOREIGN PLAN
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Plan assets at fair value $18,653 $15,439 $6,280 $5,703
Actuarial present value
of benefit obligations:
Vested benefits 16,431 16,614 4,362 4,272
Nonvested benefits 13,324 16,740 234 193
Accumulated Benefit
obligation 29,755 33,354 4,596 4,465
Projected future salary
increases 805 910 1,132 1,020
Projected benefit obligation 30,560 34,264 5,728 5,485
Plan assets more (less)
than projected
benefit obligation (11,907) (18,825) 552 218
Unrecognized net losses 6,677 14,621 830 1,168
Unrecognized prior service
cost 832 396 9 9
Unrecognized net asset (1,268) (1,401) (282) (368)
Accrued pension asset
liability $(5,666) $(5,209) $ 1,109 1,027
Discount rate 7.5% 7.0% 7.5% 7.5%
Expected long-term rate
of return on assets 8.5% 8.5% 8.5% 8.5%
Rate of increase in
compensation levels 4.0% 4.5% 5.0% 5.0%
</TABLE>
The net pension cost associated with the Company's defined contribution plans,
including the cost of shares allocated to the ESOP, was $1,537,000, $1,504,000
and $2,753,000, for 1997, 1996 and 1995, respectively.
Postretirement Health Care and Life Insurance Benefits
The Company reimburses a portion of the health care and life insurance benefits
for the majority of its retired employees who have attained specified age and
service requirements.
Net periodic postretirement benefit cost for 1997, 1996 and 1995 included the
following components:
<TABLE>
<CAPTION>
(Thousands)
1997 1996 1995
<S> <C> <C> <C>
Service cost of benefits earned $1,124 $ 791 $ 983
Interest cost on accumulated
postretirement benefit
obligation 3,048 2,991 3,070
Net amortization and deferral (681) (848) (629)
Net periodic postretirement
benefit cost $3,491 $2,934 $3,424
</TABLE>
<PAGE>
The following table sets forth the status of the Company's postretirement plans,
which are unfunded, at January 1997 and January 1996:
<TABLE>
<CAPTION>
(Thousands)
1997 1996
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $21,546 $23,427
Fully eligible active
plan participants 5,268 5,349
Other active plan participants 16,535 17,966
Accrued postretirement benefit
cost 43,349 46,742
Unrecognized prior service cost 7,084 7,748
Unrecognized net gain (loss) 3,840 (1,558)
Accrued postretirement benefit
cost 54,273 52,932
Less current portion 2,000 2,000
Accrued postretirement benefit
cost-net 52,273 50,932
Discount rate 7.6% 7.1%
Health care inflation rate 8.5% 9.0%
</TABLE>
The 1997 health care inflation rate was assumed to decrease gradually to 5% by
the year 2003 and remain at that level thereafter. An increase in the assumed
health care inflation rate by 1% per year would increase the accumulated
postretirement benefit obligation at January 1997 by $4,678,000 and the net
periodic postretirement benefit cost for 1997 by $534,000.
Employee Security Plan
The Company maintains an employee security plan which provides severance
benefits for all eligible employees of the Company and its subsidiaries who lose
their jobs in the event of a change in control as defined by the plan.
Employees are eligible if they have one year or more of service and are not
covered by a collective bargaining agreement. The plan provides two and one half
months of pay for each year of service, up to twenty-four months maximum, and a
continuation of health care and life insurance benefits on the same basis.
12. STOCK PURCHASE PLAN
At January 1997, under the terms of a stock purchase plan, the Company has
reserved 941,846 shares of common stock for issuance to its employees. The
purchase price of the stock is the lower of 90% of the market price at the time
of grant or at the time of exercise. The option price for the shares outstanding
at January 1997 is $16.88.
