10-K
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FORM 10-K FOR EKCO GROUP, INC.
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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JANUARY 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NO. 1-7484
EKCO GROUP, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 11-2167167
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
98 SPIT BROOK ROAD 03062
NASHUA, NEW HAMPSHIRE (Zip Code)
(Address of principal executive offices)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 888-1212
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
Common Stock, $.01 par value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K. / /
The aggregate market value of the shares of voting capital stock held by
non-affiliates (without admitting that any person whose shares are not included
in determining such value is an affiliate) was approximately $115 million based
upon the closing price of the shares on the New York Stock Exchange Composite
Tape on March 27, 1995.
As of March 27, 1995, there were issued and outstanding 18,281,854 shares
of Common Stock of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for the fiscal
year ended January 1, 1995: Parts I and II. Portions of the registrant's
definitive proxy statement with respect to the Annual Meeting of Stockholders to
be held on May 25, 1995: Part III.
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Part I
Item 1. BUSINESS
General
Ekco Group, Inc. (the "Company") is a leading United States
manufacturer and marketer of broad lines of branded houseware products for
everyday home use. The Company is the leading United States supplier of metal
bakeware, kitchen tools and gadgets and non-poisonous household pest control
products and is also a leading United States supplier of plastic storage
products (including crates, containers, baskets and office organizers), small
animal care and control products, and brushes, brooms and mops.
The Company broadly markets its products, primarily in the United
States and Canada, through mass merchandise stores, including Wal-Mart and Kmart
(the Company's largest customers), supermarkets, hardware stores, drug stores,
specialty stores, home centers and other retail outlets.
The current business of the Company, a Delaware corporation organized
in 1968, was established in 1987 through the purchase of Ekco Housewares, Inc.
and subsequently through additional acquisitions of leading consumer product
businesses and product lines and through internal development. The following
table lists the principal businesses and product categories which the Company
has acquired or developed beginning in 1987:
Ekco Housewares, Inc. - bakeware and kitchen tools and gadgets
(acquired October 1987)
Woodstream Corporation - non-poisonous and low-toxic pest control
products (acquired January 1989)
Non-poisonous pest control product line of McGill Metal Products
Company (acquired December 1989)
Animal care product line of Beacon Industries, Inc.
(acquired December 1991)
Frem Corporation - molded plastic houseware and office products
(acquired January 1992)
Kellogg Brush Manufacturing Co. and subsidiaries - brushes, brooms and
mops (acquired April 1993)
B. VIA International Housewares, Inc. Upscale kitchen tools, gadgets,
bakeware and other housewares items (developed beginning in the spring
of 1994 for product introduction beginning in January 1995)
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As used herein, unless the context requires otherwise, the "Company"
and the "registrant" refer to Ekco Group, Inc. and its subsidiaries.
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The Company's strategy is to increase shareholder value by
strengthening the Company's position as a major supplier of household consumer
products through new product introductions, new market extensions, distribution
expansion, and acquisition of, and alliances with, companies whose product lines
will expand the Company's business, if and when such opportunities arise. In
addition, the Company has continued and expanded the reorganization and
restructuring work which it began in the 1993 fiscal year to reduce costs and
improve productivity and efficiency. (See Note 18 of Notes to Consolidated
Financial Statements appearing in Exhibit 13 hereto, incorporated herein by
reference, for information regarding the Company's reorganization and
restructuring efforts).
The Company operates primarily in a single industry segment. See Note
15 of Notes to Consolidated Financial Statements appearing in Exhibit 13 hereto,
incorporated herein by reference, for industry and geographic area information.
Recent Developments
New Consolidated Division for Houseware Products - In connection with
its reorganization and restructuring, the Company announced in February 1995 the
combination of its principal housewares business units into a single operating
division which will, among other things, design, develop, manufacture or source,
market and distribute bakeware, kitchenware, broom, brush, mop and plastic
products. The new division consolidates the management and operations of Ekco
Housewares, Inc., Frem Corporation and Kellogg Brush Manufacturing Co. and
subsidiaries. The new division will facilitate a more unified marketing strategy
for the Company's housewares products, including the recently announced brand
strategy of utilizing the Ekco(R) trademark on all of the products of this new
division. Additionally, the division will maintain the strength of its other
brand names, including Baker's Secret(R) branded bakeware and Wright-Bernet(TM)
branded cleaning products.
Dividend Reinvestment and Stock Purchase Plan - In February 1995, the
Company declared an initial quarterly cash dividend of $0.02 per share payable
on April 3, 1995 to stockholders of record on March 17, 1995. At the same time,
the board of directors adopted the Ekco Group, Inc. Dividend Reinvestment and
Stock Purchase Plan to provide stockholders of record of the Company's common
stock, $.01 par value ("Common Stock") with a convenient and economical way to
purchase additional shares of Common Stock without fees of any kind by
automatically reinvesting all or a portion of their cash dividends and/or making
optional cash payments, whether or not their dividends are being reinvested.
Bank Credit Commitment - In March 1995, the Company received a
commitment for a $75 million bank credit facility which will replace existing
bank facilities of the Company, Ekco Housewares, Inc. and Frem Corporation. See
Note 6 of Notes to Consolidated Financial Statements appearing in Exhibit 13
hereto, incorporated herein by reference, for information regarding the
foregoing bank credit commitment.
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Products
Bakeware. The Company manufactures and markets a broad line of metal
bakeware, including non-stick coated bakeware marketed under the Baker's
Secret(R) and Baker's Secret PRO(TM) trademarks and uncoated bakeware marketed
under the Ekco trademark. The Company believes it is the leading supplier of
metal bakeware in the United States, based on trade association reports and the
reports of an independent national service providing sales and market share data
from supermarkets and mass merchandisers. The Company's bakeware products
include cookie sheets, muffin tins, brownie pans, loaf pans and similar items.
Bakeware products are distributed primarily through mass merchandisers,
supermarkets, discount drug chains and hardware stores. The Company emphasizes
value, quality, functionality, and, in the case of coated products, ease of
cleaning and release. These product features have contributed to the Company's
leading market share in bakeware. Company-sponsored research in a prior year
indicates consumer awareness levels of the Ekco and Baker's Secret brands of 90%
and 72%, respectively.
The Company regularly develops new products to take advantage of its
high consumer brand recognition and broad retail distribution. In 1994, the
Company introduced a pizza crisper marketed under the CrispIt(TM) trademark. In
January 1995, the Company introduced a bakeware merchandising system marketed
under the GridWorks(TM) brand name and specialty muffin pans marketed under the
Baker's Secret trademark. The Company's national corporate sponsorship of "The
Frugal Gourmet Cooks Italian II" program series of twenty-six shows on Public
Broadcasting Service began in September 1994 and will continue through 1997.
B. VIA International Housewares, Inc. (VIA!) has designed bakeware
product offerings for the upscale and specialty markets. These products were
announced in January 1995 and include cookie sheets, loaf pans and muffin tins
in heavy-gauge-coated and uncoated steel, terra cotta bakers, and "Entree One"
roasting pans, roasting racks, bakers, and broilers in heavy-gauge coated steel.
Kitchen Tools and Gadgets. The Company manufactures, purchases from
domestic and foreign sources and markets kitchen tools and gadgets under the
Ekco and Best Results Professional(TM) trademarks. Based upon management's
experience in the markets in which it has marketed products over a period of
years, the Company believes it is the leading supplier of kitchen tools and
gadgets in the United States. The Company markets more than 1,000 products in
its kitchen tools and gadgets line, including multiple colors of the same item
and various packaging combinations. Kitchen tools include metal, plastic and
wooden spoons, spatulas, serving forks, ladles and other cooking accessories.
Gadgets include peelers, corkscrews, whisks, can openers, bottle openers, and
similar items. The Company also markets stainless steel and carbon steel cutlery
and stainless steel flatware, mixing bowls and colanders.
Kitchen tools and gadgets are distributed primarily through grocery
stores and mass merchandisers, as well as hardware, drug, and specialty stores.
The Company's broad product lines, brand name recognition, quality,
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and service have enabled it to obtain what management believes is the leading
market position in these products.
The Company frequently updates its kitchen tool and gadget line and
introduces new items. In 1994, the Company introduced a custom-designed pizza
cutter and a line of plastic cutting boards with bright colored handles. The
Company also implemented two merchandising display programs, Zip Strips, strips
that fold for packing on which 12 products hang when attached to store shelving,
and Power Pockets, a pre-assembled display of the retailer's choice which fits
inside a wire display or serves as a free-standing countertop display. In
January 1995, the Company introduced its redesigned lines of thermometers, range
pans, melamine tools, magnets and bag clips.
VIA!'s kitchen tool and gadget product offerings announced in January
1995 include Italiano cooking items, including a dual-purpose pizza server and
cutting wheel, dual-purpose pot drainer and pasta gauge, and garlic and onion
storage jars; and working tools, including a whisk with an ergonomic grip,
wooden spoons with contrasting handles, a sculptural chrome banana ripener, and
a spoon rest/tea bag holder/utility dish.
Molded Plastic Products. The Company manufactures and markets injection
molded plastic housewares, office and juvenile products. The Company's
housewares products include an array of storage crates and bins, laundry and
storage baskets, organizers, wastebaskets, and utility caddies. Office products
include file crates, desk-top organizers, file caddies and carts. Juvenile
products include two-pocket trays, activity desks, and organizing bins and
baskets. The Company emphasizes functionality, as well as fashion and color.
The Company's molded plastic products are distributed through mass
merchandisers, as well as large specialty retailers, such as office supply
stores, drug stores and warehouse clubs. The Company currently offers more than
60 products in 8 distinctive colors. The Company develops new products
internally and works interactively with retailers on design concepts. In 1994,
the Company introduced swivel-handled baskets and tubs, heavy-duty stacking bins
and a juvenile activity desk. In January 1995, the Company introduced a storage
locker with a lift out tray, a flip-top storage crate for files, and a smaller
(12 gallon) carry-all box. Based upon management's experience in the markets in
which the Company has marketed products over a period of years, the Company
believes it is a leading manufacturer of plastic housewares and office products.
Brushes, Brooms and Mops. The Company manufactures and markets a broad
line of brushes, brooms and mops, including household cleaning brushes, brooms
and mops, indoor and outdoor specialty cleaning brushes and janitorial cleaning
implements (brushes and mops).
The Company markets these products into distinct retail channels,
thereby covering most, if not all, of the market for brushes, brooms and mops.
The Company's broom and brush products are marketed to mass merchandisers, such
as Wal-Mart and Kmart, and supermarkets; products are marketed under the
Wright-Bernet brand name to specialty hardware retailers such as Home Depot,
ServiStar and Lowe's Home Centers; and the Company's mop products are marketed
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to janitorial supply and professional cleaning companies. In 1994, the Company
introduced a dish scrubber with a detergent reservoir, a multi-use hand-held
squeegee and a washable feather duster. In January 1995, the Company introduced
a line of indoor and outdoor Dirt Buster(TM) push brooms and a line of
professional-grade janitorial dust and wet mops. Based upon management's
experience in the markets in which the Company has marketed products over a
period of years, the Company believes that it is a leading manufacturer of
smallware products (primarily consisting of brushes for household, kitchen and
personal use and other specialty brushes).
Non-Poisonous and Household Pest Control and Small Animal Care and
Control Products. The Company manufactures and markets.on-poisonous and
low-toxic household pest control products under the Victor(R) and Havahart(R)
trademarks and small animal care and control products under the Havahart and
Beacon(R) trademarks. The Company's products include spring-action rodent traps
and glue-based rodent and insect traps marketed under the Victor trademark, as
well as live animal cage traps marketed under the Havahart trademark which are
used to control garden pests and other nuisance animals, such as raccoons.
The Company's pest control and animal care products are marketed to
mass merchandisers, hardware, grocery, drug, and variety stores, agricultural
centers and farm stores, home centers and professional pest control companies.
Based upon management's experience in the markets in which the Company has
marketed products over a period of years, the Company believes it is the leading
supplier of rodent traps and live animal cage traps in the United States. In
1994, the Company introduced a line of dog crates and further expanded its
offering of point-of-sale merchandising displays. In January 1995, the Company
introduced a no-see, no-touch, pre-set and pre-baited mouse trap.
Marketing
The Company markets its product lines directly through its own sales
force to major retail stores and through distributors and manufacturer
representatives. Products are primarily purchased from the Company by businesses
located in the United States and Canada, including mass merchandising stores,
supermarkets, hardware stores, drug and variety stores, office "superstores" and
other retail outlets and by wholesalers who resell to such retailers. The
Company's products are marketed outside the United States and Canada through
distributors and agents who provide marketing support to grocery stores, mass
merchandising stores, specialty stores and department stores. The Company's
agreements with its distributors and agents are generally terminable upon 30
days notice and are not deemed to be material by the Company. One customer,
Wal-Mart, accounted for more than 10% of net revenue for Fiscal 1994.
Trademarks and Patents
The Company believes that its Ekco trademark, as well as its trademarks
Baker's Secret, Baker's Secret PRO, Best Results Professional, Havahart, Victor,
Beacon, Wright-Bernet and Woodstream, are significant to its competitive
position. The Company holds a number of patents on various
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inventions, none of which is believed to be material to the Company's business.
Seasonal Variations
Many of the Company's product categories are affected by seasonal
consumer purchasing trends, including holiday cooking and baking, back-to-school
shopping and spring and fall cleaning. Historically, the Company's revenues in
the last half of the fiscal year have been greater than in the first half. See
Note 17 of Notes to Consolidated Financial Statements appearing in Exhibit 13
hereto, incorporated herein by reference, for information regarding quarterly
results of operations.
Competition
The Company competes with a significant number of companies, some of
which are larger and have significantly greater resources than the Company. The
primary competitive factors in selling the Company's products to consumers are
brand name recognition, value, quality and availability at retail. Primary
competitive factors with respect to selling such products to retailers are brand
reputation, breadth of product line, retailer support and service, and price.
The Company competes principally: in the sale of metal bakeware with three
companies in the United States and with three companies in Canada; in the sale
of kitchen tools and gadgets with a significant number of large and small
domestic and foreign suppliers and marketers, most of whom primarily import
products from the Far East; in the sale of molded plastic houseware and office
products with a significant number of domestic and foreign manufacturers; in the
sale of brushes, brooms and mops with four companies in the United States; in
the sale of non- poisonous and low-toxic pest control products with domestic and
imported products in both the United States and Canada and, with respect to
non-poisonous products, products and services using chemical treatment for pest
control; and in the sale of live animal cages, with four companies in the United
States.
Raw Materials
The Company purchases raw materials for its products from a number of
suppliers, including several major steel companies, a number of plastic resin
suppliers and wood suppliers. The Company believes that the raw materials used
by it are available from multiple suppliers and that the loss of any of its
vendors would not have a material adverse effect on the Company. The Company
also purchases components and complete products, primarily for kitchen tools and
gadgets, from several domestic and foreign suppliers. The Company believes that
these items are available from other suppliers and that the loss of any one of
its suppliers would not have a material adverse effect on the Company.
Backlog
Information as to backlog is not material to an understanding of the
Company's business. Much of the Company's sales volume results from short
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lead-time customer reorders. The Company is generally able to fill orders and
reorders from inventory with respect to products it manufactures and
purchases. With respect to the products which it manufactures, the Company's
production capacity and its ability to adjust production levels generally enable
the Company to meet increases in customers' orders that cannot be filled from
inventory.
Employees
As of January 1, 1995, the Company employed 1,449 persons in the United
States, of whom 514 were represented under collective bargaining agreements
which expire on dates ranging from September 1995 to October 1997. The Company
also employed 32 persons in Canada as of such date, of whom 13 were represented
under a collective bargaining agreement which expires in July 1997. The Company
considers its employee relations to be satisfactory.
Item 2. PROPERTIES
As of January 1, 1995, the Company owned or leased for use in its
business the principal operating facilities set forth in the table below. The
Company's executive offices are located in Nashua, New Hampshire in a leased
facility occupying approximately 8,000 square feet. In addition to the
properties listed in the table below, the Company leases additional warehouse
space to fulfill its needs. The Company considers its principal operating
properties generally suitable and adequate for its purposes for the foreseeable
future. Substantially all of the Company's property is subject to security
interests granted in connection with the Company's bank credit agreements. For
information regarding the terms of such security interests, see Note 6 of Notes
to Consolidated Financial Statements. In addition to the properties listed in
the table, as of January 1, 1995 the Company owned approximately 976,000 square
feet of floor space which is being held for sale or lease. Approximately 36% of
such space was under lease to third parties as of that date.
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Principal Operating Facilities
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Approximate Owned or Lease
Description of Property Location Square Footage Leased Expires
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Manufacturing, warehousing and Lititz, Pennsylvania 366,000 Owned N/A
office facilities for pest
control and animal care products
Manufacturing, warehousing, office Easthampton, Massachusetts 326,000 Owned N/A
and distribution facilities for
brushes, brooms and mops
Manufacturing, warehousing and Massillon, Ohio 244,000 Owned N/A
distribution center for bakeware
Warehousing and distribution cen- Franklin Park, Illinois 190,000 Leased 01/30/99
ter for kitchen tools and gadgets
and adjacent office facilities
Manufacturing, warehousing, dis- Worcester, Massachusetts 170,000 Owned N/A
tribution and office facilities for
injection-molded plastic products
Manufacturing and warehousing Phoenix, Arizona 104,000 Owned N/A
facilities for injection-molded
plastic products
Manufacturing, warehousing, office Hamilton, Ohio 100,000 Owned N/A
and distribution facilities for
brushes, brooms and mops
Manufacturing, warehousing, office Nashville, Tennessee 42,000 Leased 12/31/95
and distribution facility for in-
stitutional mop and broom products
Offices and Warehousing facilities Niagara Falls, Ontario 39,000 Owned N/A
for products for sale in Canada Canada
Manufacturing and warehousing Obregon, Sonora 27,000 Leased 12/23/95
facilities for kitchen tools Mexico
and gadgets
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Item 3. LEGAL PROCEEDINGS
Environmental Regulation and Claims
From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters relating to the
generation or handling of hazardous substances by the Company or its
predecessors and has incurred obligations for investigations or remedial actions
with respect to certain of such matters. While the Company does not believe that
any such claims asserted or obligations incurred to date will result in a
material adverse effect upon the Company's financial position, results of
operations or liquidity, the Company is aware that, with respect to its
operating facilities at Massillon, Ohio (more fully described below), Hamilton,
Ohio and Easthampton, Massachusetts (more fully described in Note 14 of Notes to
Consolidated Financial Statements appearing in Exhibit 13 and incorporated
herein by reference), Hudson, New Hampshire and Lititz, Pennsylvania, hazardous
substances and oil have been detected and that additional investigation will be,
and remedial action will or may be, required. Operations at these and other
facilities currently or previously owned or leased by the Company utilize, or in
the past have utilized, hazardous substances. There can be no assurance that
activities at these or any other facilities or any future facilities owned or
operated by the Company may not result in additional environmental claims being
asserted against the Company or additional investigations or remedial actions
being required.
Prior to the Company's acquisition of Ekco Housewares ("Housewares") in
1987, Housewares' Massillon, Ohio steel bakeware manufacturing facility was the
subject of administrative proceedings before the United States Environmental
Protection Agency by issuance of an administrative complaint alleging violations
of the Resource Conservation and Recovery Act ("RCRA") resulting from operation
of a wastewater lagoon at the facility. American Home Products Corporation
("AHP"), a former owner of Housewares, pursuant to an indemnity agreement (the
"Indemnity Agreement") with Housewares relating to acts occurring prior to
September 7, 1984, assumed the costs of remediation measures in addition to the
defense of the administrative proceedings with federal and state environmental
protection agencies, as well as preparation of closure plans and other plans
called for as a result of these proceedings. While AHP has acknowledged its full
responsibility under the Indemnity Agreement with respect to the wastewater
lagoon, it has asserted that Housewares should contribute to the cost of a
remediation study and certain remediation measures to the extent that Housewares
exacerbated contamination at the facility since September 7, 1984. Housewares
has denied that it has exacerbated contamination at the facility since such
date. AHP and Housewares have agreed to allocate such costs in proportion to
their respective responsibilities based on the results of an engineering study
but in no event will Housewares' share with respect to the wastewater lagoon
exceed the lesser of 25% of the total cost or $750,000. The Company is unable to
determine to what extent, if any, it will be responsible to contribute to such
costs but the Company does not believe that any such contribution that it may be
required to make will have a material adverse effect on its financial position,
results of operations or liquidity.
In June 1992, the United States filed an action in the U.S. District
Court for the Northern District of Ohio against Housewares seeking penalties and
injunctive relief and alleging violations as a result of an alleged failure to
provide certain closure and post-closure financial assurances with respect to
the Massillon, Ohio site. Pursuant to the Indemnity Agreement and a confirmatory
letter from AHP to Housewares on December 19, 1988 (the
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"Indemnity Documents"), AHP conducted and controlled all matters relating to
such financial assurances and the defense of the action filed in June 1992. In
January 1994, the court entered judgment against Housewares in the amount of
$4.6 million in the lawsuit. AHP has filed a notice of appeal on behalf of
Housewares. In March 1994, AHP informed Housewares that, should it be
unsuccessful in its appeal, it would attempt to hold Housewares responsible for
a portion of the penalties (approximately $600,000, exclusive of interest)
arising from Housewares' alleged delay in furnishing certain information to the
Ohio Environmental Protection Agency. In March 1994, Housewares notified AHP
that Housewares denies all liability and that AHP is liable for all liabilities,
losses, costs or damages arising from the lawsuit pursuant to the Indemnity
Documents. The Company is unable to predict the result of the appeal or AHP's
attempts to obtain contribution from Housewares, but the Company does not
believe that any such liability will have a material adverse effect on its
financial position, results of operations or liquidity.
Litigation
From time to time, the Company is a party to litigation and other legal
proceedings, including product liability claims. In many cases, claims are
partially or fully covered by insurance. Although the outcome of such
proceedings cannot be determined with certainty, the Company believes that the
final outcome of such proceedings will not have a material adverse effect on the
Company, after taking into account proceeds of available insurance.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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EXECUTIVE OFFICERS OF THE REGISTRANT
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Name Age Office Held
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Robert Stein 55 President and Chief Executive Officer, February 1986 to
present; Chief Financial Officer, July 1980 to July 1993.
Jeffrey A. Weinstein 44 Executive Vice President, April 1985 to present; Secretary,
February 1988 to present; General Counsel, October 1978 to
present.
Donato A. DeNovellis 50 Executive Vice President, October 1994 to present; Chief
Financial Officer, July 1993 to present. Prior to joining
the Company from 1980 to 1992, Mr. DeNovellis served Xerox
Corporation (worldwide document processing servicing company)
and its subsidiary companies in a number of capacities, including
the following companies and positions: Crum & Forster, Inc.
(property/casualty insurance holding company), Managing
Director from May 1992 to October 1992, and Executive Vice
President and Chief Administrative Officer from April 1991
to May 1992; and Xerox Financial Services (financial
services company), Senior Vice President, Operations
Analysis, from January 1990 to April 1991.
Richard J. Corbin 56 Executive Vice President, Marketing and Sales, October 1994 to
present; President, Ekco Housewares, Inc., May 1994 to present.
Prior to joining the Company, Mr. Corbin served as President
and Chief Executive Officer of Thermos Systems, Inc. (food
delivery systems manufacturer), March 1993 to February 1994;
and President and Chief Executive Officer of Forster
Manufacturing Co., Inc. (consumer products manufacturer)
from February 1985 to March 1993.
Neil R. Gordon 47 Treasurer, May 1987 to present.
Brian R. McQuesten 45 Controller, May 1987 to present.
The executive officers of the Company are elected annually by the
Board of Directors and serve, subject to the provisions of any employment
agreement between the executive and the Company, until their respective
successors are chosen and qualified or until their earlier resignation or
removal.
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Part II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information set forth in the section entitled "Common Stock Price
Range and Dividends" appearing in Exhibit 13 hereto is incorporated herein by
reference.
Item 6. SELECTED FINANCIAL DATA
The information set forth in the section entitled "Selected
Consolidated Financial Data" appearing in Exhibit 13 hereto is incorporated
herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The information set forth in the section entitled "Management's
Discussion and Analysis of Results of Operations and Financial Condition"
appearing in Exhibit 13 hereto is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth in the consolidated financial statements and
notes thereto (including the note which sets forth certain supplementary
information) and the Report of Independent Auditors appearing in Exhibit 13
hereto are incorporated herein by reference. Reference is also made to Item 14
with respect to Financial Statement Schedules filed herewith.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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Part III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a) Directors - The information set forth in the section entitled
"Election of Directors" appearing in the Company's definitive proxy statement
with respect to the 1995 Annual Meeting of Stockholders is incorporated herein
by reference.
b) Executive Officers - See "Executive Officers of the Registrant"
appearing in Part I above.
Item 11. EXECUTIVE COMPENSATION
The information set forth in the sections entitled "Compensation of
Directors" and "Compensation of Executive Officers" (except for the information
under the captions "Report of the Compensation Committee on Executive
Compensation" and "Performance Graph") appearing in the Company's definitive
proxy statement with respect to the 1995 Annual Meeting of Stockholders is
incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the section entitled "Security Ownership
of Certain Beneficial Owners and Management" appearing in the Company's
definitive proxy statement with respect to the 1995 Annual Meeting of
Stockholders is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth in the section entitled "Certain
Relationships and Related Transactions" appearing in the Company's definitive
proxy statement with respect to the 1995 Annual Meeting of Stockholders is
incorporated herein by reference.
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Part IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
Page Number in
Exhibit 13
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(a) 1. Financial Statements:
Report of independent auditors....................................... 36
Consolidated balance sheets at January
1, 1995 and January 2, 1994.......................................... 9
Consolidated statements of operations for
the fiscal years ended January 1, 1995,
January 2, 1994 and January 3, 1993.................................. 10
Consolidated statements of stockholders' equity for the fiscal
years ended January 1, 1995, January 2, 1994 and
January 3, 1993...................................................... 11
Consolidated statements of cash flows
for the fiscal years ended January 1, 1995,
January 2, 1994 and January 3, 1993.................................. 13
Notes to consolidated financial
statements........................................................... 14
Page Number in
Form 10-K
--------------
Report of independent auditors....................................... 16
2. Financial Statement Schedules:
III Condensed Financial Information
of the Registrant................................................. 17
VIII Valuation and Qualifying Accounts............................... 21
Schedules other than those listed above have been omitted because they are not
required, not applicable or the required information is furnished in the
consolidated financial statements or notes thereto.
3. Exhibits: (See listing of Executive Compensation Plans and
Arrangements beginning on page 22. See Index to Exhibits
beginning on page 24.)
(b) Reports on Form 8-K -- None.
14
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 31, 1995.
EKCO GROUP, INC.
By: /s/ ROBERT STEIN
-----------------------------
Robert Stein, President and Chief
Executive Officer
(Principal Executive Officer)
By: /s/ DONATO A. DeNOVELLIS
-----------------------------
Donato A. DeNovellis, Executive Vice
President, Finance and Administration,
and Chief Financial Officer
(Principal Financial Officer)
By: /s/ BRIAN R. McQUESTEN
-----------------------------
Brian R. McQuesten, Controller
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ ANDREW D. DUNN Director March 31, 1995
--------------------------
Andrew D. Dunn
/s/ T. MICHAEL LONG Director March 31, 1995
--------------------------
T. Michael Long
/s/ STUART B. ROSS Director March 31, 1995
--------------------------
Stuart B. Ross
/s/ BILL W. SORENSON Director March 31, 1995
--------------------------
Bill W. Sorenson
/s/ HERBERT M. STEIN Director March 31, 1995
--------------------------
Herbert M. Stein
/s/ ROBERT STEIN Director March 31, 1995
--------------------------
Robert Stein
/s/ JEFFREY A. WEINSTEIN Director March 31, 1995
--------------------------
Jeffrey A. Weinstein
15
17
Independent Auditors' Report
The Board of Directors and Stockholders
Ekco Group, Inc.:
Under date of February 3, 1995, we reported on the consolidated balance sheets
of Ekco Group, Inc. and subsidiaries as of January 1, 1995 and January 2, 1994,
and the related consolidated statement of operations, stockholders' equity and
cash flows for each of the years in the three-year period ended January 1,
1995, as contained in the 1994 annual report to stockholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the fiscal year 1994. In connection with our
audits of the aforementioned consolidated financial statements, we also have
audited the related financial statement schedules listed on page 14 of this
report. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth herein.
In 1993, the Company changed its method of accounting for income taxes,
post-retirement benefits other than pensions and post-employment benefits.
KPMG Peat Marwick LLP
Boston, Massachusetts
March 31, 1995
16
18
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
------------------------------------------------------------------------------------------------------------------
JANUARY 1, 1995 JANUARY 2, 1994
--------------- ---------------
ASSETS
Current assets
Cash and cash equivalents $ - $ -
Prepaid expenses and other current assets 276 421
Deferred income taxes - 222
Investments pledged as collateral 3,600 4,350
------- -------
Total current assets 3,876 4,993
Furniture and equipment, net 103 101
Property held for sale or lease 6,032 6,620
Deferred income taxes 2,265 1,693
Other assets 2,072 7,142
Investment in and advances to subsidiaries 204,476 172,081
------- -------
Total assets $218,824 $192,630
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 3,643 $ 4,338
Current portion of long-term obligation - -
Accounts payable 762 525
Accrued expenses 4,293 4,306
Income taxes 2,616 4,953
Deferred income taxes 1,279 -
------- -------
Total current liabilities 12,593 14,122
------- -------
Long-term obligation, less current portion 22,223 6,920
------- -------
Non-interest bearing note payable to Ekco
Housewares, Inc. 26,100 26,100
------- -------
Other long-term liabilities 2,979 3,125
------- -------
7% Convertible Subordinated Note 22,000 22,000
------- -------
Series B ESOP Convertible Preferred
Stock, net; outstanding January 1, 1995,
1,568 shares; outstanding January 2, 1994,
1,645 shares, redeemable at $3.61 per share 3,096 2,686
------- -------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value - -
Common stock, $.01 par value; outstanding
January 1, 1995, 18,069 shares; outstanding
January 2, 1994, 17,844 shares 181 178
Capital in excess of par value 105,448 104,202
Retained earnings 27,172 15,749
Unearned compensation (2,968) (2,452)
------- -------
129,833 117,677
------- -------
Total liabilities and stockholders' equity $218,824 $192,630
======= =======
The accompanying notes are an integral part of the consolidated condensed
financial statements.
17
19
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT (CONTINUED)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
---------------------------------------------------------------------------------------------------------------
FISCAL YEARS ENDED
------------------
JANUARY 1, 1995 JANUARY 2, 1994 JANUARY 3, 1993
--------------- --------------- ---------------
Revenues
Investment income $ 224 $ 500 $ 445
Equity in earnings of subsidiaries 18,132 10,627 13,162
------ ------ ------
18,356 11,127 13,607
------ ------ ------
Costs and expenses:
General and administrative 4,070 3,374 4,203
Restructuring/reorganization and excess
facilities charge - 3,631 -
Interest expense 3,103 2,508 977
------ ------ ------
7,173 9,513 5,180
------ ------ ------
Income before income taxes and
cumulative effect of accounting changes 11,183 1,614 8,427
Income taxes (credit) (240) (645) (220)
------ ------ ------
Income before cumulative effect of
accounting changes 11,423 2,259 8,647
Cumulative effect of changes in method
of accounting for post-retirement
and post-employment benefits (net of
income taxes of $1,954) - (3,247) -
------ ------ ------
Net income (loss) $11,423 $ (988) $ 8,647
====== ====== ======
Per share data
Earnings before cumulative effect of
accounting changes $.57 $ .11 $.46
Cumulative effect of accounting changes - (.19) -
--- ---- ---
Net income (loss) $.57 $(.08) $.46
=== ==== ===
Weighted average number of shares used
in computation of per share data
Earnings before cumulative effect
of accounting changes 20,115 19,999 18,785
Cumulative effect of accounting
changes - 17,148 -
The accompanying notes are an integral part of the consolidated condensed
financial statements.
