SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
________ TO ________
Commission File Number 1-13066
MIKASA, INC.
(Exact name of Registrant as specified in its charter)
Delaware 33-0099676
------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20633 South Fordyce Ave., Long Beach, California 90810
------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(310) 886-3700
--------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ..X.. No .....
As of June 30, 1997, a total of 18,359,195 shares of the Registrant's Common
Stock, $0.01 par value, were outstanding.
Manually Signed Original
Exhibit Index on Page 16
Page 1 of 135
<PAGE>
MIKASA, INC.
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of 3
June 30, 1997 and December 31, 1996
Consolidated Statements of Income 4
for the three months ended June 30,
1997 and 1996, and six months ended
June 30, 1997 and 1996
Consolidated Statements of Cash Flows 5
for the six months ended June 30, 1997
and 1996
Notes to Consolidated Financial 6
Statements
Item 2. Management's Discussion and Analysis 7
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security 14
Holders
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Page 2 of 135
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 23,067 $ 42,287
Accounts receivable trade, net 26,499 24,016
Inventories 146,709 132,206
Prepaid expenses and other current assets 6,229 7,613
----------- -----------
Total current assets 202,504 206,122
Property and equipment, net 97,105 71,893
Notes receivable and other assets 1,015 1,086
Intangible assets, net 4,800 4,880
----------- -----------
Total assets $ 305,424 $ 283,981
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 1,508 $ 1,797
Accounts payable 15,106 18,620
Other current liabilities 17,598 23,320
----------- ----------
Total current liabilities 34,212 43,737
Deferred income taxes 1,672 1,672
Notes payable 90,000 60,000
----------- ----------
Total liabilities 125,884 105,409
----------- ----------
Preferred stock, undesignated, $0.01 par
value; authorized 20,000 shares; none
issued and outstanding -- --
Common stock, $0.01 par value; authorized
80,000 shares; 18,359 shares issued and
outstanding 49,532 49,532
Cumulative translation adjustment 232 185
Retained earnings 169,481 168,560
----------- ----------
219,245 218,277
Less treasury stock, 3,921 shares, at cost 39,705 39,705
----------- ----------
Total stockholders' equity 179,540 178,572
----------- ----------
Total liabilities and stockholders' equity $305,424 $283,981
=========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
Page 3 of 135
<PAGE>
<TABLE>
MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<CAPTION>
For The Three Months Ended For The Six Months
June 30 Ended June 30,
-------------------------- --------------------------
1997 1996 1997 1996
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 83,142 $ 76,476 $ 156,250 $ 145,696
Cost of sales 45,242 42,089 85,578 80,560
---------- ----------- ----------- -----------
Gross profit 37,900 34,387 70,672 65,136
Selling, general and
administrative expenses 34,891 31,193 66,952 60,065
Store closure charge -- 4,100 -- 4,100
---------- ---------- ----------- -----------
Income (loss) from
operations 3,009 (906) 3,720 971
Interest expense, net 371 339 587 551
---------- ----------- ----------- -----------
Income (loss) before
income taxes 2,638 (1,245) 3,133 420
Income tax provision (benefit) 1,064 (492) 1,255 166
---------- ----------- ----------- -----------
Net income (loss) $ 1,574 $ (753) $ 1,878 $ 254
========== =========== =========== ===========
Net income (loss) per share
of common stock $ 0.09 $ (0.03) $ 0.10 $ 0.01
========== =========== =========== ===========
Weighted average number of
shares of common stock and
common stock equivalents
outstanding 18,359 22,280 18,359 22,280
========== =========== =========== ===========
Cash dividend per share
of common stock $ 0.05 $ 0.00 $ 0.10 $ 0.00
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4 of 135
<PAGE>
MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For The Six Months Ended
June 30,
--------------------------------
1997 1996
-------------- ------------
Cash flows from operating activities:
Net income $ 1,878 $ 254
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 2,960 2,282
Changes in operating assets and
liabilities (24,927) (17,542)
---------- ---------
Net cash used in operating
activities (20,089) (15,006)
---------- ---------
Cash flows from investing activities:
Capital expenditures (28,058) (14,014)
Decrease in notes receivable 117 151
---------- ---------
Net cash used in investing activities (27,941) (13,863)
---------- ---------
Cash flows from financing activities:
Long-term borrowings under note agreements 30,000 --
Net payments of short-term debt (283) (11)
Dividends paid (918) --
----------- ---------
Net cash (used in) provided by financing
activities 28,799 (11)
----------- ---------
Effect of exchange rate changes on cash
and cash equivalents 11 (138)
----------- ---------
Net decrease in cash, cash equivalents and
short-term investments (19,220) (29,018)
Cash, cash equivalents and short-term
investments, beginning of period 42,287 73,726
----------- ---------
Cash, cash equivalents and short-term
investments, end of period $ 23,067 $ 44,708
=========== =========
The accompanying notes are an integral part of these consolidated financial
statements.
Page 5 of 135
<PAGE>
MIKASA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
1. INTERIM FINANCIAL STATEMENTS:
The accompanying consolidated financial statements of Mikasa, Inc. and its
wholly-owned and majority-owned subsidiaries (the "Company") have not been
audited by independent accountants, except for the balance sheet as of December
31, 1996. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the six months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997.
2. INCOME TAXES:
For the six months ended June 30, 1997, income taxes have been provided at
an estimated annual rate of 40.0% of income before taxes. For the six months
ended June 30, 1996, income taxes have been provided at an estimated annual
rate of 39.5% of income before taxes.
3. ACCOUNTS RECEIVABLE, TRADE:
Receivables are net of allowances for uncollectible accounts of $708 at
June 30, 1997 and $763 at December 31, 1996.
4. PROPERTY AND EQUIPMENT:
Property and equipment, at cost, are net of accumulated depreciation and
amortization of $26,349 at June 30, 1997 and 23,604 at December 31, 1996.
5. INTANGIBLE ASSETS:
Intangible assets are net of accumulated amortization of $2,259 at June 30,
1997 and $2,135 at December 31, 1996.
6. DECLARATION OF DIVIDEND:
On July 11, 1997, the Company declared a quarterly dividend of $0.05 per
share or $918 on its common stock to stockholders of record on July 24, 1997
payable on August 1, 1997.
Page 6 of 135
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain financial and operations data for the
periods indicated:
Three Months Ended
June 30,
----------------------------
1997 1996
------------ ------------
NET SALES BY CHANNEL OF DISTRIBUTION:
Direct to consumers $45,574 $40,846
Retail accounts 30,474 29,930
International 7,094 5,700
--------- ---------
Total $83,142 $76,476
========= =========
OPERATIONS DATA:
Stores open at beginning of period 137 121
U. S. stores opened during period 4 3
Canadian store opened during period - 1
Stores closed during period 0 0
---------- ---------
Stores open at end of period <F1> 141 125
========== =========
Percentage decrease in comparable store
net sales (0.3%) (4.5%)
As Of June 30,
-----------------------------
1997 1996
------------ ------------
Total U. S. store gross square footage 1,333,500 1,149,900
[FN]
<F1> Includes 6 stores planned for closure which were in operation at the end
of June 1997.
Page 7 of 135
<PAGE>
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
NET SALES. Net sales for the three months ended June 30, 1997 (the "current
period") were $83.1 million, an increase of $6.7 million or 8.7% from net sales
of $76.4 million for the three months ended June 30, 1996 (the "prior period").
This increase in net sales was attributable to a combination of factors. The
Company's direct consumer channel of distribution provided an increase of
$4.7 million of sales over the prior period. This increase in net sales was
primarily attributable to an increase in number of units sold rather than
prices. Sales from retail stores opened for less than twelve months accounted
for $5.5 million of the retail sales growth. This sales increase was partially
offset by the slight drop in comparable store sales and the sales foregone from
the stores closed in the last twelve months. Sales through the retail account
channel of distribution increased $0.6 million and sales through the
international business increased $1.4 million.
GROSS PROFIT. Gross profit for the current period was $37.9 million, an
increase of $3.5 million or 10.2% over the prior period's gross profit of
$34.4 million. Gross profit as a percentage of net sales increased to 45.6% in
the current period from 45.0% in the prior period. The gross profit increase
as a percentage of net sales was due to improved margins in the current period
from all channels of distribution over the prior period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses in the current period were $34.9 million, an increase
of $3.7 million or 11.9% over the prior period selling, general and
administrative expenses, excluding store closure charges of $31.2 million. As
a percentage of net sales, such expenses increased to 42.0% in the current
period from 40.8% in the prior period. Expenses from retail stores opened for
less than twelve months accounted for $3.9 million of the expense increase.
Included in this amount are certain preopening expenses of $0.7 million for
stores opened during the quarter and other stores expected to open in 1997.
This follows the Company's practice to expense all costs associated with new
store openings at the time incurred.
INCOME FROM OPERATIONS. Income from operations in the current period was
$3.0 million, an increase of $3.9 million from the prior period's loss from
operations of $0.9 million. This represented an increase as a percentage of net
sales to 3.6% in the current period from (1.2%) in the prior period. This
increase was primarily attributable to the increase in gross profit as a
percentage of net sales and non-recurrence of the prior period's $4.1 million
store closure charge, partially offset by the increase in selling, general and
administrative expenses as a percentage of net sales. Additionally, the
combined effect of higher anticipated operating expenses associated with the
Company's expanded retail store base and anticipated lower sales in the second
quarter contributed to the effect on income from operations. Sales are expected
to be higher toward the latter half of the year to offset these increased
expenses.
INTEREST EXPENSE, NET. Net interest expense was $0.4 million in the current
period, an increase of $0.1 million from the prior period net interest expense
of $0.3 million.
Page 8 of 135
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
NET SALES. Net sales for the six months ended June 30, 1997 (the "current
period") were $156.3 million, an increase of $10.6 million or 7.2% from net
sales of $145.7 million for the six months ended June 30, 1996 (the "prior
period"). This increase in net sales was attributable to a combination of
factors. The Company's direct consumer channel of distribution provided an
increase of $10.2 million of sales over the prior period. This increase in net
sales was primarily attributable to an increase in number of units sold rather
than prices. Sales from retail stores opened for less than twelve months
accounted for $10.5 million of the retail sales growth. This sales increase was
partially offset by the sales foregone from stores closed in the last twelve
months. Sales through the retail account channel of distribution decreased $0.3
million and sales through the international business increased $0.7 million.
GROSS PROFIT. Gross profit for the current period was $70.7 million, an
increase of $5.5 million or 8.5% over the prior period's gross profit of $65.1
million. Gross profit as a percentage of net sales increased to 45.2% in the
current period from 44.7% in the prior period. The gross profit increase as a
percentage of net sales was primarily due to improved margins in the current
period from sales to retail accounts and international business over the prior
period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses in the current period were $67.0 million, an increase of
$6.9 million or 11.5% over the prior period selling, general and administrative
expenses excluding store closure charges of $60.1 million. As a percentage of
net sales, such expenses increased to 42.9% in the current period from 41.2% in
the prior period. Expenses from retail stores opened for less than twelve
months accounted for $7.6 million of the expense increase. Included in this
amount are certain preopening expenses of $1.8 million for stores opened during
the period and other stores expected to open in 1997. This follows the
Company's practice to expense all costs associated with new store openings at
the time incurred.
Page 9 of 135
<PAGE>
INCOME FROM OPERATIONS. Income from operations in the current period was
$3.7 million, an increase of $2.7 million from the prior period's income from
operations of $1.0 million. This represented an increase as a percentage of net
sales to 2.4% in the current period from 0.7% in the prior period. This increase
was primarily attributable to the increase in gross profit as a percentage of
net sales and non-recurrence of the prior period's $4.1 million store closure
charge, partially offset by the increase in selling, general and administrative
expenses as a percentage of net sales. Additionally, the combined effect of
higher anticipated operating expenses associated with the Company's expanded
retail store base and anticipated lower sales in the second quarter contributed
to the effect on income from operations. Sales are expected to be higher toward
the latter half of the year to offset these increased expenses.
INTEREST EXPENSE, NET. Net interest expense was $0.6 million in both the
current period and the prior period.
LIQUIDITY AND CAPITAL RESOURCES
In June 1997, the Company floated $60 million in unsecured, senior notes
with a group of insurance companies at an interest rate of 7.38% per annum
payable semi-annually that mature in ten years. The first $30.0 million was
funded in June 1997 with the balance to be funded during the third quarter of
1997. Principal payments of $15.0 million per year will be due annually,
commencing in June 2003. The Company also has $60.0 million in unsecured senior
notes with a group of insurance companies and a $50.0 million unsecured
revolving credit facility provided by two banks. The senior notes bear interest
at the rate of 6.66% per annum payable semi-annually and mature on May 19, 2003.
Principal payments of $10.0 million per year will be due annually, commencing on
May 19, 1998. The maturity date of the revolving credit facility is May 19,
2000, subject to automatic extensions in one year increments at the end of each
commitment year, unless either bank delivers a notice of intention not to
extend the maturity date. As of June 30, 1997, $8.6 million had been used for
letters of credit under the revolving credit facility. The balance of $41.4
million was unused and available. The Company's senior note and revolving
credit agreements contain certain financial covenants including restrictions on
cash distributions to stockholders which could limit the Company's future
ability to pay cash dividends.
The Company had working capital of $168.3 million at June 30, 1997 and
working capital of $162.4 million at December 31, 1996. Net cash used in
operating activities was $20.1 million and $15.0 million in the six months ended
June 30, 1997 and 1996, respectively. The increase in net cash used in operating
activities in the six months ended June 30, 1997 compared to the same period of
1996 is primarily attributable to the increase in accounts receivable and
inventory, and decrease in accounts payable and accrued expenses.
Net cash used in investing activities was $27.9 million and $13.9 million in
the six months ended June 30, 1997 and 1996, respectively. The Company made
capital expenditures of $28.1 million and $14.0 million in the six months ended
June 30, 1997 and 1996, respectively (consisting primarily of expenditures for
construction of the new distribution center in South Carolina, new retail
stores' fixtures and leasehold improvements, distribution facilities' fixtures
and renovation of existing stores).
Page 10 of 135
<PAGE>
Certain monetary assets and liabilities of the Company are in foreign
currencies and may be subject to foreign exchange risk. Foreign currency
exchange losses have not in the past had a material effect on the Company's
financial condition since these assets and liabilities are not material to its
consolidated monetary assets and liabilities. As such, these items have not
been hedged by the Company.
The Company's inventory purchases in 1996 were approximately 26% from
Japanese factories and approximately 29% from Germany and Austria combined. The
significant portion of the inventory purchases in foreign currencies exposes the
Company to foreign currency fluctuations that can affect the Company's gross
profit margin. To hedge against foreign currency swings, the Company has
strategies in place which are intended to minimize the adverse impact of foreign
currency on its business. These strategies are: (i) Currency risk sharing
arrangements with certain of the Company's suppliers; (ii) Forward exchange
contract coverage on part of its German mark related purchases; (iii) Sourcing
of products in currencies other than Japanese and German where feasible; and
(iv) Converting certain purchases from foreign currency to U.S. dollar
denominations. The currency risk sharing arrangements are intended to minimize
the impact of currency swings by the equal sharing of currency exposures against
inventory purchases denominated in Japanese yen between the suppliers and the
Company. Future fluctuations of the U.S. dollar in relation to foreign
currencies can impact earnings in future periods.
The Company has two primary distribution centers in the United States,
located in Secaucus, New Jersey and Long Beach, California. While the Secaucus
facility is owned, the Long Beach facility is leased pursuant to a lease
expiring in January 1999 which includes an extension option for one year. The
Company also leases additional off-site warehouse space on a short-term and
mid-term basis in separate buildings to augment each of these primary
facilities. In the second quarter of 1996, the Company commenced construction
of the 580,000 square foot distribution facility in South Carolina which is
anticipated to be completed in the latter part of 1997. As of June 30, 1997,
$46 million of the estimated $60 million capital commitments associated with
this facility had been incurred. The Company expects to finance the balance of
this capital commitment principally from the proceeds of the new senior notes
completed in June 1997. The new facility should enable the Company to eliminate
the need for offsite facilities in Long Beach and Secaucus and accommodate
substantially increased volume. The Company believes that the use of state of
the art distribution technology in the new facility and relief from
inefficiencies resulting from overcrowding of existing facilities should
provide long term benefits. The Company anticipates certain transition costs in
the mid-term which may impact earnings at that time.
As of the close of the second quarter of 1997, Company owned stores increased
to 141, including the opening of 4 new retail stores during the quarter. The
number of states in which the Company operates stores is 42. The Company plans
to continue to pursue expansion of its store network. Present plans include
opening between 20 and 25 new retail stores in 1997, of which 9 stores have been
opened through the second quarter, and between 20 and 25 stores in 1998. Each
store requires a commitment of inventory, fixtures, equipment and pre-opening
store expenses. Additional capital will be required in order to meet the
inventory needs of the Company's expanding retail store network.
Page 11 of 135
<PAGE>
The Company currently estimates that its aggregate capital expenditures in
1997 and 1998 will approximate up to $75 million. This includes the expansion of
the retail store network (including initial investments in inventory), expansion
of its international operations and the $14 million remaining of the estimated
$60 million capital commitment for the construction of the new distribution
facility. In each of these cases, there can be no assurance that the Company's
capital expenditures will not exceed this estimated amount.
FUTURE DEVELOPMENTS
In 1997, the Company will adopt Statement of Financial Accounting Standards
No. 125, "Accounting for Transfers and Servicing Financial Assets
Extinguishments of Liabilities." Management does not believe that adoption of
this accounting standard will have a material impact on the financial statements
of the Company.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." This
statement specifies the computation, presentation, and disclosure requirements
for earnings per share and is effective for financial statements issued for
periods ending after December 15, 1997. Management is currently evaluating the
requirements of SFAS 128.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." This statement establishes standards for the
reporting and display of comprehensive income and its components in a full set
of general purpose financial statements. SFAS 130 is effective for fiscal years
beginning after December 15, 1997 and requires restatement of earlier periods
presented. Management is currently evaluating the requirements of SFAS 130.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." This
statement establishes standards for the way that a public enterprise reports
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to shareholders. SFAS 131 is effective for
fiscal years beginning after December 15, 1997 and requires restatement of
earlier periods presented. Management is currently evaluating the requirements
of SFAS 131.
SEASONALITY AND QUARTERLY FLUCTUATIONS
Historically, the Company's operations have been seasonal, with higher sales
and net income occurring in the third and fourth quarters, reflecting increased
demand during the year-end holiday selling season. Since the biggest retail
selling season is the year-end holiday season, and as more of the Company's
principal department store customers adopt electronic data interchange which
allows them to defer shipments until later in the selling season, future sales
are expected to be more heavily weighted toward the third and fourth quarters.
In addition, the Company's retail stores experience a similar seasonal selling
pattern, however, sales are more heavily weighted toward the fourth quarter. As
a result, as the Company increases the number of stores, the shift of sales
volume toward the latter part of the year is expected to continue.
Page 12 of 135
<PAGE>
The Company's results of operations may also fluctuate from quarter to
quarter in the future as a result of the amount and timing of sales contributed
by, and expenses related to the opening of, new retail stores and the
integration of such stores into the operations of the Company, as well as other
factors. The addition of a significant number of retail stores, as is
anticipated with the Company's store expansion program, can therefore
significantly affect results of operations on a quarter-to-quarter basis. As the
addition of new stores continues, operating income for the first and second
quarters will be more impacted by the combination of seasonally lower sales
volumes and increased operating expenses. The increase in operating expenses is
principally due to an increased percentage of fixed expenses that relate to
retail stores and the additional expense layering from new developing stores.
FORWARD-LOOKING INFORMATION
Certain statements or assumptions in Management's Discussion and Analysis
contain or are based on "forward-looking" information (as defined in the Private
Securities Litigation and Reform Act of 1995) that involves risk and
uncertainties inherent in the Company's business. Actual outcomes are dependent
upon the Company's successful performance of internal plans, its ability to
control inventory levels, customer changes in short range and long range plans,
domestic and international competition in the Company's product areas, whether
the Company will be able to accomplish store closures within the current time
table for closure and within the parameters of the loss provision (which are
based on current estimates of closure costs), successful completion of
construction within current cost estimates, continued acceptance of existing
products and the development and acceptance of new products, performance issues
with key suppliers, changes in government import and export policies, risks
related to international transactions and hedging strategies, as well as general
economic risks and uncertainties.
Page 13 of 135
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Shareholders held on May 28, 1997, the
following members were re-elected to the Board of Directors:
Alfred J. Blake
Robert H. Hotz
Joseph S. Muto
The following proposals were approved at the Company's Annual Meeting:
Votes Against or
For Withheld Abstentions
----------- ----------- -----------
1. Re-election of three of its
directors to the Board of
Directors
Alfred J. Blake 11,107,728 192,694
Robert H. Hotz 11,286,403 14,019
Joseph S. Muto 11,286,403 14,019
2. Amendment to the Mikasa, Inc.
Long-Term Incentive Plan 10,405,585 538,647 355,450
3. Ratification of appointment of
Coopers & Lybrand L.L.P. as
independent accountants for the
1997 fiscal year 11,296,915 2,107 1,400
There were 740 broker non-votes with respect to Item 2 and no broker non-votes
with respect to Items 1 and 3 above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.2 Instruments Defining The Rights Of Security Holders,
Including Indentures
Note Purchase Agreements dated as of June 4, 1997 by
and among Mikasa, Inc., American Commercial,
Incorporated and various Noteholders with Notes issued
thereunder
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
Page 14 of 135
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MIKASA, INC.
(Registrant)
Date: August 14, 1997 /s/ Raymond B. Dingman
-------------------------------
Raymond B. Dingman
President and Chief Executive Officer
/s/ Brenda W. Flores
-------------------------------
Brenda W. Flores
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Page 15 of 135
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Page
- -----------------------------------------------------------------------------
4.2 Instruments Defining The Rights Of Security Holders,
Including Indentures
Note Purchase Agreements dated as of June 4, 1997 17
by and among Mikasa, Inc., American Commercial,
Incorporated and various Noteholders with Notes
issued thereunder
27 Financial Data Schedule 135
Page 16 of 135
<PAGE>
- --------------------------------------------------------------------------------
MIKASA, INC.