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Outstanding at beginning
of year 449,413 453,010 426,770
Exercised during the year (123,353) (45,701) (110,175)
Expired during the year (355,039) (440,839) (322,712)
Granted during the year 494,550 482,943 459,127
Outstanding at end of year 465,571 449,413 453,010
Average per share price of
rights exercised $13.50 $13.83 $11.00
</TABLE>
Rights to purchase are exercisable on date of grant. Unexercised rights expire
on June 30 of each year and become available for future grants. Employees are
entitled to purchase one share of common stock for each $250 of their earnings
for the calendar year preceding July 1.
The consolidated statement of operations does not contain any charges as a
result of accounting for this plan.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation", (FAS
123) effective for 1996, which establishes a fair-value-based method of
accounting for stock compensation plans with employees and others.
Alternatively, the statement allows that entities may continue to account for
stock-based compensation plans in accordance with Accounting Principles Board
(APB) Opinion No. 25, "Accounting for Stock Issued to Employees", with
disclosure of pro forma amounts reflecting the difference between cost charged
to operations pursuant to APB No. 25 and compensation cost that would have been
charged to operations had FAS 123 been applied.
The Company has elected to continue to follow APB No. 25 in accounting for its
stock-based compensation plans.
<PAGE>
Application of the fair-value-based accounting provision of FAS 123 results in
the following pro forma amounts of net income and earnings per share:
<TABLE>
<CAPTION>
(Thousands Except Per Share Amounts)
1997 1996
<S> <C> <C>
Net Income from Continuing Operations
As reported $17,276 $15,425
Pro forma 16,001 14,466
Net Income:
As reported 16,972 18,088
Pro forma 15,697 17,129
Earnings Per Share from Continuing Operations:
As reported 1.54 1.39
Pro forma primary earnings per share 1.42 1.30
Earnings Per Share:
As reported 1.51 1.63
Pro forma primary earnings per share 1.40 1.54
</TABLE>
The fair value for these options was estimated at the date of grant using a
Black-Scholes options pricing model with the following weighted average
assumptions for 1997 and 1996: risk-free interest rates of 5.63% and 5.88%;
dividend yields of 2.77% and 3.25%; volatility factors of the expected market
price of the Company's common stock of 23.9% and 22.7% and a weighted average
expected life of the option of 9 months. The fair value per share for the
options granted during 1997 and 1996 was $4.30 and $3.31 respectively.
For purposes of these pro forma disclosures, the estimated fair value of the
options is expensed in the year of issue.
13. STOCK OPTION, RESTRICTED STOCK AWARD PLAN AND RIGHTS PLANS
At January 1997, under the terms of its incentive stock option plans, the
Company has reserved shares of common stock for issuance to selected key
employees.
Options were granted at prices equal to the fair market value on the date of the
grant and may be paid for in cash or by tendering previously held common stock
of the Company at the time the option is exercised.
Stock options are non-transferable other than on death, are partially
exercisable one year from the date of grant and expire ten years from date of
grant.
<TABLE>
<CAPTION>
Option Price
No. of Per (Thousands)
Shares Share Total
<S> <C> <C> <C>
Outstanding at:
January 1994 700,315 9.00-15.00 $8,897
Granted 152,000 13.63 2,071
Exercised (107,500) 9.00-15.00 (1,290)
Expired (6,936) 9.00-15.00 (86)
Outstanding at:
January 1995 737,879 9.00-15.00 9,592
Exercised (106,086) 9.00-15.00 (1,266)
Outstanding at:
January 1996 631,793 9.00-15.00 8,326
Exercised (56,531) 9.00-15.00 (709)
Expired (29,987) 9.00-15.00 (378)
Outstanding at:
January 1997 545,275 9.00-15.00 $7,239
Shares remaining available
for grant 316,200
Total exercisable as
of January 1997 412,475
</TABLE>
At the time options are exercised the proceeds of the shares issued are credited
to the related stockholders' equity accounts. There are no charges to income in
connection with the options.
The Company has a restricted stock award plan for key employees who are expected
to have a significant impact on the performance of the Company. The stock is
restricted from being sold, transferred or assigned and is forfeitable until it
vests, generally over a three (3) year period. Amounts of awards are determined
by the Management Development and Executive Compensation Committee of the
Company's Board of Directors. Compensation expense relating to awards of
restricted stock are recognized over the vesting period.