18
20
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT (CONTINUED)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
FISCAL YEARS ENDED
------------------
JANUARY 1, JANUARY 2, JANUARY 3,
---------- ---------- ----------
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
Net income (loss) $ 11,423 $ (988) $ 8,647
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operations:
Depreciation and amortization 639 643 362
Amortization of unearned compensation 1,120 1,129 1,160
Equity in earnings of subsidiaries (18,132) (10,627) (13,162)
Deferred income taxes 929 201 4,854
Cumulative effect of accounting change - 3,247 -
Other (134) 1,085 800
Change in certain assets and liabilities
affecting cash provided by (used in)
operations:
Other assets 5,069 (1,750) (470)
Accounts payable and accrued expenses 358 879 6
Income taxes payable (2,337) 1,075 561
------ ------- -------
Net cash provided by (used) in operations (1,065) (5,106) 2,758
------ ------- -------
Cash flows from investing activities:
Proceeds from sale of property and equipment - 42 30
Capital expenditures (181) (79) (1,226)
Investment in and advances to subsidiaries (13,896) (11,882) (15,982)
------- ------- -------
Net cash used in investing activities (14,077) (11,919) (17,178)
------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of long-term
obligations 22,223 - 20,863
Proceeds from issuance of treasury stock - - 7,587
Investments pledged as collateral - 750 360
Purchase of common stock for employee stock
ownership plan (950) - -
Payment of notes and long-term obligation (7,615) (993) (534)
Other 1,484 913 1,096
------ ------- -------
Net cash provided by financing
activities 15,142 670 29,372
------- ------- -------
Net increase (decrease) in cash and
cash equivalents - (16,355) 14,952
Cash and cash equivalents at beginning
of year - 16,355 1,403
------- ------- -------
Cash and cash equivalents at end of year $ - $ - $ 16,355
======= ======= =======
The accompanying notes are an integral part of the consolidated condensed
financial statements.
19
21
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT (CONTINUED)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND OTHER MATTERS:
The condensed consolidated financial statements included herein
have been prepared by the Company pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is
suggested that these condensed consolidated financial statements be read
in conjunction with the financial statements and the notes included in
this Form 10-K.
The consolidated condensed financial statements include the
accounts of the Company and its subsidiaries all of which are reported
under the equity method of accounting. The accompanying condensed
financial statements include the fiscal years ended January 1, 1995
("Fiscal 1994"), January 2, 1994 ("Fiscal 1993") and January 3, 1993
("Fiscal 1992").
Equity in earnings of the Company's subsidiaries is presented
after elimination of management fees payable to the Company, for Fiscal
1994 $4.3 million, for Fiscal 1993 $4.2 million and for Fiscal 1992 $4.1
million and interest payable of $3.3 million for Fiscal 1994.
Under the terms of the Ekco Housewares' 12.70% Notes, the amount
which may be paid to the Company by Ekco Housewares is limited in
accordance with a formula, which is based primarily on the consolidated
net revenues and net income of Ekco Housewares, plus reimbursement for
expenses and amounts due pursuant to a tax sharing arrangement. At
January 1, 1995, the amount payable to the Company by Ekco Housewares was
approximately $23.7 million.
During Fiscal 1994, Fiscal 1993, and Fiscal 1992, no dividends
were paid to the Company by its subsidiaries.
2. Income taxes:
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or
settled. The effect, if any, on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date.
20
22
EKCO GROUP, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(AMOUNTS IN THOUSANDS)
-----------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-----------------------------------------------------------------------------------------------------------------------------------
--ADDITIONS TO RESERVES-- --DEDUCTIONS FROM RESERVES--
BALANCE AT ADDITIONS CHARGED TO SETTLEMENTS BALANCE
BEGINNING CHARGED TO OTHER OR WRITE- AT CLOSE
DESCRIPTION OF PERIOD INCOME OR LOSS ACCOUNTS PAYMENTS OFFS OF PERIOD
-----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 1, 1995:
Allowance for doubtful
accounts $ 1,758 $ 247 $ - $ - $ 266 $ 1,739
Provisions related to
restructuring/reorganization
and excess facilities cost 8,323 - - 5,018 - 3,305
------ ------- ---- ------ ------ -------
$10,081 $ 247 $ - $5,018 $ 266 $ 5,044
====== ======= ==== ====== ====== =======
YEAR ENDED JANUARY 2, 1994:
Allowance for doubtful
accounts $ 1,607 $ 449 $375 (1) $ - $ 673 $ 1,758
Provisions related to
restructuring/reorganization
and excess facilities cost - 11,000 - - 2,677 8,323
------ ------- ---- ------ ------ -------
$ 1,607 $11,449 $375 $ - $3,350 $10,081
====== ======= ==== ====== ====== =======
YEAR ENDED JANUARY 3, 1993:
Allowance for doubtful
accounts $ 1,429 $ 1,077 $162 (2) $ - $1,061 $ 1,607
Reserves related to plant
consolidations 1,771 - - 1,715 - 56
------ ------- ---- ----- ------ -------
$ 3,200 $ 1,077 $162 $1,715 $1,061 1,663
====== ======= ==== ===== ====== =======
------------------------------------------------------------------------------
(1) Included in valuation of assets of Kellogg Brush Manufacturing Co.
acquired April 1, 1993.
(2) Included in valuation of assets of Frem Corporation purchased January 8,
1992.
21
23
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Name of Plan or Arrangement and Location
1(a) 1984 Restricted Stock Purchase Plan, as amended --Registration
Statement No. 33-42785, Exhibit 10.1(a) to Form 10-K for the year
ended December 29, 1991.
1(b) Form of Restricted Stock Purchase Agreement dated October 3, 1990 with
each of Robert Stein, Jeffrey A. Weinstein, Ronald N. Fox, two other
executive officers of and four other employees of the Company --
Exhibit 10.1(b) to Form 10-K for the year ended December 29, 1991.
1(c) Restricted Stock Purchase Agreement dated as of October 12, 1993 with
Donato A. DeNovellis -- Exhibit 10.1(c) to Form 10-K for the year
ended January 2, 1994.
2(a) 1985 Restricted Stock Purchase Plan, as amended -- Registration
Statement No. 33-42785, Exhibit 10.3(a) to Form 10-K for the year
ended December 29, 1991.
2(b) Form of Restricted Stock Purchase Agreement dated October 3, 1990 with
each of Robert Stein, Jeffrey A. Weinstein, Ronald N. Fox, two other
executive officers and four other employees of the Company -- Exhibit
10.3(b) to Form 10-K for the year ended December 29, 1991.
2(c) Form of Restricted Stock Purchase Agreement dated January 1, 1995 with
each of Robert Stein, Jeffrey A. Weinstein, Donato A. DeNovellis,
Ronald N. Fox, Richard J. Corbin and two other executive officers of
the Company -- Exhibit 10.2(c).
4(a) 1987 Stock Option Plan, as amended -- Registration Statement No.
33-50802, Exhibit 10.11(a) to Form 10-K for the year ended December
29, 1991.
4(b) Forms of Non-Qualified Stock Option and Repurchase Agreements dated
September 8, 1987 and amendment thereto with each of Robert Stein,
Jeffrey A. Weinstein, two other executive officers and one other
officer of the Company; as of June 22, 1988 and amendment thereto with
each of Robert Stein, Jeffrey A. Weinstein and two other executive
officers of the Company; as of January 18, 1990 and amendment thereto
with each of Robert Stein, Jeffrey A. Weinstein, Ronald N. Fox and two
other executive officers of the Company; as of January 13, 1992 with
each of Robert Stein, Jeffrey A. Weinstein, Ronald N. Fox and two
other executive officers and one other employee of the Company; as of
January 19, 1993 with each of Robert Stein, Jeffrey A. Weinstein,
Ronald N. Fox and two other executive officers of the Company; as of
July 14, 1993 with Donato A. DeNovellis; as of January 25, 1994 with
each of Robert Stein, Jeffrey A. Weinstein, Donato A. DeNovellis,
Ronald N. Fox and two other executive officers of the Company; and as
of January 1, 1995 with each of Robert Stein, Jeffrey A. Weinstein,
Donato A. DeNovellis,
22
24
Richard J. Corbin, Ronald N. Fox and two other executive officers of
the Company -- Exhibit 10.12(b) to Form 10-K for the year ended
January 3, 1988 and Exhibit 10.11(b)(2) to Form 10-K for the year
ended December 29, 1991; Exhibit 10.12(c) to Form 10-K for the year
ended January 1, 1989 and Exhibit 10.11(c)(2) to Form 10-K for the
year ended December 29, 1991; Exhibit 10.13(d) to Form 10-K for the
year ended December 31, 1989 and Exhibit 10.11(e)(2) to Form 10-K for
the year ended December 29, 1991; Exhibit 10.3(f) to Form 10-K for the
year ended January 2, 1994; and Exhibit 10.13(f)(2).
4(c) Form of Incentive Stock Option Agreement with Ronald N. Fox and
Richard J. Corbin dated as of October 28, 1988 and May 9, 1994 ,
respectively -- Exhibit 10.3(d).
5(a) Employment Agreement with Robert Stein dated as of April 18, 1994 --
Exhibit 10.7.
5(b) Employment Agreement with Jeffrey A. Weinstein dated as of April 18,
1994 -- Exhibit 10.8.
5(c) Employment Agreement with Donato A. DeNovellis dated as of April 15,
1994 -- Exhibit 10.9.
5(d) Employment Agreement between Richard J. Corbin and Ekco Housewares,
Inc. dated as of May 20, 1994 -- Exhibit 10.10.
5(e) Amended and Restatement Employment Agreement with Ronald N. Fox and
Frem Corporation dated as of February 12, 1995 -- Exhibit 10.11.
6 Ekco Group, Inc. Incentive Compensation Plan for Executive Employees
of Ekco Group, Inc. and Subsidiaries and 1994 amendment thereto dated
as of October 25, 1994 -- Exhibit 10.9 to Form 10-K for the year ended
December 29, 1991 and Exhibit 10.12(b), respectively.
7 1995 Restatement of Incentive Compensation Plan for Executive
Employees of Ekco Group, Inc. and its Subsidiaries -- Exhibit 10.13.
8 Ekco Group, Inc. Supplemental Executive Retirement Plan dated as of
July 1, 1992 -- Exhibit 10.14 to Form 10-K for the year ended January
2, 1994.
9 Form of Split Dollar Agreement dated as of October 1, 1992 with Robert
Stein, Jeffrey A. Weinstein, Ronald N. Fox and two other executive
officers of the Company, and dated as of October 1, 1993 with Donato
A. DeNovellis -- Exhibit 10.14 to Form 10-K for the year ended January
2, 1994.
23
25
INDEX TO EXHIBITS
Exhibit
Number* Exhibit Description
------ -------------------
3.1(a) Restated Certificate of Incorporation dated February 17, 1987, as amended (incorporated herein by reference to Exhibit
3.1(a) to Form 10-K for the year ended December 31, 1989).
3.1(b) Certificate of Designations of Series A Junior Participating Preferred Stock, originally filed as Exhibits 3.1(b) and
4.2(c) to Form 10-K for the year ended December 28, 1986 (included in Exhibit 4.2(a)).
3.1(c) Certificate of Designations of Series B ESOP Convertible Preferred Stock, originally filed as Exhibit 3.1(d) to Form
10-K for the year ended January 1, 1989.
3.2 By-Laws as currently in effect (incorporated herein by reference to Exhibit 3.2 to Form 10-K for the year ended
December 29, 1991).
4.1 Rights Agreement dated as of March 27, 1987, including Form of Rights Certificate and Form of Certificate of
Designations of Series A Junior participating Preferred Stock, originally filed as Exhibit 4.2(c) to Form 10-K for the
year ended December 28, 1986; First Amendment dated as of June 9, 1988, originally filed as Exhibit 4.2(a)(2) to Form
10-K for the year ended January 1, 1989; [Second] Amendment dated as of January 10, 1989, originally filed as Exhibit
4.2(a)(3) to Form 10-K for the year ended January 1, 1989; Third Amendment dated as of March 23, 1992, originally filed
as Exhibit 8 to Form 8 Amendment No. 2 to Form 8-A dated June 30, 1992; and Fourth Amendment dated as of December 22,
1992, originally filed as Exhibit 9 to Form 8 Amendment No. 3 dated January 8, 1993 to Form 8-A (incorporated herein by
reference to Exhibit 4.2 to Form 10-K for the year ended January 3, 1993).
4.2 Form of Purchase Agreement dated as of December 1, 1988 between Ekco Housewares, Inc. and each of Teachers Insurance
and Annuity Association of America, The Mutual Life Insurance Company of New York, MONY Life Insurance Company of
America, MONY Legacy Life Insurance Company, Kemper Investors Life Insurance Company and Federal Kemper Life Insurance
Company, as amended (incorporated herein by reference to Exhibit 4.1 to Form 8-K as of December 21, 1988, Exhibit
4.3(b) to Form 10-K for the year ended December 30, 1990, Exhibit 28.2 to Form 8-K as of January 8, 1992, and Exhibit
4.3(a) to Form 10-Q for the quarterly period ended July 4, 1993).
-----------------------------------------------------------------------------
* Numbered in accordance with Item 601 of Regulation S-K.
24
26
10.1(a) 1984 Restricted Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.1(a) to Form 10-K for
the year ended December 29, 1991).
10.1(b) Form of Restricted Stock Purchase Agreement dated October 3, 1990 with Robert Stein, Jeffrey A. Weinstein, Ronald N.
Fox, two other executive officers and four other employees of the Company, and Restricted Stock Purchase Agreement
dated as of October 12, 1993 with Donato A. DeNovellis (incorporated herein by reference to Exhibit 10.1(b) to Form 10-
K for the year ended December 29, 1991 and Exhibit 10.1(c) to Form 10-K for the year ended January 2, 1994,
respectively).
10.2(a) 1985 Restricted Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.3(a) to Form 10-K for
the year ended December 29, 1991).
10.2(b) Form of Restricted Stock Purchase Agreement dated October 3, 1990 with Robert Stein, Jeffrey A. Weinstein, Ronald N.
Fox, two other executive officers and four other employees of the Company (incorporated herein by reference to Exhibit
10.3(b) to Form 10-K for the year ended December 29, 1991).
10.2(c) Form of Restricted Stock Purchase Agreement dated January 1, 1995 with Robert Stein, Jeffrey A. Weinstein, Donato A.
DeNovellis, Richard J. Corbin and two other executive officers of the Company.
10.3(a) 1987 Stock Option Plan, as amended, and form of incentive stock option and non-qualified stock option agreements
(incorporated herein by reference to Exhibit 10.11(a) to Form 10-K for the year ended December 29, 1991).
10.3(b) Form of Non-Qualified Stock Option and Repurchase Agreement dated September 8, 1987, as amended, with each of Robert
Stein, Jeffrey A. Weinstein, two other executive officers and one other officer of the Company (incorporated herein by
reference to Exhibit 10.12(b) to Form 10-K for the year ended January 3, 1988 and Exhibit 10.11(b)(2) to Form 10-K for
the year ended December 29, 1991).
10.3(c) Form of Non-Qualified Stock Option and Repurchase Agreement dated as of June 22, 1988, as amended, with each of Robert
Stein, Jeffrey A. Weinstein and two other executive officers of the Company (incorporated herein by reference to
Exhibit 10.12(c) to Form 10-K for the year ended January 1, 1989 and Exhibit 10.11(c)(2) to Form 10-K for the year
ended December 29, 1991).
10.3(d) Form of Incentive Stock Option Agreement with Ronald N. Fox and Richard J. Corbin dated as of October 28, 1988 and May
9, 1994, respectively.
25
27
10.3(e) Form of Non-Qualified Stock Option and Repurchase Agreement dated as of January 18, 1990, as amended, with each of
Robert Stein, Jeffrey A. Weinstein, Ronald N. Fox and two other executive officers of the Company (incorporated herein
by reference to Exhibit 10.13(d) to Form 10-K for the year ended December 31, 1989 and Exhibit 10.11(e)(2) to Form 10-K
for the year ended December 29, 1991).
10.3(f)(1) Form of Non-Qualified Stock Option and Repurchase Agreement dated as of January 13, 1992 with each of Robert Stein,
Jeffrey A. Weinstein, Ronald N. Fox and two other executive officers of the Company, originally filed as Exhibit
10.11(f) to Form 10-K for the year ended December 29, 1991; Form of Non-Qualified Stock Option and Repurchase Agreement
dated as of January 19, 1993 with each of Robert Stein, Jeffrey A. Weinstein, Ronald N. Fox and two other executive
officers of the Company, originally filed as Exhibit 10.3(g) to Form 10-K for the year ended January 3, 1993; Form of
Non-Qualified Stock Option and Repurchase Agreement dated as of January 25, 1994 with each of Robert Stein, Jeffrey A.
Weinstein, Ronald N. Fox, Donato A. DeNovellis and two other executive officers of the Company; and Form of Non-
Qualified Stock Option and Repurchase Agreement dated as of January 1, 1995 with each of Robert Stein, Jeffrey A.
Weinstein, Donato A. DeNovellis, Richard J. Corbin, Ronald N. Fox and two other executive officers of the Company
(incorporated herein by reference to Exhibit 10.3(f) to Form 10-K for the year ended January 2, 1994; and Form of Non-
Qualified Stock Agreement dated as of December 31, 1989 and Exhibit 10.11(e)(2) to Form 10-K for the year ended
December 29, 1991).
10.3(f)(2) Schedule to Form of Non-Qualified Stock Option and Repurchase Agreement.
10.4 Form of Indemnity Agreement for officers and directors.
10.5 Ekco Group, Inc. 1988 Directors' Stock Option Plan (incorporated herein by reference to Exhibit 10.15 to Form 10-K for
the year ended December 31, 1989).
10.6(a)(1) Ekco Group, Inc. Employees' Stock Ownership Plan effective as of January 1, 1989, originally filed as Exhibit 10.13(a)
to Form 10-K for the year ended January 1, 1989, as amended.
10.6(a)(2) Amendment dated November 23, 1994 to Ekco Group, Inc. Employees' Stock Ownership Plan.
10.6(b) ESOP Loan Agreement dated as of May 22, 1989 among Neil R. Gordon, Trustee of Ekco Group, Inc. Employees' Stock
Ownership Plan, Ekco Group, Inc. and Shawmut Bank, N.A., originally filed as Exhibit 28.1 to Form 10-Q for the
quarterly period ended July 2, 1989.
26
28
10.6(c) ESOP Loan Agreement dated as of October 1, 1990 with Neil R. Gordon, Trustee (incorporated herein by reference to
Exhibit 10.10(c) to Form 10-K for the year ended December 30, 1990).
10.7 Employment Agreement with Robert Stein dated as of April 18, 1995.
10.8 Employment Agreement with Jeffrey A. Weinstein dated as of April 18, 1995.
10.9 Employment Agreement with Donato A. DeNovellis dated as of April 15, 1995.
10.10 Employment Agreement between Richard J. Corbin and Ekco Housewares, Inc. dated as of May 20, 1994.
10.11 Amended and Restated Employment Agreement with Ronald N. Fox dated as of February 12, 1995.
10.12(a) Ekco Group, Inc. Incentive Compensation Plan for Executive Employees of Ekco Group, Inc. and Subsidiaries (incorporated
herein by reference to Exhibit 10.9 to Form 10-K for the year ended December 29, 1991).
10.12(b) Ekco Group, Inc. 1994 Amendment to Incentive Compensation Plan for Executive Employees of Ekco Group, Inc. and its
Subsidiaries.
10.13 1995 Restatement of Incentive Compensation Plan for Executive Employees of Ekco Group, Inc. and its Subsidiaries.
10.14 Ekco Group, Inc. Supplemental Executive Retirement Plan dated as of July 1, 1992 (incorporated herein by reference to
Exhibit 10.13 to Form 10-K for the year ended January 2, 1994).
10.15 Form of Split Dollar Agreement dated as of October 1, 1992 with Robert Stein, Jeffrey A. Weinstein, Ronald N. Fox and
two other executive officers of the Company and dated as of October 1, 1993 with Donato A. DeNovellis (incorporated
herein by reference to Exhibit 10.14 to Form 10-K for the year ended January 2, 1994).
10.16 Standstill Agreement with Stephen Weinroth dated as of March 27, 1987, originally filed as Exhibit 10.15 to Form 10-K
for the year ended December 28, 1986 (incorporated herein by reference to Exhibit 10.13 to Form 10-K for the year ended
January 3, 1993).
10.17 Standstill Agreement with G. Chris Andersen dated as of March 30, 1987, originally filed as Exhibit 10.17 to Form 10-K
for the year ended December 28, 1986 (incorporated herein by reference
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to Exhibit 10.14 to Form 10-K for the year ended January 3, 1993).
10.18(a) Indemnification Letter from American Home Products Corporation dated February 8, 1985 to The Ekco Group, Inc.,
originally filed as Exhibit 2.2 to Form 8-K as of October 23, 1987 (incorporated herein by reference to Exhibit
10.15(a) to Form 10-K for the year ended January 3, 1993).
10.18(b) Letter of Restatement and Confirmation of the Indemnification of American Home Products Corporation to The Ekco Group,
Inc. from American Home Products Corporation to Centronics Corporation dated October 1, 1987, originally filed as
Exhibit 2.3 to Form 8-K as of October 23, 1987 (incorporated herein by reference to Exhibit 10.15(b) to Form 10-K for
the year ended January 3, 1993).
10.18(c) Letter from American Home Products Corporation dated December 19, 1988, originally filed as Exhibit 10.17(d) to Form
10-K for the year ended January 1, 1989.
10.19 Agreement dated as of March 7, 1989 with Howard R. Curd et al., originally filed as Exhibit 10.16 to Form 10-K for the
year ended January 1, 1989.
10.20 Stock Purchase and Sale Agreement dated as of January 8, 1992 with Ekco Housewares, Inc., Frem Corporation, Robert Frem
and Bruce Phillips and related agreements (incorporated herein by reference to Exhibits 2.1 through 2.5 to Form 8-K as
of January 8, 1992).
10.21 Credit Agreement dated as of March 19, 1991 among Woodstream Corporation, Fleet National Bank and Algemene Bank
Nederland, N.V., as amended (incorporated herein by reference to Exhibit 10.19 to Form 10-Q for the quarterly period
ended March 31, 1991, Exhibit 10.18(b) to Form 10-K for the year ended January 3, 1993, and Exhibit 10.20(b) to Form
10-K for the year ended January 2, 1994).
10.22 Amended and Restated Credit Agreement dated as of January 8, 1992 among Ekco Housewares, Inc., Ekco Canada Inc., Fleet
Bank of Massachusetts, N.A. and ABN AMRO Bank N.V., as amended (incorporated herein by reference to Exhibit 28.1 to
Form 8-K as of January 8, 1992, Exhibit 10.19(b) to Form 10-K for the year ended January 3, 1993, and Exhibit 10.19(c)
to Form 10-Q for the quarterly period ended July 4, 1993).
10.23 Securities Purchase Agreement dated as of December 22, 1992 with The 1818 Fund, L.P., originally filed as Exhibit
10.20(a) to Form 10-K for the year ended January 3, 1993; Subordinated Convertible Note dated December 22, 1992,
originally filed as Exhibit 10.20(b) to Form 10-K for the year ended January 3,
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1993; Registration Rights Agreement with The 1818 Fund, L.P., originally filed as Exhibit 10.20(c) to Form 10-K for the
year ended January 3, 1993; and Standstill Agreement dated April 28, 1992 with Brown Brothers Harriman & Co. and The
1818 Fund, L.P., originally filed as Exhibit 10.20(d) to Form 10-K for the year ended January 3, 1993 (incorporated
herein by reference to Exhibit 10.22 to Form 10-K for the year ended January 2, 1994).
10.24 (i) Agreement and Plan of Merger dated March 31, 1993 by and among the registrant, KBM Acquisition Corporation, Kellogg
Brush Manufacturing Co., Robert Ryan, Curtis Rodenhouse, Benton Wilde, Martin Strahs, Robert Bernet, Jr., and Bank
Boston Ventures, Inc., (ii) Registration Rights Agreement dated March 31, 1993 by an d among the registrant, Robert
Ryan, Curtis Rodenhouse, Benton Wilde, Martin Strahs, and Robert Bernet, Jr., and (iii) Form of Standstill Agreement
dated March 31, 1993 by and among the registrant, Robert Ryan, Curtis Rodenhouse, Benton Wilde, Martin Strahs, and
Robert Bernet, Jr. (incorporated herein by reference to Exhibits 2.1, 2.2, and 2.3, respectively, to the registrant's
Form 8-K as of April 1, 1993).
11 Statement re computation of per share earnings. (Reference is made to Note 13 of Notes to Consolidated Financial
Statements in Exhibit 13 hereto.)
13 1994 Annual Report to Stockholders (Sections entitled "Common Stock Price Range and Dividends," "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of Results of Operations and Financial Condition," "Consolidated
Balance Sheets," "Consolidated Statement of Operations," "Consolidated Statements of Stockholders' Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial Statements," and "Report of Independent
Auditors").
21 Subsidiaries of the registrant.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.
-----------------------------------------------------------------------------
Schedules to Exhibits 10.19, 10.20, 10.21, 10.22 and 10.23 will be
supplied upon request by the Commission.
THE FOREGOING EXHIBITS WILL NOT BE INCLUDED IN COPIES OF THIS ANNUAL REPORT ON
FORM 10-K SUPPLIED TO STOCKHOLDERS. A COPY OF THESE EXHIBITS WILL BE FURNISHED
TO STOCKHOLDERS UPON WRITTEN REQUEST ADDRESSED TO NEIL R. GORDON, TREASURER,
EKCO GROUP, INC., 98 SPIT BROOK ROAD, NASHUA, NEW HAMPSHIRE 03062.
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31
INDEX TO EXHIBITS FILED WITH FORM 10-K
FOR THE FISCAL YEAR ENDED JANUARY 1, 1995
Exhibit No. Description
----------- -----------
3.1(c) Certificate of Designations of Series B ESOP Convertible Preferred Stock, originally filed as Exhibit 3.1(d) to Form
10-K for the year ended January 1, 1989.
10.2(c) Form of Restricted Stock Purchase Agreement dated January 1, 1995 with Robert Stein, Jeffrey A. Weinstein, Donato A.
DeNovellis, Richard J. Corbin and two other executive officers of the Company.
10.3(d) Form of Incentive Stock Option Agreement with Ronald N. Fox and Richard J. Corbin dated as of October 28, 1988 and May
9, 1994, respectively.
10.3(f)(2) Schedule to Form of Non-Qualified Stock Option and Repurchase Agreement.
10.4
Form of Indemnity Agreement for officers and directors.
10.6(a)(1) Ekco Group, Inc. Employees' Stock Ownership Plan effective as of January 1, 1989, as amended, originally filed as
Exhibit 10.13(a) to Form 10-K for the year ended January 1, 1989.
10.6(a)(2) Amendment dated November 23, 1994 to Ekco Group, Inc. Employees' Stock Ownership Plan.
10.6(b) ESOP Loan Agreement dated as of May 22, 1989 among Neil R. Gordon, Trustee of Ekco Group, Inc. Employees' Stock
Ownership Plan, Ekco Group, Inc. and Shawmut Bank, N.A., originally filed as Exhibit 28.1 to Form 10-Q for the
quarterly period ended July 2, 1989.
10.7 Employment Agreement with Robert Stein dated as of April 18, 1995.
10.8 Employment Agreement with Jeffrey A. Weinstein dated as of April 18, 1995.
10.9 Employment Agreement with Donato A. DeNovellis dated as of April 15, 1995.
10.10 Employment Agreement between Richard J. Corbin and Ekco Housewares, Inc. dated as of May 20, 1994.
10.11 Amendment and Restatement of Employment Agreement with Ronald N. Fox dated as of February 12, 1995.
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10.12(b) Ekco Group, Inc. 1994 Amendment to Incentive Compensation Plan for Executive Employees of Ekco Group, Inc. and its
Subsidiaries.
10.13 1995 Restatement of Incentive Compensation Plan for Executive Employees of Ekco Group, Inc. and its Subsidiaries.
10.18(c) Letter from American Home Products Corporation dated December 19, 1988, originally filed as Exhibit 10.17(d) to Form
10-K for the year ended January 1, 1989.
10.19 Agreement dated as of March 7, 1989 with Howard R. Curd et al., originally filed as Exhibit 10.16 to Form 10-K for the
year ended January 1, 1989.
11 Statement re computation of per share earnings. (Reference is made to Exhibit 13, Note 13 of Notes to Consolidated
Financial Statements.)
13 1994 Annual Report to Stockholders (Sections entitled "Common Stock Price Range and Dividends," "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of Results of Operations and Financial Condition," "Consolidated
Balance Sheets," "Consolidated Statement of Operations," "Consolidated Statements of Stockholders' Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial Statements," and "Report of Independent
Auditors").
21 Subsidiaries of the registrant.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.
31
EX-3.1(C)
2
CERTIFICATE OF DESIGNATIONS
1
EXHIBIT 3.1(c)
-------------
CERTIFICATE OF DESIGNATIONS
OF
SERIES B ESOP CONVERTIBLE PREFERRED STOCK
OF
EKCO GROUP, INC.
(Pursuant to Section 151 of the General
Corporation Law of the State of Delaware)
-----------------------------------------
I, Robert Stein, President of Ekco Group, Inc. ("Company"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 151 thereof, DO
HEREBY CERTIFY that, pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the Company, the
Board of Directors adopted, at a meeting duly called and held on February 14,
1989, the following resolution creating a series of 1,800,000 shares of
Preferred Stock, par value $.01 per share, designated as Series B ESOP
Convertible Preferred Stock:
Resolved that, pursuant to the authority vested in the Board of
Directors of the Company ("Board of Directors") in accordance with the
provisions of its Restated Certificate of Incorporation, a series of the
authorized Preferred Stock of the Company, $.01 par value share, be, and it
hereby is, created, and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional or other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
SECTION 1. DESIGNATION AND AMOUNT; SPECIAL PURPOSE RESTRICTED
TRANSFER ISSUE.
(A) The shares of this series of Preferred Stock shall be designated
as Series B ESOP Convertible Preferred Stock ("Series B Preferred Stock") and
the number of shares constituting such series shall be 1,800,000. Such number
of shares may be increased or decreased by resolution of the Board of
Directors; PROVIDED, that no decrease shall reduce the number of shares of
Series B Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Series B
Preferred Stock.
(B) Shares of Series B Preferred Stock shall be issued only to a
trustee acting on behalf of an employee stock ownership plan or other employee
benefit plan of the Company. In the event of any transfer of shares of Series
B Preferred Stock to any person other than any such plan trustee, the shares of
Series B Preferred Stock so transferred, upon such transfer and without any
further action by the Company or the holder, shall be automatically converted
into shares of Common Stock, on the terms otherwise provided for the conversion
of shares of Series B Preferred Stock into shares of Common Stock pursuant to
Section 5 hereof and no such transferee shall have any of the voting powers,
preferences and relative, participation, optional or special rights ascribed to
shares of Series B Preferred Stock hereunder but, rather, only the powers and
rights pertaining to the Common Stock into which such shares of Series B
Preferred Stock shall be so converted. Certificates representing shares of
Series B Preferred Stock shall be legended to reflect such restrictions on
transfer. Notwithstanding the foregoing provisions of this paragraph (B) of
Section 1, shares of Series B Preferred Stock (i) may be
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converted into shares of Common Stock as provided by section 5 hereof and the
shares of Common Stock issued upon such conversion may be transferred by the
holder thereof as permitted by law and (ii) shall be redeemable by the Company
upon the terms and conditions provided by Sections 6,7 and 8 hereof.
SECTION 2. DIVIDENDS.