AMERICAN COMMERCIAL, INCORPORATED
--------------------------------------------------
NOTE PURCHASE AGREEMENT
--------------------------------------------------
DATED AS OF JUNE 4, 1997
$60,000,000 7.38% SENIOR NOTES DUE JUNE 4, 2007
- --------------------------------------------------------------------------------
Page 17 of 135
<PAGE>
TABLE OF CONTENTS
(Not a Part of the Agreement)
Page
1. AUTHORIZATION OF NOTES...............................................1
2. SALE AND PURCHASE OF NOTES...........................................1
3. CLOSINGS.............................................................2
3.1 Closings.......................................................2
3.2 Closing Procedures.............................................2
4. CONDITIONS TO CLOSINGS...............................................3
4.1 Representations and Warranties.................................3
4.2 Performance; No Default........................................3
4.3 Compliance Certificates........................................3
4.4 Opinions of Counsel............................................3
4.5 Purchase Permitted By Applicable Law, etc......................4
4.6 Sale of Other Notes............................................4
4.7 Payment of Special Counsel Fees................................4
4.8 Private Placement Number.......................................5
4.9 Changes in Corporate Structure.................................5
4.10 Proceedings and Documents......................................5
5. REPRESENTATIONS AND WARRANTIES OF MIKASA AND THE COMPANY.............5
5.1 Organization; Power and Authority..............................5
5.2 Authorization, etc.............................................6
5.3 Disclosure.....................................................6
5.4 Organization and Ownership of Shares of Subsidiaries...........6
5.5 Financial Statements...........................................7
5.6 Compliance with Laws, Other Instruments, etc...................7
5.7 Governmental Authorizations, etc...............................8
5.8 Litigation; Observance of Statutes and Orders..................8
5.9 Taxes..........................................................8
5.10 Title to Property; Leases......................................9
5.11 Licenses, Permits, etc.........................................9
5.12 Compliance with ERISA..........................................9
5.13 Private Offering by the Company...............................11
5.14 Use of Proceeds; Margin Regulations...........................11
5.15 Existing Debt.................................................12
5.16 Foreign Assets Control Regulations, etc.......................12
5.17 Status under Certain Statutes.................................12
6. REPRESENTATIONS OF THE PURCHASER....................................13
6.1 Purchase for Investment.......................................13
6.2 Source of Funds...............................................13
-i-
Page 18 of 135
<PAGE>
7. INFORMATION AS TO COMPANY...........................................15
7.1 Financial and Business Information............................15
7.2 Officer's Certificate.........................................17
7.3 Inspection....................................................18
8. PREPAYMENT OF THE NOTES.............................................19
8.1 Required Prepayments; Payment at Maturity.....................19
8.2 Optional Prepayments with Make-Whole Amount...................19
8.3 Allocation of Partial Prepayments.............................20
8.4 Maturity; Surrender, etc......................................20
8.5 Purchase of Notes.............................................20
8.6 Make-Whole Amount.............................................21
9. AFFIRMATIVE COVENANTS...............................................23
9.1 Compliance with Law...........................................23
9.2 Insurance.....................................................23
9.3 Maintenance of Properties.....................................23
9.4 Payment of Taxes..............................................24
9.5 Corporate Existence, etc......................................24
10. NEGATIVE COVENANTS..................................................25
10.1 Transactions with Affiliates..................................25
10.2 Merger, Consolidation, etc....................................25
10.3 Acquisition of Stock..........................................27
10.4 Distributions.................................................27
10.5 Subsidiary Debt; Subsidiary Preferred Stock...................28
10.6 Funded Debt to Consolidated Funded Debt Capitalization........31
10.7 Consolidated Net Worth........................................31
10.8 Liens.........................................................31
10.9 Restricted Investments........................................35
10.10 Line of Business..............................................35
10.11 Private Offering..............................................35
10.12 Sales of Subsidiary Stock.....................................36
10.13 Pari Passu Ranking of Notes...................................37
10.14 Mikasa Tradenames/Trademarks..................................37
11. EVENTS OF DEFAULT...................................................38
12. REMEDIES ON DEFAULT, ETC............................................41
12.1 Acceleration..................................................41
12.2 Other Remedies................................................42
12.3 Rescission....................................................42
12.4 No Waivers or Election of Remedies, Expenses, etc.............42
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.......................43
13.1 Registration of Notes.........................................43
13.2 Transfer and Exchange of Notes................................43
13.3 Replacement of Notes..........................................44
-ii-
Page 19 of 135
<PAGE>
14. PAYMENTS ON NOTES...................................................44
14.1 Place of Payment..............................................44
14.2 Home Office Payment...........................................45
15. EXPENSES, ETC.......................................................45
15.1 Transaction Expenses..........................................45
15.2 Survival......................................................46
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT........46
17. AMENDMENT AND WAIVER................................................46
17.1 Requirements..................................................46
17.2 Solicitation of Holders of Notes..............................47
17.3 Binding Effect, etc...........................................47
17.4 Notes held by Mikasa and the Company, etc.....................48
18. NOTICES.............................................................48
19. REPRODUCTION OF DOCUMENTS...........................................49
20. CONFIDENTIAL INFORMATION............................................50
21. SUBSTITUTION OF PURCHASER...........................................52
22. MISCELLANEOUS.......................................................52
22.1 Successors and Assigns........................................52
22.2 Payments Due on Non-Business Days; When Payments Deemed
Received......................................................52
22.3 Severability..................................................53
22.4 Construction..................................................53
22.5 Counterparts..................................................53
22.6 Governing Law.................................................53
-iii-
Page 20 of 135
<PAGE>
Schedule A -- Information as to Purchasers
Schedule B -- Defined Terms
Schedule 3 -- Payment Instructions
Schedule 4.9 -- Changes in Corporate Structure
Schedule 5.3 -- Disclosure Materials
Schedule 5.4 -- Other Subsidiaries and Ownership of Capital Stock
Schedule 5.5 -- Financial Statements
Schedule 5.8 -- Certain Litigation
Schedule 5.11 -- Patents, etc.
Schedule 5.12 -- ERISA Affiliates
Schedule 5.14 -- Use of Proceeds
Schedule 5.15 -- Existing Debt and Liens
Schedule 10.1 -- Affiliate Transactions
Exhibit 1 -- Form of 7.38% Senior Note Due June 4, 2007
Exhibit 4.4(a) -- Form of Opinion of General Counsel to Mikasa and
the Company
Exhibit 4.4(b) -- Form of Opinion of Counsel to Mikasa and the
Company
Exhibit 4.4(c) -- Form of Opinion of Special Counsel to the
Purchasers
-iv-
Page 21 of 135
<PAGE>
Mikasa, Inc.
American Commercial, Incorporated
Note Purchase Agreement
$60,000,000 7.38% SENIOR NOTES DUE JUNE 4, 2007
Dated as of June 4, 1997
To the Purchaser named on
the signature page hereto
Ladies and Gentlemen:
MIKASA, INC. (together with its successors and assigns,
"Mikasa"), a corporation organized under the laws of the State of
Delaware, and AMERICAN COMMERCIAL, INCORPORATED (together with its
successors and assigns, the "Company"), a corporation organized under
the laws of the State of California, hereby jointly and severally
agree with you as follows:
1. AUTHORIZATION OF NOTES.
Each of Mikasa and the Company will authorize the issue and sale
of $60,000,000 in aggregate principal amount of their 7.38% Senior
Notes due June 4, 2007 (the "Notes", such term to include any such
notes issued in substitution therefor pursuant to Section 13 of this
Agreement or the Other Agreements (as hereinafter defined)). The
Notes shall be substantially in the form set out in Exhibit 1, with
such changes therefrom, if any, as may be approved by you, the Other
Purchasers, Mikasa and the Company. Certain capitalized terms used in
this Agreement are defined in Schedule B; references to a "Schedule"
or an "Exhibit" are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, Mikasa and
the Company will issue and sell to you and you will purchase from
Mikasa and the Company, at each Closing provided for in Section 3,
Notes in the principal amount specified for such Closing below your
name in Schedule A at the purchase price of 100% of the principal
amount thereof. Contemporaneously with entering into this Agreement,
-1-
Page 22 of 135
<PAGE>
Mikasa and the Company are entering into separate Note Purchase
Agreements (the "Other Agreements") identical with this Agreement with
each of the other purchasers named in Schedule A (the "Other
Purchasers"), providing for the sale at each such Closing to each of
the Other Purchasers of Notes in the principal amount specified for
such Closing below its name in Schedule A. Your obligation hereunder
and the obligations of the Other Purchasers under the Other Agreements
are several and not joint obligations and you shall have no obligation
under any Other Agreement and no liability to any Person for the
performance or nonperformance by any Other Purchaser thereunder.
3. CLOSINGS.
3.1 Closings.
The Company hereby agrees to sell to you and you hereby agree to
purchase from the Company, in accordance with the provisions hereof,
(a) at a closing (the "First Closing") on June 4, 1997 (the
"First Closing Date"), the aggregate principal amount of Notes
specified below your name on Schedule A to be purchased at such
Closing; and
(b) at a closing (the "Second Closing") on August 14, 1997
or on such other Business Day thereafter on or prior to
August 28, 1997 as may be agreed upon by Mikasa, the Company, you
and the Other Purchasers (the "Second Closing Date"), the
aggregate principal amount of Notes specified below your name on
Schedule A to be purchased at such Closing.
3.2 Closing Procedures.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers at the Closings shall occur at the offices of Hebb &
Gitlin, One State Street, Hartford, Connecticut 06103, at 10:00 a.m.,
Hartford time, on the respective dates for the Closings as provided
for herein. At each Closing the Company will deliver to you the Notes
to be purchased by you at such Closing in the form of a single Note
(or such greater number of Notes in denominations of at least $500,000
as you may request), dated the date of such Closing and registered in
your name (or in the name of your nominee), against delivery by you to
the Company or its order of immediately available funds in the amount
of the purchase price therefor by wire transfer of immediately
available funds in the amount of the purchase price thereof, as
directed by Mikasa and the Company in Schedule 3. If at either
Closing Mikasa and the Company shall fail to tender such Notes to you
as provided above in this Section 3, or any of the conditions
-2-
Page 23 of 135
<PAGE>
specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights
you may have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSINGS.
Your obligation to purchase and pay for the Notes to be sold to
you on each Closing Date is subject to the fulfillment to your
satisfaction, prior to or on such Closing Date, of the following
conditions:
4.1 Representations and Warranties.
The representations and warranties of Mikasa and the Company in
this Agreement shall be correct when made and on such Closing Date.
4.2 Performance; No Default.
Mikasa and the Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be
performed or complied with by each of them on or prior to such Closing
Date and after giving effect to the issue and sale of the Notes on
such Closing Date (and the application of the proceeds thereof as
contemplated by Schedule 5.14) no Default or Event of Default shall
exist.
4.3 Compliance Certificates.
(a) Officer's Certificates. Each of Mikasa and the Company
shall have delivered to you an Officer's Certificate, dated such
Closing Date, certifying that the conditions specified in
Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificates. Each of Mikasa and the
Company shall have delivered to you a certificate, dated such
Closing Date, signed by its Secretary or an Assistant Secretary,
certifying as to the resolutions, the by-laws and the certificate
or articles of incorporation of Mikasa or the Company attached
thereto and as to such other corporate proceedings relating to
the authorization, execution and delivery of the Notes, this
Agreement and the Other Agreements as you may request.
4.4 Opinions of Counsel.
You shall have received opinions in form and substance
satisfactory to you, dated such Closing Date, from
-3-
Page 24 of 135
<PAGE>
(a) Joseph S. Muto, General Counsel to Mikasa and the
Company, substantially in the form set forth in Exhibit 4.4(a)
and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request
(and Mikasa and the Company hereby instruct their counsel to
deliver such opinion to you),
(b) Kelley Drye & Warren LLP, special counsel to Mikasa and
the Company, substantially in the form set forth in Exhibit
4.4(b) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may
reasonably request (and Mikasa and the Company hereby instruct
their counsel to deliver such opinion to you), and
(c) Hebb & Gitlin, your special counsel in connection with
such transactions, substantially in the form set forth in Exhibit
4.4(c) and covering such other matters incident to the
transactions contemplated hereby as you may reasonably request.
4.5 Purchase Permitted By Applicable Law, etc.
On each Closing Date your purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to which
you are subject, without recourse to provisions (such as section
1405(a)(8) of the New York Insurance Law) permitting limited
investments by insurance companies without restriction as to the
character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation G, T or X
of the Board of Governors of the Federal Reserve System) and (c) not
subject you to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in
effect on the date of your execution and delivery of this Agreement.
If requested by you, you shall have received an Officer's Certificate
certifying as to such matters of fact as you may reasonably specify to
enable you to determine whether such purchase is so permitted.
4.6 Sale of Other Notes.
Contemporaneously with each Closing, Mikasa and the Company shall
sell to the Other Purchasers, and the Other Purchasers shall purchase
from Mikasa and the Company, the Notes to be purchased by them at such
Closing as specified in Schedule A.
4.7 Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, Mikasa and the
Company shall have paid on or before each Closing the reasonable fees,
-4-
Page 25 of 135
<PAGE>
charges and disbursements of your special counsel referred to in
Section 4.4(c) to the extent reflected in a statement of such counsel
rendered to Mikasa or the Company at least one Business Day prior to
such Closing.
4.8 Private Placement Number.
Prior to the First Closing Date, a Private Placement Number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with
the Securities Valuation Office of the National Association of
Insurance Commissioners) shall have been obtained for the Notes.
4.9 Changes in Corporate Structure.
Except as specified in Schedule 4.9, neither Mikasa nor the
Company shall have changed its respective jurisdiction of
incorporation or been a party to any merger or consolidation and
neither Mikasa nor the Company shall have succeeded to all or any
substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to
in Schedule 5.5.
4.10 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you
and your special counsel, and you and your special counsel shall have
received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF MIKASA AND THE COMPANY.
Each of Mikasa and the Company represents and warrants to you
that:
5.1 Organization; Power and Authority.
Each of Mikasa and the Company is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to
which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each of Mikasa and the Company has the
corporate power and authority to own or hold under lease the
-5-
Page 26 of 135
<PAGE>
Properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver
this Agreement, the Other Agreements and the Notes and to perform the
provisions hereof and thereof.
5.2 Authorization, etc.
This Agreement, the Other Agreements and the Notes have been duly
authorized by all necessary corporate action on the part of Mikasa and
the Company, and this Agreement constitutes, and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of Mikasa and the Company enforceable against each of
Mikasa and the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5.3 Disclosure.
Mikasa and the Company, through their agent, Dillon, Read & Co.
Inc., have delivered to you and each Other Purchaser a copy of a
Memorandum (the "Memorandum") relating to the transactions
contemplated hereby. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other
writings identified in Schedule 5.3 and the financial statements
listed in Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of
the circumstances under which they were made. Except as disclosed in
the Memorandum or as expressly described in Schedule 5.3, or in one of
the documents, certificates or other writings identified therein, or
in the financial statements listed in Schedule 5.5, since December 31,
1995, there has been no change in the financial condition, operations,
business or Properties of Mikasa, the Company or any of the Other
Subsidiaries except changes that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
5.4 Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 contains (except as noted therein) a
complete and correct list of the Other Subsidiaries, showing, as
to each of the Other Subsidiaries, the correct name thereof, the
jurisdiction of its organization, and the percentage of shares of
each class of its Capital Stock outstanding owned by Mikasa, the
Company and/or each of the Other Subsidiaries.
-6-
Page 27 of 135
<PAGE>
(b) All of the outstanding shares of Capital Stock of each
of the Other Subsidiaries shown in Schedule 5.4 as being owned by
Mikasa, the Company and/or the Other Subsidiaries have been
validly issued, are fully paid and nonassessable and are owned by
Mikasa, the Company or the Other Subsidiaries free and clear of
any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Other Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction
of organization, and is duly qualified as a foreign corporation
or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so
qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. Each such Other Subsidiary has the corporate or other
power and authority to own or hold under lease the Properties it
purports to own or hold under lease and to transact the business
it transacts and proposes to transact.
5.5 Financial Statements.
Mikasa and the Company have delivered to you and each Other
Purchaser copies of the consolidated financial statements of Mikasa,
the Company and the Other Subsidiaries listed on Schedule 5.5. All of
said consolidated financial statements (including in each case the
related schedules and notes) fairly present in all material respects
the consolidated financial position of Mikasa, the Company and the
Other Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash
flows for the respective periods so specified and have been prepared
in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the
case of any interim financial statements, to normal year-end
adjustments).
5.6 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by Mikasa and the
Company of this Agreement and the Notes will not
(a) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect
of any Property of Mikasa, the Company or any Other Subsidiary
under, any indenture, mortgage, deed of trust, loan, purchase or
-7-
Page 28 of 135
<PAGE>
credit agreement, lease, corporate charter or by-laws, or any
other Material agreement or instrument to which Mikasa, the
Company or any Other Subsidiary is bound or by which Mikasa, the
Company or any Other Subsidiary or any of their respective
Properties may be bound or affected,
(b) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree,
or ruling of any court, arbitrator or Governmental Authority
applicable to Mikasa, the Company or any Other Subsidiary, or
(c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to Mikasa,
the Company or any Other Subsidiary.
5.7 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required in
connection with the execution, delivery or performance by Mikasa and
the Company of this Agreement or the Notes.
5.8 Litigation; Observance of Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no
actions, suits or proceedings pending or, to the knowledge of
Mikasa or the Company, threatened against or affecting Mikasa,
the Company or any Other Subsidiary or any Property of Mikasa,
the Company or any Other Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
(b) Neither Mikasa, the Company nor any Other Subsidiary is
in default under any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of
any applicable law, ordinance, rule or regulation (including,
without limitation, Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the
aggregate, would reasonably be expected to have a Material
Adverse Effect.
5.9 Taxes.
Mikasa, the Company and the Other Subsidiaries have filed
all income tax returns that are required to have been filed in any
jurisdiction, and have paid all taxes shown to be due and payable on
-8-
Page 29 of 135
<PAGE>
such returns and all other taxes and assessments payable by them, to
the extent such taxes and assessments have become due and payable and
before they have become delinquent, except for any taxes and
assessments (a) the amount of which is not individually or in the
aggregate Material or (b) the amount, applicability or validity of
which is currently being contested in good faith by appropriate
proceedings and with respect to which Mikasa, the Company or any Other
Subsidiary, as the case may be, has established adequate reserves in
accordance with GAAP. The Federal income tax liabilities of Mikasa,
the Company and the Other Subsidiaries have been audited by the
Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended December 31, 1992.
5.10 Title to Property; Leases.
Mikasa, the Company and the Other Subsidiaries have good and
sufficient title to their respective Material Properties, including
all such Properties reflected in the most recent audited balance sheet
referred to in Schedule 5.5 or purported to have been acquired by
Mikasa, the Company or any Other Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement, except
for those defects in title that, individually or in the aggregate,
would not have a Material Adverse Effect. All Material leases are
valid and subsisting and are in full force and effect in all material
respects.
5.11 Licenses, Permits, etc.
Except as disclosed in Schedule 5.11, Mikasa, the Company and the
Other Subsidiaries own or possess or have the unrestricted right to
use all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights
thereto (collectively, the "Mikasa Tradenames/Trademarks"), that are
Material, without known conflict with the prior rights of others,
except for those conflicts that, individually or in the aggregate,
would not have a Material Adverse Effect.
5.12 Compliance with ERISA.
(a) Mikasa, the Company and each ERISA Affiliate have
operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as
have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither Mikasa, the Company
nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of
-9-
Page 30 of 135
<PAGE>
the Code relating to employee benefit plans (as defined in
section 3 of ERISA), and no event, transaction or condition has
occurred or exists that would reasonably be expected to result in
the incurrence of any such liability by Mikasa, the Company or
any ERISA Affiliate, or in the imposition of any Lien on any of
the rights, Properties or assets of Mikasa, the Company or any
ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to section
401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans),
determined as of the end of such Plan's most recently ended plan
year on the basis of the actuarial assumptions specified for
funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets
of such Plan allocable to such benefit liabilities. The term
"benefit liabilities" has the meaning specified in section 4001
of ERISA and the terms "current value" and "present value" have
the meaning specified in section 3 of ERISA.
(c) Mikasa, the Company and the ERISA Affiliates have not
incurred withdrawal liabilities (and are not subject to
contingent withdrawal liabilities) under section 4201 or 4204 of
ERISA in respect of Multiemployer Plans that individually or in
the aggregate are Material.
(d) The expected post-retirement benefit obligation
(determined as of the last day of Mikasa's and the Company's most
recently ended fiscal year in accordance with Financial
Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of Mikasa, the Company and their
Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of
ERISA or in connection with which a tax could be imposed pursuant
to section 4975(c)(1)(A)-(D) of the Code. The representation by
Mikasa and the Company in the first sentence of this Section
5.12(e) is made in reliance upon and subject to the accuracy of
your representation in Section 6.2 as to the sources of the funds
used to pay the purchase price of the Notes to be purchased by
you.
-10-
Page 31 of 135
<PAGE>
(f) Schedule 5.12 sets forth all ERISA Affiliates and all
"employee benefit plans" maintained by Mikasa or the Company (or
any "affiliate" thereof) or in respect of which the Notes could
constitute an "employer security" ("employee benefit plan" has
the meaning specified in section 3 of ERISA, "affiliate" has the
meaning specified in section 407(d) of ERISA and section V of the
Department of Labor Prohibited Transaction Exemption 95-60 (60 FR
35925, July 12, 1995) and "employer security" has the meaning
specified in section 407(d) of ERISA).
(g) All Foreign Pension Plans have been established,
operated, administered and maintained in compliance with all
laws, regulations and orders applicable thereto except for such
failures to comply, in the aggregate for all such failures, that
could not reasonably be expected to have a Material Adverse
Effect. All premiums, contributions and any other amounts
required by applicable Foreign Pension Plan documents or
applicable laws have been paid or accrued as required, except for
premiums, contributions and amounts that, in the aggregate for
all such obligations, could not reasonably be expected to have a
Material Adverse Effect.