The Company maintains a shareholder rights plan. The rights were distributed to
shareholders at the rate of one right per share. The rights entitle the holder
to purchase one additional share of voting common stock at a substantial
discount and are exercisable only in the event of the acquisition of 20% or more
of the Company's voting common stock, or the commencement of a tender or
exchange offer under which the offeror would own 30% or more of the Company's
voting common stock. The rights will expire on December 13, 1999.
<PAGE>
14. OPERATIONS BY INDUSTRY SEGMENT
The Company's operations and assets are in one principal industry: tableware
products. The Company's tableware operations, which are located in the United
States, Canada, Mexico, Italy and the United Kingdom, involve the manufacture
and distribution of stainless, plated and sterling flatware, silverplated and
stainless holloware, vitreous, porcelain and bone china, cutlery and crystal.
These products are sold directly to a broad base of retail outlets including
department stores, mass merchandisers and chain stores. Additionally, these
products are sold to special sales markets, which include customers who use
them as premiums, incentives and business gifts. The Company also sells
flatware, holloware and commercial chinaware directly or through distributors to
foodservice operations worldwide, including hotels, restaurants, airlines,
schools and health care facilities. The Company does not derive more than 10% of
its total revenues from any individual customer, government agency or export
sales. Operating profit by geographic segment is revenue less operating costs,
excluding interest and income taxes. North American sales are substantially
comprised of U.S. domestic sales.
Segment information by geographic area for the three years ended January 1997,
1996 and 1995 were as follows:
<TABLE>
<CAPTION>
(Thousands)
1997 1996 1995
<S> <C> <C> <C>
NET SALES:
North America $356,590 $349,232 $324,193
Other foreign operations 20,333 14,579 11,638
Total $376,923 $363,811 $335,831
OPERATING PROFIT:
North America $39,114 $37,036 $27,970
Other foreign operations 1,858 1,019 712
Operating profit 40,972 38,055 28,682
Corporate expense 5,914 5,609 5,367
Interest expense 6,503 6,877 5,922
Income before income taxes $28,555 $25,569 $17,393
IDENTIFIABLE ASSETS:
North America $338,506 $296,440 $290,269
Other foreign operations 8,539 7,281 5,010
Total 347,045 303,721 295,279
Corporate assets-cash 3,183 2,847 2,207
Total $350,228 $306,568 $297,486
DEPRECIATION EXPENSE:
North America $10,892 $10,209 $9,311
Other foreign operations 563 406 401
Total $11,455 $10,615 $ 9,712
PROPERTY, PLANT AND EQUIPMENT
ADDITIONS:
North America $11,099 $12,030 $10,599
Other foreign operations 467 404 844
Total $11,566 $12,434 $11,443
</TABLE>
<PAGE>
15. CHANGES IN STOCKHOLDERS' EQUITY
Following is a summary of the changes in Stockholders' Equity for the three
years ended January 1997.