(A) Subject to the rights of the holders of any share of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series B Preferred Stock with respect to dividends, the holders of shares
of Series B Preferred Stock, in preference to the holders of Series A Junior
Participating Preferred Stock, par value $.01 per share ("Series A Preferred
Stock"), Common Stock and of any other junior stock of the Company, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available therefor, dividends in an amount per share equal to the
same amount per share (rounded to the nearest cent) as the aggregate per share
amount of all cash dividends and the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions as the Board of
Directors may from time to time declare on the shares of Common Stock, provided
that if a dividend is payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise) is
declared, then no dividend shall be payable to the holders of the Series B
Preferred Stock. If the "Conversion Price" (as defined in Section 5 hereof) is
adjusted as provided in Section 9 hereof, the amount of the dividend paid on a
share of Series B Preferred Stock shall be similarly adjusted so that, each
share of Series B Preferred Stock is entitled to receive an amount of dividend
which is equal to the amount of dividend to be received on the number of shares
of Common Stock into which such share of Series B Preferred Stock could be
converted on the record date set for determining the stockholders entitled to a
dividend.
SECTION 3. VOTING RIGHTS.
The holders of shares of Series B Preferred Stock shall have the
following voting rights:
(A) The holders of Series B Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the holders of Common Stock of the
Company, voting together with the holders of Common Stock as one class. Each
share of the Series B Preferred Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such shares of Series
B Preferred Stock could be converted on the record date for determining the
stockholders entitled to vote, rounded to the nearest one-hundredth of a vote;
it being understood that whenever the "Conversion Price" (as defined in Section
5 hereof) is adjusted as provided in Section 9 hereof, the voting rights of the
Series B Preferred Stock shall also be similarly adjusted.
(B) Except as otherwise required by law or set forth herein,
holders of Series B Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for the taking of any
corporate action; PROVIDED, HOWEVER, that the vote of at least 66-2/3% of the
outstanding shares of Series B Preferred Stock, voting separately as a series,
shall be necessary to adopt any alteration, amendment or repeal of any
provision of the Restated Certificate of Incorporation of the Company, as
amended, or this Resolution (including any such alteration, amendment or repeal
effected by any merger or consolidation in which the Company is the surviving
or resulting corporation) if such amendment, alteration or repeal
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would alter or change the powers, preferences or special rights of the shares
of Series B Preferred Stock so as to affect them adversely.
SECTION 4. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of Series B Preferred Stock shall be
entitled to receive out of assets of the Company which remain after
satisfaction in full of all valid claims of creditors of the Company and which
are available for payment to stockholders and subject to the rights of the
holders of any stock of the Company ranking senior to or on a parity with the
Series B Preferred Stock in respect of distributions upon liquidation,
dissolution or winding up of the Company, before any amount shall be paid or
distributed among the holders of Common Stock or any other shares ranking
junior to the Series B Preferred Stock in respect of distributions upon
liquidation, dissolution or winding up of the Company, liquidating
distributions in the amount of $3.61, plus an amount equal to all accrued and
unpaid dividends thereon to the date fixed for distribution, and no more. If
upon the liquidation, dissolution, or winding up of the Company, the amounts
payable with respect to the Series B Preferred Stock and any other stock
ranking as to any such distribution on a parity with the Series B Preferred
Stock are not paid in full, the holders of the Series B Preferred Stock and
such other stock shall share ratably in any distribution of assets in
proportion to the full respective preferential amounts to which they are
entitled. After payment of the full amount to which they are entitled as
provided by the foregoing provisions of this paragraph 4(A), the holders of
shares of Series B Preferred Stock shall not be entitled to any further right
or claim to any of the remaining assets of the Company.
(B) Neither the merger or consolidation of the Company with or
into any other corporation, nor the merger or consolidation of any other
corporation with or into the Company, nor the sale, transfer or lease of all or
any portion of the assets of the Company, shall be deemed to be a dissolution,
liquidation or winding up of the affairs of the Company for purposes of this
Section 4, but the holders of Series B Preferred Stock shall nevertheless be
entitled in the event of any such merger or consolidation to the rights
provided by Section 8 hereof.
(C) Written notice of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, stating the payment date or dates
when, and the place or places where, the amounts distributable to holders of
Series B Preferred Stock in such circumstances shall be payable, shall be given
by first-class mail, postage prepaid, mailed not less than twenty (20) days
prior to any payment date stated therein, to the holders of Series B Preferred
Stock, at the addresses shown on the books of the Company or any transfer agent
for the Series B Preferred Stock.
SECTION 5. CONVERSION INTO COMMON STOCK.
(A) A holder of shares of Series B Preferred Stock shall be
entitled, at any time prior to the close of business on the date fixed for
redemption of such shares pursuant to Section 6, 7 or 8 hereof, to cause any or
all of such shares to be converted into shares of Common Stock, initially at a
conversion rate equal to the ratio of $3.61 to the amount which initially shall
be $3.61 and which shall be adjusted as hereinafter provided (and, as so
adjusted from time to time, is hereinafter sometimes referred to as the
"Conversion Price") (that is, a conversion rate initially equivalent to one
share of Common Stock
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4
for each share of Series B Preferred Stock so converted but that is subject to
adjustment as the Conversion Price is adjusted as hereinafter provided).
(B) Any holder of shares of Series B Preferred Stock desiring to
convert such shares into shares of Common Stock shall surrender the Certificate
or certificates representing the shares of Series B Preferred Stock being
converted, duly assigned or endorsed for transfer to the Company (or
accompanied by duly executed stock powers relating thereto), together with a
written notice of conversion, at the principal executive office of the Company
or the offices of the transfer agent for the Series B Preferred Stock or such
office or offices in the continental United States of an agent for conversion
as may from time to time be designated by notice to the holders of the Series B
Preferred Stock sent by the Company or the transfer agent for the Series B
Preferred Stock. Such notice of conversion shall specify (i) the number of
shares of Series B Preferred Stock to be converted and the name or names in
which such holder wishes the certificate or certificates for Common Stock and
for any shares of Series B Preferred Stock not to be so converted to be issued,
and (ii) the address to which such holder wishes delivery to be made of such
new certificates to be issued upon such conversion.
(C) Upon surrender of a certificate representing a share or shares
of Series B Preferred Stock for conversion, the Company shall issue and send by
hand delivery (with receipt to be acknowledged) or by first class mail, postage
prepaid, to the holder thereof or to such holder's designee, at the address
designated by such holder, a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled upon conversion.
In the event that there shall have been surrendered a certificate or
certificates representing shares of Series B Preferred Stock, only part of
which are to be converted, the Company shall issue and deliver to such holder
or such holder's designee a new certificate or certificates representing the
number of shares of Series B Preferred Stock which shall not have been
converted.
(D) The issuance by the Company of shares of Common Stock upon a
conversion of shares of Series B Preferred Stock into shares of Common Stock
made at the option of the holder thereof shall be effective as of the earlier
of (i) the delivery to such holder or such holder's designee of the
certificates representing the shares of Common Stock issued upon conversion
thereof or (ii) the commencement of business on the second business day after
the surrender of the certificate or certificates for the shares of Series B
Preferred Stock to be converted duly assigned or endorsed for transfer to the
Company (or accompanied by duly executed stock powers relating thereto) as
provided by this Resolution. On and after the effective day of conversion, the
person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock, but no allowance or adjustment shall be made in
respect of dividends payable to holders of Common Stock in respect of any
period prior to such effective date. On and after the effective date of
conversion, the holder of the Series B Preferred Stock shall not have any right
to receive any dividends which shall have been declared and shall be payable to
holders of shares of Series B Preferred Stock on a particular payment date if
such payment date shall be subsequent to the effective date of conversion of
such shares.
(E) The Company shall not be obligated to deliver to holders of
Series B Preferred Stock any fractional share or shares of Common Stock
issuable upon any conversion of such shares of Series B Preferred Stock, but in
lieu thereof may make a cash payment in respect thereof in any manner permitted
by law.
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5
(F) Whenever the Company shall issue shares of Common Stock upon
conversion of shares of Series B Preferred Stock as contemplated by this
Section 5, the Company shall issue together with each such share of Common
Stock one right to purchase Series A Preferred stock (or other securities in
lieu thereof) pursuant to the Rights Agreement dated as of March 27, 1987
between the Company and The First National Bank of Boston, as Rights Agent, as
such agreement may from time to time be amended, or any rights issued to
holders of Common Stock of the Company in addition thereto or in replacement
therefor, whether or not such rights shall be entitled to be exercisable at
such time, but only if such rights are issued and outstanding and held by other
holders of Common Stock of the Company at such time and have not expired and
only if shares of Common Stock which became outstanding at such time are
accompanied by the issuance of such Rights at such time.
(G) The Company shall at all times reserve and keep available out
of its authorized and unissued Common Stock, solely for issuance upon the
conversion of shares of Series B Preferred Stock as herein provided, free from
any preemptive rights, such number of shares of Common Stock as shall from time
to time be issuable upon the conversion of all the shares of Series B Preferred
Stock then outstanding. The Company shall prepare and shall use its best
efforts to obtain and keep in force such governmental or regulatory permits or
other authorizations as may be required by law, and shall comply with all
requirements as to registration or qualification of the Common Stock, in order
to enable the Company lawfully to issue and deliver to each holder of record of
Series B Preferred Stock such number of shares of its Common Stock as shall
from time to time be sufficient to effect the conversion of all shares of
Series B Preferred Stock then outstanding and convertible into shares of Common
Stock.
SECTION 6. REDEMPTION AT THE OPTION OF THE COMPANY.
(A) The Series B Preferred Stock shall be redeemable, in whole or in
part, at the option of the Company, at any time at a redemption price per share
equal to the greater of the Conversion Price (as defined in Section 5 hereof),
as adjusted as provided in Section 9 hereof, on the date of redemption or the
product of the "Fair Market Value of the Series B Preferred Stock" on the date
of redemption times 105% plus, in each case, an amount equal to all accrued and
unpaid dividends thereon to the date fixed for redemption. The "Fair Market
Value of the Series B Preferred Stock" shall mean the Fair Market Value of the
Common Stock (as defined in paragraph (E) of Section 9 hereof, provided,
however, that in calculating their Fair Market Value, the Adjustment Period
shall be deemed to be the five (5) consecutive trading days preceding, and
including, the date of redemption), times the number of shares of Common Stock
into which the shares of Series B Preferred Stock could be converted on the
date fixed for redemption as determined in accordance with Section 5 hereof,
rounded to the nearest one-tenth of a share; it being understood that whenever
the "Conversion Price" (as defined in Section 5 hereof) is adjusted as provided
in Section 9 hereof, the number of shares into which the shares of Series B
Preferred Stock may be converted shall also be similarly adjusted. Payment of
the redemption price shall be made by the Company in cash or shares of Common
Stock, or a combination thereof, as required by paragraph (C) of this Section
6. From and after the date fixed for redemption, dividends on shares of Series
B Preferred Stock called for redemption will cease to accrue, such shares will
no longer be deemed to be outstanding and all rights in respect of such shares
of the Company shall cease, except the right to receive the redemption price.
If less than all of the outstanding shares of Series B Preferred Stock are to
be redeemed, the Company shall either redeem a portion of the shares of each
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6
holder determined pro rata based on the number of shares held by each holder or
shall select the shares to be redeemed by lot, as may be determined by the
Board of Directors of the Company.
(B) Unless otherwise required by law, notice of redemption will be
sent to the holders of Series B Preferred Stock at the address shown on the
books of the Company or any transfer agent for the Series B Preferred Stock by
first class mail, postage prepaid, mailed not less than twenty (20) days nor
more than sixty (60) days prior to the redemption date. Each such notice shall
state: (i) the redemption date; (ii) the total number of shares of the Series
B Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (iii) the redemption price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the redemption price; (v)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date; (vi) the conversion rights of the shares to be redeemed, the
period within which conversion rights may be exercised, and the Conversion
Price and number of shares of Common Stock issuable upon conversion of a share
of Series B Preferred Stock at the time; and (vii) an election form so that the
holder of Series B Preferred Stock may designate the form of payment of the
redemption price. Upon surrender of the certificates for any shares so called
for redemption and not previously converted (properly endorsed or assigned for
transfer, if the Board of Directors of the Company shall so require and the
notice shall so state), such shares shall be redeemed by the Company at the
date fixed for redemption and at the redemption price set forth in this
Section 6.
(C) The Company shall make payment of the redemption price required
upon redemption of shares of Series B Preferred Stock in cash or in shares of
Common Stock, or in a combination of such shares and cash, as specified in
writing by the holder of the shares of Series B Preferred Stock. Any such
shares are to be valued for such purpose at their Fair Market Value (as defined
in paragraph (E) of Section 9 hereof, provided, however, that in calculating
their Fair Market Value, the Adjustment Period shall be deemed to be the five
(5) consecutive trading days preceding, and including, the date of redemption).
SECTION 7. HOLDER'S REDEMPTION RIGHTS.
(A) Shares of Series B Preferred Stock shall be redeemed by the
Company for cash or, if the holder so elects, in shares of Common Stock, or a
combination of such shares and cash, any such shares of Common Stock to be
valued for such purpose as provided by paragraph (C) of Section 6, at a
redemption price equal to the Conversion Price per share plus accrued and
unpaid dividends thereon to the date fixed for redemption, at the option of the
holder, at any time and from time to time upon notice to the Company given not
less than five (5) business days prior to the date fixed by the holder in such
notice for such redemption, when and to the extent necessary (i) for such
holder to provide for distributions required to be made under, or to satisfy an
investment election provided to participants in accordance with, the Ekco
Group, Inc. Employees' Stock Ownership Plan, adopted effective as of January 1,
1989, as the same may be amended, or any successor plan (the "Plan") to
participants in the Plan or (ii) for such holder to make payment of principal,
interest or premium due and payable (whether as scheduled, upon acceleration or
upon notice of the exercise of a right to prepay) on any indebtedness incurred
by the holder for the benefit of the Plan, including indebtedness owed to the
Company.
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7
(B) Unless otherwise required by law, notice of redemption will be
sent by the holder of Series B Preferred Stock wishing to redeem to the Company
or any transfer agent for the Series B Preferred Stock by first class mail,
postage prepaid, mailed not less than twenty (20) days nor more than sixty (60)
days prior to the redemption date. Each such notice shall state: (i) the
redemption date; (ii) the total number of shares of the Series B Preferred
Stock to be redeemed; and (iii) the form of payment of the redemption price.
The company shall, within two business days, acknowledge receipt of such notice
and send a notice to the holder which shall state: (i) the redemption price;
(ii) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; (iii) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (iv)
the conversion rights of the shares to be redeemed, the period within which
conversion rights may be exercised, and the Conversion Price and number of
shares of Common Stock issuable upon conversion of a share of Series B
Preferred Stock at the time. Under surrender of the certificates for any
shares so requested to be redeemed and not previously converted (properly
endorsed or assigned for transfer, if the Board of Directors of the Company
shall so require and the notice shall so state), such shares shall be redeemed
by the Company at the date fixed for redemption and at the redemption price set
forth in this Section 7.
(C) The Company shall make payment of the redemption price required
upon redemption of shares of Series B Preferred Stock in cash or in shares of
Common Stock, or in a combination of such shares and cash, as specified in
writing by the holder of the shares of Series B Preferred Stock. Any such
shares are to be valued for such purpose at their Fair Market Value (as defined
in paragraph (E) of Section 9 hereof, provided, however, that in calculating
their Fair Market Value, the Adjustment Period shall be deemed to be the five
(5) consecutive trading days preceding, and including, the date of redemption).
SECTION 8. CONSOLIDATION, MERGER, ETC.
(A) In the event that the Company shall consummate any consolidation
or merger or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are by operation of law exchanged solely for
or changed, reclassified or converted solely into stock of any successor or
resulting company (including the Company) that constitutes "qualifying employer
securities" with respect to a holder of Series B Preferred Stock within the
meaning of Section 409(e) of the Internal Revenue Code of 1986, as amended, and
Section 407(c)(5) of the Employee Retirement Income Security Act of 1974, as
amended, or any successor provisions of law, and, if applicable, for a cash
payment in lieu of fractional shares, if any, the shares of Series B Preferred
Stock of such holder shall be assumed by and shall become preferred stock of
such successor or resulting company, having in respect of such company insofar
as possible the same powers, preferences and relative, participating, optional
or other special rights (including the redemption rights provided by Section 6,
7 and 8 hereof), and the qualifications, limitations or restrictions thereon,
that the Series B Preferred Stock had immediately prior to such transaction,
except that after such transaction each share of the Series B Preferred Stock
shall be convertible, otherwise on the terms and conditions provided by Section
5 hereof, into the qualifying employer securities so receivable by a holder of
the number of shares of Common Stock into which such shares of Series B
Preferred Stock could have been converted immediately prior to such transaction
if such holder of Common Stock failed to exercise any rights of election to
receive any kind or amount of stock, securities, cash or other property (other
than such qualifying
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employer securities and a cash payment, if applicable, in lieu of fractional
shares) receivable upon such transaction (provided that, if the kind or amount
of qualifying employer securities receivable upon such transaction is not the
same for each non-electing share, then the kind and amount of qualifying
employer securities receivable upon such transaction for each non-electing
share shall be the kind and amount so receivable per share by a majority of the
non-electing shares). The rights of the Series B Preferred Stock as preferred
stock of such successor or resulting company shall successively be subject to
adjustments pursuant to Section 9 hereof after any such transaction as nearly
equivalent to the adjustments provided for by such section prior to such
transaction. The Company shall not consummate any such merger, consolidation
or similar transaction unless all then outstanding shares of the Series B
Preferred Stock shall be assumed and authorized by the successor or resulting
company as aforesaid.
(B) In the event that the Company shall consummate any consolidation
or merger or similar transaction, however named, pursuant to which the
outstanding shares of Common Stock are by operation of law exchanged for or
changed, reclassified or converted into other stock or securities or cash or
any other property, or any combination thereof, other than any such
consideration which is constituted solely of qualifying employer securities (as
referred to in paragraph (A) of this Section 8) and cash payments, if
applicable, in lieu of fractional shares, outstanding shares of Series B
Preferred Stock shall, without any action on the part of the Company or any
holder thereof (but subject to paragraph (C) of this Section 8), be deemed
converted by virtue of such merger, consolidation or similar transaction
immediately prior to such consummation into the number of shares of Common
Stock into which such shares of Series B Preferred Stock could have been
converted at such time and each share of Series B Preferred Stock shall, by
virtue of such transaction and on the same terms as apply to the holders of
Common Stock, be converted into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in like kind) receivable by a
holder of the number of shares of Common Stock into which such shares of Series
B Preferred Stock could have been converted immediately prior to such
transaction if such holder of Common Stock failed to exercise any rights of
election as to the kind of amount of stock, securities, cash or other property
receivable upon such transaction (provided that, if the kind or amount of
stock, securities, cash or other property receivable upon such transaction is
not the same for each non-electing share, then the kind and amount of stock,
securities, cash or other property receivable upon such transaction for each
non-electing share shall be the kind and amount so receivable per share by a
majority of the non-electing shares).
(C) In the event the Company shall enter into any agreement providing
for any consolidation or merger or similar transaction described in paragraph
(B) of this Section 8, then the Company shall as soon as practicable thereafter
(and in any event at least ten (10) business days before consummation of such
transaction) give notice of such agreement and the material terms thereof to
each holder of Series B Preferred Stock and each such holder shall have the
right to elect, by written notice to the Company, to receive, upon consummation
of such transaction (if and when such transaction is consummated), from the
Company or the successor of the Company, in redemption and retirement of such
Series B Preferred Stock, a cash payment equal to the amount payable in respect
of shares of Series B Preferred Stock upon liquidation of the Company pursuant
to Section 4 hereof. No such notice of redemption shall be effective unless
given to the Company prior to the close of business on the fifth business day
prior to consummation of such transaction, unless the Company or the successor
of the Company shall waive
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such prior notice, but any notice of redemption so given prior to such time may
be withdrawn by notice of withdrawal given to the Company prior to the close of
business on the fifth business day prior to consummation of such transaction.
SECTION 9. ANTI-DILUTION ADJUSTMENTS.
(A) In the event the Company shall, at any time or from time to time
while any of the shares of the Series B Preferred Stock are outstanding, (i)
pay a dividend or make a distribution in respect of the Common Stock in shares
of Common Stock, (ii) subdivide the outstanding shares of Common Stock or (iii)
combine the outstanding shares of Common Stock into a smaller number of shares,
in each case whether by reclassification of shares, recapitalization of the
Company (including a recapitalization effected by a merger or consolidation to
which Section 8 hereof does not apply) or otherwise, the Conversion Price in
effect immediately prior to such action shall be adjusted by multiplying such
Conversion Price by the fraction the numerator of which is the number of shares
of Common Stock outstanding immediately before such event and the denominator
of which is the number of shares of Common Stock outstanding immediately after
such event. An adjustment made pursuant to this paragraph 9(A) shall be given
effect, upon payment of such a dividend or distribution, as of the record date
for the determination of shareholders entitled to receive such dividend or
distribution (on a retroactive basis) and in the case of a subdivision or
combination shall become effective immediately as of the effective date
thereof.
(B) In the event the Company shall, at any time or from time to time
while any of the shares of Series B Preferred Stock are outstanding, effect a
Pro Rata Repurchase (as hereinafter defined) of Common Stock, the Conversion
Price in effect immediately prior to such Pro Rata Repurchase shall, subject to
paragraphs (C) and (D) of this Section 9, be adjusted by multiplying such
Conversion Price by the fraction the numerator of which is (i) the product of
(x) the number of shares of Common Stock outstanding immediately before such
Pro Rata Repurchase multiplied by (y) the Fair Market Value (as herein defined)
of a share of Common Stock on the applicable expiration date (including all
extensions thereof) of any tender offer which is a Pro Rata Repurchase which is
on the date of purchase with respect to any Pro Rata Repurchase which is not a
tender offer, as the case may be, minus (ii) the Fair market Value of the
aggregate purchase price of the Pro Rata Repurchase and the denominator of
which shall be the product (A) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase minus the number of shares of
Common Stock repurchased by the Company multiplied by (B) the Fair Market Value
of a share of Common Stock on the applicable expiration date (including all
extensions thereof) of any tender offer which is a Pro Rata Repurchase or on
the date of purchase with respect to any Pro Rata Repurchase which is not a
tender offer, as the case may be. The Company shall send each holder of Series
B Preferred Stock notice of any offer by the Company to make a Pro Rata
Repurchase, at the same time as, or as soon as practicable after, such offer is
first communicated to holders of Common Stock. Such notice shall indicate the
number of shares subject to such offer for a Pro Rata Repurchase and the
purchase price payable by the Company pursuant to such offer, as well as the
Conversion Price and the number of shares of Common Stock into which a share of
Series B Preferred Stock may be converted at such time.
(C) Notwithstanding any other provisions of this Section 9, the
Company shall not be required to make any adjustment of the Conversion Price
unless such adjustment would require an increase or decrease of at least one
percent
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(1%) in the Conversion Price. Any lesser adjustment shall be carried forward
and shall be made no later than the time of, and together with, the next
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least one
percent (1%) in the Conversion Price.
(D) If the Company shall make any dividend or distribution on the
Common Stock or issue any Common Stock, other capital stock or other security
of the Company or any rights or warrants to purchase or acquire any such
security, which transaction does not result in any adjustment to the Conversion
Price pursuant to the foregoing provisions of this Section 9, the Board of
Directors shall consider whether such action is of such a nature that an
adjustment to the Conversion Price should equitably be made in respect of such
transaction. If in such case the Board of Directors determines that an
adjustment to the Conversion Price should be made, an adjustment shall be made
effective as of such date, as determined by the Board of Directors. The
determination of the Board of Directors as to whether an adjustment to the
Conversion Price should be made pursuant to the foregoing provisions of this
paragraph 9(D), and, if so, as to what adjustment should be made and when,
shall be final and binding on the Company and all stockholders of the Company.
The Company shall be entitled to make such additional adjustments in the
Conversion Price, in addition to those required by the foregoing provisions of
this Section 9, as shall be necessary in order that any dividend or
distribution in shares of capital stock of the Company, subdivision,
reclassification or combination of shares of stock of the Company or any
recapitalization of the Company shall not be taxable to holders of the Common
Stock.
(E) For purposes of this Resolution, the following definitions shall
apply:
"Fair Market Value" shall mean, as to shares of Common Stock or any
other class of capital stock or securities of the Company or any other issuer
which are publicly traded, the average of the Current Market Prices (as
hereinafter defined) of such shares or securities for each day of the
Adjustment Period (as hereinafter defined). "Current Market Price" of publicly
traded shares of Common Stock or any other class of capital stock or other
security of the Company or any other issuer for a day shall mean the last
reported sales price, regular way, or, in case no sale takes place on such day,
the average of the reported closing bid and asked prices, regular way, in
either case as reported on the New York Stock Exchange Composite Tape or, if
such security is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which such security
is listed or admitted to trading or, if not listed or admitted to trading on
any national securities exchange, on the NASDAQ National Market System or, if
such security is not quoted on such National Market System, the average of the
closing bid and asked prices on each such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for such security on each such
day shall not have been reported through NASDAQ, the average of the bid and
asked prices for such day as furnished by any New York Stock Exchange member
firm regularly making a market in such security selected for such purpose by
the Board of Directors of the Company or a committee thereof on each trading
day during the Adjustment Period. "Adjustment Period" shall mean the period of
five (5) consecutive trading days, selected by the Board of Directors of the
Company or a committee thereof, during the 20 trading days preceding, and
including, the date as of which the Fair Market Value of a security is to be
determined. Except as otherwise provided, the "Fair Market Value" of any
security which is not publicly traded or of any other property shall mean the
fair value thereof as determined by an
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independent investment banking or appraisal firm experienced in the valuation
of such securities or property selected in good faith by the Board of Directors
of the Company or a committee thereof, or, if no such investment banking or
appraisal firm is in the good faith judgment of the Board of Directors or such
committee available to make such determination, as determined in good faith by
the Board of Directors of the Company or such committee.
"Pro Rata Repurchase" shall mean any purchase of shares of Common
Stock by the Company or any subsidiary thereof, whether for cash, shares of
capital stock of the Company, other securities of the Company, evidences of
indebtedness of the Company or any other person or any property (including
shares of a subsidiary of the Company), or any combination thereof, effected
while any of the shares of Series B Preferred Stock are outstanding, pursuant
to any tender offer or exchange offer subject to Section 13(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no purchase
of shares by the Company or any subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase. For purposes of this
paragraph 9(E), shares shall be deemed to have been purchased by the Company or
any subsidiary thereof "in open market transactions" if they have been
purchased substantially in accordance with the requirements of Rule 10b-18 as
in effect under the Exchange Act, on the date shares of Series B Preferred
Stock are initially issued by the Company or on such other terms and conditions
as the Board of Directors of the Company or a committee thereof shall have
determined are reasonably designed to prevent such purchases from having a
material effect on the trading market for the Common Stock.
(F) Whenever an adjustment of the Conversion Price and the related
voting rights of the Series B Preferred Stock is required pursuant to this
Resolution, the Company shall forthwith place on file with the transfer agent
for the Common Stock and the Series B Preferred Stock if there be one, and with
the Secretary of the Company, a statement signed by two officers of the Company
stating the adjusted Conversion Price determined as provided herein and the
resulting conversion ratio, and the voting and dividend rights (as
appropriately adjusted), of the Series B Preferred Stock. Such statement shall
set forth in reasonable detail such facts as shall be necessary to show the
reason and the manner of computing such adjustment, including any determination
of Fair Market Value involved in such computation. Promptly after each
adjustment to the Conversion Price and the related voting and dividend rights
of the Series B Preferred Stock, the Company shall mail a notice thereof and of
the then prevailing conversion ratio to each holder of shares of the Series B
Preferred Stock.
SECTION 10. RANKING; ATTRIBUTABLE CAPITAL AND ADEQUACY OF SURPLUS;
RETIREMENT OF SHARES.
(A) The Series B Preferred Stock shall rank senior to the Series A
Preferred Stock and the Common Stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution and winding up of the
Company, and, unless otherwise provided in the Restated Certificate of
Incorporation of the Company, as amended, or a Certificate of Designations
relating to a subsequent series of Preferred Stock, par value $.01 per share,
of the Company, the Series B Preferred Stock shall rank junior to all other
series of the Company's Preferred Stock, par value $.01 per share, as to the
payment of dividends and the distribution of assets on liquidation, dissolution
or winding up.
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(B) The capital of the Company allocable to the Series B Preferred
Stock for purposes of the Delaware General Corporation Law (the "Corporation
Law") shall be $.01 per share.
(C) Any shares of Series B Preferred Stock acquired by the Company by
reason of the conversion or redemption of such shares as provided by this
Resolution, or otherwise so acquired, shall be retired as shares of Series B
Preferred Stock and restored to the status of authorized but unissued shares of
preferred stock, par value $.01 per share, of the Company, undesignated as to
series, and may thereafter be reissued as part of a new series of such
preferred stock as permitted by law.
SECTION 11. MISCELLANEOUS.
(A) All notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of
receipt thereof or three (3) business days after the mailing thereof if sent by
registered mail (unless first-class mail shall be specifically permitted for
such notice under the terms of this Resolution) with postage prepaid,
addressed: (i) if to the Company, to its office at 98 Spit Brook Road, Nashua,
New Hampshire 03062 (Attention: Secretary) or to the transfer agent for the
Series B Preferred Stock, or other agent of the Company designated as permitted
by this Resolution or (ii) if to any holder of the Series B Preferred Stock or
Common Stock, as the case may be, to such holder at the address of such holder
as listed in the stock record books of the Company (which may include the
records of any transfer agent for the Series B Preferred Stock or Common Stock,
as the case may be) or (iii) to such other address as the Company or any such
holder, as the case may be, shall have designated by notice similarly given.
(B) The term "Common Stock" as used in this Resolution means the
Company's Common Stock, par value $.01 per share, as the same exists at the
date of filing of a Certificate of Designations relating to Series B Preferred
Stock or any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
In the event that, at any time as a result of an adjustment made pursuant to
Section 9 of this Resolution, the holder of any share of the Series B Preferred
Stock upon thereafter surrendering such shares for conversion shall become
entitled to receive any shares or other securities of the Company other than
shares of Common Stock, the Conversion Price in respect of such other shares or
securities so receivable upon conversion of shares of Series B Preferred Stock
shall thereafter be adjusted, and shall be subject to further adjustment from
time to time, in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to Common Stock contained in Section 9 hereof, and
the provisions of Sections 1 through 8 and 10 and 11 of this Resolution with
respect to the Common Stock shall apply on like or similar terms to any such
other shares or securities.
(C) The Company shall pay any and all stock transfer and documentary
stamp taxes that may be payable in respect of any issuance or delivery of
shares of Series B Preferred Stock or shares of Common Stock or other
securities issued on account of Series B Preferred Stock pursuant hereto or
certificates representing such shares or securities. The Company shall not,
however, be required to pay any such tax which may be payable in respect of any
transfer involved in the issuance or delivery of shares of Series B Preferred
Stock or Common Stock or other securities in a name other than that in which
the shares of Series B Preferred Stock with respect to which such
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shares or other securities are issued or delivered were registered, or in
respect of any payment to any person with respect to any such shares or
securities other than a payment to the registered holder thereof, and shall not
be required to make any such issuance, delivery or payment unless and until the
person otherwise entitled to such issuance, delivery or payment has paid to the
Company the amount of any such tax or has established, to the satisfaction of
the Company, that such tax has been paid or is not payable.
(D) In the event that a holder of shares of Series B Preferred Stock
shall not by written notice designate the name in which shares of Common Stock
to be issued upon conversion of such shares should be registered or to whom
payment upon redemption of shares of Series B Preferred Stock should be made or
the address to which the certificate or certificates representing such shares,
or such payment, should be sent, the Company shall be entitled to register such
shares, and make such payment, in the name of the holder of such Series B
Preferred Stock as shown on the records of the Company and to send the
certificate or certificates representing such shares, or such payment, to the
address of such holder shown on the records of the Company.