5.13 Private Offering by the Company.
Neither Mikasa, the Company nor anyone acting on their
behalf has offered the Notes or any similar Securities for sale to, or
solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other
than you, the Other Purchasers and not more than 21 other
Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither Mikasa, the Company nor anyone
acting on their behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration
requirements of section 5 of the Securities Act.
5.14 Use of Proceeds; Margin Regulations.
Mikasa and the Company will apply the proceeds of the sale of the
Notes as set forth in Schedule 5.14. No part of the proceeds from the
sale of the Notes hereunder will be used, directly or indirectly, for
the purpose of buying or carrying any margin stock within the meaning
of Regulation G of the Board of Governors of the Federal Reserve
System (12 CFR 207), or for the purpose of buying or carrying or
trading in any Securities under such circumstances as to involve
Mikasa or the Company in a violation of Regulation X of said Board (12
CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not
-11-
Page 32 of 135
<PAGE>
constitute more than 1% of the value of the consolidated assets of
Mikasa, the Company and the Other Subsidiaries and neither Mikasa nor
the Company has any present intention that margin stock will
constitute more than 1% of the value of such assets. As used in this
Section, the terms "margin stock" and "purpose of buying or carrying"
shall have the meanings assigned to them in said Regulation G.
5.15 Existing Debt.
Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all outstanding Debt of Mikasa, the Company and
the Other Subsidiaries as of December 31, 1996 (and specifying, as to
each such item of Debt, the collateral, if any, securing such Debt),
since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of
the Debt of Mikasa, the Company or the Other Subsidiaries. Neither
Mikasa, the Company nor any Other Subsidiary is in default, and no
waiver of default is currently in effect, in the payment of any
principal or interest on any Debt of Mikasa, the Company or any Other
Subsidiary and no event or condition exists with respect to any Debt
of Mikasa, the Company or any Other Subsidiary that would permit (or
that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Debt to become due and payable before its
stated maturity or before its regularly scheduled dates of payment.
5.16 Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by Mikasa and the Company hereunder
nor their use of the proceeds thereof will violate the Trading with
the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.
5.17 Status under Certain Statutes.
Neither Mikasa, the Company nor any Other Subsidiary is subject
to regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, the
Transportation Acts (49 U.S.C.), as amended, or the Federal Power Act,
as amended.
-12-
Page 33 of 135
<PAGE>
6. REPRESENTATIONS OF THE PURCHASER.
6.1 Purchase for Investment.
You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for
the account of one or more pension or trust funds and not with a view
to the distribution thereof, provided that the disposition of your or
their Property shall at all times be within your or their control.
You understand that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration
is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that
neither Mikasa nor the Company is required to register the Notes.
6.2 Source of Funds.
You represent 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 the Notes to be purchased by
you hereunder:
(a) the Source is an "insurance company general account" as
defined in Department of Labor Prohibited Transaction Exemption
95-60 (60 FR 35925, July 12, 1995) and in respect thereof you
represent that there is no "employee benefit plan" (as defined in
section 3(3) of ERISA and section 4975(e)(1) of the Code,
treating as a single plan all plans maintained by the same
employer or employee organization or affiliate thereof) with
respect to which the amount of the general account reserves and
liabilities of all contracts held by or on behalf of such plan
exceed 10% of the total reserves and liabilities of such general
account (exclusive of separate account liabilities) plus surplus,
as set forth in the NAIC Annual Statement filed with your state
of domicile and that such acquisition is eligible for and
satisfies the other requirements of such exemption; or
(b) if you are an insurance company, the Source does not
include assets allocated to any separate account maintained by
you in which any employee benefit plan (or its related trust) has
any interest, other than a separate account that 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
-13-
Page 34 of 135
<PAGE>
(c) 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 PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to
Mikasa and the Company in writing pursuant to this paragraph (c),
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; or
(d) 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, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or
controlled 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 (i) the identity of such QPAM and (ii) 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 (d); or
(e) the Source is a governmental plan; or
(f) 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 (f); or
(g) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of
ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan" and "separate account" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
-14-
Page 35 of 135
<PAGE>
7. INFORMATION AS TO COMPANY
7.1 Financial and Business Information.
Mikasa and the Company shall deliver to each holder of Notes that
is an Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of
each quarterly fiscal period in each fiscal year of Mikasa (other
than the last quarterly fiscal period of each such fiscal year),
duplicate copies of,
(i) a consolidated balance sheet of Mikasa, the
Company and the Other Subsidiaries as at the end of such
quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of Mikasa, the Company
and its Subsidiaries, for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal
year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods
in the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior
Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being
reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments,
provided that delivery within the time period specified
above of copies Mikasa's Quarterly Report on Form 10-Q
prepared in compliance with the requirements therefor and
filed with the SEC shall be deemed to satisfy the
requirements of this Section 7.1(a);
(b) Annual Statements -- within 105 days after the end of
each fiscal year of Mikasa, duplicate copies of,
(i) a consolidated balance sheet of Mikasa, the
Company and the Other Subsidiaries, as at the end of such
year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of Mikasa, the Company
and the Other Subsidiaries, for such year, setting forth in
each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in
-15-
Page 36 of 135
<PAGE>
accordance with GAAP, and accompanied by an opinion thereon
of independent certified public accountants of recognized
national standing, which opinion shall state that such
financial statements present fairly, in all material
respects, the financial position of the companies being
reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the
circumstances; provided that the delivery within the time
period specified above of Mikasa's Annual Report on Form
10-K for such fiscal year prepared in accordance with the
requirements therefor and filed with the SEC shall be deemed
to satisfy the requirements of this Section 7.1(b);
(c) Accountants' Certificate -- within 105 days after the
end of each fiscal year of Mikasa up to and including the fiscal
year ending December 31, 2002, a certificate of the accountants
referred to in Section 7.1(b)(ii) stating that they have reviewed
this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are
aware that any such condition or event then exists, specifying
the nature and period of the existence thereof (it being
understood that such accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of any Default or
Event of Default unless such accountants should have obtained
knowledge thereof in making an audit in accordance with generally
accepted auditing standards or did not make such an audit);
(d) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report
(including, without limitation, Mikasa's annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under the
Exchange Act), notice or proxy statement sent by Mikasa or any
Subsidiary to public securities holders generally, and (ii) each
regular or periodic report, each registration statement that
shall have become effective (without exhibits except as expressly
requested by such holder), and each final prospectus and all
amendments thereto filed by the Company or any Subsidiary with
the SEC;
(e) Notice of Default or Event of Default -- promptly, and
in any event within five days after a Responsible Officer
becoming aware of the existence of any Default or Event of
-16-
Page 37 of 135
<PAGE>
Default, a written notice specifying the nature and period of
existence thereof and what action Mikasa or the Company is taking
or proposes to take with respect thereto;
(f) ERISA Matters -- promptly, and in any event within five
days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and
the action, if any, that Mikasa, the Company or an ERISA
Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable
event, as defined in section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has not
been waived pursuant to such regulations as in effect on the
First Closing Date; or
(ii) the taking by the PBGC of steps to institute,
or the threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan,
or the receipt by Mikasa, the Company or any ERISA Affiliate
of a notice from a Multiemployer Plan that such action has
been taken by the PBGC with respect to such Multiemployer
Plan; or
(iii) any event, transaction or condition that
could result in the incurrence of any liability by Mikasa,
the Company or any ERISA Affiliate pursuant to Title I or IV
of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of
any Lien on any of the rights, Properties or assets of
Mikasa, the Company or any ERISA Affiliate pursuant to Title
I or IV of ERISA or such penalty or excise tax provisions,
if such liability or Lien, taken together with any other
such liabilities or Liens then existing, would reasonably be
expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness,
such other data and information relating to the business,
operations, affairs, financial condition, assets or Properties of
Mikasa, the Company or any of the Other Subsidiaries or relating
to the ability of Mikasa or the Company to perform their
obligations hereunder and under the Notes as from time to time
may be reasonably requested by any such holder of Notes.
7.2 Officer's Certificate.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be
-17-
Page 38 of 135
<PAGE>
accompanied by a certificate of a Senior Financial Officer setting
forth:
(a) Covenant Compliance -- the information (including
detailed calculations) required in order to establish whether
Mikasa and the Company were in compliance with the requirements
of Section 10.2 through Section 10.9, inclusive, and Section
10.12, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each
such Section, where applicable, the calculations of the maximum
or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be
made, under his or her supervision, a review of the transactions
and conditions of Mikasa, the Company and the Other Subsidiaries
from the beginning of the quarterly or annual period covered by
the statements then being furnished to the date of the
certificate and that such review has not disclosed the existence
during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event
existed or exists (including, without limitation, any such event
or condition resulting from the failure of Mikasa, the Company or
of the Other Subsidiaries to comply with any Environmental Law),
specifying the nature and period of existence thereof and what
action Mikasa and the Company shall have taken or propose to take
with respect thereto.
7.3 Inspection.
Mikasa and the Company shall permit the representatives of each
holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior
notice to Mikasa and the Company, to visit the principal
executive office of Mikasa and the Company, to discuss the
affairs, finances and accounts of Mikasa, the Company and the
Other Subsidiaries with the officers of Mikasa and the Company,
and, with the consent of Mikasa and the Company (which consent
will not be unreasonably withheld) to visit the other offices and
Properties of Mikasa, the Company and each Other Subsidiary, all
-18-
Page 39 of 135
<PAGE>
at such reasonable times and as often as may be reasonably
requested in writing; and
(b) Default -- if a Default or Event of Default then
exists, at the expense of Mikasa and the Company, to visit and
inspect any of the offices or Properties of Mikasa, the Company
or any Other Subsidiary, to examine all their respective books of
account, records, reports and other papers, to make copies and
extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and
independent public accountants (and by this provision Mikasa and
the Company authorize said accountants to discuss the affairs,
finances and accounts of Mikasa, the Company and the Other
Subsidiaries), all at such times and as often as may be
requested.
8. PREPAYMENT OF THE NOTES.
8.1 Required Prepayments; Payment at Maturity.
On June 4 in each of the years 2004, 2005 and 2006, Mikasa and
the Company will prepay $15,000,000 principal amount (or such lesser
principal amount as shall then be outstanding) of the Notes at par and
without payment of the Make-Whole Amount or any premium, and Mikasa
and the Company will pay all of the principal amount of the Notes
remaining outstanding, if any, on June 4, 2007; provided that upon any
partial prepayment of the Notes pursuant to Section 8.2 or purchase of
the Notes permitted by Section 8.5, the principal amount of each
required prepayment of the Notes and the payment at maturity of the
Notes becoming due under this Section 8.1 on and after the date of
such prepayment or purchase shall be reduced in the same proportion as
the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment or purchase.
8.2 Optional Prepayments with Make-Whole Amount.
Mikasa and the Company may, at their option, upon notice as
provided below, prepay at any time all, or from time to time any part
of, the Notes, in multiples of $1,000,000 (or, if the aggregate
outstanding principal amount of the Notes is less than $1,000,000 at
such time, then such principal amount), at 100% of the principal
amount so prepaid, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal amount. Mikasa and the
Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and not more
than 60 days prior to the date fixed for such prepayment. Each such
notice shall specify such prepayment date, the aggregate principal
-19-
Page 40 of 135
<PAGE>
amount of the Notes to be prepaid on such date, the principal amount
of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial
Officer of Mikasa and the Company as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the
date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such
prepayment, Mikasa and the Company shall deliver to each holder of
Notes a certificate of a Senior Financial Officer of Mikasa and the
Company specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
8.3 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the
principal amount of the Notes to be prepaid shall be allocated among
all of the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.
8.4 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section
8, the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment, together
with interest on such principal amount accrued to such date and the
applicable Make-Whole Amount, if any. From and after such date,
unless Mikasa and the Company shall fail to pay such principal amount
when so due and payable, together with the interest and Make-Whole
Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be
surrendered to Mikasa and the Company and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal
amount of any Note.
8.5 Purchase of Notes.
Mikasa and the Company will not, and will not permit any
Affiliate to, purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except (a) upon the
payment or prepayment of the Notes in accordance with the terms of
Section 8.1, Section 8.2 or Section 12.1, or (b) pursuant to an offer
to purchase made by Mikasa, the Company or an Affiliate pro rata to
the holders of all Notes at the time outstanding upon the same terms
and conditions. Any such offer shall provide each holder with
-20-
Page 41 of 135
<PAGE>
sufficient information to enable it to make an informed decision with
respect to such offer, and shall remain open for at least 10 Business
Days. If the holders of more than 50% of the principal amount of the
Notes then outstanding accept such offer, Mikasa and the Company shall
promptly notify the remaining holders of such fact and the expiration
date for the acceptance by holders of Notes of such offer shall be
extended by the number of days necessary to give each such remaining
holder at least 5 Business Days from its receipt of such notice to
accept such offer. If Mikasa or the Company shall, directly or
indirectly, purchase any of the outstanding Notes in accordance with
the terms of clause (b) of this Section 8.5, any such purchase shall
reduce the principal amount of each required prepayment of the Notes
becoming due under Section 8.1 on and after the date of such purchase
and the principal amount of the required payment due on June 4, 2007
in the same proportion as the aggregate unpaid principal amount of the
Notes is reduced as a result of such purchase. Mikasa and the Company
will promptly cancel all Notes acquired by them or any Affiliate
pursuant to any payment, prepayment or purchase of Notes pursuant to
any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.
8.6 Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of
such Note over the amount of such Called Principal, provided that the
Make-Whole Amount may in no event be less than zero. For the purposes
of determining the Make-Whole Amount, the following terms have the
following meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section
8.2 or has become or is declared to be immediately due and
payable pursuant to Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield
with respect to such Called Principal.
-21-
Page 42 of 135
<PAGE>
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied
by (a) the yields reported, as of 10:00 A.M. (New York City time)
on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as
"Page 678" on the Telerate Access Service (or such other display
as may replace Page 678 on the Telerate Access Service) for
actively traded U.S. Treasury securities having a maturity equal
to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (b) if such yields are not reported as of
such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so
reported as of the second Business Day preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having
a constant maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (i) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with
accepted financial practice and (ii) interpolating linearly
between (1) the actively traded U.S. Treasury security with the
duration closest to and greater than the Remaining Average Life
and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (a) such Called Principal
into (b) the sum of the products obtained by multiplying (i) the
principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (ii) the number of years
(calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal
and the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due after the
Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled
due date, provided that if such Settlement Date is not a date on
which interest payments are due to be made under the terms of the
Notes, then the amount of the next succeeding scheduled interest
payment will be reduced by the amount of interest accrued to such
-22-
Page 43 of 135
<PAGE>
Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called Principal is
to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
Each of Mikasa and the Company covenants that so long as any of
the Notes are outstanding:
9.1 Compliance with Law.
Mikasa and the Company will and will cause each of the Other
Subsidiaries to comply with all laws, ordinances or governmental rules
or regulations to which each of them is subject, including, without
limitation, Environmental Laws, and will obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective
Properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such
laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits,
franchises and other governmental authorizations would not reasonably
be expected, individually or in the aggregate, to have a materially
adverse effect on the business, operations, affairs, financial
condition, Properties or assets of Mikasa, the Company and the Other
Subsidiaries taken as a whole.
9.2 Insurance.
Mikasa and the Company will and will cause each of the Other
Subsidiaries to maintain, with financially sound and reputable
insurers, insurance with respect to their respective Properties and
businesses against such casualties and contingencies, of such types,
on such terms and in such amounts (including deductibles, co-insurance
and self-insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly
situated.
9.3 Maintenance of Properties.
Mikasa and the Company will and will cause each of the Other
Subsidiaries to maintain and keep, or cause to be maintained and kept,
-23-
Page 44 of 135
<PAGE>
their respective Properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business
carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent Mikasa, the
Company or any of the Other Subsidiaries from discontinuing the
operation and the maintenance of any of its Properties if such
discontinuance is desirable in the conduct of its business and Mikasa
and the Company have concluded that such discontinuance would not,
individually or in the aggregate, have a materially adverse effect on
the business, operations, affairs, financial condition, Properties or
assets of Mikasa, the Company and the Other Subsidiaries taken as a
whole.
9.4 Payment of Taxes.
Mikasa and the Company will and will cause each of the Other
Subsidiaries to file all income tax or similar tax returns required to
be filed in any jurisdiction and to pay and discharge all taxes shown
to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies payable by any of them,
to the extent such taxes and assessments have become due and payable
and before they have become delinquent, provided that neither Mikasa,
the Company nor any Other Subsidiary need pay any such tax or
assessment if (a) the amount, applicability or validity thereof is
contested by Mikasa, the Company or such Other Subsidiary on a timely
basis in good faith and in appropriate proceedings, and Mikasa, the
Company or such Other Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of Mikasa, the Company
or such Other Subsidiary or (b) the nonpayment of all such taxes and
assessments in the aggregate would not reasonably be expected to have
a materially adverse effect on the business, operations, affairs,
financial condition, Properties or assets of Mikasa, the Company and
the Other Subsidiaries taken as a whole.
9.5 Corporate Existence, etc.
Mikasa and the Company will at all times preserve and keep in
full force and effect its corporate existence. Subject to Section
10.2, Mikasa and the Company will at all times preserve and keep in
full force and effect the corporate existence of each of the Other
Subsidiaries (unless merged into Mikasa, the Company or a Subsidiary)
and all rights and franchises of Mikasa, the Company and the Other
Subsidiaries unless, in the good faith judgment of Mikasa and the
Company, the termination of or failure to preserve and keep in full
force and effect such corporate existence, right or franchise would
-24-
Page 45 of 135
<PAGE>
not, individually or in the aggregate, have a materially adverse
effect on the business, operations, affairs, financial condition,
Properties or assets of Mikasa, the Company and the Other Subsidiaries
taken as a whole.
10. NEGATIVE COVENANTS.
Mikasa and the Company covenant that so long as any of the Notes
are outstanding:
10.1 Transactions with Affiliates.
Neither Mikasa nor the Company will, nor will either of them
permit any of the Other Subsidiaries to, enter into, directly or
indirectly, any Material transaction or Material group of related
transactions (including, without limitation, the purchase, lease, sale
or exchange of Properties of any kind or the rendering of any service)
with any Affiliate (other than Mikasa, the Company or any Other
Subsidiary), except
(a) pursuant to the reasonable requirements of Mikasa's,
the Company's or such Other Subsidiary's business and upon fair
and reasonable terms no less favorable to Mikasa, the Company or
such Other Subsidiary than would be obtainable in a comparable
arms-length transaction with a Person not an Affiliate, and
(b) as set forth in Schedule 10.1 with respect to
transactions in effect on the First Closing Date, the performance
of which (in accordance with the terms thereof in effect on the
First Closing Date) is anticipated after the First Closing Date.
10.2 Merger, Consolidation, etc.
Neither Mikasa nor the Company will, nor will either of them
permit any of the Other Subsidiaries to, merge with or into,
consolidate with, or sell, lease as lessor, transfer or otherwise
dispose of all or substantially all of their respective Property to,
any other Person or permit any other Person to merge with or into or
consolidate with any of them (except that any Other Subsidiary may
merge with or into, consolidate with, or sell, lease, transfer or
otherwise dispose of all or substantially all of its assets to, (y)
Mikasa, the Company or a Wholly-Owned Subsidiary or (z) any other
Person if, but only if in the case of this subclause (z), Mikasa, the
Company or any Wholly-Owned Subsidiary shall have received a cash
consideration in respect of such transaction not less than the Fair
Market Value of such Other Subsidiary or the Property so disposed of
(as determined by the Mikasa Board of Directors in good faith) and, if
-25-
Page 46 of 135
<PAGE>
such other Person shall be an Affiliate, the determination of such
Fair Market Value shall have been further confirmed by a written
appraisal of an independent investment banking firm of national
reputation or other qualified appraiser reasonably acceptable to the
Required Holders); provided that the foregoing restrictions shall not
apply to the merger or consolidation of Mikasa or the Company with or
into, or the sale, lease, transfer or other disposition by Mikasa or
the Company of all or substantially all of its Property in a single
transaction or series of transactions to, another Person, if:
(a) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by
conveyance, transfer or lease substantially all of the assets of
Mikasa or the Company as an entirety (the "Surviving
Corporation"), as the case may be, shall be a solvent corporation
organized and existing under the laws of the United States or any
state thereof, and, if neither Mikasa nor the Company is such
corporation, such corporation shall have executed and delivered
to each holder of any Notes its assumption of the due and
punctual performance and observance of each covenant and
condition of this Agreement, the Other Agreements and the Notes;
(b) if Mikasa shall be the Surviving Corporation, the
Company shall have reconfirmed its obligations hereunder and
under the Notes in writing, and if the Company shall be the
Surviving Corporation, Mikasa shall have reconfirmed its
obligations hereunder and under the Notes in writing;
(c) Mikasa or the Company, as the case may be, shall have
caused to be delivered to each holder of Notes an opinion of
independent counsel (which opinion and counsel are satisfactory
in form and substance to the Required Holders) to the effect that
each such agreement, reconfirmation and instrument is enforceable
in accordance with its terms and that no taxable event or
consequence will result to any holder of Notes solely by virtue
of such merger, consolidation, purchase, lease or acquisition and
the assumption by the Surviving Corporation of the obligations of
Mikasa or the Company, as the case may be, hereunder and under
the Notes; and
(d) immediately prior to, and immediately after the
consummation of such transaction, and after giving effect to such
transaction,
(i) no Default or Event of Default exists or would
exist, and
-26-
Page 47 of 135
<PAGE>
(ii) the Surviving Corporation would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to
Section 10.6.
No such conveyance, transfer or lease of substantially all of the
assets of Mikasa or the Company shall have the effect of releasing
Mikasa, the Company or any successor corporation that shall
theretofore have become such in the manner prescribed in this Section
10.2 from its liability under this Agreement or the Notes.