<TABLE>
<CAPTION>
(Thousands)
Equity
Additional Adjustment Unallocated
Common Common Prefered Paid-in Retained from Treasury ESOP
Shares Stock Stock Capital Earnings Translation Stock Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
Jan. 1994 11,429,843 $11,430 $2,236 $78,423 $8,129 $(2,461) $(9,102) $(2,742)
Stock
purchase plan 110,175 110 1,112
Dividend
reinvestment
plan 80 528 (11)
Restricted
stock plan 7,920 8 118
Stock option
plan, net 32,026 32 (6) 7
Cash dividends
declared ($.48
per share) (5,367)
Net income 13,493
ESOP shares
allocated to
participants 2,753
Equity
adjustment
from translation (3,574)
Balance
Jan. 1995 11,579,964 11,580 2,230 79,740 16,255 (6,035) (8,574)
Stock
purchase plan 45,701 46 586
Dividend
reinvestment
plan 56 276
Restricted
stock plan 4,348 4 67
Stock option
plan, net 76,211 76 699
Purchase/
retirement of
treasury stock (5) 2 (265)
Cash dividends
declared ($.48
per share) (5,407)
Net income 18,088
Purchase of
ESOP shares (2,004)
ESOP shares
allocated to
participants 1,464
Equity
adjustment
from translation (2,579)
Balance 11,706,224 11,706 2,225 81,150 28,936 (8,614) (8,563) (540)
Jan. 1996
Stock
purchase plan 123,353 124 1,542
Dividend
reinvestment
plan 305 248
Restricted
stock plan 5,054 5 (16)
Stock option
plan, net 33,175 33 313
Purchase/
retirement of
treasury stock (9) (191) (1,841)
Cash
dividends
declared ($.52
per share) (6,015)
Net income 16,972
Purchase of
ESOP shares (1,102)
ESOP shares
allocated to
participants 1,504
Equity
adjustment
from translation
146
Balance
Jan. 1997 11,867,806 $11,868 $2,216 $83,103 $39,893 $(8,468) $(10,156) $(138)
</TABLE>
<PAGE>
16. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
<TABLE>
<CAPTION>
(Thousands except per share amounts)
Quarter Ended
April 27, July 27, October 26, January 25,
1996 1996 1996 1997
<S> <C> <C> <C> <C>
Net sales $ 82,890 $86,307 $101,280 $106,446
Gross margin 27,791 30,265 35,233 39,700
Income from continuing
operations 2,522 3,101 5,306 6,347
Net income 2,669 2,755 5,201 6,347
Earnings per share
Continuing operations .23 .28 .47 .56
Net income .24 .24 .47 .56
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
April 29, July 29, October 28, January 27,
1995 1995 1995 1996
<S> <C> <C> <C> <C>
Net sales $80,266 $89,382 $100,628 $93,535
Gross margin 28,759 30,445 34,194 33,853
Income from continuing
operations 2,375 2,832 4,795 5,423
Net income 3,385 3,450 5,345 5,908
Earnings per share
Continuing operations .22 .26 .42 .49
Net income .30 .31 .48 .53
</TABLE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Oneida Ltd.
We have audited the accompanying consolidated balance sheet of Oneida Ltd. as of
January 25, 1997 and January 27, 1996, and the related consolidated statement of
operations and cash flows for each of the three years in the period ended
January 25, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Oneida Ltd. as of
January 25, 1997 and January 27, 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
January 25, 1997 in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
a professional services firm
/s/ Coopers & Lybrand L.L.P.
Syracuse, New York
February 20, 1997
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net Sales:
Consumer Products Markets $202,607 $209,096 $187,971
Foodservice Markets 174,316 154,715 147,860
Total 376,923 363,811 335,831
Gross Margin 132,989 127,251 113,192
% Net Sales 35.3% 35.0% 33.7%
Operating Expense 97,099 94,043 89,281
% Net Sales 25.8% 25.9% 26.6%
</TABLE>
Fiscal year ended January 1997 compared with fiscal year ended January 1996
Operations
1997 consolidated net sales were $13,112, or 3.6% higher than in the previous
year. Sales of foodservice products increased 12.7 % over the prior year levels,
partially due to the acquisition of Rego China in the last quarter of 1997.
Sales of consumer products decreased 3.1% from 1996, due to market softness in
the first half of the year. This trend was reversed in the latter half of 1997.
International sales of the above products were up 23.3% from the prior year,
reflecting growth in all major foreign markets, including Mexico, Canada and
Europe.
Gross margin as a percent of net sales increased to 35.3% from 35.0% in 1996
partly because of improved tableware plant manufacturing efficiencies.
Operating expenses increased by $3,056 or 3.2% over 1996. Of this increase,
$2,078 is attributable to the acquisition of Rego China. Exclusive of the Rego
operations, selling and distribution costs remain constant with 1996 levels.
When the Rego administrative costs are factored out, general and administrative
costs increased by 3.8%, principally due to higher employee profit sharing
accruals resulting from higher operating income.
1997 interest expense (prior to capitalized interest) decreased by $511 or 7.0%.