(E) Unless otherwise provided in the Restated Certificate of
Incorporation, as amended, of the Company, all payments in the form of
dividends, distributions on voluntary or involuntary dissolution, liquidation
or winding-up or otherwise made upon the shares of Series B Preferred Stock and
any other stock ranking on a parity with the Series B Preferred Stock with
respect to such dividend or distribution shall be made pro rata, so that
amounts paid per share on the Series B Preferred Stock and such other stock
shall in all cases bear to each other the same ratio that the required
dividends, distributions or payments, as the case may be, then payable per
share on the shares of the Series B Preferred Stock and such other stock bear
to each other.
(F) The Company may appoint, and from time to time discharge and
change, a transfer agent for the Series B Preferred Stock. Upon any such
appointment or discharge of a transfer agent, the Company shall send notice
thereof by first-class mail, postage prepaid, to each holder of record of
Series B Preferred Stock.
IN WITNESS WHEREOF, I have executed this Certificate of Designations
this 27th day of February 1989.
/S/ ROBERT STEIN
--------------------------
Robert Stein
President
ATTEST:
/S/ JEFFREY A. WEINSTEIN
------------------------
Jeffrey A. Weinstein
Secretary
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EX-10.2(C)
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RESTRICTED STOCK PURCHASE AGMT
1
EXHIBIT 10.2(c)
RESTRICTED STOCK PURCHASE AGREEMENT
AGREEMENT made this 1st day of January, 1995 by and between Ekco Group,
Inc., a Delaware corporation with a principal place of business at 98 Spit Brook
Road, Nashua, New Hampshire 03062 (hereinafter the "Corporation") and
____________________ of __________ _________________, (hereinafter the
"Purchaser").
W I T N E S S E T H :
WHEREAS, the Corporation has adopted and amended the 1984 Restricted
Stock Plan (hereinafter the "1984 Plan") and the 1985 Restricted Stock Plan
(hereinafter the "1985 Plan") (collectively, the "Plans") to promote the
interests of the Corporation by providing an incentive for employees, officers
and directors of the Corporation; and
WHEREAS, pursuant to the provisions of the Plans, the Corporation is
offering to sell to the Purchaser shares of the Corporation's Common Stock, par
value $.01 per share, certain shares in accordance with the provisions of the
1984 Plan, certain shares in accordance with the provisions of the 1985 Plan,
all on the terms and conditions hereinafter set forth; and
WHEREAS, Purchaser wishes to accept said offer.
NOW THEREFORE, in consideration of the premises and mutual interests
to be served hereby and the mutual covenants and promises contained herein, the
Corporation and Purchaser hereby agree as follows:
1. TERMS OF PURCHASE. (a) The Purchaser hereby accepts the offer of the
Corporation to sell to the Purchaser, in accordance with the terms of the 1984
Plan with respect to the shares issued pursuant thereto, the 1985 Plan with
respect to the shares issued pursuant thereto and this Agreement, an aggregate
of ____________ (______) shares of the Corporation's Common Stock, par value
$.01 per share (hereinafter collectively the "Plan Shares") at a purchase price
of $________ [@ $0.10 per share] receipt of which is hereby acknowledged by the
Corporation.
(b) In order to determine the rate at which restrictions on disposition
may lapse pursuant to Paragraph 3 below (and not for any other purpose), the
Plan Shares shall be apportioned into five (5) blocks ("Performance Blocks") and
identified as follows:
Name of Block Number of Plan Shares
------------- ---------------------
1984 Plan 1985 Plan
--------- ---------
1995 Performance Block
--------- ---------
1996 Performance Block
--------- ---------
1997 Performance Block
--------- ---------
2
1998 Performance Block
--------- ---------
1999 Performance Block
--------- ---------
2. PROVISIONS OF AGREEMENT CONTROLLING. The Purchaser specifically
understands and agrees that the Plan Shares issued under the 1984 Plan are being
sold to the Purchaser pursuant to the 1984 Plan, as amended, and the Plan Shares
issued under the 1985 Plan are being sold to the Purchaser pursuant to the 1985
Plan, as amended, copies of which Plans Purchaser acknowledges he or she has
read, understands and by which he or she agrees to be bound. The provisions of
the Plans are incorporated herein by reference. In the event of a conflict
between the terms and conditions of the Plans and this Agreement the provisions
of this Agreement will control.
3. RESTRICTIONS ON DISPOSITION. In accordance with Paragraph 5(b) of
each of the Plans, the Purchaser may not, and hereby specifically agrees
that he or she shall not pledge, encumber, hypothecate, assign, sell, transfer,
give or otherwise dispose of the Plan Shares, provided, however, that all of the
aforesaid restrictions shall lapse and shall no longer apply to:
(a) Any Plan Shares in any Performance Blocks owned by the Purchaser
upon the Purchaser's death.
(b) Any Plan Shares in any Performance Blocks owned by the Purchaser
upon the Purchaser's "Disability" (as that term is specifically defined in
Paragraph 8 hereof).
(c) Any Plan Shares in all Performance Blocks owned by the Purchaser
upon the tenth annual anniversary of the Closing Date, provided that the
Purchaser is at such date an employee or director of the Corporation and has
been an employee or director of the Corporation on at least five (5) consecutive
preceding anniversary dates.
(d) Any Plan Shares in a Performance Block at the rate specified in the
Appendix to this Agreement if the criteria for the performance of the
Corporation for the year designated for the Performance Block, as set forth in
the Appendix, are attained.
(e) Any Plan Shares in all Performance Blocks owned by the Purchaser
upon the occurrence of a Change of Control unless such Change of Control shall
have been approved by a resolution adopted by the Board of Directors of the
Corporation with at least two-thirds (2/3) of the then serving Corporation
directors who are Corporation directors as of the date hereof voting in favor.
As used herein, a "Change of Control" shall be deemed to have occurred (i) if
any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended), other than the Corporation or any
employee stock plan of the Corporation, is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation representing fifteen
percent (15%) or more of the outstanding Common Stock of the Corporation; or
(ii) ten (10) days following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by any "person"
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of fifteen percent (15%) or more of the Common Stock of the Corporation,
provided, however, that at the conclusion of such ten (10) day period such
person has not discontinued or rescinded his intention to make such a tender or
exchange offer, or (iii) if during any consecutive twelve (12) month period
beginning on or after November 6, 1991 individuals who at the beginning of such
period were directors of the Corporation cease, for any reason, to constitute
at least a majority of the Board of Directors of the Corporation; or (iv) if a
merger of, or consolidation involving, the Corporation in which the
Corporation's stock is converted into securities of another corporation or into
cash shall be consummated, or a plan of complete liquidation of the Corporation
(whether or not in connection with a sale of all or substantially all of the
Corporation's assets) shall be adopted and consummated, or substantially all of
the Corporation's operating assets are sold (whether or not a plan of
liquidation shall be adopted or a liquidation occurs), excluding in each case a
transaction solely for the purpose of reincorporating the Corporation in a
different jurisdiction or recapitalizing the Corporation's stock.
(f) The occurrence of the events described in the aforementioned
Subsections (a), (b), (c), (d) and (e) shall each be deemed a ("Lapsing Event").
(g) Plan Shares as to which the restrictions on disposition have not
lapsed are hereinafter referred to as "Restricted Shares."
(h) Any disposition or encumbrance of any Restricted Shares contrary to
the provisions hereof shall be null and void, and the Corporation shall have no
obligation to recognize or give effect to such disposition or encumbrance on its
books and records or otherwise.
4. ADDITIONAL SHARES. As used in this Agreement, the term "Restricted
Shares" shall be deemed to include any securities issued in respect of the
Restricted Shares as a result of a stock split, stock dividend, combination of
shares or an exchange for other securities by reclassification, redesignation,
merger, consolidation, recapitalization or otherwise.
5. ESCROW OF SHARE CERTIFICATES. Certificates representing Plan Shares
shall be delivered to Devine, Millimet & Branch, P.A., of Manchester, New
Hampshire, as Escrow Agent. The Escrow Agent will deliver any Plan Shares as to
which restrictions have lapsed pursuant to Section 3 above to the Purchaser as
soon as practicable after receipt of written notice signed by either the
President, Secretary or Treasurer of the Corporation that a Lapsing Event has
occurred. Such notice shall identify the Lapsing Event, and shall instruct the
Escrow Agent to deliver such Plan Shares as to which restrictions have lapsed.
The Escrow Agent will deliver all Plan Shares then held in escrow to the
Purchaser as to which restrictions have lapsed pursuant to Section 3(e) upon
receipt of written notice signed by Purchaser that a Lapsing Event pursuant to
Section 3(e) has occurred.
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6. TAX LIABILITY OF THE PURCHASER AND PAYMENT OF TAXES. The Purchaser
agrees that, to the extent that the lapsing of restrictions on disposition of
any of the Restricted Shares or the declaration of dividends on any such shares
before the lapse of such restrictions on disposition results in the Purchaser's
being deemed to be in receipt of earned income under the provisions of the
Internal Revenue Code of 1986, as amended, the Corporation shall be entitled to
immediate payment from the Purchaser of the amount of any tax required to be
withheld by the Corporation with respect to such earned income as follows:
(i) in cash to the extent of the greater of two thousand, five hundred
dollars ($2,500.00) or ten percent (10%) of such withholding tax, and
(ii) by the Purchaser's issuing a promissory note (the "Promissory
Note") to the Corporation in principal amount equal to the full amount of the
balance of such withholding tax, which Promissory Note shall be due and payable
with interest at the annual rate of the prime rate of Fleet Bank of
Massachusetts, N.A. in effect at the date of the note plus one percent (1%),
ninety (90) days after the date on which the taxable event has occurred. The
Promissory Note shall also provide for mandatory prepayments equal to (a)
twenty-five percent (25%) of any net cash compensation, payable to the Purchaser
by the Corporation after the date of the Promissory Note, and (b) one hundred
percent (100%) of the proceeds from the sale by Purchaser of any of the Plan
Shares then owned. The Promissory Note shall be secured by a pledge of all the
Plan Shares which caused the tax liability to occur. Said Promissory Note and
pledge shall each be in form and substance reasonably satisfactory to the
Corporation.
In the event Purchaser does not comply with the foregoing within three
(3) days after the due date for payment and presentation of documentation
indicating the tax required to be withheld by the Corporation, the Corporation,
in addition to its other remedies, will be entitled to the entire amount due
hereunder from any salary or any other payments due to the Purchaser from the
Corporation.
7. SECURITIES LAW COMPLIANCE. The Purchaser represents that any sales
of Plan Shares at a time when the Purchaser may be deemed an "affiliate" of the
Corporation for purposes of the Securities Act of 1933, as amended (the "Act"),
shall be made in accordance with the requirements of Rule 144 under the Act (or
any successor rule) applicable to sales by an "affiliate" of shares registered
under the Act or in a transaction otherwise exempt from the registration
requirements of the Act and as to which the Corporation shall have received an
opinion of counsel satisfactory to it confirming such exemption.
8. CORPORATION'S DUTY ON OCCURRENCE OF LAPSING EVENT. Upon the
occurrence of a Lapsing Event described in Section 3(c) or 3(d), the Corporation
shall give notice of such event to the Escrow Agent immediately, but in no
event, later than fifteen days after such event. Upon the occurrence of a
Lapsing Event described in Section 3(a) or 3(b) and upon receipt of written
request of a duly appointed executor or administrator of the estate of the
Purchaser, in the case of death of the Purchaser or the duly
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authorized representative of the Purchaser or the Purchaser, in the case
of Disability of the Purchaser, and of documentation reasonably satisfactory to
the Corporation which substantiates the fact of death or Disability, the
Corporation shall notify the Escrow Agent as soon as practicable, but in no
event, later than fifteen (15) days after receipt of such request.
The term "Disability" shall mean permanent and total disability as
defined in the Corporations's Wage Continuation Plan in effect at the time such
Disability is being determined.
9. SALE OF RESTRICTED SHARES TO CORPORATION UPON TERMINATION OF
SERVICE.
(a) In the event that the Purchaser's employment with, or position as a
director of, the Corporation terminates for any reason (hereinafter
"Termination") other than death, Disability or Change of Control as defined in
Section 3(e) above, then, on the effective date of Termination, the Corporation
shall send written notice to the Escrow Agent of such event, no sooner than
twenty days and no later than thirty days after the effective date of
Termination. Such notice shall contain instructions to the Escrow Agent of
either (i) the Corporation's intention to repurchase the Restricted Shares from
Purchaser, or (ii) the Corporation's determination not to purchase all or any
portion of the Restricted Shares.
(b) The Corporation will be deemed to have determined not to, and
agrees that it will not, purchase all or any portion of the Restricted Shares in
the event that:
(1) the Purchaser has an employment agreement with the
Corporation which provides, among other things, that such Purchaser
shall immediately upon (i) a Change of Control (as defined therein),
(ii) Constructive Termination (as defined therein) following a Change of
Control, or (iii) termination of employment by the Corporation without
"good cause" (as defined and as may be further conditioned therein),
have the unconditional, unencumbered and free right, title and interest
in all shares of stock of the Corporation which were granted, sold or
optioned to the Purchaser by the Corporation at any time prior to the
effective date of termination of employment as if all restrictions had
lapsed and all events necessary to vest in the Purchaser such rights,
including the lapsing of time, had occurred; and
(2) a condition specified in (i), (ii) or (iii) above, as the
case may be, has occurred.
In the event that conditions (1) and (2) above have been met, the
provisions in this Section 9(b), and not the provisions of Section 9(f) below,
shall apply.
(c) The Corporation will be deemed to have determined to, and agrees
that it will, purchase all or any portion of the Restricted Shares in the event
that the Corporation shall have terminated the Purchaser's employment for good
cause. As used herein, "good cause" shall mean and be limited to a
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material breach of the Purchaser's employment obligations or obligations of
confidentiality, all as may be specified in an employment agreement between the
Purchaser and the Corporation, or any action by the Purchaser during the term
of this Agreement involving willful malfeasance or gross (but not simple)
negligence on the part of the Purchaser in a material respect. Notwithstanding
the foregoing, following a Change of Control, "good cause" shall not be deemed
to have occurred unless (1) the conduct which is the basis for such material
breach is either willful or intentionally unlawful, and (2) the Purchaser shall
not have ceased such conduct or cured the effect thereof, if curable, so that
such breach shall no longer be material within thirty (30) days after the
Purchaser shall have received written notice from the Corporation of the
Corporation's intention to terminate the Purchaser's employment for good cause,
which notice shall specify in detail the basis therefor.
(d) If the Corporation elects, or is required pursuant to Subsection
(c) above, to purchase the Restricted Shares from the Purchaser, the Escrow
Agent shall deliver such Restricted Shares immediately to the Secretary of the
Corporation and the Corporation shall contemporaneously with the receipt thereof
make payment to the Purchaser at the price specified in Section 1 above.
(e) If the Corporation elects, or is required pursuant to Subsection
(b) above, not to purchase all or any portion of the Restricted Shares, the
Escrow Agent shall forthwith deliver one or more certificates representing the
Restricted Shares the Corporation has determined not to purchase to the
Purchaser and the Purchaser shall be restored to all rights as a stockholder
with respect to those shares as of the effective date of Termination. The
Corporation may impose such restrictions as it deems appropriate on the transfer
of the Restricted Shares which it does not purchase hereunder, subject to the
limitations set forth in Paragraph 7 of each of the Plans. Notwithstanding the
foregoing, if the conditions set forth in Subsection (b) above have been met,
then no such restrictions may be imposed by the Corporation.
(f) Unless otherwise stated in Subsection (b) above, if the Corporation
does not within sixty (60) days after the effective date of Termination give
written instructions to the Escrow Agent, then the Corporation will be deemed to
have instructed the Escrow Agent to purchase the Restricted Shares from the
Purchaser and the terms of Section (d) above shall apply.
10. EQUITABLE RELIEF, CONSENT TO JURISDICTION AND APPOINTMENT OF AGENT
FOR SERVICE OF PROCESS. The Purchaser specifically acknowledges and agrees that
in the event of a breach or threatened breach of the provisions of this
Agreement or either of the Plans, including the attempted transfer of the
Restricted Shares by the Purchaser, monetary damages may not be adequate to
compensate the Corporation, and, therefore, in the event of such a breach or
threatened breach, in addition to any right to damages, the Corporation shall be
entitled to equitable relief in any court having competent jurisdiction. Nothing
herein shall be construed as prohibiting the Corporation from pursuing any other
remedies available to it for any such breach or threatened breach.
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The Purchaser specifically consents to the jurisdiction of the courts of
the State of New Hampshire and to the appointment of the Secretary of the
Corporation as his or her agent for the service of process in any action,
whether at law or in equity, brought by the Corporation to protect any of its
rights hereunder or under the Plans.
11. NO IMPLIED AGREEMENT. Nothing herein contained shall be deemed to
give the Purchaser the right to be retained in the employ of the Corporation.
12. NOTICES. All notices required by this Agreement shall be in
writing signed by the party giving such notice and shall be delivered by
registered or certified mail, postage prepaid, to the addresses set forth below:
To the Corporation: Ekco Group, Inc.
98 Spit Brook Road, Suite 102
Nashua, New Hampshire 03062
Attention: Corporate Secretary
To the Purchaser: Purchaser's last address in the records of
the Corporation
13. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and upon their respective successors and assigns and upon Purchaser's
heirs, executors and administrators.
14. GOVERNING LAW. This Agreement shall be interpreted and construed
in accordance with the laws of the State of New Hampshire.
15. SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, then such
provision or provisions shall be modified to the extent necessary to make such
provision valid and enforceable, and to the extent that this is impossible, then
such provision shall be deemed to be excised from this Agreement, and the
validity, legality and enforceability of the rest of this Agreement shall not be
affected thereby.
16. ENTIRE AGREEMENT. This Agreement, the Appendix hereto and the
Plans constitute the entire agreement among the parties with respect to the
subject matter hereof, and may not be modified, amended, renewed, or terminated,
nor may any term, condition or breach of any term or condition be waived, except
by a writing signed by the person or persons sought to be bound by such
modification, amendment, renewal, termination or waiver. Any waiver of any
term, condition or breach hereof shall not
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be a waiver of any other term or condition or of the same term or condition for
the future, or of any subsequent breach.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EKCO GROUP, INC.
By:_________________________________
Title:______________________________
Date:_______________________________
PURCHASER:
____________________________________
(Signature)
Date: ______________________________
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APPENDIX
The Plan Shares purchased pursuant to this Agreement are subject to
special conditions on the lapsing of restrictions on transfer contained in
Section 3 of the Agreement and hereinbelow. The conditions set forth in
Sections 3(c) and 3(d), as more fully described below, of the Agreement are in
lieu of the restrictions contained in Paragraph 5(b)(i)(C) of each of the Plans,
it being intended that all other provisions of the Plans as the same relate to
restrictions on disposition and the lapse thereof remain in full force and
effect.
Restrictions on disposition may lapse earlier than the time specified in
Section 3(c) of the Agreement in accordance with the following:
1. Restrictions on disposition of Restricted Shares will lapse as to
twenty percent (20%) of any Performance Block owned by the Purchaser for each
full year of employment following the later to occur of (a) January 1 of the
year designated for the Performance Block, or (b) the Closing Date for the
Restricted Shares in such Performance Block, provided that the Target Return on
Capital (as defined below) is attained for the designated year of the
Performance Block.
EXAMPLE: Assume that the Closing Date for Restricted Shares in
each Performance Block is February 1, 1995 and that the Target Return on
Capital is achieved in 1995, but not achieved in 1996. If the
Purchaser's employment with the Corporation terminates on February 1,
1997, restrictions on disposition will have lapsed as to 40% of the
Restricted Shares in the 1995 Performance Block; restrictions on
disposition will be maintained on the remaining 60% of Restricted Shares
in the 1995 Performance Block and on 100% of the Restricted Shares in
the 1996 through 1999 Performance Blocks, subject to the right of the
Committee (as defined in each of the Plans) not to repurchase such
shares pursuant to the terms of Paragraph 7 of such Plans.
2. Restrictions on disposition of Restricted Shares in a Performance
Block which would have lapsed in Paragraph 1 above but did not because the
Target Return on Capital was not attained will retroactively lapse whenever the
amount in (X) is equal to or greater than the amount in (Y) where (X) is the
cumulative total of actual Pre-Tax Operating Profits (as defined below) for the
designated year for the Performance Block and each following year and (Y) is the
cumulative total of Pre-Tax Operating Profits which would have been earned if
Target Returns On Capital had been achieved for the designated year for the
Performance Block and each following year up to the point of measurement.
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EXAMPLE: Assume that the Closing Date for Restricted Shares
in each Performance Block is February 1, 1995 and that the Target
Returns on Capital are not achieved in 1995 or in 1996. If cumulative
Pre-Tax Operating Profits in 1995 through 1997 equal or exceed the total
Target Returns on Capital for all such years, restrictions on
disposition on Restricted Shares in the 1995 through 1997 Performance
Blocks will lapse on December 31, 1997 as follows: As to 40% of
Restricted Shares in the 1995 and 1996 Performance Blocks and as to 20%,
in the 1997 Performance Block. On February 1, 1998, restrictions will
lapse as to an additional 20% of the 1995 Performance Block. Thereafter,
restrictions on disposition on Restricted Shares in the 1995 through
1997 Performance Blocks will continue to lapse at the rate of 20% per
year until all such shares are free of restriction without regard to
Returns on Capital after 1997.
3. For the purposes of this Appendix, the terms below shall have the
meanings attributed to them. Such terms shall refer to the consolidated
financial statements of the Corporation, as reported periodically to the
Securities and Exchange Commission, adjusted to omit the effects of
extraordinary items, discontinued operations, changes in accounting and to
reflect such other adjustments as are deemed appropriate by the Committee (as
defined below).
(a) "Average Invested Capital" means in any year, the sum of
stockholders' equity in the Corporation plus interest-bearing debt determined on
average by referring to these amounts at the last day of the preceding year and
at the end of each calendar quarter in the current year.
(b) "Committee" means the Compensation Committee of the Board of
Directors of the Corporation or any successor to such Committee.
(c) "Pre-Tax Operating Profit" means consolidated operating profit
(i.e., revenues less cost of goods sold and selling, general and administrative
expenses) but before interest expense, amortization of goodwill and income
taxes.
(d) "Return on Capital" means the percentage determined by dividing the
Pre-Tax Operating Profit for a fiscal year by the Average Invested Capital for
the same year.
(e) "Target Return On Capital" means the Return on Capital which the
Committee has determined appropriate for the following fiscal years:
Fiscal Year Performance Block Target Return on Capital
----------- ----------------- ------------------------
1995 1995 Performance Block 17%
1996 1996 Performance Block 18%
1997 1997 Performance Block 19%
1998 1998 Performance Block 20%
1999 1999 Performance Block 21%
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EKCO GROUP, INC.
RESTRICTED STOCK PURCHASE AGREEMENTS
SCHEDULE
Each of the following employees of the Company has a Restricted Stock
Purchase Agreement with the Company which covers the following blocks of
restricted shares awarded as of January 1, 1995 pursuant to the Company's 1984
and 1985 Restricted Stock Plans which is identical in form to the foregoing
Form of Restricted Stock Purchase Agreement except as to the number of shares
in each such Performance Block:
Name and Job Title(s) No. of Shares in Performance Block for Each Year
--------------------- ------------------------------------------------
1995 1996 1997 1998 1999
Robert Stein 1984 Plan: 13,300 -0- -0- -0- -0-
President & Chief 1995 Plan: 5,916 19,216 19,216 19,216 19,216
Executive Officer
Jeffrey A. Weinstein 1984 Plan: 3,723 -0- -0- -0- -0-
Executive Vice Presi- 1985 Plan: 1,657 5,380 5,380 5,380 5,380
dent, Secretary &
General Counsel
Donato A. DeNovellis 1984 Plan: 3,016 1,840 -0- -0- -0-
Executive Vice Presi- 1985 Plan: -0- 6,176 8,016 8,016 8,016
dent, Finance & Admi-
nistration, and Chief
Financial Officer
Richard J. Corbin 1984 Plan: 6,611 -0- -0- -0- -0-
Executive Vice Presi- 1995 Plan: 2,942 9,553 9,553 9,553 9,553
dent, Marketing &
Sales and President,
Ekco Housewares, Inc.
Neil R. Gordon 1984 Plan: 1,329 -0- -0- -0- -0-
Treasurer 1985 Plan: 593 1,922 1,922 1,922 1,922
Brian R. McQuesten 1984 Plan: 1,675 -0- -0- -0- -0-
Controller 1985 Plan: 741 2,416 2,416 2,416 2,416
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EX-10.3(D)
4
INCENTIVE STOCK OPTION PLAN AGMT
1
EXHIBIT 10.3(d)
INCENTIVE STOCK OPTION AGREEMENT
EKCO GROUP, INC.
AGREEMENT made as of the [DATE] (the "Grant Date"), between
Ekco Group, Inc., a Delaware corporation having a principal place of business
in Nashua, New Hampshire, and [NAME OF EMPLOYEE], of [ADDRESS OF EMPLOYEE], an
employee of [NAME OF COMPANY], an Affiliate of the Company (the "Employee").
WHEREAS, the Company desires to grant to the Employee an
Option to purchase shares of its common stock of a par value of $.01 a share
(the "Shares") under and for the purposes of the Company's 1987 Stock Option
Plan, as amended (the "Plan");
WHEREAS, the Company and the Employee understand and agree
that any terms used herein have the same meanings as in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the
parties hereto agree as follows:
1. GRANT OF OPTION
The Company hereby grants to the Employee the right and option
to purchase at one time or from time to time all or any part of an aggregate of
[NUMBER OF SHARES] Shares, subject to adjustment as provided in the Plan, on
the terms and conditions and subject to all the limitations set forth herein
and in the Plan, which is incorporated herein by reference. The Employee
acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE
The purchase price of the Shares covered by this Option shall
be [EXERCISE PRICE] per Share, subject to adjustment as provided in the Plan
(the "Purchase Price").
3. EXERCISE OF OPTION
(a) Subject to the provisions of this Agreement, the Option granted
hereby shall be exercisable within the term set forth in Section 4 below as
follows:
(i) As to up to [ONE-FIFTH OF THE NUMBER OF SHARES GRANTED] Shares
covered by this Option: at any time and from time to time on or
after the first Award Anniversary;
(ii) As to up to an additional [ONE-FIFTH OF THE NUMBER OF SHARES
GRANTED] Shares covered by this Option: at any time and from time to
time on or after the second Award Anniversary;
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(iii) As to up to an additional [ONE-FIFTH OF THE NUMBER OF SHARES
GRANTED] Shares covered by this Option: at any time and from time to
time on or after the third Award Anniversary;
(iv) As to up to an additional [ONE-FIFTH OF THE NUMBER OF SHARES
GRANTED] Shares covered by this Option: at any time and from time to
time on or after the fourth Award Anniversary; and
(v) As to up to all Shares covered by this Option: at any time
and from time to time on or after the fifth Award Anniversary.
For purposes of this Subsection (a), the term "Award Anniversary" shall mean
any twelve month anniversary of the Grant Date.
Notwithstanding the foregoing and except as provided in
Section 4 below providing for exercises under other circumstances, this Option
may not be exercised in whole or in part unless the Employee is then in the
employ of the Company or an Affiliate and, unless at the time of the exercise,
the Employee shall have been continuously employed within the meaning of
Section 422A(a)(2) of the Code.
(b) Notwithstanding the provisions of the foregoing Subsection (a)
and except as otherwise provided herein or in the Plan, this Option, to the
extent not previously exercised, shall become fully exercisable to the same
extent and in the same manner as if it had become exercisable by the passage of
time specified in Subsection (a) above in the event of, and immediately upon,
the occurrence of:
(i) The termination of the Employee's employment as a result of
death; or
(ii) The termination of the Employee's employment as a result of
Disability.
4. TERM OF OPTION
(a) This Option shall terminate ten (10) years from the Grant Date
of this Option, but shall be subject to earlier termination as provided herein
or in the Plan.
(b) If the Employee ceases to be an employee of the Company or of
an Affiliate (for any reason other than death or Disability or termination by
the Employee's employer for cause), then this Option may be exercised (subject
to the provisions herein and in the Plan regarding exercise of the Option) but
only within three (3) months after the date on which the Employee ceases to be
an employee, or within ten (10) years from the granting of this Option,
whichever is earlier, and may not be exercised thereafter. In such event, this
Option shall be exercisable only to the extent that the right to purchase
shares under the Plan has accrued and is in effect at the date of such
cessation of employment.
The provisions of this Subsection (b), and not the provisions of Subsections
(c) and (d) below, shall apply to the Employee if the Employee subsequently
becomes
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Disabled or dies after the Employee's termination of employment; however, in
the case of the Employee's death which occurs within the three (3) months
following the termination of employment, the Employee's Survivors may exercise
this Option within six (6) months after the date of the Employee's death, but
in no event beyond the originally prescribed term hereof.
(c) In the event of the Disability (as defined in Section 422(A of
the Code), this Option shall be exercisable within one (1) year after the date
of such Disability or, if earlier, the term originally prescribed by this
Agreement.
(d) In the event of the death of the Employee while an employee of
the Company or of an Affiliate, this Option may be exercised only by the
Employee's legal representatives and/or any person or persons who acquired the
Employee's rights to this Option by will or by the laws of descent and
distribution.
The Company shall use reasonable efforts to notify the
Employee's legal representative, if known, or his or her next of kin or other
persons likely to know his or her legal representative, promptly after the date
of death of the existence of this Option. Any failure by the Company to give
such notice will not extend the period of time during which this Option may be
exercised or otherwise entitle the holder to any greater rights than stated in
this Agreement or in the Plan. This Option must be exercised, if at all,
within one (1) year after the date of death of the Employee, or, if earlier,
within the originally prescribed term of this Option.
(e) In the event the Employee's employment is terminated by the
Employee's employer for "cause" (as defined in the Plan), the Employee's right
to exercise any unexercised portion of this Option shall cease forthwith, and
this Option shall thereupon terminate.
5. NON-ASSIGNABILITY
This Option shall not be transferable by the Employee
otherwise than by will or by the laws of descent and distribution and shall be
exercisable, during the Employee's lifetime, only by the Employee (or his or
her legal representative if permitted pursuant to Section 422A of the Code).
This Option shall not be assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of this Option or of any rights granted
hereunder contrary to the provisions of this Section 5, or the levy of any
attachment or similar process upon this Option or such rights, shall be null
and void.
6. EXERCISE OF OPTION AND ISSUE OF SHARES
This Option may be exercised, in whole or in part, at one time
or from time to time (to the extent that it is exercisable in accordance with
its terms) by giving written notice to the Company. Such written notice shall
be signed by the person exercising this Option, shall state the number of
Shares with respect to which this Option is being exercised, shall contain any
warranty required by Section 7 below, and shall otherwise comply with the terms
and conditions of this Agreement and the Plan. Such notice must be received by
the Company within the relevant exercise period specified in Section 4 of this
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Agreement. Such notice shall either: (i) be accompanied by payment of the full
purchase price of such Shares, in which event the Company, subject to the
provisions of Section 7, shall deliver a certificate or certificates
representing such Shares as soon as practicable after the notice shall be
received, or (ii) fix a date (not less than five nor more than ten business
days after such notice shall be received by the Company, which date must be
within the relevant exercise period specified in Section 4 of this Agreement)
for the payment of the full purchase price of such Shares against delivery
subject to the provisions of Section 7, of a certificate or certificates
representing such Shares. Payment of such purchase price shall, in either
case, be made by check payable to the order of the Company. The certificate or
certificates for the Shares as to which this Option shall have been so
exercised shall be registered in the name of the person or persons so
exercising this Option and shall be delivered as provided above to the person
or persons exercising this Option. All Shares that shall be purchased upon the
exercise of this Option as provided herein shall be fully paid and
non-assessable.