10.3 Acquisition of Stock.
Neither Mikasa nor the Company will, nor will either of them
permit any of the Other Subsidiaries to, acquire any stock of any
corporation if upon completion of such acquisition such corporation
would be a direct or indirect Subsidiary, or acquire all of the assets
of, or such of the assets as would permit the transferee to continue
any one or more integral business operations of, any Person unless,
immediately after the consummation of such acquisition, and after
giving effect thereto, no Default or Event of Default exists or would
exist and Mikasa and the Company would be permitted to incur at least
$1.00 of additional Funded Debt pursuant to Section 10.6 hereof and a
Domestic Other Subsidiary would be permitted to incur at least $1.00
of additional Debt pursuant to Section 10.5(a) hereof. On the date
any such corporation becomes a Subsidiary, all of its then existing
Debt, Liens securing such Debt and Preferred Stock shall be deemed
incurred or issued, as the case may be, for purposes of Section 10.5,
Section 10.6 and Section 10.8 hereof.
10.4 Distributions.
(a) Limitation on Distributions. Neither Mikasa nor the
Company will, nor will either of them permit any Other Subsidiary
to, directly or indirectly, make or incur any liability to
declare or make any Distribution in respect of any of their
respective Capital Stock, unless
(i) such Distribution is by Mikasa in respect of
its Capital Stock and immediately after giving effect
thereto,
(A) the aggregate amount of all Distributions
(other than the Distributions referred to in clause (ii) and
clause (iii) below) made or authorized on or after
January 1, 1997 does not exceed the sum of
-27-
Page 48 of 135
<PAGE>
(i) 65% of the aggregate Consolidated Net
Income (or, in case such aggregate Consolidated
Net Income shall be a deficit, minus 100% of such
deficit) for the period commencing on January 1,
1997 and ending on the date such Distribution is
to be made; plus
(ii) $35,000,000;
(B) no Default or Event of Default exists or
would exist; and
(C) Mikasa and the Company would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to
Section 10.6 hereof and a Domestic Other Subsidiary would be
permitted to incur at least $1.00 of additional Debt
pursuant to Section 10.5(a) hereof;
(ii) such Distribution is a dividend payable by a
Wholly-Owned Subsidiary or the Company in respect of its
Capital Stock; or
(iii) such Distribution is a purchase or other
acquisition of Subsidiary Stock by Mikasa, the Company or a
Wholly-Owned Subsidiary from any one or more of Mikasa, the
Company or a Wholly-Owned Subsidiary.
(b) Time of Payment. Neither Mikasa nor the Company will,
nor will either permit any of the Other Subsidiaries to,
authorize a Distribution on its Capital Stock that is not payable
within 60 days of authorization.
10.5 Subsidiary Debt; Subsidiary Preferred Stock.
(a) Domestic Subsidiary Debt. Neither Mikasa nor the
Company will at any time permit any of the Domestic Other
Subsidiaries to create, incur, issue, assume, guarantee or
otherwise become liable in respect of any Debt to be held by a
Person other than Mikasa, the Company or any Wholly-Owned
Subsidiary unless
(i) immediately after giving effect thereto,
Total Domestic Subsidiary Debt/Preferred Stock shall not
exceed 15% of Consolidated Net Worth at such time, and
(ii) immediately prior to, and immediately after
the consummation of such transaction, and after giving
-28-
Page 49 of 135
<PAGE>
effect thereto, no Default or Event of Default exists or
would exist and Mikasa and the Company would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to
Section 10.6 hereof.
(b) Domestic Preferred Stock. Neither Mikasa nor the
Company will at any time permit any of the Domestic Other
Subsidiaries to issue any Preferred Stock unless
(i) such Preferred Stock is to be held by Mikasa,
the Company or a Wholly-Owned Subsidiary or
(ii) such Preferred Stock constitutes
Nonconvertible Preferred Stock which is to be held by
Persons other than Mikasa, the Company or a Wholly Owned
Subsidiary and
(A) immediately after giving effect to the
issuance of such Nonconvertible Preferred Stock, Total
Domestic Subsidiary Debt/Preferred Stock shall not exceed
15% of Consolidated Net Worth at such time and
(B) immediately prior to, and immediately after
the consummation of such transaction, and after giving
effect thereto, no Default or Event of Default exists or
would exist and Mikasa and the Company would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to
Section 10.6 hereof.
(c) Foreign Subsidiary Debt. Neither Mikasa nor the
Company will at any time permit any of the Foreign Other
Subsidiaries to create, incur, issue, assume, guarantee or
otherwise become liable in respect of any Debt to be held by a
Person other than Mikasa, the Company or any Wholly-Owned
Subsidiary unless
(i) immediately after giving effect thereto,
Total Foreign Subsidiary Debt/Preferred Stock shall not
exceed 15% of Consolidated Net Worth at such time, and
(ii) immediately prior to, and immediately after
the consummation of such transaction, and after giving
effect thereto, no Default or Event of Default exists or
would exist and Mikasa and the Company would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to
Section 10.6 hereof.
-29-
Page 50 of 135
<PAGE>
(d) Foreign Preferred Stock. Neither Mikasa nor the
Company will at any time permit any of the Foreign Other
Subsidiaries to issue any Preferred Stock unless
(i) such Preferred Stock is to be held by Mikasa,
the Company or a Wholly-Owned Subsidiary or
(ii) such Preferred Stock constitutes
Nonconvertible Preferred Stock which is to be held by
Persons other than Mikasa, the Company or a Wholly Owned
Subsidiary and
(A) after giving effect to the issuance of such
Nonconvertible Preferred Stock, Total Foreign Subsidiary
Debt/Preferred Stock shall not exceed 15% of Consolidated
Net Worth at such time, and
(B) immediately prior to, and immediately after
the consummation of such transaction, and after giving
effect thereto, no Default or Event of Default exists or
would exist and Mikasa and the Company would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to
Section 10.6 hereof.
(e) Transfers of Debt and Preferred Stock. If Mikasa, the
Company or any Other Subsidiary shall sell or otherwise dispose
of any Debt of any Other Subsidiary or any Preferred Stock of any
Other Subsidiary to any Person other than to Mikasa, the Company
or a Wholly-Owned Subsidiary, such Debt or such Preferred Stock
shall be deemed, for purposes of this Section 10.5, to have been
issued at such time and such sale or other disposition shall not
be consummated if it shall breach any of the requirements of this
Section 10.5. Except as permitted under this Section 10.5 or
Section 10.2 or Section 10.12 hereof, Mikasa and the Company will
not, and neither of them will permit any Other Subsidiary to,
sell or otherwise dispose of any Debt or Preferred Stock of any
Other Subsidiary to any Person other than to Mikasa, the Company
or a Wholly-Owned Subsidiary.
(f) MLI Exception. Anything contained herein to the
contrary notwithstanding, neither Mikasa nor the Company shall
permit MLI to incur any Debt or issue any Preferred Stock except
(i) Debt owing to, or Preferred Stock owned by, the Company (and
the Company will not dispose of or otherwise transfer such Debt
or Preferred Stock) and (ii) other unsecured Debt necessary for
the operation of MLI's retail sales business in Nevada in an
aggregate amount not to exceed $100,000 at any time.
-30-
Page 51 of 135
<PAGE>
10.6 Funded Debt to Consolidated Funded Debt Capitalization.
Neither Mikasa nor the Company will, nor will either of them
permit any of the Other Subsidiaries to, create, incur, issue, assume,
guarantee or otherwise become liable in respect of any Funded Debt
(other than the Notes) at any time, unless
(a) immediately after giving effect thereto, Consolidated
Funded Debt does not exceed 50% of Consolidated Funded Debt
Capitalization at such time, and
(b) immediately prior to, and immediately after the
consummation of such transaction, and after giving effect
thereto, no Default or Event of Default exists or would exist,
and a Domestic Other Subsidiary would be permitted to incur at
least $1.00 of additional Debt pursuant to Section 10.5(a)
hereof.
10.7 Consolidated Net Worth.
Neither Mikasa nor the Company will at any time permit
Consolidated Net Worth to be less than:
(a) $140,000,000, plus
(b) an amount determined by aggregating for each fiscal
year of Mikasa and the Company ended on or after January 1, 1997
and on or prior to such time, the greater of (a) $0 and (b) 35%
of Consolidated Net Income for such fiscal year.
10.8 Liens.
(a) Negative Pledge. Neither Mikasa nor the Company will,
nor will either of them permit any of the Other Subsidiaries to,
grant, incur, assume, create or cause or permit to exist, or
agree or consent to grant, incur, assume, create or cause or
permit to exist in the future (upon the happening of a
contingency or otherwise), a Lien upon, or in respect of, any of
their Property (including, without limitation, any Capital Stock
of the Company or the Other Subsidiaries), whether now owned or
hereafter acquired, except:
(i) Liens securing taxes, assessments or
governmental charges or levies or the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords
-31-
Page 52 of 135
<PAGE>
and other like Persons, provided that the payment thereof is
not at the time required by Section 9.4 hereof;
(ii) Liens incurred or deposits made in the
ordinary course of business
(A) in connection with workers' compensation,
unemployment insurance, social security and other like laws,
and
(B) to secure the performance of letters of
credit, bids, tenders, sales contracts, leases, statutory
obligations, surety and performance bonds (of a type other
than set forth in Section 10.8(a)(iii) hereof) and other
similar obligations not incurred in connection with the
borrowing of money, the obtaining of advances or the payment
of the deferred purchase price of Property;
(iii) Liens
(A) arising from judicial attachments and
judgments,
(B) securing appeal bonds or supersede as bonds,
and
(C) arising in connection with court proceedings
(including, without limitation, surety bonds and letters of
credit or any other instrument serving a similar purpose),
provided that (1) the execution or other enforcement of such
Liens is effectively stayed, (2) the claims secured thereby
are being actively contested in good faith and by
appropriate proceedings, (3) adequate reserves (in
accordance with GAAP) have been established and maintained
in respect thereof, and provided further that the aggregate
amount so secured will not at any time exceed $2,000,000
(excluding in the calculation of said $2,000,000 any amounts
so secured to the extent, but only to the extent, such
amounts are fully covered by insurance maintained by Mikasa,
the Company or any Other Subsidiary (x) in respect of which
all action necessary to claim, or preserve the right to
claim, such insurance shall have been undertaken, including,
without limitation, the payment of all premiums in respect
of such insurance and the filing of all appropriate or
required notices or claim forms, (y) in respect of which no
defense or other contractual reason shall exist, or shall
-32-
Page 53 of 135
<PAGE>
have been asserted by the issuer of such insurance, that
would enable such issuer to either raise a defense to the
payment of such insurance or to otherwise contractually
decline to pay such insurance and (z) the issuer of which
is, in the good faith opinion of the Mikasa Board of
Directors, capable of discharging its payment obligations in
connection with such insurance) and the existence of such
judicial attachment or judgment shall not constitute a
Default or Event of Default;
(iv) Liens on Property of an Other Subsidiary,
provided that such Liens secure only (A) obligations owing
to Mikasa, the Company or a Wholly-Owned Subsidiary or (B)
Debt of such Other Subsidiary to the extent such Debt is
permitted under Section 10.5 hereof;
(v) Liens in the nature of reservations, exceptions,
encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other similar title
exceptions or encumbrances affecting real Property, provided
that such Liens do not individually or in the aggregate
materially detract from the value of said Properties or
materially interfere with the use by Mikasa, the Company or
the Other Subsidiaries of such Property in the ordinary
conduct of the business of Mikasa, the Company and such
Other Subsidiaries;
(vi) Liens on Property arising in connection with
Capital Leases so long as each such Lien encumbers only
Property that is the subject of the related Capital Lease
and no other Property of Mikasa, the Company or any of the
Other Subsidiaries and immediately before, and after giving
effect thereto, no Default or Event of Default would exist
and Mikasa and the Company would be permitted to incur at
least $1.00 of additional Funded Debt pursuant to Section
10.6 hereof and a Domestic Other Subsidiary would be
permitted to incur at least $1.00 of additional Debt
pursuant to Section 10.5(a) hereof;
(vii) Liens in existence on the First Closing Date
securing Debt and listed on Schedule 5.15 hereto;
(viii) Purchase Money Liens, if, after giving effect
thereto and to any concurrent transactions:
(A) each such Purchase Money Lien secures Debt of
Mikasa, the Company or any of the Other Subsidiaries in an
-33-
Page 54 of 135
<PAGE>
amount not exceeding 90% of the cost of acquisition of the
particular Property to which such Debt relates (or, in the
case of a Lien existing on any Property of any corporation
at the time it becomes a Subsidiary, 90% of the Fair Market
Value of such Property at such time); and
(B) immediately before, and after giving effect
thereto, no Default or Event of Default would exist and
Mikasa and the Company would be permitted to incur at least
$1.00 of additional Funded Debt pursuant to Section 10.6
hereof and a Domestic Other Subsidiary would be permitted to
incur at least $1.00 of additional Debt pursuant to Section
10.5(a) hereof; and
(ix) any Lien permitted by clause (iv), clause (vi),
clause (vii) and clause (viii) above securing an obligation
which is being renewed, extended, refinanced or refunded,
provided that the principal amount of such obligation is not
increased in excess of the amount outstanding thereunder at
the time of such renewal, extension, refinancing or
refunding, such Lien is not extended to any other Property
and, after giving effect to such renewal, extension,
refinancing or refunding, no Default or Event of Default
would exist and Mikasa and the Company would be permitted to
incur at least $1.00 of additional Funded Debt pursuant to
Section 10.6 hereof and a Domestic Other Subsidiary would be
permitted to incur at least $1.00 of additional Debt
pursuant to Section 10.5(a) hereof.
(b) Equal and Ratable Lien; Equitable Lien. In case any
Property shall be subjected to a Lien in violation of this
Section 10.8, Mikasa and the Company will forthwith make or cause
to be made, or will cause the Other Subsidiaries to make, to the
fullest extent permitted by applicable law, provision whereby the
Notes will be secured equally and ratably with all other
obligations secured thereby, pursuant to such agreements and
instruments as shall be approved by the Required Holders, and
Mikasa and the Company will cause to be delivered to each holder
of a Note an opinion of independent counsel to the effect that
such agreements and instruments are enforceable in accordance
with their terms, and in any such case the Notes shall have the
benefit, to the full extent that, and with such priority as, the
holders of Notes may be entitled under applicable law, of an
equitable Lien on such Property securing the Notes. Such
violation of this Section 10.8 will constitute an Event of
Default hereunder, whether or not any such provision is made
pursuant to this Section 10.8(b).
-34-
Page 55 of 135
<PAGE>
(c) Financing Statements. Neither Mikasa nor the Company
will, nor will either of them permit any of the Other
Subsidiaries to, sign or file a financing statement under the
Uniform Commercial Code (or similar statute) of any jurisdiction
that names Mikasa, the Company or such Other Subsidiary as
debtor, or sign any security agreement authorizing any secured
party thereunder to file any such financing statement, except, in
any such case, a financing statement filed or to be filed to
perfect or protect a security interest that Mikasa, the Company
or such Other Subsidiary is entitled to create, assume or incur,
or permit to exist, under the foregoing provisions of this
Section 10.8 or to evidence for informational purposes a lessor's
interest in Property leased to Mikasa, the Company or any such
Other Subsidiary.
(d) Mikasa Tradenames/Trademarks. Anything contained
herein to the contrary notwithstanding, neither Mikasa nor the
Company will cause or will agree or consent to cause or permit in
the future (upon the happening of a contingency or otherwise),
nor will either of them permit the Other Subsidiaries (including,
without limitation, MLI) to cause or to agree or consent to cause
or permit in the future (upon the happening of a contingency or
otherwise), any of the Mikasa Tradenames/Trademarks to be subject
to a Lien.
10.9 Restricted Investments.
Neither Mikasa nor the Company will, nor will either of them
permit any of the Other Subsidiaries to, make any Restricted
Investment.
10.10 Line of Business.
Neither Mikasa nor the Company will, nor will either of them
permit any of the Other Subsidiaries to, engage in any business other
than businesses engaged in by Mikasa, the Company and the Other
Subsidiaries on the First Closing Date or businesses directly related
to, or dealing with, the manufacturing, licensing, sale and
distribution of tabletop products, tabletop accessories and household
products. Mikasa will not directly engage in any manufacturing
business, provided that the foregoing shall not restrict the Company
or the Other Subsidiaries from engaging in such a manufacturing
business to the extent permitted under the immediately preceding
sentence.
10.11 Private Offering.
Neither Mikasa nor the Company will, nor will either of them
permit any Person acting on their behalf to, offer the Notes or any
-35-
Page 56 of 135
<PAGE>
part thereof or any similar Securities for issue or sale to, or
solicit any offer to acquire any of the same from, any Person so as to
bring the issuance and sale of the Notes within the provisions of
section 5 of the Securities Act.
10.12 Sales of Subsidiary Stock.
Neither Mikasa nor the Company will at any time, nor will either
of them at any time permit any of the Other Subsidiaries to, sell or
otherwise dispose of any shares of Capital Stock (or any options or
warrants to purchase Capital Stock or other Securities exchangeable
for or convertible into Capital Stock) of a Subsidiary (said Capital
Stock, options, warrants and other Securities herein called
"Subsidiary Stock"), nor will any Subsidiary issue, sell or otherwise
dispose of any shares of its own Subsidiary Stock, if the effect of
the transaction would be to reduce the proportionate interest of
Mikasa, the Company and the Other Subsidiaries in the outstanding
Subsidiary Stock of the Subsidiary whose shares are the subject of the
transaction, provided that the foregoing restrictions do not apply to:
(a) the issue of directors' qualifying shares; and
(b) the sale for an all cash consideration of the entire
Investment (whether represented by stock, debt, claims or
otherwise) of Mikasa, the Company and the Other Subsidiaries in
any Subsidiary, if all of the following conditions are met:
(i) if such sale is to a Person that is not an
Affiliate, such sale is for Fair Market Value and is in the
best interests of the Company (in each case, in the good
faith opinion of the board of directors of the Company) or,
if such sale is to a Person that is an Affiliate, such sale
is for Fair Market Value and is in the best interests of the
Company (in each case, in the good faith opinion of the
board of directors of the Company) and the determination of
such Fair Market Value shall have been further confirmed by
a written appraisal of an independent investment banking
firm of national reputation or other qualified appraiser
reasonably acceptable to the Required Holders;
(ii) the Subsidiary being disposed of has no
continuing Investment in any Other Subsidiary not being
-36-
Page 57 of 135
<PAGE>
simultaneously disposed of or in Mikasa or in the Company;
and
(iii) immediately after the consummation of the
transaction, and after giving effect thereto, no Default or
Event of Default would exist, and Mikasa and the Company
would be permitted to incur at least $1.00 of additional
Funded Debt pursuant to Section 10.6 hereof and a Domestic
Other Subsidiary would be permitted to incur at least $1.00
of additional Debt pursuant to Section 10.5(a) hereof.
Anything contained herein to the contrary notwithstanding, (y)
Mikasa shall maintain direct legal and beneficial ownership of all
Capital Stock of the Company and (z) the Company shall maintain direct
legal and beneficial ownership of all Capital Stock of MLI.
10.13 Pari Passu Ranking of Notes.
Each of Mikasa and the Company warrants that its obligations
under this Agreement and the Notes do, and undertakes that the same
will continue to, rank at least pari passu with all of its other
present and future unsecured senior obligations.
10.14 Mikasa Tradenames/Trademarks.
The Company will not sell or otherwise dispose of any Mikasa
Tradenames/Trademarks it owns except to MLI, and Mikasa will not sell
or otherwise dispose of any Mikasa Tradenames/Trademarks it owns
except to MLI. Neither Mikasa nor the Company will permit MLI to sell
or otherwise dispose of any Mikasa Tradenames/Trademarks it owns. Any
future trademarks, service marks, trade names, copyrights and licenses
and rights with respect thereto used by Mikasa, the Company and the
Other Subsidiaries will be owned by MLI and shall otherwise be subject
to the same requirements and restrictions provided for herein and in
Section 10.8(d) hereof in respect of the Mikasa Tradenames/Trademarks.