The decline in interest expense was principally due to lower average interest
rates on the Company's borrowings.
Liquidity and Financial Resources
During the current year, the Company has invested approximately $11,600 in
capital additions, primarily in its manufacturing facilities. The Company plans
to spend $16,000 on similar capital projects in 1998.
In the fourth quarter, the Company purchased substantially all of the assets of
Rego China (See Note 2 to the Financial Statements). As part of this
transaction, the Company borrowed $35,000 of long-term debt.
Consequently, total outstanding debt increased from $21,477 or 23.4% during
1997. The Company sold its Camden Wire subsidiary on February 12, 1997 (See
Note 3 to the Financial Statements). This sale resulted in the Company
receiving $43,500 in cash. The majority of these proceeds were used to pay
down outstanding debt. Cash from 1997 operations is expected to provide
sufficient liquidity for all of the Company's capital needs.
In 1997, the Mexican peso did not experience the rapid devaluation present in
the prior two years. However, the cumulative devaluation over the past three
years has been sufficient to denote Mexico as having a hyper-inflationary
economy for accounting purposes. Accordingly, in 1998, the Company will begin
accounting for its Mexican operations as hyper-inflationary, using the
methodology of Financial Accounting Standard (FAS) No. 52. This will entail
reflecting translation adjustments in the income statement, rather than as a
charge/credit to stockholders' equity. Management believes the impact on the
Company's financial statements in 1998 will not be material.
Fiscal year ended January 1996 compared with fiscal year ended January 1995
Operations
1996 consolidated net sales were $27,980, or 8.3% higher than in the previous
year. Tableware sales increased in both the domestic consumer and foodservice
markets, as well as internationally. Tableware sales increased in both the
domestic consumer and foodservice markets, as well as internationally.
Tableware sales benefited from the introduction of several well received new
patterns and increased distribution efficiencies. In particular, significant
sales increases were achieved in the retail department store and mass
merchandise markets.
Gross margin as a percent of net sales increased to 35.0% from 33.7% in 1995.
Improved sales volume and manufacturing efficiencies were realized in the
Company's tableware plants.
Operating expenses increased by $4,762, or 5.3% over 1995. Selling and
distribution costs rose by 2.8%, in direct relation to the higher sales level
realized by the Company this year. In contrast, general and administrative costs
increased by 12.1%, primarily due to higher employee benefit and profit sharing
accruals.
1996 Interest expense (prior to capitalized interest) increased by $1,021 or
16.3%. The rise in interest expense was principally due to the effect of
increased interest rates on the Company's variable rate borrowings in 1996
versus 1995.
<PAGE>
FIVE YEAR SUMMARY
<TABLE>
<CAPTION>
ONEIDA LTD.
(Thousands except per share amounts)
Year ended in January 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net sales $376,923 $363,811 $335,831 $322,511 $328,679
Gross margin 132,989 127,251 113,192 110,487 108,550
Interest expense 6,503 6,877 5,922 6,271 8,228
Income before income taxes
and cumulative effect 28,555 25,569 17,393 15,274 4,789
Income taxes 11,279 10,144 7,306 6,356 1,814
Income (loss) from
continuing operations 17,276 15,425 10,087 8,919 (28,867)
Income (loss) from
discontinued operations (304) 2,663 3,406 1,743 (4,385)
Net income (loss) 16,972 18,088 13,493 10,662 (33,252)