The Company shall pay all original issue taxes with respect to
the issue of the Shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection herewith. Except as
specifically set forth herein, the holder acknowledges that any income or other
taxes due from him or her with respect to this Option or the shares issuable
pursuant to this Option shall be the responsibility of the holder. The holder
of this Option shall have rights as a shareholder only with respect to any
Shares covered by this Option after due exercise of this Option and tender of
the full exercise price for the shares being purchased pursuant to such
exercise. Pursuant to the Plan, the Company shall make delivery of the Shares
against payment of this Option price therefor.
7. PURCHASE FOR INVESTMENT
Unless the offering and sale of the Shares to be issued upon
the particular exercise of this Option shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended, or any
successor legislation (the "Act"), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
(i) The person(s) who exercise this Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for his or her own account, for investment and
not with a view to, or for sale in connection with, the distribution
of any such Shares, in which event the person(s) acquiring such Shares
shall be bound by the provisions of the following legend which shall
in substantially the following form be endorsed upon the
certificate(s) evidencing the option Shares issued pursuant to such
exercise:
"The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, in the absence
of an effective registration statement for the shares under
the Securities Act of 1933 or an opinion of counsel
satisfactory to the Company that an exemption from
registration is then available."
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(ii) The Company shall have received an opinion of its counsel that
the Shares may be issued upon such particular exercise in compliance
with the Act without registration thereunder.
Without limiting the generality of the foregoing, the Company may delay
issuance of the Shares until completion of any reasonable action or obtaining
of any consent, which the Company deems reasonably necessary under any
applicable law (including without limitation state securities or "blue sky"
laws).
8. REGISTRATION RIGHTS
(a) In the event that the Company has an effective registration
statement covering the sale and resale of securities issued pursuant to the
Plan, then the Employee agrees to sign a waiver in substantially the following
form:
"For so long as a registration statement under the Securities Act of
1933, as amended, is in effect covering the sale and resale of
securities issued pursuant to the 1987 Stock Option Plan of Ekco
Group, Inc. (the "Company"), the undersigned Employee waives his/her
rights to require the Company to file a registration statement
pursuant to Section 8 of the Incentive Stock Option Agreement dated as
of [DATE], between the undersigned Employee and the Company."
(b) The Employee acknowledges that option agreements have been
executed by the Company with [NUMBER] other employees of the Company and its
Affiliates and [NUMBER] Outside Directors of the Company and may be executed
with other employees and Directors (collectively, "Other Holders"), each
containing or to contain a section substantially identical to this Section 8.
Subject to the terms hereinafter set forth, at any time after the Grant Date,
the holder shall have the right, by written notice to the Company, to require
the Company to file and use its best efforts to cause to become effective a
registration statement under the Securities Act of 1933, as amended (the "Act")
on Form S-8, Form S-2 or Form S-3 or other like form, if available, covering
such number of Shares acquired or to be acquired prior to the effective date of
such registration statement, subject to the limitations that (i) the Company
shall be required to file no more than an aggregate of two (2) registration
statements pursuant to such notices and/or pursuant to notices received from
Other Holders, and (ii) if, in the opinion of counsel to the Company, the
holder can then sell, subject to such limitations as to the number of Shares
which may be sold as may be imposed by Rule 144 under the Act or any successor
rule, Shares requested to be included in any such registration statement,
without such registration, the Company need not so register such Shares. In no
event will the Company be required to register Shares which are subject to the
Purchase Option. The Company agrees to promptly notify a holder in the event
that it receives a notice from any of the Other Holders requiring it to file a
registration statement and to permit the holder to require the Company to
include Shares owned by the holder in such registration statement, subject to
the limitations set forth above.
(c) In connection with any registration statement pursuant to this
Section 8:
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(i) The holder will furnish to the Company in writing such appropriate
information as the Company, or the Securities and Exchange Commission
(the "Commission") or any other regulatory authority may request;
(ii) The holder agrees to execute, deliver and/or file with or supply
to the Company, the Commission, any underwriters and/or any state or
other regulatory authority such information, documents,
representations, undertakings and/or agreements necessary to carry out
the provisions of the registration agreements contained in this
Agreement and/or to effect the registration or qualification of the
Shares under the Act and/or any of the laws and regulations of any
state or governmental instrumentality;
(iii) The Company will furnish to the holder of Shares included in the
registration statement such number of copies of such prospectus
(including each preliminary, amended or supplemental prospectus) as
the holder may reasonably request; and
(iv) In the event an offering of securities by the Company is pending,
the Company shall have the right to require that the holder delay any
offering of Shares for a period of ninety (90) days after the
effective date of such pending offering (upon the Company's having
first delivered to the holder the written opinion of its principal
underwriter, or if there be none, then from an officer of the Company
based upon a good faith resolution of the Board of Directors to the
effect that the offering of such Shares will have an adverse effect on
the marketing of such pending offering.
(d) The Company will pay all its out-of-pocket expenses and
disbursements in connection with any registration statement filed under this
Section 8, including, without limitation, printing expenses, fees of the
Company's counsel and auditors, registration fees, blue sky fees and similar
costs to the extent permitted by state and regulatory authorities.
(e) The Company will be obligated to keep any registration
statement filed by it under this Section 8 effective under the Act for a period
of ninety (90) days after the actual effective date of such registration
statement and to prepare and file such supplements and amendments necessary to
maintain an effective registration statement for such period. As a condition
to the Company's obligation under this Subsection (e), the holder will execute
and deliver to the Company such written undertakings as the Company and its
counsel may reasonably require in order to assure full compliance with relevant
provisions of the Act.
(f) The Company will use its best efforts to register or qualify
the Shares covered by a registration statement filed pursuant hereto under such
securities or Blue Sky laws in such jurisdictions within the United States as
the holder may reasonably request, provided, however, that the Company reserves
the right, in its sole discretion, not to register or qualify such stock in any
jurisdiction where such stock does not meet with the requirements of such
jurisdiction or where the Company is required to qualify as a foreign
corporation to do business in such jurisdiction and is not so qualified therein
or is required to file any general consent to service of process.
6
7
(g) In the event that a holder has not sold all of his or her
Shares on or prior to the expiration of the period specified in Subsection (e)
above, the holder hereby agrees that the Company may deregister by
post-effective amendment any of his or her Shares covered by the registration
statement or notification but not sold on or prior to such date. The Company
agrees that it will notify the holder of the filing and effective date of such
post-effective amendment.
(h) The holder agrees that upon notification by the Company that
the prospectus in respect to any public offering covered by the provisions
hereof is in need of revision, the holder will immediately upon receipt of such
notification (i) cease to offer or sell any securities of the Company which
must be accompanied by such prospectus; (ii) return to the Company all such
prospectuses in the hands of the holder; and (iii) not offer or sell any
securities of the Company until the holder has been provided with a current
prospectus and the Company has given the holder notification permitting the
holder to resume offers and sales.
9. NOTICES
Any notices required or permitted by the terms of this Agreement or the Plan
shall be given by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
To the Company: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: General Counsel
To the Employee: Employee's last address in the
records of the Company or an Affiliate
or to such other address as either party furnishes to the other by like notice.
Any such notice shall be deemed to have been given when mailed in accordance
with the foregoing provisions.
10. GOVERNING LAW
This Agreement shall be construed and enforced in accordance
with the law of the State of New Hampshire, except to the extent the law of the
State of Delaware may be applicable.
11. BENEFIT OF AGREEMENT
This Agreement shall be for the benefit of and shall be
binding upon the heirs, executors, administrators, legal representatives and
successors of the parties hereto, subject to the provisions of Section 5 above.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed and delivered by its duly authorized officer and its corporate seal
to be hereunto affixed and the Employee has hereunto set his or her hand and
seal all as of the day and year first above written in duplicate originals.
7
8
EKCO GROUP, INC.
[SEAL]
By_______________________________
Title____________________________
_________________________________
EMPLOYEE
8
9
EKCO GROUP, INC.
1987 STOCK OPTION PLAN
SCHEDULE
Each of the following person named in the Summary Compensation Table,
as well as a number of employees of operating subsidiaries of the Company, has
a Incentive Stock Option Agreement with the Company covering shares purchased
pursuant to the Company's 1987 Stock Option Plan which is substantially similar
in form to the foregoing Form of Incentive Stock Option Agreement except as to
the date, number of shares, and exercise price:
No. of Per Share
Name and Job Title(s) Dates Shares Exercise Price
--------------------- ----- ------ --------------
Ronald N. Fox 10-28-88 15,000 $ 2.25
Senior Vice President,
Operations
Frem Corporation
Richard J. Corbin 05-09-94 30,000 $ 7.00
Executive Vice President,
Marketing & Sales
Ekco Group, Inc. and
President
Ekco Housewares, Inc.
9
EX-10.3(F)(2)
5
SCHEDULE TO STOCK OPTION PLAN
1
EXHIBIT 10.3(f)(2)
------------------
EKCO GROUP, INC.
1987 STOCK OPTION PLAN
SCHEDULE
Each of the following employees of the Company has a Non-Qualified
Stock Option and Repurchase Agreement with the Company covering shares
purchased pursuant to the Company's 1987 Stock Option Plan which is identical
in form to the foregoing Form of Non-Qualified Stock Option and Repurchase
Agreement except as to the date, number of shares, and exercise price:
No. of Per Share
Name and Job Title(s) Dates Shares Exercise Price
--------------------- ----- ------ --------------
Robert Stein 01-13-92 77,000 $10.0625
President & Chief Executive 01-19-93 120,000 $11.3125
Officer 01-25-94 75,000 $ 7.5625
01-03-95 66,359 $ 6.50
Jeffrey A. Weinstein 01-13-92 27,500 $10.0625
Executive Vice President, 01-19-93 60,000 $11.3125
Secretary & General Counsel 01-25-94 22,000 $ 7.5625
01-03-95 16,491 $ 6.50
Donato A. DeNovellis 07-14-93 30,000 $10.0625
Executive Vice President, 01-25-94 20,000 $ 7.5625
Finance & Administration 01-03-95 24,538 $ 6.50
and Chief Financial Officer
Richard J. Corbin 01-03-95 29,288 $ 6.50
Executive Vice President,
Marketing & Sales
Ronald N. Fox 01-13-92 27,500 $10.0625
Senior Vice President 01-19-93 60,000 $11.3125
01-25-94 16,000 $ 7.5625
Neil R. Gordon 01-13-92 9,500 $10.0625
Treasurer 01-19-93 9,000 $11.3125
01-25-94 8,500 $ 7.5625
01-03-95 5,937 $ 6.50
Brian R. McQuesten 01-13-92 9,500 $10.0625
Controller 01-19-93 10,000 $11.3125
01-25-94 8,500 $ 7.5625
01-03-95 6,992 $ 6.50
Harry E. Whaley 01-13-92 18,500 $10.0625
President, Woodstream
Corporation (subsidiary
of the Company)
EX-10.4
6
INDEMNITY AGMT
1
EXHIBIT 10.4
INDEMNITY AGREEMENT
This Agreement is made as of the ____ day of _____, 19___, by and
between Ekco Group, Inc., a Delaware corporation (the "Corporation"), and
____________ ("Indemnitee") with reference to the following facts:
Indemnitee is currently serving as a director or officer of
the Corporation [and/or one of its Subsidiaries] and the Corporation
wishes Indemnitee to continue in such capacity. Indemnitee is
willing, under certain circumstances, to continue in such capacity.
In addition to the indemnification to which Indemnitee is or
may be entitled pursuant to the Bylaws of the Corporation, and as
additional consideration for Indemnitee's service, the Corporation
has, in the past, furnished at its expense directors' and officers'
liability insurance protecting Indemnitee in connection with such
service. Only a limited amount of such insurance is currently in
effect.
Indemnitee has indicated that he does not regard the
indemnification provisions available under the Corporation's Bylaws
and insurance in effect to be adequate to protect him against the
risks associated with his service to the Corporation. Indemnitee may
not be willing to continue in office in the absence of obtaining
insurance such as that which he has heretofore enjoyed.
In order to induce Indemnitee to continue to serve as a [director or
officer] of the Corporation [and/or one of its Subsidiaries] and to encourage
Indemnitee's free exercise of his entrepreneurial judgment on behalf of the
Corporation and in consideration of his continued service, the Corporation
hereby agrees to indemnity Indemnitee as follows:
1. The Corporation will pay on behalf of Indemnitee and his
executors, administrators, or assigns, any amount which he is, or becomes,
legally obligated to pay because of any claim or claims made against him after
May 18, 1993 because of any past, present or future act or omission or neglect
or breach of duty, including any actual or alleged error or misstatement or
misleading statement, which he may commit or suffer while he was, is or may
hereafter be acting in his capacity as a director or officer of the Corporation
and/or one of its Subsidiaries or solely because of his being a director or
officer. The payments which the Corporation will be obligated to make hereunder
shall include, INTERALIA, damages, judgments, settlements and costs, cost of
investigation (excluding salaries of officers or employees of the Corporation)
and costs of defense of legal actions, claims or proceedings and appeals
therefrom, and costs of attachment or similar bonds, provided however, that
the Corporation shall not be obligated to pay fines or other obligations or
fees imposed by law or otherwise which it is prohibited by applicable law
from paying as indemnity or for any other reason.
2. If a claim under this Agreement is not paid by the Corporation,
or on its behalf, within ninety days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and if successful, in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim.
2
3. In the event of payment under this Agreement, the Corporation
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Corporation effectively to bring suit
to enforce such rights.
4. The Corporation shall not be liable under this Agreement to
make any payment in connection with any claim made against Indemnitee:
(a) for which payment is actually made to Indemnitee under a
valid and collectible insurance policy, except with respect to any
excess beyond the amount of payment under such insurance;
(b) for which Indemnitee is entitled to indemnity and/or
payment by reason of having given notice of any circumstance which
might give rise to a claim under any policies of insurance, the terms
of which have expired prior to the effective date of this Agreement;
(c) for which Indemnitee is indemnified by the Corporation
otherwise than pursuant to this Agreement;
(d) based upon or attributable to Indemnitee gaining in fact
any personal profit or advantage to which he was not legally entitled;
(e) based upon Section 174 of the Delaware General Corporation
Law;
(f) for an accounting of profits made from the purchase or sale
by Indemnitee of securities of the Corporation within the meaning of
Section 16(b) of the Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any state statutory law or common law;
or
(g) brought about or contributed to by the dishonesty of
Indemnitee, provided that Indemnitee shall be protected under this
Agreement as to any claims upon which suit may be brought against him
by reason of any alleged dishonesty on his part, unless a judgment or
other final adjudication thereof adverse to Indemnitee shall establish
that he committed (i) acts of active and deliberate dishonesty, (ii)
with actual dishonest purpose and intent, and (iii) which acts were
material to the cause of action so adjudicated.
5. No costs, charges or expenses for which indemnity shall be
sought hereunder shall be incurred without the Corporation's consent, which
consent shall not be unreasonably withheld.
6. Action taken in Indemnitee's capacity as an Officer or Director
shall, without limitation, include any service as a Director or Officer of the
Corporation which imposes duties on, or involves services by, such Director or
Officer with respect to any employee benefit plan, its participants, or
beneficiaries or any service at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise.
7. If Indemnitee is entitled under any provision of this Agreement
to indemnification by the Corporation for some or a portion of the damages,
judgements, settlements and costs incurred, but not for the total amount
2
3
thereof, the Corporation shall nevertheless indemnify Indemnitee for the
portion to which Indemnitee is entitled.
8. Indemnitee, as a condition precedent to his right to be
indemnified under this Agreement, shall give to the Corporation notice in
writing as soon as practicable of any claim made against him for which
indemnity will or could be sought under this Agreement. Notice to the
Corporation shall be directed to 98 Spit Brook Road, Nashua, New Hampshire
03062, Attention: President (or such other address as the Corporation shall
designate in writing to Indemnitee). Notice shall be deemed received if sent
by prepaid mail properly addressed, the date of such notice being the date
postmarked. In addition, Indemnitee shall give the Corporation such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's power.
9. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one instrument.
10. Nothing herein shall be deemed to diminish or otherwise
restrict Indemnitee's right to indemnification under any provision of the
Certificate of Incorporation or Bylaws of the Corporation, or under Delaware
law.
11. If this Agreement or any portion thereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Corporation
shall nevertheless indemnify Indemnitee as to expenses, judgments, fines and
penalties with respect to any proceeding to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated or by
any other applicable law.
12. This Agreement shall be binding upon any successor to the
Corporation.
13. This Agreement shall be governed by and construed in accordance
with Delaware law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
EKCO GROUP, INC.
By
---------------------------
---------------------------
Indemnitee
Date:
-----------------------
3
4
SCHEDULE OF INDEMNITY AGREEMENTS
WITH EKCO GROUP, INC.
Each of the following persons has an indemnity agreement with Ekco
Group, Inc. which is identical in form to the foregoing Indemnity Agreement
except that agreements executed before April 29, 1988 bear the former company
name of Centronics Corporation and agreements executed before February 17, 1987
bear the former name of Centronics Data Computer Corp.:
Present Position
Name With the Company Date of Agreement
---- ---------------- -----------------
Edmond M. Coller Former Director 02-12-87
Richard J. Corbin Executive Vice President, 10-26-94
Marketing and Sales
Donato A. DeNovellis Executive Vice President, 10-26-94
Finance & Administration,
and Chief Financial Officer
Andrew D. Dunn Director 08-03-87
Ronald N. Fox Senior Vice President, 06-30-87
Operations, Frem Corporation
Neil R. Gordon Treasurer 07-30-86
Thomas G. Kamp Former Director & Officer 07-30-86
Michael D. Kaufman Former Director 01-04-87
Robert W. Kilcullen, Jr. Former Director & Officer 07-30-86
Milton C. Lauenstein Former Director 08-18-87
T. Michael Long Director 05-18-93
Brian R. McQuesten Controller 07-30-86
Linda R. Millman Associate General Counsel 01-01-92
& Assistant Secretary
Kenneth J. Novack Former Director 08-10-87
Stuart B. Ross Director 02-14-89
Harold J. Seigle Former Director 08-03-87
Bill W. Sorenson Director 03-15-88
Herbert M. Stein Director 08-03-87
Robert Stein President & Chief 07-30-86
Executive Officer
Jeffrey A. Weinstein Executive Vice President, 07-30-86
Secretary & General Counsel
4
EX-10.6(A1)
7
EMPLOYEES' STOCK OWNERSHIP PLAN
1
EXHIBIT 10.6(a)(1)
____________________________________________
EKCO GROUP, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
____________________________________________
Effective January 1, 1989
Restated as of January 1, 1992
2
EKCO GROUP, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
________________________________________
ARTICLE 1: ADOPTION OF ESOP
1. PLAN NAME AND EFFECTIVE DATE. The plan name is the EKCO GROUP, INC.
EMPLOYEES' STOCK OWNERSHIP PLAN. This employee stock ownership plan was
adopted effective as of January 1, 1989. The employer intends that the plan be
a qualified plan under Internal Revenue Code Section 401 and related provisions
and has authorized its counsel to submit the plan to the Service for review and
comment. After review of the plan, the Service has indicated that it will
issue a favorable determination letter subject to the employer making certain
amendments to the plan, which are incorporated in this restated document. In
addition, the employer has authorized amendments to the plan which will revise
certain rules of plan administration and those revised rules are also included
herein.
2. PLAN TO COMPLY WITH CODE AND ERISA. The employer intends this plan to
comply with all applicable provisions of the Code and ERISA. The plan is
specifically meant to qualify:
a. as a stock bonus plan under Code Section 401(a), and
b. as an employee stock ownership plan within the meaning of Code
Section 4975(e)(7) and Section 407(d)(6) of ERISA, and
c. as an eligible individual account plan within the meaning of
Section 407(d)(3) of ERISA.
3. PURPOSE. Through the vehicle of this employee stock ownership plan, the
employer intends to provide employees with a significant interest in its voting
common stock. The employer wants employees to have this ownership stake so
that employees will increase productivity and associate long term gains in
employer stock value with their own personal success.
ARTICLE 2: DEFINITIONS
Certain terms used in the plan are defined in this article. Other
terms are defined elsewhere in the plan and the location of the definitions
appears in this article. There is no significance to the location of a
particular definition.
EKCO Group, Inc. Employees' Stock Ownership Plan
- 1 -
3
1. ACCOUNT is the bookkeeping entry maintained by the plan administrator
to keep track of each participant's interest in the trust fund. Subaccounts
may be maintained when appropriate. Accounting rules appear in Article 6.
2. AFFILIATED EMPLOYER means any corporation which is a member of a controlled
group of corporations (as defined in Section 414(b) of the Code) which includes
the employer, any trade or business (whether or not incorporated) which is
under common control (as defined in Section 414(c) of the Code) with the
employer, any organization (whether or not incorporated) which is a member of
an affiliated service group (as defined in section 414(m) of the Code) which
includes the employer, and any other entity required to be aggregated with the
employer pursuant to regulations under Section 414(o) of the Code.
3. BENEFICIARY means a person, class of persons or trust designated by a
participant or by the terms of the plan to receive any amounts payable under
the plan upon the death of a participant. A participant may name one or more
beneficiaries (and one or more contingent beneficiaries) on a beneficiary form
authorized for use by the plan administrator, which will be valid only if
delivered to the plan administrator prior to death. The sole primary
beneficiary of a participant who is married at the date of death must be his
spouse, regardless of any written designation by the participant to the
contrary; however, a spouse may waive the right to be sole primary beneficiary,
provided that the spouse's signed waiver is witnessed by a plan official or a
notary public. Any such spousal waiver may be designated either as specific
for the beneficiaries then named by the participant or may be designated as
unlimited without regard to any future change of beneficiary by the
participant. If a participant dies and no beneficiary form is on file with the
plan administrator, plan proceeds will be paid as follows: to the surviving
spouse, if any, and if none, to the estate of the participant.
4. BOARD means the board of directors of EKCO or, when the context requires,
the board of directors of an affiliated employer.
5. BREAK IN SERVICE is defined in Section 1 of Article 3 at page 6.
6. CODE means the Internal Revenue Code of 1986, as amended from time to time,
or any successor statute enacted in its place.
7. COMMITTEE means the committee constituted under Article 10 which serves as
the plan administrator.
8. COMPENSATION of an employee for any plan year is:
EKCO Group, Inc. Employees' Stock Ownership Plan
- 2 -
4
a. his salary or hourly wages paid from a participating employer
during such plan year, including:
i. overtime,
ii. bonuses (in the plan year in which paid, not when
accrued) and
iii. commissions (in the plan year in which paid, not when
accrued).
b. Compensation will be grossed up by the amount of compensation
reduction elected by the participant under any Code Section
401(k) or Code Section 125 benefit plans of EKCO or any
participating employer (except that compensation may not be
grossed up when determining the Code Section 415 limit on plan
additions, which limit is described in Article 12).
c. Compensation excludes:
i. any payments to or benefits received under this or
any other public or private employee benefit plan, and
ii. amounts paid or reimbursed for moving expenses, and
iii. amounts realized from the exercise of any
non-qualified stock option, or when restricted stock
(or property) held by an employee either becomes
freely transferable or is no longer subject to a
substantial risk of forfeiture, and
iv. any amount included in the gross income of an
employee upon the receipt of non-vested property for
services, to the extent resulting from the employee's
election to recognize income by making an election
under Code Section 83(b), and
v. amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option, and
vi. any other amounts which receive special tax benefits,
such as the tax-free portion of any premium for the
first $50,000 of group term life insurance.
EKCO Group, Inc. Employees' Stock Ownership Plan
- 3 -
5
d. The amount of any compensation in excess of $200,000, or such
larger amount as permitted by cost of living adjustments
permitted for the compensation limit in Code
Section 401(a)(17), will not be included in any participant's
compensation.
9. EKCO means EKCO GROUP, INC., a Delaware corporation and the sponsor of
the plan.
10. EMPLOYEE means any person employed as a common law employee by the
employer.
11. EMPLOYER / PARTICIPATING EMPLOYER means EKCO and each other participating
employer which adopts this plan for its employees with the consent of the board
of directors of EKCO. However, only EKCO is considered to be the employer in
any case in which this plan provides for the exercise of discretion in the
appointment of a committee member, administrator, or trustee or to the extent
the plan permits or requires the exercise of sponsorship functions such as the
amendment or termination of the plan document.
12. EMPLOYER STOCK means any qualifying employer securities, within the
meaning of Code Section 4975(e)(8), of EKCO or an affiliated employer. For
this plan, the term means either:
a. shares of voting common stock issued by EKCO or an affiliated
employer which are readily tradable on an established
securities market, or
b. shares of noncallable preferred stock, if such stock is
readily convertible into voting common stock at a price which
is reasonable as of the date the plan acquires it. (Shares
may be treated as noncallable if there is a reasonable
opportunity after any call for a conversion into common
stock.)
If at any time there are no readily tradable securities, the term
"employer stock" means securities as described in Code Section 409(1)(2).
13. ENTRY DATE is the date on which employees who satisfy the eligibility
standards of Article 4 may join the plan. January 1, 1989 is the first entry
date. Each following July 1 and January 1 are entry dates.
14. ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor statute enacted in its place.
15. EXEMPT LOAN means any loan to the plan described in Code Section
4975(d)(3), the proceeds of which are used to finance the acquisition of
employer stock or to refinance such loan.
EKCO Group, Inc. Employees' Stock Ownership Plan
- 4 -
6
16. HIGHLY COMPENSATED EMPLOYEE means an individual described in Code Section
414(q). In determining those individuals who are HIGHLY COMPENSATED EMPLOYEES,
the calendar year ending with the plan year will be considered the "lookback
year" within the meaning of regulations interpreting Code Section 414(q).
17. HOUR OF SERVICE is defined in Section 1 of Article 3 at page 6.
18. LIMITATION YEAR means, for purposes of determining maximum allocations
and benefits under the limitation rules of Code Section 415, the calendar year.
19. NORMAL RETIREMENT AGE is age 65. Participants are not required to retire
on that date.
20. PARTICIPANT means an employee who has satisfied the eligibility standards
to become a participant in the plan under Article 4. Where the context
requires or permits, participant also refers to a person who was formerly an
active participant in the plan and who retains the right to receive future
payments. A person's status as a participant will end when he has received all
benefits to which he is entitled under the plan.
21. PLAN means the EKCO GROUP, INC. EMPLOYEES' STOCK OWNERSHIP PLAN, as set
forth in this instrument and including any amendments that are subsequently
adopted.
22. PLAN ADMINISTRATOR is the named fiduciary under ERISA charged with the
administration of the plan. A committee appointed by the board is the plan
administrator. If no committee is currently appointed to serve in this
capacity, the Trustee will serve as Plan Administrator unless the Trustee
declines to so serve, in which event Ekco will be the plan administrator. The
duties of the plan administrator are set out in detail in Article 10.
23. PLAN YEAR means the 12-month period from January 1 through December 31.
The first plan year commenced as of January 1, 1989.
24. SUSPENSE ACCOUNT means the account described in Section 2(c) of Article 6
at page 13 to which shares of employer stock acquired with the proceeds of an
exempt loan are credited pending repayment of the exempt loan.
25. TOP-HEAVY DEFINITIONS, including TOP-HEAVY PLAN, KEY EMPLOYEE, PERMISSIVE
AND REQUIRED AGGREGATION GROUPS, etc. are of limited applicability, due to the
unlikely possibility of the plan ever being characterized as top-heavy within
the meaning of Code Section 416. The definitions appear in Article 13.
EKCO Group, Inc. Employees' Stock Ownership Plan
- 5 -
7
26. TRUST FUND means the employer stock and other property held by the trustee
hereunder for the purposes of the plan.
27. TRUSTEE means the person or persons named as trustee or serving from time
to time as the successor trustee in accordance with the terms of the plan. For
convenience, the masculine singular pronoun is used to describe the trustee.
The duties of the trustee are set out in a separate trust agreement to which
EKCO is a party.
28. VALUATION DATE is the last day of each plan year and any other dates
during the plan year selected by the plan administrator to value the trust
fund, as discussed more fully in Article 6.
29. VESTED means a non-forfeitable interest in an account, as discussed more
fully in Article 7.
30. YEAR OF SERVICE is defined in Section 1 of Article 3 at page 7.
31. YEAR OF ELIGIBILITY SERVICE is defined in Section 1 of Article 3 at
page 7.
32. YEAR OF VESTING SERVICE is defined in Section 1 of Article 3 at page 7.
ARTICLE 3: PLAN SERVICE
1. DEFINITIONS. The following definitions relate to the crediting of service.
a. BREAK IN SERVICE. A break in service is a calendar year in
which the employee completes 500 or fewer hours of service.
b. HOUR OF SERVICE.
i. General Definition. Hours of service are counted to
determine years of service and breaks in service.
Hour of service for an employee means:
(1) Each hour for which he is directly or
indirectly paid or entitled to payment by the
employer for the performance of duties.
(2) Each hour for which he is directly or
indirectly paid or entitled to payment by the
employer, regardless of whether the
employment relationship has
EKCO Group, Inc. Employees' Stock Ownership Plan
- 6 -
8
terminated, for reasons (such as vacation,
holiday, sickness, disability, layoff, jury
duty, military duty or leave of absence)
other than the performance of duties.
However, no hours of service will be credited
for payments made to comply with applicable
worker's compensation, unemployment
compensation or disability insurance laws
or to reimburse the employee for medical
expenses. An employee will be credited
with no more than 501 hours under this
subparagraph for any single continuous period
of time when no duties are performed.
(3) Each hour for which back pay has been awarded
or agreed to by the employer, regardless of
mitigation of damages. However, an hour of
service which was credited under either of
the above rules will not be credited again
under this rule.
ii. Application of hours to computation periods. Hours
earned for the performance of duties will be credited
to the 12-month computation period in which the
duties are performed. Hours earned for other than
the performance of duties will be credited to the
computation period in which amounts payable become
due. Hours earned for back pay awards or agreements
will be credited to the computation period to which
the award or agreement pertains. All hours will be
credited in compliance with Department of Labor
Regulations Section 2530.200-2(b) and (c), which are
incorporated herein by this reference.
c. YEAR OF SERVICE.
---------------
i. General definition. A year of service is a 12-month
computation period in which an employee completes at
least 1,000 hours of service. As described, there
are different rules for determining years of
allocation service, years of eligibility service, and
years of vesting service.
ii. Year of allocation service. For purposes of
determining a participant's share of allocated
securities under Section 3 of
EKCO Group, Inc. Employees' Stock Ownership Plan
- 7 -
9
Article 6 at page 13, a year of allocation service
is a calendar year in which the participant is
credited with at least 1,000 hours of service. A
year of allocation service is completed when the
employee completes the 1,000 hours during the period,
not on the last day of the period.
When determining allocation service, service prior to
the effective date of the Plan and prior to
membership is credited.
iii. Year of eligibility service. For eligibility to join
the plan, the 12-month computation period will begin
on the day on which the employee first performs an
hour of service and on subsequent anniversaries of
such date. A year of eligibility service is not
completed until the last day of the 12-month
computation period regardless of when during such
period the employee completes 1,000 hours of service.
When determining eligibility service, service prior
to the effective date of the Plan and prior to
membership is credited.
iv. Year of vesting service. For determination of vested
benefits, the 12-month computation period runs from
January 1 through December 31. A year of vesting
service is completed when the employee completes the
1,000 hours during the period, not on the last day of
the period.
When determining vesting service, service prior to
the effective date of the Plan and prior to
membership is credited.
2. SPECIAL RULES FOR CREDITING SERVICE. The following are special
rules which relate to the crediting of service:
a. For companies which are acquired by Ekco, service prior to
acquisition counts as allocation, eligibility and vesting
service unless provided otherwise in an amendment authorized
by the Ekco board. At the date of this restatement, such
service is accordingly credited to employees of the following
acquired companies: Woodstream Corporation, Ekco Housewares,
Inc. and Frem Corporation.