Nothing in this paragraph shall
(a) limit the licensing or franchising of any Mikasa
Tradenames/Trademarks in the ordinary course of business of
Mikasa, the Company and/or MLI, provided that such licensing or
franchising is (as determined in good faith by Mikasa) in the
best interests of Mikasa, the Company and the Other Subsidiaries
or
(b) limit the option of Mikasa, the Company or MLI to not
renew or not cause to be renewed or otherwise to abandon or allow
-37-
Page 58 of 135
<PAGE>
to lapse or be involuntarily cancelled any of the Mikasa
Tradenames/Trademarks, provided that
(i) such failure to renew or such abandonment or
lapsing or involuntary cancellation shall (as determined in
good faith by Mikasa) be in the best interests of Mikasa,
the Company and the Other Subsidiaries or otherwise be
unavoidable in accordance with applicable law as a result of
insufficient utilization or other legal grounds not within
the reasonable control of Mikasa, the Company and such Other
Subsidiaries and
(ii) all such failures to renew, such abandonments and
such lapsing and involuntary cancellation, which shall have
occurred on or after the First Closing Date, would not (as
determined in good faith by Mikasa) reasonably be expected
to have a Material Adverse Effect.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) Mikasa or the Company defaults in the payment of any
principal or Make-Whole Amount, if any, on any Note when the same
becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise; or
(b) Mikasa or the Company defaults in the payment of any
interest on any Note for more than five Business Days after the
same becomes due and payable; or
(c) Mikasa or the Company defaults in the performance of or
compliance with any term contained in any of Section 7.1(e),
Sections 10.2 through Section 10.9, inclusive, Section 10.12,
Section 10.13 and Section 10.14; or
(d) Mikasa or the Company defaults in the performance of or
compliance with any term contained herein (other than those
referred to in paragraphs (a), (b) and (c) of this Section 11)
and such default is not remedied within 30 days after the earlier
of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) Mikasa or the Company receiving written notice
of such default from any holder of a Note; or
(e) any representation or warranty made in writing by or on
behalf of Mikasa or the Company or by any officer of Mikasa or
-38-
Page 59 of 135
<PAGE>
the Company in this Agreement or in any writing furnished in
connection with the transactions contemplated hereby proves to
have been false or incorrect in any material respect on the date
as of which made; or
(f) Mikasa, the Company or any of the Significant
Subsidiaries shall fail to make any payment on any Debt when due;
or
(i) any event shall occur or any condition shall
exist in respect of any Debt or any Security of Mikasa, the
Company or any of the Significant Subsidiaries, or under any
agreement securing or relating to such Debt or Security,
that immediately or with any one or more of the passage of
time, the giving of notice or the expiration of waivers or
modifications granted in respect of such event or condition:
(A) causes (or permits any one or more of
the holders thereof or a trustee therefor to cause) such
Debt or Security, or a portion thereof, to become due prior
to its stated maturity or prior to its regularly scheduled
date or dates of payment;
(B) permits any one or more of the holders
thereof or a trustee therefor to elect any of the directors
to the Mikasa Board of Directors or the board of directors
of the Company or any such Significant Subsidiary; or
(C) permits any one or more of the holders
thereof or a trustee therefor to require Mikasa, the Company
or any such Significant Subsidiary to repurchase such Debt
or such Security from such holder;
provided that the aggregate principal amount of all such Debt
plus the aggregate face amount of all such Securities referred to
in this clause (f) shall exceed $2,000,000 at such time; or
(g) Mikasa, the Company or any Significant Subsidiary (i)
is generally not paying, or admits in writing its inability to
pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of
a custodian, receiver, trustee or other officer with similar
-39-
Page 60 of 135
<PAGE>
powers with respect to it or with respect to any substantial part
of its Property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any
of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by
Mikasa, the Company or any Significant Subsidiary, a custodian,
receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its
Property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of Mikasa, the Company or
any Significant Subsidiary, or any such petition shall be filed
against Mikasa, the Company or any Significant Subsidiary and
such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $2,000,000 are rendered against one or
more of Mikasa, the Company and the Significant Subsidiaries and
which judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay; or
(j) if any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof
or a waiver of such standards or extension of any amortization
period is sought or granted under section 412 of the Code, (ii) a
notice of intent to terminate any Plan shall have been or is
reasonably expected to be filed with the PBGC or the PBGC shall
have instituted proceedings under ERISA section 4042 to terminate
or appoint a trustee to administer any Plan or the PBGC shall
have notified Mikasa, the Company or any ERISA Affiliate that a
Plan may become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within the
meaning of section 4001(a)(18) of ERISA) under all Plans,
determined in accordance with Title IV of ERISA, shall exceed
$10,000,000, (iv) Mikasa, the Company or any ERISA Affiliate
shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, (v) Mikasa, the Company or any ERISA Affiliate withdraws
from any Multiemployer Plan, (vi) Mikasa, the Company or any
Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner
-40-
Page 61 of 135
<PAGE>
that would increase the liability of Mikasa, the Company or any
Subsidiary thereunder, or (vii) Mikasa, the Company or any Other
Subsidiary fails to comply with any law applicable to any Foreign
Pension Plan the failure of which would reasonably be expected to
have a Material Adverse Effect; and any such event or events
described in clauses (i) through (vii) above, either individually
or together with any other such event or events, would reasonably
be expected to have a Material Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and
"employee welfare benefit plan" shall have the respective meanings
assigned to such terms in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1 Acceleration.
(a) If an Event of Default with respect to Mikasa or the
Company described in paragraph (g) or (h) of Section 11 (other
than an Event of Default described in clause (i) of paragraph (g)
or described in clause (vi) of paragraph (g) by virtue of the
fact that such clause encompasses clause (i) of paragraph (g))
has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, any holder or holders of more than 35% in principal
amount of the Notes at the time outstanding may at any time at
its or their option, by notice or notices to Mikasa or the
Company, declare all the Notes then outstanding to be immediately
due and payable.
(c) If any Event of Default described in paragraph (a) or
(b) of Section 11 has occurred and is continuing, any holder or
holders of Notes at the time outstanding affected by such Event
of Default may at any time, at its or their option, by notice or
notices to Mikasa or the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith
mature and the entire unpaid principal amount of such Notes, plus (x)
all accrued and unpaid interest thereon and (y) the Make-Whole Amount
determined in respect of such principal amount (to the full extent
permitted by applicable law), shall all be immediately due and
payable, in each and every case without presentment, demand, protest
or further notice, all of which are hereby waived. Mikasa and the
-41-
Page 62 of 135
<PAGE>
Company acknowledge, and the parties hereto agree, that each holder of
a Note has the right to maintain its investment in the Notes free from
repayment by Mikasa or the Company (except as herein specifically
provided for) and that the provision for payment of a Make-Whole
Amount by Mikasa and the Company in the event that the Notes are
prepaid or are accelerated as a result of an Event of Default, is
intended to provide compensation for the deprivation of such right
under such circumstances.
12.2 Other Remedies.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 12.1, the
holder of any Note at the time outstanding may proceed to protect and
enforce the rights of such holder by an action at law, suit in equity
or other appropriate proceeding, whether for the specific performance
of any agreement contained herein or in any Note, or for an injunction
against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or
otherwise.
12.3 Rescission.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of not less
than 66% in principal amount of the Notes then outstanding, by written
notice to Mikasa or the Company, may rescind and annul any such
declaration and its consequences if (a) Mikasa and the Company has
paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and
are unpaid other than by reason of such declaration, and all interest
on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of
the Notes, at the Default Rate, (b) all Events of Default and
Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been
waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the
Notes. No rescission and annulment under this Section 12.3 will
extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a
-42-
Page 63 of 135
<PAGE>
waiver thereof or otherwise prejudice such holder's rights, powers or
remedies. No right, power or remedy conferred by this Agreement or by
any Note upon any holder thereof shall be exclusive of any other
right, power or remedy referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of Mikasa and the Company under
Section 15, Mikasa and the Company will pay to the holder of each Note
on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or
collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1 Registration of Notes.
Each of Mikasa and the Company shall keep at their principal
executive offices a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or
more Notes, each transfer thereof and the name and address of each
transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as
the owner and holder thereof for all purposes hereof, and Mikasa and
the Company shall not be affected by any notice or knowledge to the
contrary. Mikasa and the Company shall give to any holder of a Note
that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered
holders of Notes.
13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of
Mikasa and the Company for registration of transfer or exchange (and
in the case of a surrender for registration of transfer, duly endorsed
or accompanied by a written instrument of transfer duly executed by
the registered holder of such Note or his attorney duly authorized in
writing and accompanied by the address for notices of each transferee
of such Note or part thereof), Mikasa and the Company shall execute
and deliver, at the expense of Mikasa and the Company (except as
provided below), one or more new Notes (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Note. Each such new
Note shall be payable to such Person as such holder may request and
shall be substantially in the form of Exhibit 1. Each such new Note
shall be dated and bear interest from the date to which interest shall
have been paid on the surrendered Note or dated the date of the
-43-
Page 64 of 135
<PAGE>
surrendered Note if no interest shall have been paid thereon. Mikasa
and the Company may require payment of a sum sufficient to cover any
stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of
less than $500,000, provided that if necessary to enable the
registration of transfer by a holder of its entire holding of Notes,
one Note may be in a denomination of less than $500,000. Any
transferee, by its acceptance of a Note registered in its name (or the
name of its nominee), shall be deemed to have made the representation
set forth in Section 6.2.
13.3 Replacement of Notes.
Upon receipt by Mikasa and the Company of evidence reasonably
satisfactory to each of them of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the
case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to them (provided that if the holder of
such Note is, or is a nominee for, an original purchaser or an
Institutional Investor, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof, Mikasa and the Company at their own expense
shall execute and deliver, in lieu thereof, a new Note, dated and
bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1 Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes
shall be made in New York, New York at the principal office of Morgan
Guaranty Trust Company of New York in such jurisdiction. Mikasa and
the Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of
payment shall be either the principal offices of Mikasa and the
Company in such jurisdiction or the principal office of a bank or
trust company in such jurisdiction.
-44-
Page 65 of 135
<PAGE>
14.2 Home Office Payment.
So long as you or your nominee shall be the holder of any Note,
and notwithstanding anything contained in Section 14.1 or in such Note
to the contrary, Mikasa and the Company will pay all sums becoming due
on such Note for principal, Make-Whole Amount, if any, and interest by
the method and at the address specified for such purpose below your
name in Schedule A, or by such other method or at such other address
as you shall have from time to time specified to Mikasa and the
Company in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except
that upon written request of Mikasa and the Company made concurrently
with or reasonably promptly after payment or prepayment in full of any
Note, you shall surrender such Note for cancellation, reasonably
promptly after any such request, to Mikasa and the Company at their
principal executive offices or at the place of payment most recently
designated by the Mikasa and Company pursuant to Section 14.1. Prior
to any sale or other disposition of any Note held by you or your
nominee you will, at your election, either endorse thereon the amount
of principal paid thereon and the last date to which interest has been
paid thereon or surrender such Note to Mikasa and the Company in
exchange for a new Note or Notes pursuant to Section 13.2. Mikasa and
the Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of
any Note purchased by you under this Agreement and that has made the
same agreement relating to such Note as you have made in this Section
14.2.
15. EXPENSES, ETC.
15.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are
consummated, Mikasa and the Company will pay all costs and expenses
(including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by you and each
Other Purchaser or holder of a Note in connection with such
transactions and in connection with any amendments, waivers or
consents under or in respect of this Agreement or the Notes (whether
or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or
defend) any rights under this Agreement or the Notes or in responding
to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the Notes, or by
reason of being a holder of any Note, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the
-45-
Page 66 of 135
<PAGE>
insolvency or bankruptcy of Mikasa, the Company or any Subsidiary or
in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. Mikasa and the Company will
pay, and will save you and each other holder of a Note harmless from,
all claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by you). Your "special
counsel," as referred to in this Agreement with respect to the
consummation of the transactions contemplated hereby shall be Hebb &
Gitlin.
15.2 Survival.
The obligations of Mikasa and the Company under this Section 15
will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes,
and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the
purchase or transfer by you of any Note or portion thereof or interest
therein and the payment of any Note, and may be relied upon by any
subsequent holder of a Note, regardless of any investigation made at
any time by or on behalf of Mikasa and you or any other holder of a
Note. All statements contained in any certificate or other instrument
delivered by or on behalf of Mikasa and the Company pursuant to this
Agreement shall be deemed representations and warranties of Mikasa and
the Company under this Agreement. Subject to the preceding sentence,
this Agreement and the Notes embody the entire agreement and
understanding between you and Mikasa and the Company and supersede all
prior agreements and understandings relating to the subject matter
hereof.
17. AMENDMENT AND WAIVER.
17.1 Requirements.
This Agreement and the Notes may be amended, and the observance
of any term hereof or of the Notes may be waived (either retroactively
or prospectively), with (and only with) the written consent of Mikasa,
the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of any of Sections 1, 2, 3, 4, 5, 6 or
21, or any defined term (as it is used therein), will be effective as
to you unless consented to by you in writing, and (b) no such
amendment or waiver may, without the written consent of the holder of
-46-
Page 67 of 135
<PAGE>
each Note at the time outstanding affected thereby, (i) subject to the
provisions of Section 12 relating to acceleration or rescission,
change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of
computation of interest or of the Make-Whole Amount on, the Notes,
(ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or
waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
17.2 Solicitation of Holders of Notes.
(a) Solicitation. Mikasa and the Company will
provide each holder of the Notes (irrespective of the
amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a
decision is required, to enable such holder to make an
informed and considered decision with respect to any
proposed amendment, waiver or consent in respect of any
of the provisions hereof or of the Notes. Mikasa and
the Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 17 to each
holder of outstanding Notes promptly following the date
on which it is executed and delivered by, or receives
the consent or approval of, the requisite holders of
Notes.
(b) Payment. Mikasa and 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, or grant any
security, to any holder of Notes as consideration for
or as an inducement to the entering into by any holder
of Notes of any waiver or amendment of any of the terms
and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted,
on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such
waiver or amendment.
17.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section
17 applies equally to all holders of Notes and is binding upon them
and upon each future holder of any Note and upon Mikasa and the
Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will
-47-
Page 68 of 135
<PAGE>
extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right
consequent thereon. No course of dealing between Mikasa and the
Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any
rights of any holder or such Note. As used herein, the term "this
Agreement" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.
17.4 Notes held by Mikasa and the Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent
to be given under this Agreement or the Notes, or have directed the
taking of any action provided herein or in the Notes to be taken upon
the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly
or indirectly owned by Mikasa, the Company or any of their Affiliates
shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid). Any such notice
must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to Mikasa and the
Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to Mikasa
and the Company in writing, or
(iii) if to Mikasa or the Company, to Mikasa and the
Company at the following address:
(A) if to the Company,
American Commercial, Incorporated
20633 South Fordyce Avenue
Long Beach, California 90749
Attention: Brenda Flores
Fax: (310) 633-1546
-48-
Page 69 of 135
<PAGE>
with a copy to:
Mikasa, Inc.
20633 South Fordyce Avenue
Long Beach, California 90749
Attention: Joseph S. Muto, Esq.
Fax: (310) 608-4457
(B) if to Mikasa,
Mikasa, Inc.
20633 South Fordyce Avenue
Long Beach, California 90749
Attention: Brenda Flores
Fax: (310) 633-1546
with a copy to:
American Commercial, Incorporated
20633 South Fordyce Avenue
Long Beach, California 90749
Attention: Joseph S. Muto, Esq.
Fax: (310) 608-4457
or at such other address as Mikasa and the Company shall have
specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually
received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closings
(except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process
and you may destroy any original document so reproduced. Mikasa and
the Company agree and stipulate that, to the extent permitted by
applicable law, any such reproduction 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
any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. This Section
-49-
Page 70 of 135
<PAGE>
19 shall not prohibit Mikasa and the Company or any other holder of
Notes from contesting any such reproduction to the same extent that it
could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information"
means information delivered to you by or on behalf of Mikasa, the
Company or any Other Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified when received by you as being
confidential information of Mikasa, the Company or such Other
Subsidiary, provided that such term does not include information that
(a) was publicly known or otherwise known to you prior to
the time of such disclosure,
(b) subsequently becomes publicly known through no act or
omission by you or any person acting on your behalf,
(c) otherwise becomes known to you other than through
disclosure by Mikasa, the Company or any Other Subsidiary or
(d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available.
You will maintain the confidentiality of such Confidential Information
in accordance with procedures adopted by you in good faith to protect
confidential information of third parties delivered to you, provided
that you may deliver or disclose Confidential Information to
(i) your directors, officers, trustees,
employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of
the investment represented by your Notes),
(ii) your financial advisors and other
professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with
the terms of this Section 20,
(iii) any other holder of any Note,
(iv) any Institutional Investor to which you sell
or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing
-50-
Page 71 of 135
<PAGE>
prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20),
(v) any Person from which you offer to purchase
any security of Mikasa or the Company (if such Person has
agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this
Section 20),
(vi) any federal or state regulatory authority
having jurisdiction over you,
(vii) the National Association of Insurance
Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information
about your investment portfolio, or
(viii) any other Person to which such delivery or
disclosure may be necessary or appropriate
(A) to effect compliance with any law, rule,
regulation or order applicable to you,
(B) in response to any subpoena or other
legal process,
(C) in connection with any litigation to
which you are a party, or
(D) if an Event of Default has occurred and
is continuing, to the extent you 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 your Notes and this Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of this
Section 20 as though it were a party to this Agreement. On reasonable
request by Mikasa or the Company in connection with the delivery to
any holder of a Note of information required to be delivered to such
holder under this Agreement or requested by such holder (other than a
holder that is a party to this Agreement or its nominee), such holder
-51-
Page 72 of 135
<PAGE>
will enter into an agreement with the Company embodying the provisions
of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates
as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to Mikasa and the Company, which notice
shall be signed by both you and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain
a confirmation by such Affiliate of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of such
notice, wherever the word "you" is used in this Agreement (other than
in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter
transfers to you all of the Notes then held by such Affiliate, upon
receipt by Mikasa and the Company of notice of such transfer, wherever
the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate,
but shall refer to you, and you shall have all the rights of an
original holder of the Notes under this Agreement.
22. MISCELLANEOUS.
22.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by
or on behalf of any of the parties hereto bind and inure to the
benefit of their respective successors and assigns (including, without
limitation, any subsequent holder of a Note) whether so expressed or
not.
22.2 Payments Due on Non-Business Days; When Payments Deemed
Received.
(a) Payments Due on Non-Business Days. Anything
in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or
Make-Whole Amount or interest on any Note that is due
on a date other than a Business Day shall be made on
the next succeeding Business Day without including the
additional days elapsed in the computation of the
interest payable on such next succeeding Business Day.
(b) Payments, When Received. Any payment to be
made to the holders of Notes hereunder or under the
-52-
Page 73 of 135
<PAGE>
Notes shall be deemed to have been made on the Business
Day such payment actually becomes available to such
holder at such holder's bank prior to 12:00 noon (local
time of such bank).
22.3 Severability.
Any provision of this Agreement that 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 (to the full
extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.
22.4 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers
to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such Person.
22.5 Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number
of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
22.6 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF
SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
[Remainder of page intentionally blank. Next page is signature page.]
-53-
Page 74 of 135
<PAGE>
If you are in agreement with the foregoing, please sign the form
of agreement on the accompanying counterpart of this Agreement and
return it to Mikasa and the Company, whereupon the foregoing shall
become a binding agreement between you, Mikasa and the Company.
Very truly yours,
MIKASA, INC.
By /s/ Brenda Flores
------------------------------------
Name: Brenda Flores
Title: Vice President and Chief
Financial Officer
AMERICAN COMMERCIAL, INCORPORATED
By /s/ Joseph S. Muto
------------------------------------
Name: Joseph S. Muto
Title: Secretary and General Counsel
The foregoing is hereby agreed
to as of the date thereof.
[Separately executed by each
of the following Purchasers]
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By /s/ Mary Ann McCarthy
------------------------------------
Name: Mary Ann McCarthy
Title: Managing Director
-54-
Page 75 of 135
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ Michael J. Kroeger
------------------------------------
Name: Michael J. Kroeger
Title: Vice President
PFL LIFE INSURANCE COMPANY
By /s/ Gregory W. Theobald
------------------------------------
Name: Gregory W. Theobald
Title: Vice President and Assistant Secretary
LIFE INVESTORS INSURANCE COMPANY OF AMERICA
By /s/ Gregory W. Theobald
------------------------------------
Name: Gregory W. Theobald
Title: Vice President and Assistant Secretary
THE GUARDIAN LIFE INSURANCE COMPANY
OF AMERICA
By /s/ Thomas Donohue
-----------------------------------
Name: Thomas Donohue
Title: Vice President
-55-
Page 76 of 135
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
Purchaser Name MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Name in Which Notes are Massachusetts Mutual Life Insurance Company
Registered
- --------------------------------------------------------------------------------
Note Registration First Closing
Numbers; Principal -------------
Amounts R-1; $3,000,000
Second Closing
--------------
R-6; $3,000,000
- --------------------------------------------------------------------------------
Payment on Account of
Notes
Federal Funds Wire Transfer
Method
Chase Manhattan Bank, N.A.
Account 4 Chase MetroTech Center
Information New York, NY 10081
ABA No.: 021000021
For MassMutual Pension Management
Account No.: 910-2594018
Re: (See "Accompanying Information" below)
With telephone advice of payment to the Securities
Custody and Collection Department of Massachusetts
Mutual Life Insurance Company at (413) 744-3878
- --------------------------------------------------------------------------------
Accompanying Information Issuers: MIKASA, INC. AND AMERICAN
COMMERCIAL, INCORPORATED
Description of
Security: 7.38% Senior Notes due June 4, 2007
Security Number: 59862# AA 7
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- --------------------------------------------------------------------------------
Address for Notices Massachusetts Mutual Life Insurance Company
Related to Payments 1295 State Street
Springfield, MA 01111
Attn: Securities Custody and Collection Department
F 381
- --------------------------------------------------------------------------------
Address for All other Massachusetts Mutual Life Insurance Company
Notices 1295 State Street
Springfield, MA 01111
Attn: Securities Investment Division
- --------------------------------------------------------------------------------
Instructions re Delivery Law Department of Purchaser
of Notes
- --------------------------------------------------------------------------------
Tax Identification 04-1590850
Number
Schedule A-1
Page 77 of 135
<PAGE>
Purchaser Name MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Name in Which Notes are Massachusetts Mutual Life Insurance Company
Registered
- --------------------------------------------------------------------------------
Note Registration First Closing
Numbers; Principal -------------
Amounts R-2; $7,000,000
Second Closing
--------------
R-7; $7,000,000
- --------------------------------------------------------------------------------
Payment on Account of
Notes
Federal Funds Wire Transfer
Method
Citibank, N.A.