Cash dividends declared-
Preferred stock 133 134 134 135 136
Common stock 5,882 5,273 5,233 5,129 5,090
PER SHARE OF COMMON STOCK
Income before accounting
changes 1.51 1.63 1.24 1.01 .28
Continuing operations 1.54 1.39 .92 .84 (2.88)
Discontinued operations (.03) .24 .32 .17 (.44)
Net income (loss) 1.51 1.63 1.24 1.01 (3.32)
Dividends declared .52 .48 .48 .48 .48
Book value 10.47 9.46 8.53 7.97 7.39
FINANCIAL DATA
Current assets 224,775 211,930 205,168 189,171 192,197
Working capital 128,221 140,106 134,386 123,263 122,306
Total assets 350,228 306,568 297,486 280,527 247,305
Long-term debt 68,126 63,129 68,277 66,301 72,906
Stockholders' equity 118,318 106,300 95,196 85,913 77,664
Additions to property,
plant and equipment 11,566 12,434 11,443 10,813 11,879
Property, plant and
equipment-at cost 195,429 185,637 177,166 166,529 157,976
Accumulated depreciation 116,283 105,957 97,474 88,182 80,297
SHARES OF CAPITAL STOCK
Outstanding at end of year
Preferred 89 89 89 89 91
Common 11,093 10,999 10,902 10,498 10,205
Weighted average number
of common shares out-
standing during the year 11,138 11,019 10,784 10,393 10,056
SALES OF MAJOR PRODUCTS BY PERCENT
OF TOTAL SALES
Consumer 54% 57% 56% 56% 54%
Foodservice 46% 43% 44% 44% 46%
AVERAGE NUMBER OF
EMPLOYEES 4,525 4,690 4,534 4,672 4,652
</TABLE>
Dividends and Price Range of the Company's Common Stock
The Company's Common Stock is listed on the New York Stock Exchange and trades
under the symbol OCQ. The total number of stockholders of record at January 1997
was 4,069. The following table sets forth the high and low sale prices per share
of the Company's Common Stock for the periods indicated on the Composite Tape,
and cash dividends declared for the quarters in the Company's 1997 and 1996
fiscal years.
<TABLE>
<CAPTION>
JANUARY 1997 JANUARY 1996
Fiscal Dividends Fiscal Dividends
Quarter High Low Per Share Quarter High Low Per Share
<S> <C> <C> <C> <S> <C> <C> <C>
First.....$17.50 $14.88 $.13 First.....$15.25 $13.38 $.12
Second.... 18.75 15.50 .13 Second.... 15.88 14.00 .12
Third..... 15.88 14.50 .13 Third..... 16.75 15.00 .12
Fourth.... 18.25 14.25 .13 Fourth.... 17.63 15.13 .12
</TABLE>
<PAGE>
EXHIBIT 22
PARENTS AND SUBSIDIARIES
There are no parents of the Company. There is no subsidiary for which
separate financial statements are filed. The following list includes the Company
and its subsidiaries, all of which are included, in the consolidated financial
statements.
<TABLE>
<CAPTION>
State or Percentage of
Country of Voting Securities
Name Incorporation Owned by the Company
<S> <C> <C>
Oneida Ltd. New York
Oneida Canada, Limited Canada 100
Buffalo China, Inc. New York 93
THC Systems, Inc. New York 100
Kenwood Silver Company, Inc. New York 100
Oneida Mexicana, S.A. de C.V. Mexico 100
Oneida Distribution
Services, Inc. New York 100
Oneida International, Inc. Delaware 80
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Jan-25-1997
<PERIOD-START> Jan-28-1996
<PERIOD-END> Oct-26-1996
<PERIOD-TYPE> 12-MOS
<CASH> 3,138
<SECURITIES> 0
<RECEIVABLES> 52,043
<ALLOWANCES> 1,797
<INVENTORY> 124,293
<CURRENT-ASSETS> 224,775
<PP&E> 195,429
<DEPRECIATION> 116,283
<TOTAL-ASSETS> 350,228
<CURRENT-LIABILITIES> 96,554
<BONDS> 68,126
0
2,216
<COMMON> 11,868
<OTHER-SE> 104,234
<TOTAL-LIABILITY-AND-EQUITY> 350,228
<SALES> 376,923
<TOTAL-REVENUES> 376,923
<CGS> 243,934
<TOTAL-COSTS> 243,934
<OTHER-EXPENSES> 97,931
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,503
<INCOME-PRETAX> 28,555
<INCOME-TAX> 11,279
<INCOME-CONTINUING> 17,276
<DISCONTINUED> (304)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,972
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
</TABLE>