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b. Effect of termination of employment. If an employee leaves
employment with the employer, he will forfeit at the end of
the plan year any portion of his account which is not vested.
A participant's accounts which are not vested in employer
stock will be forfeited before any of his shares of employer
stock are forfeited.
c. Return to employment after leaving employment.
i. Restoration of forfeited amount. If a participant
who has forfeited non-vested amounts returns to
employment prior to his incurring 5 consecutive
breaks in service the forfeited amounts will be
restored to his account, without adjustment for
investment earnings or losses during the period of
absence. Restoration will come from forfeitures in
the year of his return or, if there are none, from
employer contributions in the year of his return or,
if there are none, on a pro-rata basis from
participant accounts as in effect on the first day of
the plan year preceding his return.
ii. Restoration of service credit. An employee who
returns to employment after a break in service will
be restored his pre-break service, for purposes of
determining his share of future allocations, his
vested rights in future contributions and his
eligibility to join the plan again.
d. Credit with related organizations and in non-eligible
classifications. To be eligible to participate, an employee
must be employed by a participating employer and not be in an
ineligible job classification or employed by a non-
participating affiliated employer, as set out more fully in
Article 4. For vesting, eligibility and allocation purposes,
an employee who participates is credited, however, with all of
his service with any affiliated employers who are not
participating employers or in any ineligible job
classification. Service would also be credited for these
purposes for time spent as a "leased employee" within the
meaning of Code Section 414(n) and with any entities
considered "predecessor employers" under Code Section 414(a).
c. Special rule for maternity or paternity leave. In addition to
the hours credited, an employee will be credited with the
number of hours the employee
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normally would have worked but for absence on a maternity or
paternity leave. Such hours will be credited solely for the
purpose of determining whether such employee has incurred a
break in service and a maximum of 501 hours of service will be
credited to an employee under this rule. Such hours will be
credited to the computation period in which the maternity or
paternity leave began if necessary to prevent such computation
period from being a break in service; otherwise such hours
will be credited to the following computation period.
A maternity or paternity leave is an absence from work:
i. because of the employee's pregnancy, or
ii. because of the birth of a child of the employee, or
iii. because of the placement of a child with the employee
in connection with the employee's adoption of the
child, or
iv. so the employee can care for such a child following
its birth or adoption.
ARTICLE 4: EMPLOYEES ELIGIBLE TO PARTICIPATE
1. ELIGIBILITY FOR INITIAL PARTICIPATION.
a. Each employee of a participating employer who has completed
one or more years of eligibility service as of January 1,
1989, the effective date, will participate as of that date.
b. Each employee of a participating employer who has not yet
completed at least one year of eligibility service on the
effective date will become a participant on the entry date
after which he completes one year of eligibility service.
c. No employee may participate while a member of a collective
bargaining unit with which retirement benefits were the
subject of good faith bargaining and with which participation
in this plan was not agreed.
d. No employee may participate who is a non-resident alien with
no US source income from the employer.
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e. No employee will be permitted to participate in the plan if
he is a person described in Code Section 409(n) during the
"nonallocation period" described in said Code Section.
2. ELIGIBILITY FOR ANNUAL ALLOCATIONS. A participant who has satisfied the
initial eligibility tests above will qualify to share in employer contributions
(and forfeitures from the accounts of terminating employees) for any plan year
if:
a. he is paid by a participating employer for at least 1000 hours
of service during the plan year; and
b. he is employed on the last day of the plan year by the
employer, an affiliated employer or any other participating
employer, unless not employed due to:
i. retirement on or after normal retirement age, or
ii. death while an employee, or
iii. total and permanent disability suffered while an
employee.
Annual allocations will be shared according to the rules in Section 3
of Article 6 at page 13.
3. ELIGIBILITY FOR SPECIAL FIRST YEAR ALLOCATION. In order to create employee
enthusiasm for the plan, a special allocation will be made as of February 28,
1989 to each employee who:
i. qualifies for initial participation under Section 1,
and
ii. is employed on February 28, 1989.
The special allocation will be shared according to the rules in
Section 3 of Article 6 at page 13. The amount of the special allocation is
determined by special vote of the Board.
4. TERMINATION OF ACTIVE PARTICIPATION. An employee's active participation
will end when his employment with a participating employer ends because of
death, retirement, or for any other reason.
5. REENTRY OF FORMER ACTIVE PARTICIPANT. A former active participant who
returns to service as an employee of a participating employer will resume his
active participation in the plan on the date of his return.
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ARTICLE 5: EMPLOYER CONTRIBUTIONS
1. PURPOSE OF CONTRIBUTIONS. Contributions to the trust fund are exclusively
for the purpose of providing employer stock to eligible participants.
Contributions may be held in cash or cash equivalents:
a. pending the investment in employer stock, or
b. to repay exempt loans, or
c. for such other purposes as the plan administrator directs
which are consistent with the purpose of the plan.
2. AMOUNT OF CONTRIBUTION.
a. Each participating employer will contribute to the trust fund
for each plan year such amount, if any, as its board of
directors determines in its sole discretion. A board's
determination of any amount to be contributed to the trust
fund will be final and conclusive. Contributions must always
be sufficient to enable the Trustee to make regular payments
on any indebtedness which he has incurred to the Company to
purchase Employer stock or on any indebtedness which he has
incurred to a third party lender, if such indebtedness was
entered into with the consent of the Company.
b. No contribution is permitted which would exceed the limits for
tax deduction under Code Section 404 for a stock bonus plan
which is a "leveraged ESOP."
3. FORM AND TIME OF CONTRIBUTION.
a. Form of contribution. The employer's contribution for a plan
year, if any, may be paid in a single sum or installments, in
cash or in employer stock (either from treasury or from
authorized but unissued shares).
b. Time of contribution. The employer's contribution for a plan
year will be paid to the trustee during or after a plan year,
except that no payments on account of a plan year may be made
later than the due date (including extensions) for filing the
employer's federal income tax return for its fiscal year with
or in which the plan year ends.
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4. MORE THAN ONE PARTICIPATING EMPLOYER.
a. Each board of directors for each participating employer will
determine the amount to be contributed for its participating
employees. When expressed as a percentage of compensation,
the percentage contributed for employees of each participating
employer may, but need not be, the same, subject to Code rules
preventing illegal discrimination.
b. Any employer may contribute all or any part of the entire
amount due on behalf of one or more other participating
employers and charge the amount to such participating
employer. The employer will not make a contribution which, at
the time of its making, would cause the allocations to any
participant's accounts to exceed the limitations of Code
Section 415 or the tax deduction limits of Code Section 404.
5. RETURN OF EMPLOYER CONTRIBUTIONS.
a. Initial qualification. If the Internal Revenue Service denies
initial qualification of the plan under Code Section 401 for
any reason other than an untimely application, all
contributions to the plan will be returned to the employer.
b. Mistake of fact. If an employer contribution is made because
of a mistake of fact, the amount contributed because of the
mistake of fact will be returned to the employer, but only if
demand is made within the time allowed by law.
c. Disallowance of deduction. Employer contributions are
conditioned on their deductibility under Code Section 404. If
a portion or all of any deduction is disallowed, the portion
of the contribution for which the deduction is disallowed will
be returned to the employer, but only if demand is made within
the time allowed by law.
6. NO PARTICIPANT CONTRIBUTIONS PERMITTED. Participants will not be required
or permitted to make contributions of their own funds.
ARTICLE 6: ACCOUNTS AND ALLOCATIONS
1. ESTABLISHMENT OF ACCOUNTS. The plan administrator will establish and
maintain a bookkeeping account in the name of each participant to which credits
and charges will be made to
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keep track of each participant's interest in the trust fund.
Segregation of assets in the trust fund among various accounts is not
required.
2. TYPES OF ACCOUNTS.
a. EMPLOYER STOCK ACCOUNTS. The accounts which reflect
participants' credits and charges of employer stock are
called the employer stock accounts. Fractional shares
in participants' employer stock accounts will be
accounted for to the nearest one-hundredth of a share.
b. DOLLAR ACCOUNTS. The accounts which reflect the
amount, if any, credited to the participants as cash
contributions which are not to be presently used for
the purchase of of stock are called the participants'
dollar accounts.
c. SUSPENSE ACCOUNT. Those shares which are purchased
with the proceeds of any exempt loan (either from the
employer, an affiliated employer, or another lender)
will initially be allocated to a suspense account
maintained by the trustee within the trust fund. Each
plan year a number of shares of employer stock will be
released from the suspense account in accordance with
the provisions of agreements with the lender of the
exempt loan. Any such loan agreement must provide for
release of the shares from the suspense account at
least as rapidly as provided in IRS Regulation Sec. 54.
4975-7(b)(8)(i) --the general rule -- or as provided
in IRS Regulation Sec. 54.4975- 7(b)(8)(ii) -- the
special rule. For the purpose of determining the
number of shares of employer stock to be released
from the suspense account, shares acquired with
different exempt loans will be accounted for
separately. Shares which are released each year
will be allocated at the end of each applicable plan
year, as if they were employer contributions, to the
employer stock accounts of eligible participants
according to the unit ratio method of allocation
described in Section 3, below. Participants hired on
or after January 1, 1992 (or on or after any future
date designated by the Board) will not be allocated any
employer stock attributable to leveraged purchases
prior to January 1, 1992 (or, in the case of any
employees hired after a future date designated by the
Board, securities attributable to leveraged purchases
prior to that designated date), provided that the
employer contributions utilized to purchase employer
stock for any such excluded group of
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employees (or if employer stock is contributed directly for
such excluded group, the value of the contributed employer
stock) will be approximately equivalent, as a percentage of
their compensation and service units, to the employer
contributions, as a percentage of compensation and service
units, for any non-excluded group of employees.
3. UNIT-RATIO METHOD OF ALLOCATION.
a. End of the year allocations. Allocations to employer stock
accounts and dollar accounts will be based on the number of
each eligible participant's units at the end of any year
compared to the total number of units of all eligible
participants for the plan year. Units will be assigned at the
end of each plan year as follows:
i. for each year of vesting service: 6 units;
ii. for each full $100 of compensa-
tion in the year, or major
fraction thereof: 1 unit.
b. Special February 28, 1989 allocation. The contribution which
the Board designates for this special allocation will be
allocated according to the amount of each participant's units
for the month compared to the total number of units for all
eligible participants for the month. Units will be assigned
as follows:
i. for each year of vesting service
as of February 28, 1989: 1 unit;
ii. for each full $100 of compensa-
tion in the months of January
and February,
or major fraction thereof: 1 unit.
4. VALUATION DATES AND VALUATION OF ASSETS.
a. Employer stock accounts.
i. Public shares. The value to each employee of his
employer stock account is determined, to the extent
the account consists of shares readily tradable on an
established securities market (within the meaning of
Code Section 409(h)), by the market price of the
shares at any particular time.
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ii. Preferred shares convertible to public shares. The
value of any preferred shares convertible to shares
readily tradable on an established securities market
(within the meaning of Code Section 409(h)) is the
greater of the floor price of such preferred shares,
if a floor price has been established for such
preferred issue, or the market price of the public
shares to which the preferred shares are convertible.
iii. Other shares. In the event that the plan ever holds
shares which are not readily tradable on an
established securities market or convertible into
such shares, the plan administrator will determine
their value at the last day of the plan year and at
any other time the plan administrator may direct
(referred to as valuation dates) with the appraisal
process described in Section 9 of Article 14.
iv. Dividends. The plan administrator will determine
whether dividends declared on employer stock will:
(1) be used to repay amounts owed on exempt loans
(provided that dividends on shares in
employer stock accounts may be used for this
purpose only if additional employer stock,
equal in value to the dividends applied to
the loan repayment, are allocated to the
employer stock accounts); or
(2) be paid directly to participants to whose
employer stock accounts the employer stock
was allocated; or
(3) be paid to the trustee with instructions to
distribute to participants to whose employer
stock accounts the employer stock was
allocated; or
(4) be paid to the trustee with instructions that
the amounts be allocated to the dollar
accounts of participants to whose employer
stock accounts the employer stock was
allocated.
EKCO Group, Inc. Employees' Stock Ownership Plan
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b. Dollar accounts. As of the last day of each plan
year and at any other time the plan administrator may
direct (referred to as valuation dates), the plan
administrator will determine the fair market value of
all assets, if any, allocable to participants' dollar
accounts. The plan administrator will then apportion
that new fair market value based on the ratio of
adjusted account values for dollar accounts at the
beginning of the valuation period. Adjusted account
values, for purposes of apportioning investment gain
or loss, are determined in this manner:
i. Payments from accounts. Any amount
distributed, paid, withdrawn or transferred
from a dollar account will be treated as if it
were paid on the first day of the current
valuation period.
ii. Employer contributions. Any employer
contributions to dollar accounts will be
credited as if made on the last day of the plan
year for which the contribution is made.
Benefit payments from dollar accounts are to be based
on the fair market value of the account on the
valuation date immediately preceding any payment,
adjusted for subsequent payments and contributions;
the value of an account on the valuation date
preceding the event which made the participant
eligible for payment (termination of employment, for
example) is irrelevant.
c. Segregated accounts. The plan administrator may also
adopt rules under which participants may request, in
writing, segregation of all or part of their funds
for separate investment. The plan administrator may
limit this option to specific categories of
participants or accounts, such as participants who
are nearing retirement and who have elected to
diversify their accounts, as provided in Article 8.
A segregated account will be credited or charged with
only the earnings, investment results and expenses of
such account, and will not share in the earnings,
investment results and expenses of any of the other
investment funds within the trust fund. The plan
administrator is not required to adopt this
procedure.
ARTICLE 7: VESTING; PAYMENT FROM PLAN ACCOUNTS
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1. VESTING SCHEDULE.
a. RETIREMENT, DEATH OR DISABILITY. A participant will have a
non-forfeitable interest (100% vested) in his accounts,
regardless of his years of vesting service, if any of the
following events occurs while he is actively employed by the
employer or an affiliated employer:
i. his attainment of normal retirement age,
ii. his death, or
iii. his permanent and total disability, as determined by
the plan administrator.)
b. OTHER TERMINATION. If termination of employment occurs for
any other reason a participant's interest in his accounts
vests (becomes non-forfeitable) according to the following
schedule:
YEARS OF VESTING SERVICE PERCENT VESTED
------------------------ --------------
less than 3 0%
3 years 20%
4 years 40%
5 years 60%
6 years 80%
7 or more 100%
Vesting in an account does not protect a participant from losses due
to adverse investment experience. Vesting also does not permit a participant
to withdraw his account balance.
Non-vested amounts will be forfeited (becoming forfeitures) at the end
of the plan year in which the participant terminates employment. Forfeitures
will be allocated to participant accounts as if they were additional employer
contributions. Participants who have forfeited non-vested accounts and return
to work before incurring 5 consecutive years of break in service will be
restored their forfeited amounts as provided in Section 2 of Article 3 at
page 8.
2. DESCRIPTION OF EVENTS WHICH PERMIT PAYMENTS. Payments from an account are
allowed in any of the following circumstances:
a. the participant has terminated employment, regardless of age,
and has applied for payment; or
b. the participant has reached age 59 1/2, regardless of whether
he has terminated employment, and has applied for payment; or
EKCO Group, Inc. Employees' Stock Ownership Plan
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c. the participant has died, and the beneficiary has applied for
payment.
3. DESCRIPTION OF EVENTS WHICH REQUIRE PAYMENT. Payments will be made without
consent or cooperation of the payee in either of the following two cases:
a. Small payments. The participant has terminated employment or
died and the total amount to which he is entitled is less than
$3,500. In that event, the plan administrator may require the
payment of this small benefit in order to save administrative
expenses even if the participant or beneficiary has not
applied for payment; or
b. Payments required by Code Section 401(a)(9). Code Section
401(a)(9) requires that minimum amounts must be paid to
participants who are older than age 70 1/2 and to
beneficiaries within a reasonable period following death. The
Code-required minimum distribution rules are meant to prohibit
excessive tax deferral, but are unnecessarily complex for
administration of this plan. Accordingly, the following
rules, which may require faster payment than Code section
401(a)(9) requires, are adopted for this plan:
i. Even if a participant is actively employed by the
employer and does not want payments to start,
payments are required to start, effective for the
calendar year in which the participant reaches age 70
1/2, although the payment for that first year may be
deferred as late as April 1 following the calendar
year in which he reaches age 70 1/2. The minimum
payment for each year is determined by dividing the
account balance at the end of the previous plan year
by the following numbers: 10 for the first year,
then 9, then 8, etc. so that the full account is paid
in 10 years.
ii. If a participant dies, the full amount of his account
must be paid to the beneficiary within 5 years of the
year of death. If payments had started to the
participant, the death benefit must be paid at least
as rapidly as under the method that was in effect for
the participant.
The minimum distribution rules of Code Section 401(a)(9) are
adopted by reference. Payments under either of the above
rules must always be at least as large and as timely as
required by the Code.
EKCO Group, Inc. Employees' Stock Ownership Plan
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4. PAYMENT OPTIONS. A participant (or beneficiary) may elect payment in any
of the following forms:
a. Employer stock accounts.
i. For shares readily tradeable on a public exchange:
(1) a transfer of ownership of all such shares to
which the payee is entitled with cash payment
for any fractional shares; or
(2) deferred transfer of ownership of shares to
which the payee is entitled, but no deferral
is permitted beyond the time for commencement
of minimum distributions in the above
section.
ii. For preferred shares which are not readily tradeable
on a public exchange but which are convertible into
such shares:
(1) the participant may instruct that the
preferred shares be converted by the employer
into readily tradeable shares and may require
that the readily tradeable shares be
distributed to him; or
(2) the participant may instruct that the
preferred shares be redeemed for any "floor
price" available through such issue and that
the amount of the redemption proceeds be
distributed to him; or
(3) the participant may require a deferred
transfer of ownership of shares to which the
payee is entitled, but no deferral is
permitted beyond the time for commencement of
minimum distributions in the above section.
b. Dollar accounts.
i. full payment of all amounts to which the payee is
entitled; or
ii. deferred payment, but no deferral is permitted beyond
the time for commencing required payments under Code
Section 401(a)(9).
5. TIME WHEN PAYMENTS ARE DUE. Payments will be made within 90 days following
the plan administrator's determination that an event has occurred which permits
payment. Prior to payment,
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the participant (or beneficiary) must execute an application in the form
required by the plan administrator. The 90 day period may be extended by an
additional 90 days if there is reasonable cause for administrative delay.
ARTICLE 8: DIVERSIFICATION ELECTION
1. DIVERSIFICATION ELECTION. This Article sets out procedures meant to comply
with the diversification procedures required of ESOP's under Code Section
401(a)(28). The intent is to allow working participants who are nearing
retirement age the opportunity to diversify their plan investments. This
procedure permits such participants to elect to receive payments from their
employer stock accounts which they may keep as income subject to applicable
taxes, or which they may roll over, either to another defined contribution plan
of the employer or to an individual retirement account.
2. ELIGIBILITY TO DIVERSIFY. Any participant who is age 55 or more and who
has completed 10 years of active participation in this plan is permitted to
diversify his account investments according to the procedures set out in this
Article.
3. TIME WHEN DIVERSIFICATION ELECTIONS MAY BE MADE. The diversification
period starts in the plan year in which occurs the later of the participant's
55th birthday or the conclusion of 10 plan years as a participant in the plan.
It continues for that plan year and for each of the next five plan years.
Elections to diversify may by made only within the 90 day periods following the
close of each plan year in the 6 year diversification period.
4. AMOUNT AVAILABLE FOR DIVERSIFICATION. The amount available for
diversification is 25% of the value (or 50% of the value in the last year in
which the participant is eligible to diversify) of all of his employer stock
accounts at the end of the plan year preceding the applicable election, reduced
by the dollar value of any previous distributions under this Article.
5. PAYMENT TO PARTICIPANT. A participant who is eligible for and who elects
diversification will be paid the amount he has elected (not to exceed the
amount available for diversification) within 90 days of the end of any 90 day
period in which diversification is elected.
ARTICLE 9: SPECIAL RULES FOR EMPLOYER STOCK
1. VOTING RIGHTS.
a. If employer has registration type securities. If the employer has a
class of stock which is a registration-
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type security (within the meaning of Code Section 409 (e))
participants may vote any shares which have been allocated to
their account and which have voting rights as follows:
i. the plan administrator will be responsible for
distributing to participants copies of any proxies,
proxy solicitation materials or other materials
related to any such stockholder vote within a
reasonable time prior to the time for any vote; and
ii. the participant (or beneficiary if the participant is
deceased) will direct the plan administrator as to
the manner in which the trustee is to vote the shares
and fractional shares allocated to the participant's
account on any issue; and
iii. in the case of shares in suspense accounts, the
shares will be voted in the same proportion as the
shares of stock in participant accounts for which the
plan administrator received valid instructions.
b. If employer has no registration type securities. If at any
time the employer has no shares of registration type
securities, shares of stock will still be voted by the trustee
according to participant direction, as provided above.
2. RESPONSE TO TENDER OFFERS.
a. Tender offer defined. A tender offer is the offer by one or
more persons alone or in conjunction with others to purchase,
with cash or by exchange, 1% or more of the issued and
outstanding shares of employer stock.
b. Tender of shares in participants' accounts. Employer stock
which has been allocated to a participant's account will be
tendered in response to any such offer as follows:
i. the plan administrator will be responsible for
distributing to participants copies of any materials
related to any such tender offer within a reasonable
time prior to the time for such decision to tender;
and
ii. the plan administrator will advise participants and
beneficiaries that their decision to tender or not to
tender will be confidential and the
EKCO Group, Inc. Employees' Stock Ownership Plan
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plan administrator will set up appropriate procedures
(such as with an independent accounting firm or bank)
so that participants' individual decisions are not
disclosed to the employer, its officers, directors,
agents or to any member of the plan administrator
committee, it being intended that each participant be
allowed to make tender and exchange decisions on a
fully confidential basis; and
iii. the participant (or beneficiary if the participant is
deceased) will direct the plan administrator as to
whether the shares and fractional shares allocated to
the participant's account are to be tendered; and
iv. in the case of shares allocated to participant
accounts for which participants (or, when
appropriate, beneficiaries) do not provide timely
tender or exchange instructions, the participants (or
beneficiaries) will be deemed to have instructed that
the shares not be tendered or exchanged.
v. In all events, these provisions are to be interpreted
and administered so that the plan is deemed, under
the law of the state of Delaware, to be an employee
stock plan in which participants have the right to
determine confidentially whether employer stock held
subject to the plan will be tendered in a tender or
exchange offer and the plan will be so administered,
notwithstanding any provision herein to the contrary.
c. Shares in suspense accounts. Employer stock which is in a
suspense account will be tendered or exchanged in the same
proportion as the shares of stock which were allocated to
participant accounts.
ARTICLE 10: NAMED FIDUCIARIES
1. IDENTITY OF FIDUCIARIES. The employer, the trustee, and the plan
administrator will be the fiduciaries named in this plan with the power and
responsibility to control and manage the plan and its assets. Any other person
or company which handles plan assets or has the power to make binding decisions
on matters of plan administration (such as any investment manager appointed by
the employer), will be a fiduciary, but only to the extent required by ERISA.
EKCO Group, Inc. Employees' Stock Ownership Plan
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2. RESPONSIBILITIES OF EMPLOYER AS PLAN SPONSOR. As the plan sponsor,
the employer has the power and responsibility:
a. to amend or terminate the plan and trust;
b. to cause the plan and trust to be merged or consolidated with
another plan and trust;
c. to appoint, remove and replace the plan administrator and the
trustee;
d. to perform such additional duties as are imposed by the plan,
the trust, or by law.
The responsibilities and authority of the employer, in its role as
plan sponsor, are set forth in further detail in the various articles of the
plan and in the trust agreement.
3. RESPONSIBILITIES AND AUTHORITY OF TRUSTEE. The trustee will manage and
control the investment of plan assets, except to the extent that such
responsibilities are specifically assigned to one or more investment managers
by the plan administrator. The trustee is not required to make any independent
determination on entitlement to plan benefits and may rely fully on payment
instructions from the plan administrator. The trustee may rely fully on the
plan administrator's instructions to buy or sell employer stock, to vote the
employer stock on any corporate issue, to enter into any exempt loan to buy
employer stock, and to encumber plan assets (to the extent permitted by ERISA)
to purchase employer stock. The responsibilities and authority of the trustee
are set forth in detail in the trust agreement.
4. PLAN ADMINISTRATOR AND COMMITTEE.
a. Committee selection. The employer may appoint a committee
whose members may, but need not be, plan participants or
employees or officers of the employer. The number of persons
serving on the committee at any time will be determined by the
employer, and may be changed from time to time by the
employer. The employer will notify the trustee in writing of
each committee member's appointment, and the trustee may
assume such appointment continues in effect until written
notice to the contrary is given by the employer.
b. Change of committee members. The employer may remove any
committee member at any time, with or without cause, by filing
written notice of his removal with the committee and the
trustee. A committee member may resign at any time by filing
his written resignation
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with the employer. A vacancy, however arising, may be filled
by the employer.
c. Committee charged with plan administration duties. The
committee will have all powers and authority necessary or
appropriate for the operation and administration of the plan.
It will:
i. interpret and apply all plan provisions and may
correct any defect, supply any omission, or reconcile
any inconsistency or ambiguity in the manner it
considers advisable,
ii. make all final determinations concerning eligibility,
benefits and rights,
iii. make all decisions with respect to the purchase and
sale of employer stock and the form and number of
exempt loans for any such purchases.
iv. to make limited amendments to the plan and trust, as
provided in Section 1 of Article 11.
All determinations and actions of the committee will be
conclusive and binding upon all persons, except as otherwise
provided in the plan or by law. The committee may revoke or
modify any determination or action previously made in error.
d. Plan Administrator if no committee serving. If no committee
is serving as plan administrator, the trustee will serve and
will have all powers and responsibilities of the committee,
unless the trustee declines in which event the employer will
serve as plan administrator.
e. Appointment of investment advisors. The committee may
appoint, remove and replace one or more investment managers,
or may refrain from such appointments;
f. Reporting and disclosure duties of committee. The committee
will prepare, file, submit, distribute or make available any
plan descriptions, reports, statements, forms or other
information to any government agency, employee, former
employee, or beneficiary as may be required by ERISA or any
other law.
g. Information. The employer and the trustee will supply all
information required by the committee to administer the plan,
and the committee may rely upon the accuracy of such
information.
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h. Compensation and expense. Each committee member will serve
without compensation unless otherwise determined by the
employer, provided that in no event will plan assets be used
to compensate an employee of the employer for his services as
a committee member. Unless paid by the employer, all
reasonable expenses of administering the plan will be paid
from plan assets. These costs may include and are not limited
to the fees of the trustee and any investment advisor hired by
the employer, the legal costs to the employer for plan design,
drafting, Code qualification, amendments, legal rulings and
opinions, and the costs for any accountant's audit of plan
assets. Such expenses may include the compensation of all
persons employed or retained by the committee, premiums for
bonds and insurance protecting the plan or trust fund and
required by law or deemed advisable by the committee, and all
other costs of plan administration.
i. Decisions, rules, and regulations. Any action or decision
concurred in by a majority of the committee members, either at
a meeting or by agreement without a formal meeting, will
constitute an action or decision of the committee. No
committee member may vote on any matter which relates
exclusively to himself. The committee may adopt and amend
such rules for the conduct of its business and the
administration of the plan as it deems advisable.
j. Chairperson of the committee. The committee at its option may
appoint any committee member or other person to serve as
chairperson, and may remove that person at any time. The
committee will notify the trustee in writing of such
appointment, and the trustee may assume the appointment as
chairperson continues until written notice to the contrary is
given by the committee. The chairperson, or a majority of the
committee members then in office, will have the authority to
execute all instruments or memoranda necessary or appropriate
to carry out the actions and decisions of the whole committee
and any person may rely upon any such instrument or
memorandum.
5. RESPONSIBILITIES ARE NOT SHARED. Each named fiduciary will have only those
responsibilities that are specifically assigned under this plan. No named
fiduciary will be liable on account of the improper performance or
nonperformance of responsibilities assigned to another named fiduciary.
6. DUAL FIDUCIARY CAPACITY PERMITTED. Any person or group of persons may
serve in more than one fiduciary capacity, including service both as trustee
and committee member.
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7. ACTIONS BY THE EMPLOYER. Wherever the plan specifies that the employer is
required or permitted to take any action, such action will be taken by its
board of directors, or by a duly authorized committee, or by one or more
directors, officers, employees or other persons duly authorized to do so by the
board of directors.
8. ALLOCATION AND DELEGATION OF RESPONSIBILITIES. The members of the
committee or the members of the board of directors of the employer or of a
committee of such board may allocate their responsibilities among themselves in
any reasonable manner and may delegate any of their responsibilities to any
other person or persons by so specifying in a written instrument. No committee
member or director will be liable for the improper discharge or nonperformance
of any responsibility so allocated or delegated to another person except to the
extent liability is imposed by law.
9. ADVICE. A named fiduciary may employ or retain such attorneys,
accountants, investment advisors, consultants, specialists and other persons or
firms as it deems necessary or desirable to advise or assist it in the
performance of its duties. Unless otherwise provided by law, the fiduciary
will be fully protected for any action taken or omitted by him or it in
reliance upon any such person or firm rendered within his or its area of
expertise.
10. INDEMNIFICATION. To the extent permitted by law and not prohibited by the
employer's charter and by-laws, the employer will indemnify and hold harmless
every person serving as a fiduciary (whether a named fiduciary or otherwise),
and the estate of such an individual if he is deceased, from and against all
claims, loss, damages, liability, and reasonable costs and expenses, incurred
in carrying out his fiduciary responsibilities, unless due to the gross
negligence, bad faith or willful misconduct of such individual; provided that
counsel fees and amounts paid in settlement must be approved by the employer
and provided further that this section will not apply to any claim, loss,
damages, liability, or costs and expenses which are covered by a liability
insurance policy maintained by the employer, or by the plan or by an individual
fiduciary. The preceding sentence will not apply to a corporate trustee, an
insurance company, an investment manager or outside service provider (or to an
employee of any of the foregoing) unless the employer otherwise specifies in
writing.
11. PARTICIPANTS ARE FIDUCIARIES. Each participant is a fiduciary to the
extent he provides instruction as to the way in which the shares of stock in
any employer stock account are to be voted. The other plan fiduciaries may
rely fully on such instructions as if they were the instructions of a plan
fiduciary to whom this duty has been delegated. For no other purpose will
participants be considered fiduciaries.
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ARTICLE 11: PLAN AMENDMENT, MERGER AND TERMINATION
1. AMENDMENT OF PLAN.
a. Employer. The employer may amend the plan without the consent
of any person, provided that no amendment will reduce any
participant's nonforfeitable account balance as of the date
such amendment is adopted (or its effective date if later),
and provided further that no amendment or action of any type
will permit any part of the trust fund to revert to the
employer or be used for or diverted to purposes other than for
the exclusive benefit of participants or their beneficiaries.
b. Plan administrator. The plan administrator may make
amendments to the plan and trust without approval of the
employer if the amendments:
i. are administrative in nature, so as to facilitate
plan administration and do not increase the liability
or expenses of the employer; or
ii. are remedial, meaning that the amendments are
necessary in order that the plan qualify under the
rules of Code Section 401 or that loans to acquire
employer stock not be prohibited within the meaning
of Code Section 4975.
2. MERGER OF PLANS: PARTICIPANT PROTECTION. A merger or consolidation with,
or transfer of assets or liabilities to, any other plan will be permitted only
if the benefit each participant would receive if such plan were terminated
immediately after the merger, consolidation or transfer is not less than the
benefit he would have received if this plan had terminated immediately before
the merger, consolidation or transfer.
3. TERMINATION.
a. Employer may terminate. The employer has established the plan
with the bona fide expectation and intention that it will be
able to continue the plan and contributions to it
indefinitely, but it will be under no obligation or liability
to continue contributions or to maintain the plan for any
particular length of time. The employer in its discretion may
discontinue contributions to the plan indefinitely or
temporarily and the employer may terminate this plan at any
time.