Account 111 Wall Street
Information New York, NY 10043
ABA No.: 021000089
For MassMutual Long Term Pool
Account No.: 4067-3488
Re: (See "Accompanying Information" below)
With telephone advice of payment to the Securities
Custody and Collection Department of Massachusetts
Mutual Life Insurance Company at (413) 744-3878
- --------------------------------------------------------------------------------
Accompanying Information Issuers: MIKASA, INC. AND AMERICAN
COMMERCIAL, INCORPORATED
Description of
Security: 7.38% Senior Notes due June 4, 2007
Security Number: 59862# AA 7
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- --------------------------------------------------------------------------------
Address for Notices Massachusetts Mutual Life Insurance Company
Related to Payments 1295 State Street
Springfield, MA 01111
Attn: Securities Custody and Collection Department
F 381
- --------------------------------------------------------------------------------
Address for All other Massachusetts Mutual Life Insurance Company
Notices 1295 State Street
Springfield, MA 01111
Attn: Securities Investment Division
- --------------------------------------------------------------------------------
Instructions re Delivery Law Department of Purchaser
of Notes
- --------------------------------------------------------------------------------
Tax Identification 04-1590850
Number
Schedule A-2
Page 78 of 135
<PAGE>
Purchaser Name METROPOLITAN LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Name in Which Notes are Metropolitan Life Insurance Company
Registered
- --------------------------------------------------------------------------------
Note Registration First Closing
Numbers; -------------
Principal Amounts R-3; $10,000,000
Second Closing
--------------
R-8; $10,000,000
- --------------------------------------------------------------------------------
Payment on Account of
Notes
Federal Funds Wire Transfer for receipt not later
Method than 12:00 noon, New York time
The Chase Manhattan Bank
Account ABA # 021000021
Information Metropolitan Branch
33 East 23rd Street
New York, NY 10010
for credit to:
Metropolitan Life Insurance Company -- Corporate
Investments
Acct# 002-2-410591
- --------------------------------------------------------------------------------
Accompanying Information Issuers: MIKASA, INC. AND AMERICAN
COMMERCIAL, INCORPORATED
Description of
Security: 7.38% Senior Notes due June 4, 2007
Security Number: 59862# AA 7
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- --------------------------------------------------------------------------------
Address for All Notices, Metropolitan Life Insurance Company
including Notices One Madison Avenue
Related to Payments New York, New York 10010
Attention: Treasurer
Telecopier: (212) 578-0266
With a copy to:
Metropolitan Life Insurance Company
334 Madison Avenue
P.O. Box 633
Convent Station, New Jersey 07961-0633
Attention: Vice President - Private Placements
Telecopier: (201) 254-3050
- --------------------------------------------------------------------------------
Instructions re Delivery Law Department of Purchaser
of Notes
- --------------------------------------------------------------------------------
Tax Identification 13-5581829
Number
Schedule A-3
Page 79 of 135
<PAGE>
Purchaser Name PFL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Name in Which Notes are PFL Life Insurance Company
Registered
- --------------------------------------------------------------------------------
Note Registration First Closing
Numbers; Principal -------------
Amounts R-4; $5,000,000
Second Closing
--------------
None
- --------------------------------------------------------------------------------
Payment on Account of
Notes
Federal Funds Wire Transfer
Method
Citibank, N.A.
Account 111 Wall Street
Information New York, NY 10043
ABA #021000089
DDA #36112805
For further credit to: PFL Life Insurance Company
Custody Account No.: 847659
- --------------------------------------------------------------------------------
Accompanying Information Issuers: MIKASA, INC. AND AMERICAN
COMMERCIAL, INCORPORATED
Description of
Security: 7.38% Senior Notes due June 4, 2007
Security Number: 59862# AA 7
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- --------------------------------------------------------------------------------
Address for Notices AEGON USA Investment Management, Inc.
Related to Payments Attn: Michael Meese
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-5112
- --------------------------------------------------------------------------------
Address for All other AEGON USA Investment Management, Inc.
Notices Attn: Director of Private Placements
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-5335
Fax: (319) 369-2666
- --------------------------------------------------------------------------------
Instructions re Delivery Law Department of Purchaser
of Notes
- --------------------------------------------------------------------------------
Tax Identification 39-0989781
Number
Schedule A-4
Page 80 of 135
<PAGE>
Purchaser Name LIFE INVESTORS INSURANCE COMPANY OF AMERICA
- --------------------------------------------------------------------------------
Name in Which Notes are Life Investors Insurance Company of America
Registered
- --------------------------------------------------------------------------------
Note Registration First Closing
Numbers; Principal -------------
Amounts None
Second Closing
--------------
R-9; $5,000,000
- --------------------------------------------------------------------------------
Payment on Account of
Notes
Federal Funds Wire Transfer
Method
Citibank, N.A.
Account 111 Wall Street
Information New York, NY 10043
ABA #021000089
DDA #36112805
For further credit to: Life Investors Insurance
Company of America Custody Account No.: 847658
- --------------------------------------------------------------------------------
Accompanying Information Issuers: MIKASA, INC. AND AMERICAN
COMMERCIAL, INCORPORATED
Description of
Security: 7.38% Senior Notes due June 4, 2007
Security Number: 59862# AA 7
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- --------------------------------------------------------------------------------
Address for Notices AEGON USA Investment Management, Inc.
Related to Payments Attn: Michael Meese
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-5112
- --------------------------------------------------------------------------------
Address for All other AEGON USA Investment Management, Inc.
Notices Attn: Director of Private Placements
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-5335
Fax: (319) 369-2666
- --------------------------------------------------------------------------------
Instructions re Delivery Law Department of Purchaser
of Notes
- --------------------------------------------------------------------------------
Tax Identification 42-0191090
Number
Schedule A-5
Page 81 of 135
<PAGE>
Purchaser Name THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
- --------------------------------------------------------------------------------
Name in Which Notes are CUDD & CO.
Registered
Note Registration First Closing
Numbers; Principal -------------
Amounts R-5; $5,000,000
Second Closing
--------------
R-10; $5,000,000
- --------------------------------------------------------------------------------
Payment on Account of
Notes
Federal Funds Wire Transfer
Method
The Chase Manhattan Bank
Account FED ABA #021000021
Information CHASE/NYC/CTR/BNF
A/C 900-9-000200
- --------------------------------------------------------------------------------
Accompanying Information Issuers: MIKASA, INC. AND AMERICAN
COMMERCIAL, INCORPORATED
Description of
Security: 7.38% Senior Notes due June 4, 2007
Security Number: 59862# AA 7
Due Date and Application (as among principal,
premium and interest) of the payment being made:
- --------------------------------------------------------------------------------
Address for Notices The Guardian Life Insurance Company of America
Related to Payments Attn: Investment Account M-IA
201 Park Avenue South
New York, NY 10003
Fax: (212) 677-9023
- --------------------------------------------------------------------------------
Address for All other The Guardian Life Insurance Company of America
Notices 201 Park Avenue South
New York, NY 10003
Attn: Thomas M. Donohue, Investment Department 7B
Fax: 212-777-6715
- --------------------------------------------------------------------------------
Instructions re Delivery Chase Manhattan Bank
of Notes 4 New York Plaza
Ground Floor/Receive Window
New York, NY 10081
Attn: Frank Taylor
Telephone: 212-623-8125
Reference The Guardian Account #G05978
- --------------------------------------------------------------------------------
Tax Identification 13-6022143
Number
Schedule A-6
Page 82 of 135
<PAGE>
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings
set forth below or set forth in the Section hereof following such
term:
"Acceptable Bank" means
(a) any bank or trust company which (i) is organized
under the laws of, and located in, the United States of
America, any state thereof, or any Acceptable Other
Jurisdiction, (ii) has capital, surplus and undivided
profits aggregating at least $250,000,000 (or the foreign
currency equivalent thereof) and (iii) whose long-term
unsecured debt obligations (or the long-term unsecured debt
obligations of the bank holding company owning all of the
Capital Stock of such bank or trust company) shall have
received one of the three highest ratings issued by Moody's
Investors Service, Inc. (or its successor) or by Standard &
Poor's Ratings Group (or its successor) or comparable
ratings issued by any other rating agency of national or
international standing and reputation,
(b) The Tokai Bank, Ltd., and
(c) The First National Bank of Boston.
"Acceptable Other Jurisdiction" means the countries of
Japan, England, Ireland, Scotland, France, Germany, Switzerland,
Liechtenstein, Luxembourg, Austria, Italy, Spain, Portugal,
Belgium, the Netherlands, Canada, Puerto Rico, the Virgin
Islands, Norway, Sweden, Finland, Denmark, South Africa,
Australia, New Zealand, India, the Philippines, Thailand,
Singapore, Hong Kong, Malaysia, Indonesia, Korea, Taiwan, and the
countries located in the regions commonly referred to on the
First Closing Date as Central America and South America but
excluding, except as expressly listed above, any Caribbean nation
or country and excluding in all cases (whether or not listed
above) any country in which operations or business transactions
shall not be permitted under the laws of the United States of
America.
"Acceptance" means, with respect to any Person (the
"Obligor"), (a) any outstanding and unpaid sight or time draft
maturing not more than 365 days from the date of its issuance,
Schedule B-1
Page 83 of 135
<PAGE>
drawn by the Obligor on a bank or trust company and accepted by
such bank or trust company, (b) any outstanding and unpaid sight
or time draft maturing not more than 365 days from the date of
its issuance drawn by any Person selling goods or providing
services to the Obligor on a bank or trust company which shall
have issued a letter of credit to such Person for the account of
the Obligor, provided that if such bank or trust company shall
have paid such sight or time draft and the Obligor shall have not
reimbursed such bank or trust company for such payment, the
obligation owing from the Obligor to such bank or trust company
in respect of such reimbursement shall still be deemed to be an
Acceptance under this definition, and (c) any outstanding and
unpaid sight or time draft drawn on the Obligor by any Person
selling goods or providing services to the Obligor and accepted
by the Obligor.
"Affiliate" means, at any time, and with respect to any
Person, any other Person that at such time directly or indirectly
through one or more intermediaries Controls, or is Controlled by,
or is under common Control with, such first Person. As used in
this definition, "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. Unless
the context otherwise clearly requires, any reference to an
"Affiliate" is a reference to an Affiliate of Mikasa or the
Company.
"Agreement, this" is defined in Section 17.3.
"Business Day" means (a) for the purposes of Section 8.6
only, any day other than a Saturday, a Sunday or a day on which
commercial banks in New York, New York are required or authorized
to be closed, and (b) for the purposes of any other provision of
this Agreement, any day other than a Saturday, a Sunday or a day
on which commercial banks in New York, New York or Los Angeles,
California are required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the
acquisition of an asset and the incurrence of a liability in
accordance with GAAP.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of
capital stock or other equity interests of any corporation,
Schedule B-2
Page 84 of 135
<PAGE>
association or other business entity, including, without
limitation, Preferred Stock and Voting Stock of such Person.
"Closing Dates" means the First Closing Date and the Second
Closing Date.
"Closings" means either or both of the First Closing or the
Second Closing, as the context may require.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated
thereunder from time to time.
"Company" is defined in the introductory sentence of this
Agreement.
"Confidential Information" is defined in Section 20.
"Consolidated Funded Debt" means, at any time, the aggregate
amount of Funded Debt of Mikasa, the Company and the Other
Subsidiaries determined on a consolidated basis for such Persons
at such time, plus an amount equal to Deemed Funded Debt at such
time.
"Consolidated Funded Debt Capitalization" means, at any
time, the sum of
(a) Consolidated Net Worth, plus
(b) Consolidated Funded Debt,
determined in each case at such time.
"Consolidated Net Income" means, with respect to any fiscal
period, net earnings (or loss) after income taxes of Mikasa, the
Company and the Other Subsidiaries determined on a consolidated
basis for such Persons for such period, but, in any event,
excluding:
(a) any gains or losses arising from the sale or other
disposition of investments or fixed or capital assets after
giving effect to any tax effects thereof, provided that, for
purposes of this clause (a),
(i) if the aggregate amount of such gains shall
exceed the aggregate amount of such losses, the first
$500,000 of such excess (if such excess shall have been
Schedule B-3
Page 85 of 135
<PAGE>
determined in respect of a period of 12 consecutive
months or, if such excess shall have been determined in
respect of some other period, the proportionally
adjusted amount of such $500,000 figure that would
reflect on a proportional basis any period longer or
shorter, as the case may be, than said 12-month period)
shall be included as "income" in the determination of
"Consolidated Net Income" and
(ii) if the aggregate amount of such losses shall
exceed the aggregate amount of such gains, the first
$500,000 of such excess (if such excess shall have been
determined in respect of a period of 12 consecutive
months or, if such excess shall have been determined in
respect of some other period, the proportionally
adjusted amount of such $500,000 figure that would
reflect on a proportional basis any period longer or
shorter, as the case may be, than said 12-month period)
shall be included as a "loss" in the determination of
"Consolidated Net Income";
(b) any extraordinary or nonrecurring gains or losses
after giving effect to any tax effects thereof;
(c) any gain resulting from any reappraisal,
revaluation or write-up of assets;
(d) net earnings and losses of any Subsidiary accrued
prior to the date it became a Subsidiary;
(e) net earnings and losses of any Person,
substantially all the assets of which have been acquired in
any manner by Mikasa, the Company or any of the Other
Subsidiaries, realized by such other Person prior to the
date of such acquisition;
(f) net earnings of any Person (other than a
Subsidiary) in which Mikasa, the Company or any of the Other
Subsidiaries shall have an ownership interest unless such
net earnings shall have actually been received by Mikasa,
the Company or such Other Subsidiary in the form of cash
distributions;
(g) any portion of the net earnings of any Subsidiary
that, by reason of any contract or charter restriction or
applicable law or regulation (or in the good faith judgment
of the Mikasa Board of Directors for any other reason), is
Schedule B-4
Page 86 of 135
<PAGE>
unavailable for payment of dividends to Mikasa, the Company
or any Other Subsidiary;
(h) the earnings and losses of any Person to which
assets of Mikasa, the Company or any of the Other
Subsidiaries shall have been sold, transferred or disposed
of, or into which Mikasa, the Company or any of the Other
Subsidiaries shall have been merged, prior to the date of
such merger or consolidation;
(i) any income resulting from the acquisition by
Mikasa, the Company or any Other Subsidiary of the equity
interests, Capital Stock or assets of another Person, in
each case where such income is attributable to the fact that
the net book value of the equity investment of Mikasa, the
Company or such Other Subsidiary in such Person exceeds the
amount invested by Mikasa, the Company or such Other
Subsidiary in such Person;
(j) any gain or loss arising from the acquisition of
any Securities of Mikasa, the Company or any of the Other
Subsidiaries after giving effect to any tax effects thereof;
(k) any portion of the net earnings of Mikasa, the
Company or any of the Other Subsidiaries that cannot be
freely converted into United States Dollars;
(l) any gain or loss resulting from the receipt of any
proceeds of any insurance policy; and
(m) any restoration during such period to income of
any contingency reserve, except to the extent that provision
for such reserve was made during such period out of income
accrued during such period.
"Consolidated Net Worth" means, at any time, the result of
(a) the sum of
(i) the par or stated value of the Capital Stock
of Mikasa, the Company and the Other Subsidiaries, plus
(ii) the aggregate amount of additional paid-in
capital of Mikasa, the Company and the Other
Subsidiaries, plus
Schedule B-5
Page 87 of 135
<PAGE>
(iii) the sum of
(A) the aggregate amount of retained
earnings of Mikasa, the Company and the Other
Subsidiaries, plus
(B) any so-called "non-cash" losses included
in such retained earnings arising after the First
Closing Date and attributed to the disposition of
discontinued operations of a segment of the
business of Mikasa, the Company and the Other
Subsidiaries (but, in any case, excluding from
such "non-cash" losses under this subclause (B)
any operating losses from the operations of any
such segments), minus
(b) the sum of
(i) the aggregate amount of all write-ups of
assets (y) owned by Mikasa, the Company and the Other
Subsidiaries on the First Closing Date, which write-up
occurred subsequent to December 31, 1996, and (z)
acquired by Mikasa, the Company and the Other
Subsidiaries after the First Closing Date, which
write-up occurred subsequent to the acquisition of such
assets, plus
(ii) all previously issued, reacquired and
uncancelled Capital Stock of Mikasa, the Company and
the Other Subsidiaries (to the extent included in
clause (a) above), plus
(iii) amounts attributable to minority
interests (to the extent that they are included in
clause (a) above),
determined in each case on a consolidated basis for such Persons
at such time.
"Current Debt" means, with respect to any Person, at any
time, without duplication,
(a) its liabilities for borrowed money,
(b) liabilities (excluding, in any case, any
liabilities of such Person as a lessee under any real or
personal Property operating lease) secured by any Lien
Schedule B-6
Page 88 of 135
<PAGE>
existing on Property owned by such Person (whether or not
such liabilities have been assumed),
(c) its liabilities in respect of Capital Leases,
(d) its liabilities under any other obligations for
borrowed money (including, without limitation, any
liabilities in respect of Acceptances and so-called "take or
pay" obligations), and
(e) its liabilities under Guaranties of obligations
described above in clause (a), clause (b), clause (c) and/or
clause (d) above of other Persons,
provided that, in each such case, such liability is either
payable on demand or within one year from the creation thereof
and is not renewable or extendible at the option of such Person
to a date more than one year from the date of creation thereof.
Any such liability which is renewable or extendible at the option
of such Person to a date more than one year from the date of
creation thereof shall be deemed to be Funded Debt and not
Current Debt; provided, however, that, the foregoing
notwithstanding, any Acceptance of such Person shall always be
classified as Current Debt under this Agreement. If any
indebtedness in respect of any of the foregoing liabilities is
expressed to mature more than one year from the date of its
creation but, as of any date of determination, has principal due
and payable within one year of such date of determination,
"Current Debt" shall not include such principal payable within
such one year period but rather the same shall be included in
"Funded Debt."
"Debt" means, with respect to any Person, at any time,
without duplication, all Funded Debt and Current Debt of such
Person at such time.
"Deemed Funded Debt" shall have the meaning ascribed to such
term in the definition of "Funded Debt" in this Schedule B.
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.
"Default Rate" means that rate of interest that is the
lesser of (a) the highest rate allowed by applicable law or (b)
9.38% per annum.
Schedule B-7
Page 89 of 135
<PAGE>
"Distribution" means
(a) any dividend or other distribution, direct or
indirect, on account of Capital Stock of Mikasa, the Company
or any Other Subsidiary (except dividends payable solely in
shares of such Capital Stock), and
(b) any redemption, retirement, purchase or other
acquisition, direct or indirect, of any Capital Stock of
Mikasa, the Company or any Other Subsidiary, or of any
warrants, rights or other options to acquire any shares of
such Capital Stock.
"Domestic Acceptable Bank" means any Acceptable Bank
organized under the laws of, and located in, the United States of
America, including, without limitation, The Tokai Bank, Ltd.
"Domestic Other Subsidiary" means any Other Subsidiary that
is organized under the laws of the United States of America or
any jurisdiction thereof and that conducts substantially all of
its business and has substantially all of its Property within the
United States of America.
"Environmental Laws" means any and all Federal, state,
local, and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or
the release of any materials into the environment, including, but
not limited to, those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) that is treated as a single employer together
with Mikasa or the Company under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated pursuant
thereto.
Schedule B-8
Page 90 of 135
<PAGE>
"Fair Market Value" means, at any time with respect to any
Property, the sale value of such Property that would be realized
in an arm's-length sale at such time between an informed and
willing buyer, and an informed and willing seller, under no
compulsion to buy or sell, respectively.
"First Closing" is defined in Section 3.1(a).
"First Closing Date" is defined in Section 3.1(a).
"Foreign Acceptable Bank" means any Acceptable Bank other
than a Domestic Acceptable Bank but including, without
limitation, The Tokai Bank, Ltd.
"Foreign Other Subsidiary" means any Other Subsidiary that
is not a Domestic Other Subsidiary.
"Foreign Pension Plan" means any plan, fund or other similar
program
(a) established or maintained outside of the United
States of America by any one or more of Mikasa, the Company
or any of the Other Subsidiaries primarily for the benefit
of the employees (substantially all of whom are aliens not
residing in the United States of America) of Mikasa, the
Company or such Other Subsidiaries which plan, fund or other
similar program provides for retirement income for such
employees or results in a deferral of income for such
employees in contemplation of retirement and
(b) not otherwise subject to ERISA.
"Funded Debt" means, with respect to any Person, at any
time, without duplication,
(a) its liabilities for borrowed money, other than
Current Debt;
(b) liabilities (excluding, in any case, any
liabilities of such Person as a lessee under any real or
personal Property operating lease) secured by any Lien
existing on Property owned by such Person (whether or not
such liabilities have been assumed), other than Current
Debt;
(c) its liabilities in respect of Capital Leases,
other than Current Debt;
Schedule B-9
Page 91 of 135
<PAGE>
(d) its liabilities under any other obligations for
borrowed money (including, without limitation, any so-called
"take or pay" obligations), other than Current Debt; and
(e) its liabilities under Guaranties of liabilities of
the type set forth in clause (a), clause (b), clause (c)
and/or clause (d) above of other Persons.
For purposes of determining at any time hereunder the amount of
Funded Debt of Mikasa, the Company, and the Other Subsidiaries,
"Funded Debt" shall include the smallest average daily principal
amount of Current Debt of Mikasa, the Company and the Other
Subsidiaries outstanding during any period of 20 consecutive days
selected by Mikasa falling within the 365-day period ending on
the last day of the fiscal quarter immediately preceding such
time (such amount at any time is herein referred to as "Deemed
Funded Debt").
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which Mikasa, the Company
or any Other Subsidiary conducts all or any part of its
business, or which asserts jurisdiction over any
Properties of Mikasa, the Company or any Other
Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
"Guaranty" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such 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,
obligations incurred through an agreement, contingent or
otherwise, by such Person:
Schedule B-10
Page 92 of 135
<PAGE>
(a) to purchase such indebtedness or obligation or any
Property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to
maintain any working capital or other balance sheet
condition or any income statement condition of any other
Person or otherwise to advance or make available funds for
the purchase or payment of such indebtedness or obligation;
(c) to lease Properties or to purchase Properties or
services primarily for the purpose of assuring the owner of
such indebtedness or obligation of the ability of any other
Person to make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness
or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of
the obligor under any Guaranty, the indebtedness or other
obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
"holder" means, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by
Mikasa and the Company pursuant to Section 13.1.
"Institutional Investor" means (a) any original purchaser of
a Note, (b) any holder of a Note holding more than 5% of the
aggregate principal amount of the Notes then outstanding, and (c)
any bank, trust company, savings and loan association or other
financial institution, any pension plan, any investment company,
any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Investment" means any investment, made in cash or by
delivery of Property, by Mikasa, the Company or any of the Other
Subsidiaries (a) in any Person, whether by acquisition of stock,
indebtedness or other obligation or Security, or by loan,
Guaranty, advance or capital contribution, or otherwise, or (b)
in any Property.
"Lien" means, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or
any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or
other title retention agreement or Capital Lease, upon or with
Schedule B-11
Page 93 of 135
<PAGE>
respect to any Property or asset of such Person (including, in
the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements). The term "Lien" does
not include negative pledge clauses in agreements relating to the
borrowing of money and does not include the rights of a licensee
or a distributee provided for under a license or a
distributorship agreement entered into in the ordinary course of
business.
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business,
operations, affairs, financial condition, assets, or Properties
of Mikasa, the Company and the Other Subsidiaries taken as a
whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, affairs, financial condition,
assets or Properties of Mikasa, the Company and the Other
Subsidiaries, taken as a whole, or (b) the ability of Mikasa or
the Company to perform its obligations under this Agreement and
the Notes, or (c) the validity or enforceability of this
Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Mikasa" is defined in the introductory sentence of this
Agreement.
"Mikasa Board of Directors" means, at any time, the board of
directors of Mikasa or any committee thereof that, in the
instance, shall have the lawful power to exercise the power and
authority of such board of directors.
"Mikasa Tradenames/Trademarks" is defined in Section 5.11.
"MLI" means Mikasa Licensing, Inc., a Delaware corporation.
"Multiemployer Plan" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Nonconvertible Preferred Stock" means, with respect to any
corporation, association or other business entity, Preferred
Stock which is not, directly or indirectly, convertible into
Voting Stock of such Person.
"Notes" is defined in Section 1.
Schedule B-12
Page 94 of 135
<PAGE>
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of Mikasa or the
Company whose responsibilities extend to the subject matter of
such certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"Other Subsidiary" means each of the direct and indirect
Subsidiaries of Mikasa other than the Company.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
"Plan" means an "employee benefit plan" (as defined in
section 3(3) of ERISA) that is or, within the preceding five
years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been
made or required to be made, by Mikasa, the Company or any ERISA
Affiliate or with respect to which Mikasa, the Company or any
ERISA Affiliate may have any liability.
"Preferred Stock" means any class of capital stock of a
corporation that is preferred over any other class of capital
stock of such corporation as to the payment of dividends or the
payment of any amount upon liquidation or dissolution of such
corporation.
"Preferred Stock Value" with respect to any Preferred Stock
issued by an Other Subsidiary and beneficially owned by Persons
other than Mikasa, the Company or any Other Subsidiary, the sum
of (a) all unpaid dividends accrued thereon (whether accumulated
or otherwise) plus (b) the highest of (i) the aggregate par or
stated value thereof, (ii) the aggregate liquidation value
thereof or (iii) the aggregate consideration payable in
connection with any "put" option in respect thereof pursuant to
which Mikasa, the Company or any Other Subsidiary would be
required to purchase such Preferred Stock.
Schedule B-13
Page 95 of 135
<PAGE>
"Property" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible,
choate or inchoate.
"PTE" is defined in Section 6.2(c).
"Purchase Money Lien" means
(a) a lien held by any Person (whether or not the
seller of such assets) on real Property acquired or
constructed by Mikasa, the Company or any of the Other
Subsidiaries, which Lien secures all or a portion of the
related purchase price or construction costs of such
Property and was created not more than 30 days after such
Property was acquired or its construction completed,
provided that such Purchase Money Lien
(i) encumbers only the real Property being so
purchased or constructed, and
(ii) such Lien is not thereafter extended to any
other Property, and
(b) any Lien existing on real Property of any
corporation, association or other business entity at the
time it becomes a Subsidiary, provided that
(i) no such Lien shall extend to or cover any
Property other than the real Property subject to such
Lien at the time of any such transaction, and
(ii) such Lien was not created in contemplation of
any such transaction.
For purposes of this definition and Section 10.8 (a)(viii)
hereof, a Lien on real Property which also encumbers fixtures and
other items of personal Property used in connection with such
real Property shall be deemed to be a Lien on real Property.
"QPAM Exemption" means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
"Required Holders" means, at any time, the holders of at
least 51% in principal amount of the Notes at the time
outstanding (exclusive of Notes then owned by Mikasa, the
Company, or any of their respective Affiliates).
Schedule B-14
Page 96 of 135
<PAGE>
"Responsible Officer" means any Senior Financial Officer and
any other officer of Mikasa or the Company with responsibility
for the administration of the relevant portion of this Agreement.
"Restricted Investments" means, at any time, all Investments
except the following:
(a) Investments in one or more of the Subsidiaries or
any corporation that concurrently with such Investment
becomes a Subsidiary;
(b) receivables arising from the sale of goods and
services, and Investments in Property to be used, in each
case in the ordinary course of business or operations of
Mikasa, the Company or any Other Subsidiary making such
Investment;
(c) Investments in direct obligations of the United
States of America, or any agency thereof, or obligations
guaranteed by the United States of America, provided that
such obligations mature within two years from the date of
acquisition thereof;
(d) (i) with respect to Mikasa, the Company and any
Domestic Other Subsidiary, Investments in demand deposit
accounts, certificates of deposit, time deposits or banker's
acceptances maintained in or issued by Domestic Acceptable
Banks, provided that such obligations mature within one year
from the date of acquisition thereof and are denominated in
United States Dollars; and (ii) with respect to Foreign
Other Subsidiaries, Investments of a type described in
subclause (i) above in this clause (d) and Investments
maintained in or issued by a Foreign Acceptable Bank
consisting of commercial bank demand deposit accounts and
other similar commercial operating accounts or compensating
balances in respect of Debt of such Foreign Other
Subsidiaries which Investments in or issued by such Foreign
Acceptable Banks are denominated in currencies other than
United States Dollars;
(e) Investments in demand deposit accounts and other
similar commercial bank operating accounts, provided that
such Investments are payable or withdrawable upon demand;
(f) Investments in commercial paper rated "A-1" or
higher by Standard & Poor's Ratings Group (or its successor)
or "P-1" or higher by Moody's Investors Service, Inc. (or
Schedule B-15
Page 97 of 135
<PAGE>
its successor) (or any future comparable ratings issued by
Moody's Investors Service, Inc., Standard & Poor's Ratings
Group, or the successor of either), provided that such
obligations mature within two years from the date of
creation thereof;
(g) Investments in corporate debt obligations of
corporations organized under the laws of the United States
of America or any state thereof that at the time of
acquisition thereof have an assigned rating of "A+" or
higher by Standard & Poor's Ratings Group (or its successor)
or "A-1" or higher by Moody's Investors Service, Inc. (or
its successor) (or any future comparable ratings issued by
Moody's Investors Service, Inc., Standard & Poor's Ratings
Group, or the successor of either), provided that such
obligations mature within one year of such time;
(h) Investment by Mikasa Corporation, a corporation
organized under the laws of Japan, in a certain loan
receivable of Miyawo Toki K.K., a company organized under
the laws of Japan, maturing on December 31, 1998 and in the
original stated principal amount of (Y)144,000,000;
(i) Investment by the Company in and to Mikasa Europe
Distribution GmbH, a limited liability company organized
under the laws of Germany, and Mikasa Europe Distribution
Gmbh & Co. KG, a limited partnership organized under the
laws of Germany, provided that the United States Dollar
equivalent of all such Investments shall not exceed
$3,000,000;
(j) Investment by the Company in its new distribution
facility located in South Carolina including the possible
acquisition by the Company of a revenue bond in the amount
of approximately $4,000,000 which is related to the
construction of such facility; and
(k) Investments in addition to the Investments
described in clause (a) through clause (j), inclusive,
above, provided that the aggregate amount of all Investments
made under this clause (k), after giving effect to any then
proposed Investment to be included under this clause (k),
shall not exceed 12% of Consolidated Net Worth, determined
at the time of the making of any such Investment.
Schedule B-16
Page 98 of 135
<PAGE>
Investments shall be valued at cost less any return of capital
thereon whether through the sale or liquidation thereof or
otherwise.
"SEC" means the Securities and Exchange Commission and any
other successor agency of the United States government.
"Second Closing" is defined in Section 3.1(b).
"Second Closing Date" is defined in Section 3.1(b)
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Security" means "security" as defined in section 2(1) of
the Securities Act.
"Senior Financial Officer" means the chief financial
officer, principal accounting officer, or comptroller of Mikasa
or the Company.
"Significant Subsidiaries" means and includes:
(a) Dinnerware Plus (CA), Inc., Dinnerware Plus
(Maine), Inc., Dinnerware Plus (NC), Inc., Dinnerware Plus
(Texas), Inc., Housewares Merchandisers, Inc., Tabletop
Merchandisers, Inc., Mikasa Nagoya Holdings, Inc., Mikasa
International, Inc., Mikasa (Canada), Inc., and MLI,
(b) any Subsidiary that owns any Mikasa
Tradenames/Trademarks that individually or in the aggregate
are Material, and
(c) any other Subsidiary that
(i) has assets constituting 5% or more of the
total assets of Mikasa, the Company and the Other
Subsidiaries, determined on a consolidated basis as of
the end of the then most recently ended fiscal year of
Mikasa and the Company, or
(ii) accounted for 5% or more of Consolidated Net
Income for the then most recently ended fiscal year of
Mikasa and the Company.
"Source" is defined in Section 6.2.
Schedule B-17
Page 99 of 135
<PAGE>
"Subsidiary" means, as to any Person, any corporation,
association or other business entity in which such Person or one
or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable
it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership
or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries
(unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one
or more of its Subsidiaries). Unless the context otherwise
clearly requires, any reference to a "Subsidiary" is a reference
to a Subsidiary of Mikasa.
"Subsidiary Stock" is defined in Section 10.12.
"Surviving Corporation" is defined in Section 10.2(a).
"Total Domestic Subsidiary Debt/Preferred Stock" means, at
any time, the aggregate amount of (a) Debt of all Domestic Other
Subsidiaries determined at such time other than Debt owed by such
Domestic Other Subsidiaries to Mikasa, the Company or any
Wholly-Owned Subsidiary plus (b) the Preferred Stock Value of all
Preferred Stock of all Domestic Other Subsidiaries other than
such Preferred Stock beneficially owned by Mikasa, the Company or
any Wholly-Owned Subsidiary.
"Total Foreign Subsidiary Debt/Preferred Stock" means, at
any time, the aggregate amount of (a) Debt of all Foreign Other
Subsidiaries determined at such time other than Debt owed by such
Foreign Other Subsidiaries to Mikasa, the Company or any Wholly-
Owned Subsidiary plus (b) the Preferred Stock Value of all
Preferred Stock of all Foreign Other Subsidiaries other than such
Preferred Stock beneficially owned by Mikasa, the Company or any
Wholly-Owned Subsidiary.
"United States Dollars," "Dollars," or "$" means lawful
money of the United States of America.
"Voting Stock" means, with respect to any corporation,
association or other business entity, any capital stock of any
class or classes of such Person (if such Person is a corporation)
or other voting equity interests (if such Person is an
association or other business entity) the holders of which
Schedule B-18
Page 100 of 135
<PAGE>
(a) are, in the case of such Person which is a
corporation, ordinarily, in the absence of contingencies,
entitled to elect corporate directors and are not otherwise
limited in the exercise of the voting rights in respect of
such capital stock or
(b) are, in the case of such Person that is an
association or other business entity, entitled to (i) elect
or replace Persons performing managerial functions similar
to those of corporate directors, (ii) elect or replace
general partners or Persons performing managerial functions
similar to those of general partners or (iii) perform
functions similar to those of a corporate director or a
general partner or to otherwise directly manage such Person
and, in each such case in this clause (b), are not otherwise
limited in the exercise of such voting or managerial rights
other than as expressly provided in any applicable organic
or constitutive document of such Person or by applicable
law.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary
100% of all of the equity interests (except directors' qualifying
shares) and voting interests of which are owned by any one or
more of Mikasa and Mikasa's other Wholly-Owned Subsidiaries at
such time.
"Yen or (Y)" means lawful currency of Japan.
Schedule B-19
Page 101 of 135
<PAGE>
SCHEDULE 3
PAYMENT INSTRUCTIONS
Re: Mikasa, Inc. and American Commercial, Incorporated --
$60,000,000 7.38% Senior Notes Due 2007
In accordance with Section 3 of the Note Purchase Agreement,
Mikasa and the Company direct you to make payment for the Note or
Notes being purchased by you by payment by U.S. federal funds wire
transfer in immediately available funds of the purchase price thereof
to:
BankBoston, N.A.
Boston, Massachusetts 02110
ABA No.: 011000390
Account No.: 51132895
Account Name: American Commercial, Inc.
Contact at bank: Michele Kapinos
Sr. Account Administrator
(617) 434-4039
Schedule 3-1
Page 102 of 135
<PAGE>
SCHEDULE 4.9
CHANGES IN CORPORATE STRUCTURE
None.
Schedule 4.9-1
Page 103 of 135
<PAGE>
SCHEDULE 5.3
DISCLOSURE MATERIALS
None.
Schedule 5.3-1
Page 104 of 135
<PAGE>
SCHEDULE 5.4
OTHER SUBSIDIARIES AND OWNERSHIP OF CAPITAL STOCK
Schedule 5.4-1
Page 105 of 135
<PAGE>
SCHEDULE 5.5
FINANCIAL STATEMENTS
Annual Report of Mikasa, Inc. on Form 10-K for fiscal years ended
December 31, 1995 and December 31, 1996.
Schedule 5.5-1
Page 106 of 135
<PAGE>
SCHEDULE 5.8
CERTAIN LITIGATION
None.
Schedule 5.8-1
Page 107 of 135
<PAGE>
SCHEDULE 5.11
PATENTS, ETC.
None.
Schedule 5.11-1
Page 108 of 135
<PAGE>
SCHEDULE 5.12
ERISA AFFILIATES
American Commercial, Incorporated Defined Benefit Pension Plan
American Commercial, Incorporated Profit Sharing Plan
American Commercial, Incorporated Group Medical Insurance Plan
American Commercial, Incorporated Group Long Term Disability Plan
American Commercial, Incorporated Group Term Life Insurance Plan
American Commercial, Incorporated Employee Assistance Plan
The foregoing Plans provide benefits to Mikasa, the Company, and all
of the entities identified in Schedule 5.4 other than entities not
organized in the United States.
Schedule 5.12-1
Page 109 of 135
<PAGE>
SCHEDULE 5.14
USE OF PROCEEDS
The proceeds of the Notes will be used by the Company for
construction of the Company's distribution center in Charleston, South
Carolina and for Mikasa's and the Company's general corporate
purposes, including continued expansion of the company-owned retail
store network.
Schedule 5.14-1
Page 110 of 135
<PAGE>
SCHEDULE 5.15
EXISTING DEBT AND LIENS
As of December 31, 1996
Maturity Outstand-
Lender/Note Agreement Date ing Debt
- --------------------------------------------------------------------------------
Unsecured Note Purchase Agreement Dated May 1, 1993 05/19/2003 $60,000,000
Lenders -- Various insurance companies
Fixed Interest Rate at 6.66%
- --------------------------------------------------------------------------------
Unsecured Revolving Credit Agreement Dated May 19, 1993 05/19/2000 $0
Credit Line -- $50,000,000
Lenders -- BankBoston and The Tokai Bank, Ltd.
Variable Interest Rate
- --------------------------------------------------------------------------------
Unsecured Revolving Credit Agreement 12/31/1997 $1,797,000
Credit Line -- DM 3,200,000, U.S.$Equivalent =
$1,880,000
Lender -- Comerzbank Paderborn, Germany
Variable Interest rate
- --------------------------------------------------------------------------------
Secured Revolving Credit Agreement 11/30/1997 $0
Credit Line -- $6,000,000
Lender -- The Tokai Bank, Ltd.
Variable Interest Rate
Secured primarily by buildings and land of the Nagoya,
Japan facility.
- --------------------------------------------------------------------------------
Schedule 5.15-1
Page 111 of 135
<PAGE>
SCHEDULE 10.1
AFFILIATE TRANSACTIONS
None.
Schedule 10.1-1
Page 112 of 135
<PAGE>
EXHIBIT 1
[FORM OF NOTE]
MIKASA, INC.
AMERICAN COMMERCIAL, INCORPORATED
7.38% Senior Note Due June 4, 2007
No. R-__ [Date]
$__________ PPN: 59862# AA 7
FOR VALUE RECEIVED, the undersigned, MIKASA, INC., a Delaware
corporation ("Mikasa"), and AMERICAN COMMERCIAL, INCORPORATED, a
California corporation ("ACI" and together with Mikasa, the
"Companies"), jointly and severally hereby promise to pay to
______________, or registered assigns, the principal sum of
________________________________ DOLLARS ($__________) on June 4,
2007, with interest (computed on the basis of a 360-day year of twelve
30-day months) (a) on the unpaid balance thereof at the rate of 7.38%
per annum from the date hereof, payable semiannually on the fourth day
of June and December in each year, commencing with the June 4th or
December 4th next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the lesser of
(i) the highest rate allowed by applicable law, or (ii) 9.38%.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United
States of America as provided in the Note Purchase Agreements referred
to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated
as of June 4, 1997 (as from time to time amended, the "Note Purchase
Agreements"), among the Companies and the respective Purchasers named
therein and is entitled to the benefits thereof. Each holder of this
Note will be deemed, by its acceptance hereof, (i) to have agreed to
the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreements and (ii) to have made the representation set forth
in Section 6.2 of the Note Purchase Agreements.
Exhibit 1-1
Page 113 of 135
<PAGE>
This Note is a registered Note and, as provided in the Note
Purchase Agreements, 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 such
holder's attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer,
the Companies 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 Companies will not be affected by
any notice to the contrary.
The Companies will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements.
This Note is also subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in the
Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the
price (including any applicable Make-Whole Amount) and with the effect
provided in the Note Purchase Agreements.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE COMPANIES AND THE HOLDER HEREOF SHALL BE GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION
OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
MIKASA, INC.
By
------------------------------------
Title:
AMERICAN COMMERCIAL, INCORPORATED
By
------------------------------------
Title:
Exhibit 1-2
Page 114 of 135
<PAGE>
EXHIBIT 4.4(a)
FORM OF OPINION OF GENERAL COUNSEL TO MIKASA AND THE COMPANY
[Letterhead of Mikasa, Inc.]
[Closing Date]
To the Persons Listed in
Annex 3 hereto
Re. Mikasa, Inc.
American Commercial, Incorporated
Ladies and Gentlemen:
Reference is made to the separate Note Purchase Agreements,
each dated as of June 4, 1997, (collectively, the "Note Purchase
Agreement"), among Mikasa, Inc., a Delaware corporation ("Mikasa"),
American Commercial, Incorporated, a California corporation (the
"Company"), and each of the purchasers listed in Schedule A attached
thereto (the "Purchasers"), which provide, among other things, for the
issuance and sale by Mikasa and the Company of their joint and several
7.38% Senior Notes due June 4, 2007, in the aggregate principal amount of
$60,000,000 ($30,000,000 in aggregate principal amount of which are being
issued and sold on the date hereof). The capitalized terms used herein
and not defined herein have the meanings specified in the Note Purchase
Agreement.
I have acted as counsel to each of Mikasa and the Company in
connection with the transactions contemplated by the Note Purchase
Agreement. This opinion is delivered to you pursuant to Section 4.4(a)
of the Note Purchase Agreement. In acting as such counsel, I have
examined:
(a) the Note Purchase Agreement;
(b) Mikasa's and the Company's joint and several 7.38% Senior
Notes due June 4, 2007, dated the date hereof, in the form of Exhibit 1
to the Note Purchase Agreement, and in the principal amounts and with the
registration numbers set forth in Schedule A to the Note Purchase
Agreement (the "Notes");
Exhibit 4.4(a)-1
Page 115 of 135
<PAGE>
(c) the documents executed and delivered by each of Mikasa and
the Company in connection with the transactions contemplated by the Note
Purchase Agreement;
(d) the bylaws and minute books of each of Mikasa and the
Company and each of the Subsidiaries of the Company listed on Annex 1
hereto ("Significant Subsidiaries") and a certified copy of the
certificate of incorporation of each of Mikasa and the Company, as in
effect on the date hereof;
(e) a good standing certificate from the state of
incorporation of each of Mikasa and the Company, good standing
certificates from the states of incorporation of each Significant
Subsidiary, and foreign good standing certificates for each of such
corporations from each of the states set forth in Annex 2 hereto; and
(f) originals, or copies certified or otherwise identified to
my satisfaction, of such other documents, records, instruments and
certificates of public officials and officers of Mikasa and the Company
as I have deemed necessary or appropriate to enable me to render this
opinion.
In rendering my opinion, I have relied, to the extent I deem
necessary and proper, on warranties and representations as to factual
matters contained in the Note Purchase Agreement and in the Offeree
Letter.
I have no actual knowledge of any material inaccuracies in any
of the facts contained in the Note Purchase Agreement.
My opinion is based upon the corporate laws of the State of
California, the General Corporation law of the State of Delaware, and the
federal law of the United States.
Based on the foregoing, I am of the following opinions:
1. Each of Mikasa, the Company and each Significant Subsidiary is
a corporation duly incorporated, validly existing and in good standing
under the laws of its state of incorporation and has all requisite
corporate power and authority to carry on its business and own its
Property.
2. Each of Mikasa, the Company and each Significant Subsidiary has
duly qualified and is in good standing as a foreign corporation in each
jurisdiction where the character of its Properties or the nature of its
activities makes such qualification necessary, except where the failure
to so qualify and be in good standing would not have a material adverse
effect on the ability of Mikasa or the Company to perform its obligations
under the Note Purchase Agreement and the Notes.
Exhibit 4.4(a)-2
Page 116 of 135
<PAGE>
3. All consents, approvals and authorizations of, and all
designations, declarations, filings, registrations, qualifications, or
recordations with, Governmental Authorities required on the part of each
of Mikasa, the Company and each Significant Subsidiary have been obtained
in connection with the ownership of its Properties and the conduct of its
businesses, except where the failure to obtain any such consent, approval
or authorization with respect to such ownership and conduct would not
have a material adverse effect on the ability of Mikasa or the Company to
perform its obligations under the Note Purchase Agreement and the Notes.
4. All consents, approvals and authorizations of, and all
designations, declarations, filings, registrations, qualifications and
recordations with, Governmental Authorities required on the part of each
of Mikasa, the Company and the Significant Subsidiaries have been
obtained in connection with the intended use of the proceeds of the Notes
(without regard to the use of the proceeds for working capital).