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b. Full vesting. All participants who are actively
employed in the plan year in which the plan was
terminated, or in the plan year in which any "partial
termination" occurs (to the extent they are affected
by the partial termination) will be fully vested in
their account balances. There will be no other
liability to any participant, beneficiary or other
person as a result of any such discontinuance or
termination.
b. Return of suspense account proceeds to employer. If
the plan is terminated and, at the time of termination,
additional amounts remain in any suspense account after
repayment of all loans made to the plan, the cash will be
distributed as follows:
i. to the accounts of all participants otherwise
eligible to share in employer contributions for the
year, up to the limits permitted by Code Section 415
and this plan; and
ii. remaining amounts will be returned to the employer.
4. EFFECT OF TERMINATION. After termination of the plan, no employee will
become a participant and no further contributions will be made on behalf of
participants. The trustee will continue to hold the assets of the trust fund
for distribution as directed by the plan administrator. The plan administrator
will determine whether to direct the trustee to disburse the plan's assets as
immediate benefit payments, to retain and disburse them in the future, or to
follow any other procedure which it deems advisable.
ARTICLE 12: CODE RULES LIMITING ADDITIONS TO ACCOUNTS
1. DEFINITIONS. The following definitions apply for purposes of the technical
rules under Section 415 of the Code which limit employer contributions of all
types to the plan.
a. "Adjustment Factor" means the cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section
415(d) of the Code for years beginning after December 31,
1987, as applied to such items and in such manner as the
Secretary shall provide.
b. "Annual additions" means the amount allocated to a
participant's account during the limitation year that
constitutes:
i. employer contributions of all types,
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ii. employee "after-tax" contributions (which are not
permitted in this plan),
iii. forfeitures, and
iv. amounts described in Code Sections 415(l)(l) and
419(A)(d)(2).
c. "Defined contribution dollar limitation" means:
i. $30,000 or, if greater, one-fourth of the defined
benefit dollar limitation set forth in Section
415(b)(1) of the Code as in effect for the limitation
year, or
ii. if in any plan year no more than one-third of the
employer's contribution to the plan for such year is
allocated to the accounts of employees who are highly
compensated employees, forfeitures of securities
acquired with an exempt loan will not be considered
additions and the following amount will be
substituted for the above dollar limitation:
(1) the sum of $30,000 (as adjusted periodically
for cost-of-living changes in accordance with
federal regulations), and
(2) the lesser of $30,000 (as so adjusted) or the
amount of the employer's contribution to the
plan for such year for the participant
(provided that for this purpose the
employer's contribution to dollar accounts
will be disregarded).
d. "Employee" means employees of the employer or any affiliated
employer and includes leased employees within the meaning of
Section 414(n)(2) of the Code. However, if leased employees
constitute less than twenty percent of the employer's
non-highly compensated work force within the meaning of
Section 414(n)(1)(C)(ii) of the Code, the term "employee"
shall not include those leased employees covered by a plan
described in Section 414(n)(5) of the Code unless otherwise
provided by the terms of this plan other than this amendment.
e. "Family member" means an individual described in Section
414(q)(6)(B) of the Code.
f. "Inactive participant" means any employee or former employee
who has ceased to be a participant and on whose behalf an
account is maintained under the plan.
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g. "Participant" means any employee of the employer who has met
the eligibility and participation requirements of the plan as
an active employee at any time during the plan year,
regardless of his employment status at the end of the plan
year.
2. RULES FOR CODE SECTION 415 COMPLIANCE. Code section 415 and its
limitations are incorporated by reference. For guidance, the following
important rules are included:
a. Maximum annual addition limit. The maximum annual addition
that may be contributed or allocated to a participant's
account under the plan for any limitation year shall not
exceed the lesser of:
i. the defined contribution dollar limitation, or
ii. 25 percent of the participant's compensation, within
the meaning of Section 415(c)(3) of the Code for the
limitation year.
b. Special rules. The 25% of compensation limitation referred to
above does not apply to:
i. any contribution for medical benefits (within the
meaning of Section 419A(f)(2) of the Code) after
separation from service which is otherwise treated as
an annual addition, or
ii. any amount otherwise treated as an annual addition
under Section 415(l)(l) of the Code.
c. Treatment of excess. If as a result of the allocation of
forfeitures or a reasonable error in estimating participant's
compensation the amount allocated to a participant's accounts
would exceed the above limitations, such excess amount will be
reallocated to the accounts of other participants entitled to
share in employer allocations for such plan year for whom
these limits would not be violated.
d. Ordering rules. For the purpose of reallocating the excess
additions, the amount reallocated will consist:
i. first, of any amounts which would otherwise be
allocated to the affected participant's dollar
account; and
ii. second, to shares of employer stock which would
otherwise be allocated to his employer stock account.
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e. Combined plan limits. For any plan year, the sum of
a participant's defined contribution plan fraction
and his defined benefit plan fraction may not exceed
1.0. If the sum of such fractions would exceed 1.0
without the application of this section, his benefit
under the defined benefit plan or plans will be
reduced to a benefit that will produce a defined
benefit plan fraction and a defined contribution plan
fraction that equal 1.0.
i. A participant's defined contribution plan
fraction for any plan year is the fraction:
(1) whose numerator is the sum of annual
additions (as defined in Code Section
415(c)(2)) to his accounts under all
qualified defined contribution plans
maintained by the employer (or an
affiliated company) as of the close
of such plan year, and
(2) whose denominator is the sum of the
lesser of the following amounts
determined for such year and for each
prior year of plan service with the
employer: the product of 1.25 (1.0
if the plan is top-heavy) and the dollar
limitation in effect for such year, or
the product of 1.4 and 25% of the
participant's net compensation for
such year.
ii. His defined benefit plan fraction for any plan
year is a fraction
(1) whose numerator is his aggregate
projected annual benefit under all
defined benefit plans sponsored by the
employer (or an affiliated company)
as of the close of such plan year, and
(2) whose denominator is the lesser of the
product of 1.25 (1.0 if the plan is
top-heavy) and the dollar limitation in
effect under Section 415(b)(1)(A) of the
Code, or the product of 1.4 and the
participant's highest average net
compensation as determined under Section
415(b)(1)(B) of the Code. For this
purpose, the projected annual benefit
of a participant means the total
normal retirement benefit to which he
would be entitled on the assumptions
that his employment continues until his
normal
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retirement age and his annual earnings and all other
relevant factors remain the same for all future years
as in the year when the projection is made.
ARTICLE 13: SPECIAL PROVISIONS FOR TOP-HEAVY PLANS
1. APPLICABILITY OF ARTICLE. This section is included in the plan to meet the
requirements of Code Section 416, and the provisions of this section will be
operative only if, when and to the extent that Code Section 416 applies to the
plan. At such time as the requirements of Code Section 416 apply to the plan
because the plan is top-heavy as defined in the following section, the
provisions of this section will apply and will govern over any contrary
provision of the plan.
2. DEFINITIONS FOR TOP-HEAVY RULES.
a. The plan will be top-heavy for a plan year if, as of the
determination date, the sum of the aggregate amount in the
accounts of participants who are key employees exceeds 60% of
such amount determined for all participants in this plan.
b. Notwithstanding the preceding paragraph, if the plan is
included within a required or permissive aggregation group,
the plan will be top heavy for a plan year if, as of the
determination date, the sum of the aggregate amount in the
accounts of participants who are key employees (including all
defined contribution plans within such group) and the
aggregate present value of cumulative accrued benefits of
participants who are key employees (including all defined
benefit plans within such group), exceeds 60% of such amount
determined for all participants in all such plans.
c. In determining the amounts in participants' accounts and
present values of accrued benefits under the preceding two
paragraphs, the present value of accrued benefits will be
based on the actuarial assumptions used to determine the
minimum funding requirements of Code Section 412(b); if there
is more than one defined benefit plan in the aggregation
group, each plan will use the same actuarial assumptions for
purposes of the top heavy test, as determined by the actuary;
distributions made during the 5 years ending on the
determination date will be taken into account; rollover
contributions after December 31, 1983, will be taken into
account only to the extent provided in regulations under Code
Section 416(g)(4)(A); account balances and accrued benefit
values of a person who
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was but no longer is a key employee will be disregarded; and
account balances and accrued benefit values of any
individual who has not received any compensation from an
employer (other than benefits under the plan) at
any time during the 5 years ending on the determination date
will be disregarded.
d. The determination date for purposes of determining whether the
plan is top-heavy under subsection (i) for a particular plan
year is the last day of the preceding plan year. In the case
of the first plan year, the determination date is the last day
of that year.
e. A key employee is any employee or former employee (including a
beneficiary of such an employee) who at any time during the
plan year or any of the four preceding plan years was:
i. an officer of the employer having annual compensation
greater than 150% of the amount in effect under
Section 415(b)(1)(A) of the Code for such plan year
(but no more than the lesser of 50 employees or 10%
of all employees will be taken into account under
this subsection (A) as key employees);
ii. one of the 10 employees owning (or considered as
owning within the meaning of Code Section 318) the
largest interests in the employer but only if such
employee's compensation for such plan year exceeds
the amount specified in Code Section 415(c)(1)(A).
For purposes of the preceding sentence, if 2
employees have the same interest in the employer, the
employee having greater annual compensation from the
employer shall be treated as having a larger
interest;
iii. a person owning (or considered as owning within the
meaning of Code Section 318) more than 5% of the
outstanding stock of the employer; or
iv. a person who has annual compensation from the
employer of more than $150,000 and who would be
described in subsection (C) above if 1% were
substituted for 5%.
For purposes of applying Code Section 318 to the provisions of
paragraph iii, subparagraph (C) of Code Section 318(a)(2) will be applied by
substituting "5%" for "50%". In addition, the rules of Code Section 414 (b),
(c) and (m) will not apply for purposes of determining ownership under
subsections (C) and (D) above.
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f. A non-key employee is any employee or former employee
(including a beneficiary of such an employee) who is not a key
employee under subsection (iii) above.
g. A required aggregation group includes all qualified plans of
the employer (whether or not terminated) in which a key
employee participates and each other qualified plan of the
employer that enables any of such plans to meet the
requirements of Section 401(a)(4) or Section 410 of the Code.
A permissive aggregation group includes (in addition to plans
in a required aggregation group) any plan which the employer
designates for inclusion provided that inclusion of such plan
does not cause the group to fail the requirements of Section
401(a)(4) or Section 410 of the Code.
3. LIMIT ON COMPENSATION. For any plan year in which the plan is top-heavy,
the amount of gross compensation taken into account under the plan for a
participant will not exceed $200,000 (as adjusted periodically for
cost-of-living changes in accordance with applicable provisions of the Code and
regulations).
4. MINIMUM CONTRIBUTION. For any plan year in which the plan is top-heavy,
the employer will make a minimum contribution on behalf of each non-key
employee who participated in the plan at any time during the plan year and who
is employed on the last day of the plan year equal to 3% of his gross
compensation (before any reductions under Code Sections 401(k) or 125).
However, the minimum contribution called for under the preceding sentence will
not exceed the contribution (determined as a percentage of his gross
compensation) for such plan year under this plan (and any other defined
contribution plan included in an aggregation group with this plan) on behalf of
the key employee for whom such contribution is the highest. Also, such minimum
contribution will be offset as permitted under regulations under Code Section
416 to reflect contributions on behalf of or benefits accrued by such non-key
employee under any other plan maintained by the employer.
5. VESTING IN ACCOUNTS. In years when the plan is top-heavy, participants'
vesting will be computed under the following vesting schedule:
Years of Vesting Service Vested Percentage
------------------------ -----------------
Less than 3 0%
3 or more 100%
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ARTICLE 14: CLAIMS PROCEDURE
1. CLAIMS REVIEW PROCEDURE. Any request for benefits (the "claim") by a
participant or his beneficiary (the "claimant") will be filed in writing with
the plan administrator. Within a reasonable period after receipt of a claim,
the plan administrator will provide written notice to any claimant whose claim
has been wholly or partly denied, including:
a. the reasons for the denial,
b. the plan provisions on which the denial is based,
c. any additional material or information necessary to perfect
the claim and the reasons it is necessary, and
d. the plan's claims review procedure.
A claimant will be given a full and fair review by the plan
administrator of the denial of his claim if he requests a review in writing
within a reasonable period after notification of the denial. The claimant may
review pertinent documents and may submit issues and comments orally, in
writing, or both. The plan administrator will render its decision on review
promptly and in writing and will include specific reasons for the decision and
reference to the plan provisions on which the decision is based.
2. CONFLICTING CLAIMS FOR BENEFITS. If two or more persons claim entitlement
to payment of the same benefit, the plan administrator may withhold payment of
such benefit until the dispute has been determined by a court of competent
jurisdiction or has been settled by the persons concerned.
ARTICLE 15: MISCELLANEOUS PROVISIONS
1. NONALIENATION OF BENEFITS. No benefit, right or interest of any person in
this plan will be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, or to seizure, attachment or other
legal, equitable or other process, or be liable for, or subject to, the debts,
liabilities or other obligations of such person. However, the plan
administrator will carry out the applicable requirements of any qualified
domestic relations order (as defined in Code Section 4l4(p)) received from a
court. The plan administrator will establish procedures for notifying the
affected member of any domestic relations order received by the plan and for
determining whether any said order is a qualified domestic relations order.
2. PAYMENT TO MINORS AND INCOMPETENTS. If the plan administrator deems any
person incapable of giving a binding
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receipt for benefit payments because of his minority, illness, infirmity or
other incapacity, it may direct payment directly for the benefit of such
person, or to any person selected by the plan administrator to disburse it.
Such payment, to the extent thereof, will discharge all liability for such
payment under the plan.
3. CURRENT ADDRESS OF PAYEE. Any person entitled to benefits is responsible
for keeping the plan administrator informed of his current address at all
times. The plan administrator, the trustee and the employer has no obligation
to locate such person, and will be fully protected if all payments and
communications are mailed to his last known address, or are withheld pending
receipt of proof of his current address and proof that he is alive.
4. EXCLUSIVE BENEFIT OF PARTICIPANTS. The plan is for the exclusive benefit
of participants and their beneficiaries. Contributions are made to the trust
fund by the employer and by participants for the purpose of distributing
benefits to participants and their beneficiaries from the trust fund in
accordance with the plan. Except as provided in Section 17.8, no part of the
trust fund or any distribution therefrom will be used for or diverted to
purposes other than for the exclusive benefit of participants and their
beneficiaries and defraying those reasonable expenses of administering the plan
and trust fund not paid by the employer.
5. PLAN DOES NOT CREATE EXTRA EMPLOYMENT RIGHTS. The plan will not be
interpreted to give any person any benefit, right or interest except as
expressly provided, or to create a contract of employment or to give any
employee the right to continue as an employee or to affect or modify his terms
of employment in any way.
6. APPLICATION OF PLAN'S TERMS. The benefits and rights of a participant and
his beneficiaries under the plan on account of the participant's retirement,
death, disability or other termination of employment will be determined in
accordance with the terms of the plan that are in effect on the date of such
event. This protection will not prevent the employer from amending or
terminating the plan, however, provided that such action complies with the Code
and ERISA.
7. BENEFITS NOT GUARANTEED. The employer, the trustee and the plan
administrator do not guarantee the payment of benefits. Benefits will be paid
only from the assets of the trust fund and are limited to the amount of assets
in the trust fund.
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8. RULES OF CONSTRUCTION.
a. A word or phrase defined or explained in any section
or article has the same meaning throughout the plan
unless the context indicates otherwise.
b. Where the context so requires, the masculine includes
the feminine, the singular includes the plural, and
the plural includes the singular.
c. Unless the context indicates otherwise, the words
"herein", "hereof", "hereunder", and words of similar
import refer to the plan as a whole and not only to
the section in which they appear.
9. SPECIAL PROVISIONS IF EMPLOYER WERE NOT A PUBLIC CORPORATION.
a. Right to sell back ("put for cash") employer stock
for which there is no established market. If the
plan ever were to contain employer stock which was
not readily tradable on an established securities
market, a participant to whom shares of employer
stock were distributed may require the employer to
purchase any or all of such shares by filing with the
employer a written notice stating the number of
shares of employer stock he intends to sell
accompanied by the certificate representing such
shares endorsed in blank or with a duly executed
stock power.
i. Time for filing notice. Such notice must be
filed within 15 months after the date of
distribution of the shares tendered for sale
in such notice. The plan administrator in
its discretion may waive the requirement that
such written notice be filed within the
periods specified in the preceding two
sentences.
ii. Other persons who may exercise the "put for
cash" option. The right to put the employer
stock back to the employer may be exercised
by the following persons with respect to
shares of employer stock owned by such
person:
(1) the participant's donee;
(2) any person, including the
participant's beneficiary, executor,
administrator or a distributee of
the participant's estate, who owns
such shares as a result of the
participant's death; or
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(3) the trustee or custodian under an
individual retirement account
established by the participant to
which he transferred such shares.
Any such other person must exercise the
option within the time period provided above
without extension.
iii. Purchase by trustee. The plan administrator
in its discretion may direct the trustee to
purchase shares of employer stock tendered by
a participant or other person. The employer
must purchase any shares which the trustee
does not purchase.
iv. Determination of purchase price. The price
at which the employer (or the trustee) will
purchase shares of employer stock which are
not readily tradable on an established market
will be the fair market value of such shares
as determined by the trustee as of the
valuation date most recently preceding the
date on which the participant (or other
person) files the written notice exercising
the right to put for cash.
v. Payment of purchase price. The employer (or
trustee) in its discretion may pay the
purchase price for shares purchased under
this article in one payment or with an
adequately secured promissory note providing
for substantially level payments, bearing
reasonable interest, and fully payable within
60 months. Such payment will be made within
30 days after the date the participant (or
other person) files the notice exercising the
right to put the shares.
vi. Determination of value of employer stock
which is not readily tradable on an
established securities market. The plan
administrator will determine the value of any
employer stock held in the plan. For stock
which is not readily tradable on an
established securities market, the plan
administrator must consult with and rely upon
the report of an "independent appraiser" who
meets the standards for an appraiser under
the regulations for Code Section 170 (a)(1).
b. Restrictions on transfer generally not allowed.
Shares of employer stock distributed to a participant
may not be subject to restrictions on transfer at any
EKCO Group, Inc. Employees' Stock Ownership Plan
- 39 -
41
time when the charter or bylaws of the employer do not
restrict share ownership exclusively to employees and plans
qualified under Code Section 401(a). Even in that event, any
such shares may be subject only to a limited right of first
refusal in favor of the employer as follows:
i. The right of first refusal may provide only
that a person owning such shares may not sell
any such shares until the expiration of 14
days after he gives written notice to the
employer of the receipt of a good faith offer
to purchase such shares from a third party.
ii. During such 14 day period, the employer may
purchase such shares by paying the owner the
greater of the value of such shares as most
recently determined or the purchase price
(and other terms) offered in good faith by
such third party.
iii. In its discretion, the employer may permit
the trustee to purchase such shares during
the same period and at the same price and
other terms that the employer may purchase
such shares.
c. Employee stock rights are protected on termination.
Termination of the plan will not cause participants
to lose any of the following rights which ERISA
requires that the plan provide with respect to the
employer stock distributed to them from the plan,
meaning specifically:
i. the "put for cash" option for any employer
stock which is not readily tradable on an
established securities market or convertible
into such a security, as provided above; and
ii. the limitation on stock transfer restrictions as
provided above.
10. TEXT CONTROLS. Headings and titles are for convenience only, and the text
will control in all matters.
EKCO Group, Inc. Employees' Stock Ownership Plan
- 40 -
42
11. APPLICABLE STATE LAW. To the extent that state law applies, the
provisions of the plan will be construed, enforced and administered according
to the laws of the State of Delaware.
Adopted June __, 1992.
EKCO GROUP, INC.
By:/S/ ROBERT STEIN
----------------
President
EKCO Group, Inc. Employees' Stock Ownership Plan
- 41 -
EX-10.6(A)(2)
8
EMPLOYEES' STOCK OWNERSHIP PLAN AMENDMENT
1
EXHIBIT 10.6(a)(2)
EKCO GROUP, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
AMENDMENT
--------------------------------------------------------------------------------
WHEREAS, Ekco Group, Inc. ("Ekco") sponsors the Ekco Group, Inc.
Employees' Stock Ownership Plan (the "Plan"); and
WHEREAS, Ekco has reserved the right to amend the Plan;
NOW, THEREFORE, the Plan is amended as follows:
1) Effective January 1, 1993, the following Section 15.12 is added to the
Plan:
12. Direct Rollover Rules
---------------------
a. Applicability of article. This Article applies to distributions
made on or after January 1, 1993. Notwithstanding any provision of
the plan to the contrary that would otherwise limit a distributee's
election under this Article, a distributee may elect, at the time and
in the manner prescribed by the plan administrator, to have any
portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct
rollover.
b. Definitions.
i. Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and
distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the
Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
ii. Eligible retirement plan: An eligible retirement plan is
an individual retirement account described in section 408(a)
of the Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in
section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account
or individual retirement annuity.
iii. Distributee: A distributee includes an employee or
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's former spouse
or former spouse who is the alternate payee under a qualified
domestic relations
2
order, as defined in section 414(p) of the Code, are
distributees with regard to the interest of the spouse or
former spouse.
iv. Direct rollover: A direct rollover is a payment by the
plan to the eligible retirement plan specified by the
distributee.
2) Effective January 1, 1994, the following Section 2.8.e is added to the
definition of compensation in Section 2.8:
e. In addition to other applicable limitations set forth in the plan,
and notwithstanding any other provision of the plan to the contrary,
for plan years beginning on or after January 1, 1994, the annual
compensation of each employee taken into account under the plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93
annual compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which compensation is determined
(determination period) beginning in such calendar years. If a
determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination
period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in
this plan to the limitation under section 401(a)(17) of the Code shall
mean the OBRA '93 annual compensation limit set forth in this
provision.
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current
plan year, the compensation for that prior determination period is
subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination
periods beginning before the first day of the first plan ear beginning
on or after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
Executed November 23, 1994
Ekco Group, Inc.
By: /S/ NEIL R. GORDON
---------------------
EX-10.6(B)
9
LOAN AGMT
1
EXHIBIT 10.6(b)
---------------
LOAN AGREEMENT
BY AND BETWEEN
NEIL R. GORDON, TRUSTEE OF EKCO GROUP, INC.
EMPLOYEES' STOCK OWNERSHIP PLAN TRUST
AND
EKCO GROUP, INC.
AND
SHAWMUT BANK, N.A.
$6,426,000
----------
TERM LOAN
---------
MAY 22, 1989
------------
2
LOAN AGREEMENT
--------------
Neil R. Gordon, as trustee, under Trust Agreement - Ekco Group, Inc.
Employees' Stock Ownership Plan dated January 1, 1989 (the "Borrower"), EKCO
GROUP, INC., a Delaware corporation having its principal place of business at
98 Spit Brook Road, Suite 102, Nashua, New Hampshire, (the "Company"), and
SHAWMUT BANK, N.A., national banking association organized under the laws of
the United States and having an office at One Federal Street, Boston,
Massachusetts 02211 (the "Bank"), hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING AND OTHER TERMS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADMINISTRATOR" means the committee designated under the ESOP Plan to
administer the ESOP Plan.
"AFFILIATE" means singly and collectively the Company and any Person
(other than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, the Borrower. For purposes of
this definition, a Person shall be deemed to be "controlled by" the Borrower if
the Borrower possesses, directly or indirectly, power either to (i) vote 10% or
more of the securities having ordinary voting power for the election of
directors of such Person or (ii) direct or cause the direction of the
management and policies of such Person whether by contract or otherwise, and
the legal representative, successor or assign of any such Person.
"AGREEMENT" means this loan agreement.
"A.M." means a time from and including 12 o'clock midnight to and
excluding 12 o'clock noon on any Business Day using Boston, Massachusetts time.
"BANK" has the meaning assigned in the first paragraph of this
Agreement.
"BORROWED MONEY" means any obligation to repay money, any Indebtedness
evidenced by notes, bonds, debentures, guaranties or similar obligations
including without limitation the Loan, and any obligation under a conditional
sale or other title retention agreement, the net aggregate rentals under any
Capitalized Lease Obligation or any lease which is the substantial equivalent
of the financing of the property so leased and any reimbursement obligation for
any letter of credit.
"BORROWER" has the meaning assigned in the first paragraph of this
Agreement.
1
3
"BUSINESS DAY" means any day on which banks in Boston, Massachusetts
are not authorized or required to close.
"CLOSING DATE" means the date on which all of the conditions precedent
set forth in Section 3.1 of this Agreement have been satisfied and the Loan is
made.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" has the same meaning ascribed to that term in the Pledge
and Security Agreement.
"COMMERCIAL BASE RATE" means the rate of interest per annum announced
from time to time by Bank as its "commercial base rate", such rate to be
adjusted on the effective date of any change thereof by Bank, and which rate is
not intended to be the lowest rate of interest charged by Bank to its
borrowers.
"COMMONLY CONTROLLED ENTITY" means a Person, whether or not
incorporated, which is under common control with the Borrower within the
meaning of section 414(b) or (c) of the Code.
"COMPANY" has the meaning assigned in the first paragraph of this
Agreement.
"DEFAULT" means an event or condition which with the giving of notice
or lapse of time or both would become an Event of Default.
"DOLLARS" and the sign "$" mean lawful money of the United States of
America.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended from time to time.
"ESOP" means the Ekco Group, Inc. Employees' Stock Ownership Plan as
defined by the ESOP Plan and ESOP Trust Agreement.
"ESOP PLAN" means the Ekco Group, Inc. Employees' Stock Ownership Plan
dated January 1, 1989 and attached as Exhibit H.
"ESOP TRUST AGREEMENT" means the Trust Agreement - Ekco Group, Inc.
Employees' Stock Ownership Plan dated January 1, 1989 and attached as Exhibit I.
"EVENTS OF DEFAULT" has the meaning assigned to that term in Section
6.1 of this Agreement.
"EVENT OF INCLUSION" means the effective date of any event, action,
law, amendment, regulation, judgement, decision, ruling, decree or otherwise,
and whether by the Borrower, Company, Bank, government or judicial entity or
otherwise that causes more than fifty percent (50%) of the interest paid or to
2
4
be paid to Bank on the Loan to be included in the gross income of Bank for any
purpose of the Code as amended from time to time or any other applicable
federal income tax law.
"EXHIBIT" means, when followed by a letter, the exhibit attached to
this Agreement bearing that letter and by such reference fully incorporated in
this Agreement.
"FINANCING DOCUMENTS" means, collectively, this Agreement, the Note,
the Security Documents, and, as they may be amended or supplemented from time
to time.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America.
"GUARANTY" means the guaranty of the Company substantially in the form
of Exhibit B.
"INDEBTEDNESS" means, for any Person, (i) all indebtedness or other
obligations of said Person for Borrowed Money or for the deferred purchase
price of property or services, (ii) all indebt edness or other obligations of
any other Person ("Other Person") for Borrowed Money or for the deferred
purchase price of property or services, the payment or collection of which said
Person has guaranteed (except by reason of endorsement for collection in the
ordinary course of business) or in respect of which said Person is liable,
contingently or otherwise, including, without limita tion, liable by way of
agreement to purchase or lease, to provide funds for payment, to supply funds
to purchase, sell or lease property or services primarily to assure a creditor
of such Other Person against loss or otherwise to invest in or make a loan to
the Other Person, or otherwise to assure a creditor of such Other Person
against loss, (iii) all indebtedness or other obligations of any Person for
Borrowed Money or for the deferred purchase price of property or services
secured by (or for which the holder of such indebtedness has an existing right,
contingent or other wise, to be secured by) any Lien upon or in any property
owned by said Person, whether or not said Person has assumed or become liable
for the payment of such indebtedness or obligations and (iv) all other
liabilities or obligations of said Person which would, in accordance with GAAP,
be classified as liabilities of such a Person for borrowed money.
"INCLUSION RATE" means the rate per annum at which interest shall
accrue on the Loan during an Event of Inclusion.
"INVESTMENT" means any investment in any Person whether by means of a
purchase of capital stock, notes, bonds, debentures or other evidences of
Indebtedness and/or by means of a capital or partnership contribution, loan,
deposit, advance or otherwise, but shall not include ordinary advances to
employees for travel expenses, drawing accounts and similar expenditures made
in the ordinary course of business.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or otherwise) or other security
agreement or preferential arrangement of any kind or nature whatsoever
3
5
(including without limitation any conditional sale or other title retention
agreement and any Capitalized Lease Obligation) having substantially the same
eco nomic effect as any of the foregoing and the filing of any financing
statement under the applicable Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing.
"LOAN" means at any time the outstanding principal amount of
Indebtedness owed to the Bank as evidenced by the Note.
"MULTIEMPLOYER PLAN" means a multiemployer Plan as defined in Title IV
of ERISA.
"NOTE" means the Term Note of the Borrower payable to the order of the
Bank and substantially in the form of Exhibit A.
"ORIGINAL NOTE" means the note in a face amount of $6,489,000 dated
February 28, 1989 evidencing the loan from Company to Borrower that qualifies
as an exempt loan pursuant to Section 4975(d)(3) of the Code and Section 408 of
ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to subtitle A of Title 4 of ERISA.
"P.M." means a time from and including 12 o'clock noon on any Business
Day to the end of such Business Day using Boston, Massachusetts time.
"PERSON" means an individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"PLAN" means an employee benefit plan or other plan main tained for
employees of the Borrower or any Commonly Controlled Entity and covered by
Title IV of ERISA.
"PLEDGE AND SECURITY AGREEMENT" means the document whereby Company
pledges cash and cash equivalent investments to Bank as security for its
obligations under the Guaranty and this Agreement, substantially in the form of
Exhibit C.
"REPORTABLE EVENT" shall have the meaning assigned to that term in
Title IV of ERISA.
"SECTION" means, when followed by a number, the section or subsection
of this Agreement bearing that number.
"SECURITY DOCUMENTS" means the Guaranty and Pledge and Security
Agreement and all documents, instruments and agreements now or hereafter
providing security for the Loan, for Borrower's or Company's obligations under
the Financing Documents, and for any other Indebtedness of Borrower, Company
or Subsidiaries to the Bank, all as executed, delivered to and accepted by the
Bank on or prior to the Closing Date, as same may be amended from time to time
pursuant to their terms.
4
6
"SINGLE EMPLOYER PLAN" means any Plan which is not a Multi employer
Plan.
"SUBSIDIARY" means any corporation, if any, of which more than 50% of
the outstanding capital stock having ordinary voting power to elect a majority
of the board of directors or other managers of such corporation (irrespective
of whether or not at the time capital stock of any other class or classes of
such cor poration shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by the Company, or by
the Company and/or one or more Subsidiaries or the management of which
corporation are under control of the Company and/or any other Subsidiary,
directly or indirectly through one or more Persons and any Person which, under
GAAP, should at any time for financial reporting purposes be consol idated with
the Company and/or any other Subsidiary.
SECTION 1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data submitted pursuant to this Agreement shall be prepared in accordance with
GAAP.
SECTION 1.3 OTHER TERMS. The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE 2.
AMOUNT AND TERMS OF THE LOAN
Section 2.1 Principal.
----------------------
Bank agrees, subject to the terms and conditions contained in this
Agreement, to make a Loan to Borrower on or before the Closing Date in a
principal amount equal to Six Million Four Hundred Twenty-six Thousand Dollars
($6,426,000). The Loan shall be evidenced by the Note, completed and duly
executed by Borrower in accordance with this Agreement, and delivered to Bank
on the Closing Date in accordance with ARTICLE 3 in an original principal
amount equal to the amount of the Loan.
Section 2.2 Interest.