5. To the best of my knowledge after due inquiry, there is no
judgment, order, action, suit, proceeding, inquiry, order or
investigation, at law or in equity, before any court or Governmental
Authority, arbitration board or tribunal, pending or threatened against
Mikasa, the Company, any Significant Subsidiary or Mikasa (Canada), Inc.,
except for any such judgment, order, action, suit, proceeding, inquiry,
order or investigation that would not have a material adverse effect on
the ability of Mikasa or the Company to perform its obligations under the
Note Purchase Agreement and the Notes.
6. Each of Mikasa and the Company has the requisite corporate
power and authority to execute and deliver the Note Purchase Agreement,
to issue and sell the Notes, and to perform its obligations set forth in
each of the Note Purchase Agreement and the Notes.
7. To the best of my knowledge after due inquiry, the execution
and delivery of the Note Purchase Agreement and the Notes, and the
issuance and sale of the Notes, by each of Mikasa and the Company and the
performance by each of Mikasa and the Company of its obligations
thereunder will not conflict with, constitute a violation of, result in a
breach of any provision of, constitute a default under, or result in the
creation or imposition of any Lien or encumbrance upon any Property of
Mikasa or the Company or the Property of any Significant Subsidiary or
Mikasa (Canada), Inc. pursuant to any agreement or instrument to which
Mikasa, the Company, any Significant Subsidiary or Mikasa (Canada), Inc.
is a party or by which its respective Properties may be bound.
I acknowledge that this opinion is being issued as of today's
date at the request of Mikasa and the Company pursuant to Section 4.4(a)
of the Note Purchase Agreement. I have no obligation to update this
opinion for events or changes in law or fact occurring after the date
hereof. This opinion is intended solely for your use and is not to be
made available to or relied upon by other persons without my prior
Exhibit 4.4(a)-3
Page 117 of 135
<PAGE>
written consent except (i) transferees of the Purchasers listed on Annex
3 attached hereto may rely upon this opinion and (ii) Hebb & Gitlin may
rely upon this opinion in connection with its opinion to be rendered
pursuant to Section 4.4(c) of the Note Purchase Agreement.
Very truly yours,
Joseph S. Muto
Secretary and General Counsel
Exhibit 4.4(a)-4
Page 118 of 135
<PAGE>
ANNEX I
Significant Subsidiaries
Dinnerware Plus, (CA) Inc.
Dinnerware Plus, (Maine) Inc.
Dinnerware Plus, (N.C.) Inc,
Dinnerware Plus, (Texas) Inc.
Housewares Merchandisers, Inc.
Tabletop Merchandisers, Inc.
Mikasa Nagoya Holdings, Inc.
Mikasa International, Inc.
Mikasa Licensing, Inc.
Annex 1-1
Page 119 of 135
<PAGE>
ANNEX 2
Foreign Good Standing Certificates
Corporation State
Dinnerware Plus, (CA) Inc. California
Dinnerware Plus, (Maine) Inc. Maine
Dinnerware Plus, (N.C.) Inc. North Carolina
Dinnerware Plus, (Texas) Inc. Texas
Housewares Merchandisers, Inc. Florida, Pennsylvania
Tabletop Merchandisers, Inc. New Jersey
Mikasa Nagoya Holdings, Inc. None
Mikasa International, Inc. None
Mikasa Licensing, Inc. Nevada
Annex 2-1
Page 120 of 135
<PAGE>
ANNEX 3
Addresses
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
PFL Life Insurance Company
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-5335
Life Investors Insurance Company of America
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-5335
The Guardian Life Insurance Company of America
201 Park Avenue South
New York, NY 10003
Hebb & Gitlin
One State Street
Hartford, CT 06103
Annex 3-1
Page 121 of 135
<PAGE>
EXHIBIT 4.4(b)
[Letterhead of Kelley Drye & Warren LLP]
June 4, 1997
To the Persons Listed in
Annex 2 hereto
Re: Mikasa, Inc.
American Commercial, Incorporated
Ladies and Gentlemen:
Reference is made to the separate Note Purchase Agreements,
each dated as of June 4, 1997 (collectively, the "Note Purchase
Agreement"), among Mikasa, Inc., a Delaware corporation ("Mikasa"),
American Commercial, Incorporated, a California corporation (the
"Company"), and each of the purchasers listed in Schedule A attached
thereto (the "Purchasers"), which provide, among other things, for the
issuance and sale by Mikasa and the Company of their joint and several
7.38% Senior Notes due June 4, 2007, in the aggregate principal amount of
$60,000,000 ($30,000,000 in aggregate principal amount of which are being
issued and sold on the date hereof). The capitalized terms used herein
and not defined herein have the meanings specified in the Note Purchase
Agreement.
We have acted as special counsel to each of Mikasa and the Company
in connection with the transactions contemplated by the Note Purchase
Agreement. This opinion is delivered to you pursuant to Section 4.4(b)
of the Note Purchase Agreement. In acting as such counsel, we have
examined:
(a) the Note Purchase Agreement;
(b) Mikasa's and the Company's joint and several 7.38% Senior
Notes due June 4, 2007, dated the date hereof, in the form of Exhibit 1
to the Note Purchase Agreement, and in the principal amounts and with the
registration numbers set forth in Schedule A to the Note Purchase
Agreement (the "Notes");
Exhibit 4.4(b)-1
Page 122 of 135
<PAGE>
(c) the documents executed and delivered by each of Mikasa and
the Company in connection with the transactions contemplated by the Note
Purchase Agreement;
(d) the bylaws and minute books of each of Mikasa and the
Company and each of the Subsidiaries of the Company listed on Annex 1
hereto ("Significant Subsidiaries") and a certified copy of the
certificate of incorporation of each of Mikasa and the Company, as in
effect on the date hereof;
(e) a letter to Hebb & Gitlin and Kelley Drye & Warren LLP
from Dillon, Read & Co. Inc., describing the manner of the offering of
the Notes (the "Offeree Letter");
(f) the opinion of Joseph S. Muto, general counsel to
Mikasa and the Company, dated the date hereof (the "General Counsel
Opinion"); and
(g) originals, or copies certified or otherwise identified to
our satisfaction, of such other documents, records, instruments and
certificates of public officials and officers of Mikasa and the Company
as we have deemed necessary or appropriate to enable us to render this
opinion.
In our examination, we have assumed the genuineness of all
signatures (with the exception of signatures of officers of Mikasa and
the Company known to us), the authenticity of all documents submitted
to us as originals, the conformity to originals of all documents
submitted to us as copies, the authenticity of the originals of such
latter documents and the legal capacity of all natural persons. With
your consent, we have assumed that the representations and warranties
as to factual matters (which do not draw legal conclusions) made by
Mikasa and the Company in and pursuant to the Note Purchase Agreement
and made by Dillon, Read & Co. Inc. in the Offeree Letter are true
and correct and have made no independent investigation thereof, except
as indicated herein; however, to our knowledge, there are no material
inaccuracies in any of the facts contained in the Note Purchase
Agreement or the Offeree Letter. We have also relied upon the General
Counsel Opinion with respect to all questions concerning the due
incorporation, valid existence and good standing of each of Mikasa
and the Company. In addition, we have relied upon factual
representations (which do not draw legal conclusions) as to certain
matters contained in a certificate signed by officers of Mikasa and
the Company and have made no independent investigation thereof,
except as indicated herein. When, in this opinion, we have used the
Exhibit 4.4(b)-2
Page 123 of 135
<PAGE>
phrases "to the best of our knowledge", "of which we are aware" or
"to our knowledge," we mean that the attorneys presently working at
this firm who have given substantive attention to the transactions
contemplated by the Note Purchase Agreement have no present actual
knowledge (i.e. conscious awareness) of any facts inconsistent therewith
and that such knowledge is not based on any independent investigation
of the applicable facts. We have assumed that you have received all
documents which you were required to receive under the Note Purchase
Agreement and that the Note Purchase Agreement is an obligation
binding upon you.
The opinions herein are subject to the following
qualifications:
(a) We express no opinion as to the enforceability of any
provision of the Note Purchase Agreement, the Notes or other instruments
to the extent such provision may be subject to, and affected by,
applicable bankruptcy, insolvency, moratorium or similar state or
federal laws affecting the rights and remedies of creditors generally
(including, without limitation, fraudulent transfer laws) and general
principles of equity.
(b) We express no opinion on the enforceability of certain rights and
remedies set forth in the Note Purchase Agreement or other instruments to
the extent such rights or remedies may be limited by applicable state
law, but in our opinion, such laws will not materially interfere with the
practical realization of the benefits intended to be provided by the Note
Purchase Agreement or the Notes.
(c) We express no opinion with respect to the enforceability of
provisions in the Note Purchase Agreement providing for specific
performance, injunctive relief or other equitable remedies, regardless
of whether such enforceability is sought in a proceeding in equity or at
law.
(d) We express no opinion concerning any law other than the law of
the State of New York, the corporate and "Blue Sky" laws of the State of
California, General Corporation law of the State of Delaware and the
federal law of the United States and we express no opinion as to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of California and Delaware, any other laws,
or as to matters of municipal law or the laws of any local agencies
within any state.
(e) We have been advised by the Company that all shares of the capital
stock of the Significant Subsidiaries issued prior to the date hereof are
fully paid; we have relied upon such advice and have made no independent
investigation thereof.
Exhibit 4.4(b)-3
Page 124 of 135
<PAGE>
(f) We have assumed there was no misrepresentation, omission or deceit
by any person in connection with the execution, delivery or performance
of any of the documents referred to herein or any of the transactions
contemplated by such documents and that there has been no mutual mistake
of fact or misunderstanding, fraud, duress or undue influence in the
negotiation, execution or delivery of the Note Purchase Agreement, the
Notes or any transactions, agreements or instruments contemplated
thereby.
(g) We express no opinion as to compliance with applicable antifraud
statutes, rules or regulations of applicable state and federal law.
Based upon and subject to the foregoing, it is our opinion that:
1. Each of the Note Purchase Agreement and the Notes has been duly
authorized by all necessary corporate action on the part of each of
Mikasa and the Company (no action on the part of the stockholders of
Mikasa or the Company being required in respect thereof), has been
executed and delivered by a duly authorized officer of each of Mikasa and
the Company, and constitutes a legal, valid and binding obligation of
each of Mikasa and the Company, enforceable against each of Mikasa and
the Company in accordance with its terms,
2. The execution and delivery of the Note Purchase Agreement
and the Notes, and the issuance and sale of the Notes, by each of Mikasa
and the Company and the performance by each of Mikasa and the Company of
its obligations thereunder will not conflict with, constitute a violation
of, result in a breach of any provision of, constitute a default under, or
result in the Creation or imposition of any Lien or encumbrance upon any
Property of Mikasa or the Company or the Property of any Significant
Subsidiary pursuant to the certificate of incorporation or bylaws of Mikasa
or the Company or such Significant Subsidiary, or any applicable statute,
rule or regulation to which Mikasa, the Company or any Significant
Subsidiary is subject.
3. All consents, approvals and authorizations of, and all
designations, declarations, filings, registrations, qualifications and
recordations with, Governmental Authorities required on the part of each of
Mikasa, the Company and the Significant Subsidiaries have been obtained in
connection with the execution and delivery of each of the Note Purchase
Agreement and the Notes and the issue and sale of the Notes.
4. Based in part on your representations contained in Section 6.1
of the Note Purchase Agreement, it is not necessary in connection with the
offering, issuance, sale and delivery of the Notes under the circumstances
contemplated by the Note Purchase Agreement, the Offeree Letter and the
Notes to register any of such Notes under the Securities Act of 1933, as
Exhibit 4.4(b)-4
Page 125 of 135
<PAGE>
amended, as such is in effect on the date hereof, and it is not necessary
to register the Notes under the "Blue Sky" laws of the States of New York
or California, nor to qualify an indenture with respect thereto under the
Trust Indenture Act of 1939, as amended.
5. Neither the issuance of the Notes nor the intended use of the
proceeds of the Notes (as described in Schedule 5.14 of the Note Purchase
Agreement) will violate Regulations G, T or X of the Federal Reserve Board.
6. Neither Mikasa nor the Company is
i. an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or
ii. a "holding company" or an "affiliate" of a "holding
company," or a "subsidiary company" of a "holding company," or
a "public utility" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
7. To our knowledge, based upon the representations in the Note
Purchase Agreement and our review of the stock transfer records of Mikasa,
the Company and the Significant Subsidiaries, each of Mikasa and the
Company owns of record all of the outstanding shares of the Capital Stock
of each of the Significant Subsidiaries. All such shares have been duly
issued and are fully paid and nonassessable.
We acknowledge that this opinion is being issued as of today's
date at the request of Mikasa and the Company pursuant to Section 4-4(b) of
the Note Purchase Agreement. We have no obligation to update this opinion
for events or changes in law or fact occurring after the date hereof. This
opinion is intended solely for your use and is not to be made available to
or relied upon by other persons without our prior written consent except
(i) transferees of the Purchasers listed on Annex 2 attached hereto may
rely upon this opinion and (ii) Hebb & Gitlin may rely upon this opinion in
connection with its opinion to be rendered pursuant to Section 4.4(c) of
the Note Purchase Agreement.
Very truly yours,
Exhibit 4.4(b)-5
Page 126 of 135
<PAGE>
ANNEX I
Significant Subsidiaries
Dinnerware Plus, (CA) Inc.
Dinnerware Plus, (Maine) Inc.
Dinnerware Plus, (N.C.) Inc,
Dinnerware Plus, (Texas) Inc.
Housewares Merchandisers, Inc.
Tabletop Merchandisers, Inc.
Mikasa Nagoya Holdings, Inc.
Mikasa International, Inc.
Mikasa Licensing, Inc.
Annex 1-1
Page 127 of 135
<PAGE>
ANNEX 2
Addresses
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attention: Securities Custody and Collection Department F381
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Treasurer
PFL Life Insurance Company
AEGON USA Investment Management, Inc.
Attention: Michael Meese
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-5112
Life Investors Insurance Company of America
AEGON USA Investment Management, Inc.
Attention: Michael Meese
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-5112
The Guardian Life Insurance Company of America
Attention: Investment Account M-1A
201 Park Avenue South
New York, New York 10003
Hebb & Gitlin
One State Street
Hartford, CT 06103
Annex 2-1
Page 128 of 135
<PAGE>
EXHIBIT 4.4(c)
[HEBB & GITLIN Letterhead]
June 4, 1997
To the Persons Listed in
Annex 1 hereto
Re: Mikasa, Inc.
American Commercial, Incorporated
Ladies and Gentlemen:
Reference is made to the separate Note Purchase Agreements,
each dated as of June 4, 1997 (collectively, the "Note Purchase
Agreement"), among Mikasa, Inc., a Delaware corporation ("Mikasa"),
American Commercial, Incorporated, a California corporation (the
"Company"), and each of the purchasers listed in Schedule A attached
thereto (the "Purchasers"), which provide, among other things, for the
issuance and sale by Mikasa and the Company of their joint and several
7.38% Senior Notes due June 4, 2007, in the aggregate principal amount of
$60,000,000 ($30,000,000 in aggregate principal amount of which are being
issued and sold on the date hereof). The capitalized terms used herein
and not defined herein have the meanings specified in the Note Purchase
Agreement.
We have acted as special counsel to the Purchasers in
connection with the transactions contemplated by the Note Purchase
Agreement. This opinion is delivered to you pursuant to Section 4.4(c)
of the Note Purchase Agreement. In acting as such counsel, we have
examined:
(a) the Note Purchase Agreement;
(b) Mikasa's and the Company's joint and several 7.38% Senior
Notes due June 4, 2007, dated the date hereof, in the form of Exhibit 1
to the Note Purchase Agreement, and in the principal amounts and with the
registration numbers set forth in Schedule A to the Note Purchase
Agreement (the "Note");
(c) the certificates of certain officers of Mikasa and the
Company, delivered pursuant to Section 4.3 of the Note Purchase
Agreement;
Exhibit 4.4(c)-1
Page 129 of 135
<PAGE>
(d) a letter to Hebb & Gitlin and Kelley Drye & Warren LLP
from Dillon, Read & Co. Inc., describing the manner of the offering of
the Notes (the "Offeree Letter");
(e) the opinion of Kelley Drye & Warren LLP, special counsel
to Mikasa and the Company, dated the date hereof;
(f) the opinion of Joseph S. Muto, general counsel to Mikasa
and the Company, dated the date hereof; and
(g) originals, or copies certified or otherwise identified to
our satisfaction, of such other documents, records, instruments and
certificates of public officials as we have deemed necessary or
appropriate to enable us to render this opinion.
In rendering our opinion, we have relied, to the extent we deem
necessary and proper, on:
(A) warranties and representations as to certain factual
matters contained in the Note Purchase Agreement;
(B) the Offeree Letter;
(C) said opinions of Kelley Drye & Warren LLP and Joseph S.
Muto with respect to all questions governed by the laws of the State of
California and the State of Delaware;
(D) said opinion of Kelley Drye & Warren concerning the
authorization, execution and delivery of instruments by each of Mikasa
and the Company (except that we have made an independent examination of a
certificate of an officer of each of Mikasa and the Company setting
forth, with respect to each, a certified copy of its certificate of
incorporation, its bylaws and corporate resolutions authorizing its
participation in the transactions contemplated by the Note Purchase
Agreement); and
(E) said opinion of Joseph S. Muto with respect to all
questions concerning the due incorporation, valid existence, good
standing, and corporate power and authority of each of Mikasa and the
Company (except that we have made an independent examination of each of
the officer's certificates referred to in clause (D) above).
Exhibit 4.4(c)-2
Page 130 of 135
<PAGE>
Based on such investigation as we have deemed appropriate, said
opinions are satisfactory in form and scope to us and in our opinion the
Purchasers and we are justified in relying thereon. As to such opinions
and the matters therein upon which we are relying, we incorporate herein
the assumptions and qualifications to such opinions set forth therein.
Based on the foregoing, we are of the following opinions:
1. Each of Mikasa and the Company is a corporation duly
incorporated, validly existing and in good standing under the laws of its
state of incorporation.
2. Each of Mikasa and the Company has the requisite corporate
power and authority to execute and deliver the Note Purchase Agreement,
to issue and sell the Notes, and to perform its obligations set forth in
each of the Note Purchase Agreement and the Notes.
3. Each of the Note Purchase Agreement and the Notes has been duly
authorized by all necessary corporate action on the part of each of
Mikasa and the Company, has been executed and delivered by a duly
authorized officer of each of Mikasa and the Company, and constitutes a
legal, valid and binding obligation of each of Mikasa and the Company,
enforceable against each of Mikasa and the Company in accordance with its
terms.
4. The execution and delivery of the Note Purchase Agreement and
the Notes, and the issuance and sale of the Notes, by each of Mikasa and
the Company and the performance by each of Mikasa and the Company of its
obligations thereunder will not conflict with, constitute a violation of,
result in a breach of any provision of, constitute a default under, or
result in the creation or imposition of any lien upon any of the Property
of Mikasa or the Company, pursuant to the certificate of incorporation or
bylaws of Mikasa or the Company;
5. No consent, approval or authorization of Governmental
Authorities is required on the part of Mikasa or the Company under the
laws of the United States of America or the State of New York in
connection with the execution and delivery of the Note Purchase Agreement
and the Notes, or the offer, issue, sale and delivery of the Notes. Our
opinion in this paragraph 5 is based solely on a review of generally
Exhibit 4.4(c)-3
Page 131 of 135
<PAGE>
applicable laws of the United States of America and the State of New
York, and not on any search with respect to, or review of, any orders,
decrees, judgements or other determinations specifically applicable to
Mikasa or the Company.
6. Under existing law, the issuance and sale of the Notes, under
the circumstances contemplated by the Note Purchase Agreement, are not
subject to the registration requirements under the Securities Act of
1933, as amended, or the "Blue Sky" laws of the State of New York, and
neither Mikasa nor the Company is required to qualify an indenture with
respect to the Notes under the Trust Indenture Act of 1939, as amended.
All opinions contained herein with respect to the
enforceability of documents and instruments are qualified to the extent
that:
(a) the availability of equitable remedies, including, without
limitation, specific enforcement and injunctive relief, is subject to the
discretion of the court before which any proceedings therefor may be
brought; and
(b) the enforceability of certain terms provided in the Note
Purchase Agreement and the Notes may be limited by
(i) applicable bankruptcy, reorganization, arrangement,
insolvency, moratorium, fraudulent conveyance or similar laws
affecting the enforcement of creditors' rights generally as at the
time in effect, and
(ii) common law or statutory requirements with respect to
commercial reasonableness.
Except in reliance on the opinions of Kelley Drye & Warren LLP
and Joseph S. Muto, we express no opinion as to the law of any
jurisdiction other than the law of New York and United States federal
law.
Exhibit 4.4(c)-4
Page 132 of 135
<PAGE>
Future holders of the Notes may rely on this opinion as if it
were addressed to them.
Very truly yours,
Exhibit 4.4(c)-5
Page 133 of 135
<PAGE>
ANNEX 1
Addresses
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
PFL Life Insurance Company
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-5335
Life Investors Insurance Company of America
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499-5335
The Guardian Life Insurance Company of America
201 Park Avenue South
New York, NY 10003
Annex 1-1
Page 134 of 135
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 23,067
<SECURITIES> 0
<RECEIVABLES> 27,207
<ALLOWANCES> 708
<INVENTORY> 146,709
<CURRENT-ASSETS> 202,504
<PP&E> 123,454
<DEPRECIATION> 26,349
<TOTAL-ASSETS> 305,424
<CURRENT-LIABILITIES> 34,212
<BONDS> 90,000
0
0
<COMMON> 18,359
<OTHER-SE> 130,008
<TOTAL-LIABILITY-AND-EQUITY> 305,424
<SALES> 156,250
<TOTAL-REVENUES> 156,250
<CGS> 85,578
<TOTAL-COSTS> 152,530
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 587
<INCOME-PRETAX> 3,133
<INCOME-TAX> 1,255
<INCOME-CONTINUING> 1,878
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,878
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