---------------------
2.2.1 RATE OPTIONS. Subject to the provision of this section, Borrower
shall elect to have interest accrue on the outstanding principal balance in
accordance with one of the following interst rate options:
FIXED RATE OPTION. The rate per annum during the period that a Fixed
Rate Option is in effect shall be equal to the amount agreed to by Bank
and Borrower as specified in the Interest Option Election then in
effect; and
FLOATING RATE OPTION. The rate per annum during the period that the
Floating Rate Option is in effect shall be equal to seventy-eight
percent (78%) of the Commercial Base Rate.
5
7
2.2.2 ACCRUAL Subject to and in accordance with the terms and
conditions of this Agreement and the Note, interest shall accrue beginning on
the Closing Date on the outstanding principal balance of the Loan at the rate
per annum applicable to the Interest Option Election then in effect, provided,
however, that interest shall accrue in accordance with the Floating Rate Option
for any period(s) that a valid Interest Option Election is not in effect.
Borrower shall pay interest in arrears on the Loan outstanding from time to
time after the Closing Date monthly on the 15th day of each month commencing
June 15, 1989.
2.2.3 INTEREST OPTION ELECTION On the Closing Date and from time to
time thereafter, Bank and Borrower shall execute an Interest Option Election in
substantially the form of EXHIBIT D. Each Interest Option Election shall
specify the option selected by Borrower, the agreed-upon rate if the Fixed Rate
Option is selected, and the period for which such option shall remain in
effect, provided, however, that the period for each Fixed Rate Option may not
exceed five (5) years. Each Interest Option Election may specify agreed-upon
penalties and/or premiums for prepayment of the Loan while a Fixed Rate Option
is in effect. An Interest Option Election executed by Borrower and Bank and
delivered to Bank shall be effective for the term specified therein unless Bank
and Borrower consent otherwise, and shall govern accrual of interest in
accordance with its terms. Upon expiration of the term specified in each
Interest Option Election, Bank and Borrower may execute subsequent Interest
Option Elections which shall govern accrual of interest as specified.
2.2.4 RATE DURING EVENT OF INCLUSION Notwithstanding any provision of
the Financing Documents to the contrary, upon the occurrence of and for the
duration of any Event of Inclusion, interest shall accrue and be due and
payable on the outstanding principal balance of the loan at a rate per annum
sufficient to provide Bank at all times with an after-tax yield on the Loan
equivalent to the after-tax yield on the Loan under the Floating Rate Option
which it would have earned had the Event of Inclusion not occurred.
Section 2.3 Repayment.
----------------------
The Loan shall be repaid in two hundred forty (240) consecutive monthly
installments of principal and interest accrued thereon, all such monthly
installments to be due on the 15th day of each month, commencing with June 15,
1989. Installments due during the term specified in an effective Interest
Option Election electing the Fixed Rate Option shall be equal in amount, and
calculated on the assumption that the rate of interest then in effect shall
continue for the duration of the Loan. Installments due during any period that
the Floating Rate Option or the Inclusion Rate is in effect shall be in an
amount calculated to provide for equal monthly payments on the assumption that
the applicable rate of interest in effect for such period on the first day of
the first month of such period shall continue for the duration of the Loan,
provided, however, that the amount of any remaining installments for such
period shall be recalculated pursuant to the foregoing whenever such applicable
interest rate then in effect varies from the rate in effect on the first day of
the preceding month. The final installment shall be in an amount equal to the
amount applicable as specified above plus the then outstanding principal
balance of the Loan, together with all interest, fees, charges,
6
8
costs and expenses accrued thereon. The amount of each such installment
hereunder shall be applied first to interest accrued and the remainder to the
then outstanding principal balance of the Loan. At least ten (10) days before
the due date of each payment specified in this paragraph, Bank shall deposit in
the U.S. mail postage prepaid a written notice addressed to Borrower indicating
the amount and due date of such payment; provided, however, that Bank's failure
to provide such notice shall not affect Borrower's unconditional obligations to
repay in full the Loan and all interest, fees and other sums due in connection
with this agreement and/or the Note.
SECTION 2.4 COMPUTATION OF INTEREST AND FEES. Interest and fees due
under this Agreement and under the Note shall be computed on the basis of a
year consisting of twelve (12) months of thirty (30) days each.
SECTION 2.5 INCREASED COSTS - CAPITAL. If, after the date hereof, the
Bank shall have reasonably determined that the adoption of any applicable law,
governmental rule, regulation or order regarding capital adequacy of banks or
bank holding companies, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank with any policy, guideline, directive or
request regarding capital adequacy (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital of the Bank as a consequence of the
obligations hereunder of the Bank to a level below that which the Bank could
have achieved but for such adoption, change or compliance taking into
consideration the policies of the Bank with respect to capital adequacy
immediately before such adoption, change or compliance and assuming that the
capital of the Bank was fully utilized prior to such adoption, change or
compliance) by an amount reasonably deemed by the Bank to be material, then the
Borrower shall pay to the Bank from time to time as specified by the Bank such
additional amounts as shall be sufficient to compensate the Bank for such
reduced return, each such payment to be made by the Borrower within five (5)
Business Days after each demand by the Bank. A certificate of one of the
officers of the Bank setting forth the amount to be paid to the Bank hereunder
shall, in the absence of manifest error, be conclusive. In determining such
amount, the Bank may use any reasonable averaging and attribution methods. The
Bank will use its best efforts to inform the Borrower or any event occurring
after the date hereof which will require payments to be made under this Section
promptly after the Bank becomes aware of such event, but the failure of the
Bank so to inform the Borrower shall not affect any of the obligations of the
Borrower hereunder.
SECTION 2.6 NOTATIONS. At the time of the making of the Loan
evidenced by the Note and upon each payment or prepayment of principal,
interest, fees and other sums due in connection with this Agreement or the
Note, Bank shall enter upon its records an appropriate notation evidencing such
Loan or such payment or prepayment. Failure to make any such notation shall
not affect the Borrower's unconditional obligations to repay in full the Loan
and all interest, fees and other sums due in connection with this Agreement
and/or any of the Note, nor shall any such failure, standing alone, constitute
grounds
7
9
for disproving a payment by the Borrower. Any such notations and the Bank's
records containing such notations may be introduced in evidence in any judicial
or administrative proceeding relating to this Agreement, the Loan or the Note.
SECTION 2.7 TIME AND PLACE OF PAYMENTS. All payments and prepayments
of principal, fees, interest and any other amounts owed from time to time under
this Agreement and/or the Note shall be made to the Bank at the address
referred to in Section 8.8 in Dollars and in immediately available funds prior
to 2:00 o'clock P.M. on the Business Day that such payment is due.
SECTION 2.8 CHARGE AGAINST ACCOUNTS The Borrower hereby authorizes
and instructs the Bank to charge against the Borrower's accounts, if any, with
the Bank on each monthly payment date hereunder and under the Note an amount up
to the principal, interest and fees due and payable to the Bank hereunder and
under the Note and such charge shall be deemed payment hereunder and under the
Note to the extent that immediately available funds are then in such accounts.
The Borrower may revoke the foregoing instruction by written notice to the Bank
given in accordance with this Agreement. In addition, the Borrower and Company
hereby irrevocably authorize the Bank, if and to the extent payment of any
amount due hereunder or under the Note is not made when due, to charge against
the Borrower's or Company's accounts, with the Bank an amount equal to the
amount thereof not paid when due. Any such payment or prepayment which is
received by the Bank in Dollars and in immediately available funds after Bank's
close of business on a Business Day shall be deemed received for all purposes
of this Agreement on the next succeeding Business Day except that solely for
the purpose of determining whether a Default has occurred under paragraph
6.1.1, any such payment or prepayment if received by the Bank prior to the
close of the Bank's business on a Business Day shall be deemed received on such
Business Day.
SECTION 2.9 RIGHT OF SET OFF Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, without notice to the Borrower or Company (any such
notice being expressly waived by the Borrower and Company), to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other Indebtedness at any time owing by the Bank to
or for the credit or the account of the Borrower or Company against any and all
of the obligations of the Borrower and Company now or hereafter existing under
this Agreement, the Note or the Security Documents irrespective of whether or
not the Bank shall have made any demand and although such obligations may be
unmatured. Bank agrees to promptly notify Borrower or Company, respectively,
after any such setoff and application; provided that the failure to give such
notice shall not affect the validity of such setoff and application. The
rights of Bank under this Section are in addition to all other rights and
remedies (including, without limitation, other rights of setoff) which Bank may
have.
SECTION 2.10 UNCONDITIONAL OBLIGATIONS AND NO DEDUCTIONS. Borrower's
and Company's obligation to make all payments provided for in this Agreement,
the Note and the Security Documents shall be unconditional. Each such payment
shall be made without deduction for any claim, defense or offset of any type,
8
10
including without limitation any withholdings and other deductions on account
of income or other taxes and regardless of whether any claims, defenses or
offsets of any type exist; provided, however, that the foregoing shall not
apply to any withholding tax described in sections 1441, 1442 and 3406 of the
Code, or any succeeding provision of any legislation that amends, supplements
or replaces any such section, or to of any tax, levy, impose, duty, charge,
fee, deduction or withholding that results from any noncompliance by Bank with
any federal, state or foreign law or from any failure by Bank to file or
furnish any report, return, statement or form the filing or furnishing of which
would not have an adverse effect on Bank and would eliminate such tax, impose,
duty, deduction or withholding; provided further, that if Borrower has made
withholding payments to a proper taxing authority and Bank determines that it
has received a tax credit on account thereof, Bank shall refund an amount equal
to the amount of such tax credit to Borrower within fifteen (15) Business Days
after filing of the tax return on which such credit was taken, but if any such
tax credits are subsequently disallowed, Borrower, upon written notice from
Bank, shall repay to Bank an amount equal to the amount of such disallowed tax
credit(s). However, this Section shall not constitute a waiver of any claims
Borrower may hereafter have at law against Bank.
SECTION 2.11 PREPAYMENT AND CERTAIN PAYMENTS. All or any portion of
the unpaid principal balance of the Loan may be prepaid without premium or
penalty at any time while the Floating Rate Option or Inclusion Rate is in
effect by a payment to Bank in immediately available Dollars by Borrower.
Prepayment of all or any portion of the unpaid principal balance of the Loan
may be made while the Fixed Rate Option is in effect by a payment to Bank in
immediately available Dollars by Borrower, provided that Borrower pays to Bank
at the time of such prepayment such premiums and/or penalties as specified in
the Interest Option Election then in effect, or if no premiums or penalties are
specified as determined by Bank in its sole discretion. Any premiums or
penalties imposed by Bank pursuant to this section shall not be in excess of
that amount necessary to provide Bank with an after-tax yield on the Loan for
the period that such Fixed Rate Option was actually in effect equivalent to the
after tax-yield Bank would have earned had payments been made pursuant to
SECTION 2.13 for the entire period that such Fixed Rate Option was scheduled to
be in effect. All such payments and prepayments of the Loan shall be
accompanied by the interest accrued on the principal amount being paid or
prepaid through the date of payment or prepayment, and each such partial
payment or prepayment of principal of the Loan, except in the event the
outstanding principal balance of the Loan is less than $10,000, shall be in a
principal amount of at least Ten Thousand Dollars ($10,000.00). Borrower may
make payments pursuant to this section no more than twice each calendar year.
Any prepayment of the Loan will be applied to installments thereof in the
inverse order of maturity.
SECTION 2.12 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder or under the Note shall be stated to be due on a day other than
a Business Day, such payment may be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment and of fees, if any, under this Agreement and under the Note.
SECTION 2.13 USE OF PROCEEDS. The Borrower shall use proceeds of the
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Loan as allowed under Code Section 409(l) for the sole purpose of refinancing
the loan from Company to Borrower evidenced by the Original Note, pursuant to
the terms and conditions of this Agreement. It is intended that the
transaction contemplated by this Agreement constitute an exempt loan pursuant
to Section 4975(d)(3) of the Code and Section 408 of ERISA.
Section 2.14 Security.
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The Loan will be secured by the Security Documents.
Section 2.15 Purchase of Note.
------------ ----------------
Upon written demand to Company, which may be made at any time in Bank's
sole discretion, Company shall purchase from Bank the Note for an amount equal
to the then outstanding principal balance of the Note plus unpaid accrued
interest plus such other amounts due Bank pursuant to this Agreement
(collectively, the "Note Purchase Price"). Within four (4) business days after
delivery of such demand to Company, Company shall pay to Bank the Note Purchase
Price. In addition to all other rights and remedies available to Bank, Company
irrevocably authorizes Bank upon the demand contemplated by this section to
liquidate any and all Collateral pursuant to section 6 of the Pledge and
Security Agreement and to apply the proceeds of such collateral to the amount
due Bank pursuant to this section. Upon Bank's receipt of the Note Purchase
Price in full, Bank shall transfer to Company the Note without recourse and
without warranties or representations, express or implied. Company shall
purchase the Note despite the existence of claims or defenses or that the Note
is overdue, has been dishonored or is in default, and shall have reason to know
of any of the foregoing at the time of such purchase.
ARTICLE 3.
CONDITIONS OF LENDING
Section 3.1 Conditions Precedent to the Loan.
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The obligation of the Bank to make the Loan is subject to performance
by the Borrower and Company of all of their obligations under this Agreement
and to the satisfaction of the conditions precedent that all legal matters
incident to the transactions contemplated hereby or incidental to the Loan
shall be satisfactory to counsel for the Bank and the Bank at its request shall
have received before, or otherwise on, the Closing Date all of the following,
each dated the Closing Date or another date acceptable to the Bank and each to
be in the form and substance approved by the Bank:
(3.1.1) FINANCING DOCUMENTS The Financing Documents duly executed and
delivered, as appropriate, by the Borrower and/or Company;
(3.1.2) PERFECTION OF SECURITY INTERESTS Evidence that Bank has legal,
valid and perfected first priority security interests in all the Collateral.
(3.1.3) LEGAL OPINION Favorable opinions of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., counsel for Borrower and Company,
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substantially in the form of Exhibit F.
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(3.1.4) ADMINISTRATOR'S CERTIFICATE A certificate duly executed and
delivered by the Administrator authorizing and approving such of the Financing
Documents to which the Borrower is a party and other matters contemplated
hereby and certifying as to the power, identity and signature of each person
authorized to sign and deliver each Financing Document to be executed and
delivered by or on behalf of the ESOP. The Bank may conclusively rely on such
Administrator's certificate until the Bank shall receive a further certificate
of the Administrator cancelling or amending the prior certificate and
submitting the signatures of the officers named in such further certificate
(3.1.5) SECRETARY'S CERTIFICATE A certificate duly executed and
delivered by the clerk or secretary of Company certifying as to the resolutions
of the board of directors and/or shareholders of Company authorizing and
approving such of the Financing Documents to which the Company is a party and
other matters contemplated hereby and certifying as to the power, identity and
signatures of each officer of Company authorized to sign and deliver each
Financing Document to be executed and delivered by or on behalf of Company.
Bank may conclusively rely on each such clerk's or secretary's certificate
until Bank shall receive a further certificate of the clerk or secretary of
Company cancelling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(3.1.6) CLOSING CERTIFICATES Certificate executed and delivered by
the President or Vice President of the Company stating that:
(A) No Default or Event of Default has occurred and is
continuing, or would result from the making of the Loan; and
(B) From October 10, 1988 to the Closing Date there has been
no material adverse change in the financial condition or operations
of the Borrower, Company or any Subsidiary.
Certificate executed and delivered by Borrower stating that no Default
or Event of Default has occurred and is continuing, or would result from the
making of the Loan.
(3.1.7) CORPORATE STATUS Certificates of the Secretary of State and
Department of Taxation of the State of Delaware (Tax Certificate), dated
reasonably near the Closing Date, stating that Company is duly organized or
qualified and in good standing as a corporation in such state and has paid all
franchise and other taxes required to be filed or paid to the date of such
certificate, except that the Tax Certificate may be provided within a
reasonable time after the Closing Date if on the Closing Date Company delivers
to the Bank a signed certificate from Company's accountant certifying the facts
required in the Tax Certificate.
(3.1.8) ESOP DOCUMENTS True copies of the ESOP Trust Agreement, ESOP
Plan and such other documents, agreements, or instruments deemed necessary by
Bank to establish the validity of Borrower.
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(3.1.9) EVIDENCE OF INDEBTEDNESS True copies of all documents,
instruments and agreements evidencing Indebtedness of Borrower for Borrowed
Money.
(3.1.10) DISCHARGE OF INDEBTEDNESS True copies of all documents,
instruments and agreements necessary to terminate, cancel or discharge as
required by Bank those documents, instruments and agreements evidencing or
securing certain existing Indebtedness for Borrowed Money of Borrower.
(3.1.11) FINANCIAL STATEMENTS True copies of the financial statements
and other information required pursuant to paragraph 4.2.5 and any revisions
thereto and such other evidence as reasonably deemed necessary by Bank to
establish Borrower's and Company's solvency, ability to pay debts generally as
they mature and sufficiency of capital for an ongoing business.
(3.1.12) OTHER INFORMATION Such other information about Borrower,
Company and Subsidiaries, and/or their assets, business and/or financial
condition as Bank may reasonably request.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER Borrower
represent and warrant to Bank that, after giving effect to the Loan and the
application of the proceeds thereof (which representations and warranties shall
survive the making of the Loan) as follows:
4.1.1 VALIDITY OF THE ESOP. The ESOP Trust Agreement is valid, binding
and enforceable under the laws of the State of Delaware. The Borrower is a
duly organized and validly existing "employee stock ownership plan" as defined
in Sections 133(c) and 4975(e)(7) of the Code, applicable Regulations and
Section 407(d)(6) of ERISA, and will obtain a favorable determination from the
Internal Revenue Service that the ESOP is qualified under Code Section 401(a)
within the time permitted by Code Section 401(b).
4.1.2 AUTHORITY OF THE ESOP. The execution of this Agreement, the
Note, the Financing Documents and other instruments and agreements in
connection therewith are within the authority of Borrower and its Trustee, has
been duly authorized by said Trustee and are not in violation of the terms of
the ESOP Trust Agreement, and, except to such extent as shall have no practical
adverse effect as determined by Bank in its sole discretion, are not in
violation of any provision of applicable law. Borrower has not done and will
not do anything with the proceeds of the Loan that would cause the Loan to be
subject to tax imposed on prohibited transactions by Section 4975 of the Code
or subject to excise tax.
4.1.3 AUTHORIZATION AND ABSENCE OF DEFAULTS. The execution, delivery
to the Bank and performance by the Borrower of the Financing Documents have
been duly authorized by all necessary legal and governmental action and do not
and will not, except to such extent as shall have no practical adverse effect
as determined by Bank in its sole discretion, (i) require any consent or
approval of the shareholders or board of directors of Company which has not
been
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obtained, (ii) violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to Borrower or any Affiliate (iii) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower or any Affiliate is or
are a party or parties or by which it or they or its or their properties may be
bound or affected; or (iv) result in, or require, the creation or imposition
of any Lien on any of its or their respective properties or revenues other than
Liens granted to Bank by the Security Documents. Except to the extent set
forth in reports filed by Company with the Securities and Exchange Commission,
Borrower has complied in all material respects with, and does not violate or
contravene in any material respect, any provision of any applicable law, or any
judgment, decree or order of any court or governmental or regulatory authority,
bureau, agency or official applicable to the Borrower or the business or
operations of the Borrower, and Borrower is not in violation of or in default
under any provision of its charter documents or by-laws, or any provision of
any contract, agreement or instrument (including, without limitation, any
writing evidencing any indebtedness or any guaranty) to which the Borrower is a
party or by which such person or any of its property is bound or effected, the
violation of or contravention of or default under or in respect of which are
reasonably likely to, individually or in the aggregate, materially adversely
affect the financial position, business, operations or prospects of the
Borrower.
4.1.4 ACQUISITION OF CONSENTS. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, other than those which have been obtained, is or will be necessary to
the valid execution and delivery to Bank or performance by Borrower of any
Financing Documents, except to such extent as shall have no practical adverse
effect, as determined by Bank in its sole discretion.
4.1.5 VALIDITY AND ENFORCEABILITY. Each of the Financing Documents
when delivered and executed by Borrower hereunder will constitute, the legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms.
4.1.6 TAXES. Borrower has filed all tax returns (federal, state and
local) required to be filed and paid all taxes shown thereon to be due,
including interest and penalties, or provided adequate reserves for payment
thereof, except where failure to comply with this paragraph has no material
adverse effect on the financial condition of Borrower.
4.1.7 ACCURACY OF REPRESENTATIONS AND WARRANTIES. None of Borrower's
representations or warranties set forth in this Agreement or in any document or
certificate taken together with any related document or certificate furnished
pursuant to this Agreement contains any untrue statement of a material fact or
omits a material fact necessary to make any statement of fact contained herein
or therein, in light of the circumstances under which it was made, not
misleading; except that unless provided otherwise any such document or
certificate which is dated speaks as of the date stated and not the present.
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4.1.8 SOLVENCY, ETC. After giving effect to the consummation of the
Loan to be made under this Agreement as of the time this representation and
warranty is given Borrower will be able to pay its debts as they become due.
Borrower will not be rendered insolvent within the meaning of Section 101(31)
of the Bankruptcy Code of 1978, as amended, by the execution and delivery of
this Agreement and the consummation of any transactions contemplated herein.
4.1.9 PRINCIPAL PLACE OF BUSINESS; BOOKS AND RECORDS. Borrower's
principal place of business is located at Borrower's address set forth in
Section 8.8. All of Borrower's books and records are kept at its principal
place of business.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF COMPANY. Company
represents and warrants to the Bank that, after giving effect to the Loan and
the application of the proceeds thereof (which representations and warranties
shall survive the making of the Loans) as follows:
4.2.1 ORGANIZATION AND EXISTENCE. Company is a corporation, duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, and has all requisite corporate power and authority and full
legal right to own or hold under lease its properties, conduct its business as
now conducted and as proposed to be conducted, and to execute and deliver, and
to perform all of its obligations under the Financing Documents.
4.2.2 AUTHORIZATION AND ABSENCE OF DEFAULTS. The execution, delivery
to the Bank and performance by Company of the Financing Documents have been
duly authorized by all necessary corporate and governmental action and do not
and will not, except as shall have no practical adverse effect as Bank shall
determine in its sole discretion, (i) require any consent or approval of the
shareholders or board of directors of Company which has not been obtained, (ii)
violate any provision of any law, rule, regulation (including, without
limitation, Regulations U and X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to Company, any Affiliate and/or
any Subsidiary and/or the articles of incorporation or by-laws, where
applicable, of Company (iii) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease
or instrument to which Company, is a party or by which it or its or their
properties may be bound or affected; or (iv) result in, or require, the
creation or imposition of any Lien on any of its or their respective properties
or revenues other than Liens granted to the Bank by the Security Documents.
Except to the extent set forth in reports filed by Company with the Securities
and Exchange Commission, Company has complied in all material respects with,
and does not violate or contravene in any material respect, any provision of
any applicable law, or any judgment, decree or order of any court or
governmental or regulatory authority, bureau, agency or official applicable to
the Company or the business or operations of the Company, and Company is not in
violation of or in default under any provision of its charter documents or
by-laws, or any provision of any contract, agreement or instrument (including,
without limitation, any writing evidencing any indebtedness or any guaranty) to
which the Company is a party or by which such person or any of its property is
bound or effected, the violation of or contravention of or
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default under or in respect of which are reasonably likely to, individually or
in the aggregate, materially adversely affect the financial position, business,
operations or prospects of the Company.
4.2.3 ACQUISITION OF CONSENTS. No authorization, consent, approval,
license, exemption of or filing or registration with any person, court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, other than those which have been obtained, is or will be
necessary to the valid execution and delivery to the Bank or performance by the
Company of any Financing Documents, except as shall have no practical adverse
effect as Bank shall determine in its sole discretion.
4.2.4 VALIDITY AND ENFORCEABILITY. Each of the Financing Documents
when delivered and executed by Company hereunder will constitute, the legal,
valid and binding obligations of Company enforceable against Company in
accordance with their respective terms.
4.2.5 FINANCIAL INFORMATION. The following information with respect to
Company has heretofore been furnished to the Bank: the consolidated balance
sheets of Company and Subsidiaries as of January 1, 1989 together with
consolidated statements of income and expenses, sources and uses of funds,
retained earnings, paid-in capital, and surplus and changes in financial
position for the fiscal year then ending, certified by Coopers & Lybrand,
independent certified public accountants. Each of the financial statements
referred to in this Section was prepared in accordance with GAAP applied on a
consistent basis and presents fairly the financial condition of the Person
being reported on at such dates and is complete and correct in all material
respects. Since October 10, 1988, there has been no material adverse change in
the financial condition or operations of Company or any of the Subsidiaries on
a consolidated basis.
4.2.6 NO LITIGATION. Except as set forth in Exhibit G, there is no
litigation, at law or in equity, or any proceeding before any Federal, state,
or municipal board or other governmental or administrative agency pending or,
to the knowledge of the Company, threatened, or any basis therefore, which
involves a material risk of judgment or liability not fully covered by
insurance which may result, either individually or in the aggregate, in any
material adverse change in the business or assets or in the condition,
financial or otherwise, of the Company, and no judgment, decree, or order of
any Federal, state, or municipal court, board or other governmental or
administrative agency has been issued against the Company which has or may have
a material adverse effect on the business or assets or on the condition,
financial or otherwise, of the Company.
4.2.7 REGULATION U. After applying the proceeds of the Loan, margin
stock (as defined in Regulation U constitutes less than 25% of those assets of
company and of Borrower which are subject to any restrictions on sale, pledge
or other disposition while the Loan remains outstanding.
4.2.8 ABSENCE OF ADVERSE AGREEMENTS. Company is not a party to any
indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any corporate restriction which would have a
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practical adverse effect as Bank shall determine in its sole discretion on the
business, properties, assets, operations or condition, financial or otherwise,
of Company or on the ability of Company to carry out its obligations under the
Financing Documents.
4.2.9 TAXES. Company has filed all tax returns (federal, state and
local) required to be filed by it and has paid, or made adequate, provisions
for the payment of, all taxes which have or may become due pursuant to said
returns, for which the failure to file or pay would have a material adverse
effect upon Company.
4.2.10 ERISA. Company and any Commonly Controlled Entity do not
maintain or contribute to any Single Employer Plan which is not in substantial
compliance with ERISA, as amended, or which has incurred any accumulated
funding deficiency within the meaning of section 412 and 418B of the Code, or
which has applied for or obtained a waiver from the Internal Revenue Service of
any minimum funding requirement under section 412 of the Code. Company and any
Commonly Controlled Entity have not incurred any liability to the PBGC in
connection with any Plan covering any employees of Company or any Commonly
Controlled Entity in amount exceeding Fifty Thousand Dollars ($50,000.00) in
the aggregate or ceased operations at any facility or withdrawn from any Plan
in a manner which could subject any of them to liability under section 4062(e),
4063 or 4064 of ERISA in amount exceeding Fifty Thousand Dollars ($50,000.00)
in the aggregate, and know of no facts or circumstance which might give rise to
any liability of Company or any Commonly Controlled Entity to the PBGC under
Title IV of ERISA in amount exceeding Fifty Thousand Dollars ($50,000.00) in
the aggregate. Company and any Commonly Controlled Entity have not incurred
any withdrawal liability in amount exceeding Fifty Thousand Dollars
($50,000.00) in the aggregate (including but not limited to any contingent or
secondary withdrawal liability) within the meaning of sections 4201 and 4202 of
ERISA, to any Multiemployer Plan, and no event has occurred, and there exists
no condition or set of circumstances, which presents a risk of the occurrence
of any withdrawal from or the partition, termination, reorganization or
insolvency of any Multiemployer Plan which could result in any liability to a
Multiemployer Plan in amount exceeding Two Hundred Fifty Thousand Dollars
($250,000.00) in the aggregate.
Full payment has been made of all amounts which Company and any
Commonly Controlled Entity are required to have paid as contributions to any
Plan under applicable law or under any Plan or any agreement relating to any
Plan to which Company or any Commonly Controlled Entity is a party. Company
and each Commonly Controlled Entity have made adequate provision for reserves
to meet contributions that have not been made because they are not yet due
under the terms of any Plan or related agreements.
Neither Company nor any Commonly Controlled Entity has any knowledge,
or reason to believe, that a Reportable Event has occurred with respect to any
Plan which could result in a liability or liabilities of Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000.00) or more in the aggregate.
4.2.11 ACCURACY OF REPRESENTATIONS AND WARRANTIES. None of Company's
representations or warranties set forth in this Agreement or in any document
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or certificate taken together with any related document or certificate
furnished pursuant to this Agreement contains any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
any statement of fact contained herein or therein, in light of the
circumstances under which it was made, not misleading; except that unless
provided otherwise any such document or certificate which is dated speaks as of
the date stated and not the present.
4.2.12 SOLVENCY, ETC. After giving effect to the consummation of the
Loan to be made under this Agreement as of the time this representation and
warranty is given (a) Company will be able to pay its debts as they become due,
(b) Company will have funds and capital sufficient to carry on its business and
all businesses in which it is about to engage, and (c) the Company will own
property having a value both at fair valuation and at fair saleable value in
the ordinary course of its business greater than the amount required to pay its
Obligations, including for this purpose unliquidated and disputed claims.
Company will not be rendered insolvent within the meaning of Section 101(31) of
the Bankruptcy Code of 1978, as amended, by the execution and delivery of this
Agreement and the consummation of any transactions contemplated herein.
4.2.13 LICENSES, REGISTRATIONS, COMPLIANCE WITH LAWS, ETC.
Company has all permits, governmental licenses, registrations and approvals,
material to carrying out its businesses as presently conducted and as required
by law or the rules and regulations of any federal, foreign governmental,
state, county or local association, corporation or governmental agency, body,
instrumentality or commission having jurisdiction over Company including but
not limited to the United States Environmental Protection Agency, the United
States Department of Labor, the United States Occupational Safety and Health
Administration, the United States Equal Employment Opportunity Commission and
analogous and related state and foreign agencies. Except as previously
disclosed to the Bank in writing, there is no material violation or failure of
compliance or allegation of such violation or failure of compliance known to
Company on the part of Company or any Subsidiaries with any of the foregoing
permits, licenses, registrations, approvals, rules or regulations and there is
no material action, proceeding or investigation pending or to the knowledge of
Company threatened nor has Company received any notice of such which might
result in the termination or suspension of any such permit, license,
registration or approval.
4.2.14 PRINCIPAL PLACE OF BUSINESS; BOOKS AND RECORDS. Company's
principal place of business is located at Company's address set forth in
Section 8.8. All of Company's books and records are kept at its principal
place of business.
4.2.15 SUBSIDIARIES. All Subsidiaries of Company are listed on
Exhibit J.
ARTICLE 5.
COVENANTS OF BORROWER AND COMPANY
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE BORROWER AND COMPANY OTHER
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THAN REPORTING REQUIREMENTS. From the date hereof and thereafter for so long
as Borrower or Company is indebted to the Bank under any of the Financing
Documents, Borrower and Company will with respect to themselves unless noted
otherwise below, and unless the Bank shall otherwise consent in writing:
5.1.1 PAYMENT OF TAXES, ETC. Duly pay and discharge, or cause to paid
and discharged, when the same shall become due and payable, all material taxes,
assessments and other governmental charges, imposed upon it and its properties,
sales and activities, or upon the income and profits therefrom, as well as the
claims for labor, materials, or supplies which if unpaid might by law become a
lien or charge upon any of its properties; provided, however, that the Company
shall not be required to make any such payment at any time while it shall be
contested in good faith by appropriate actions its obligations to do so if it
shall have set aside on its books reserves (segregated to the extent required
by generally accepted accounting principles) adequate with respect thereto, all
determined in accordance with generally accepted accounting principles.
5.1.2 OTHER OBLIGATIONS. Except as otherwise required by this
Agreement, pay, perform, discharge and fulfill all of its obligations,
liabilities and covenants under each material document, instrument or agreement
to which it is a party, except when the amount or validity thereof is currently
being contested in good faith by appropriate actions.
5.1.3 PRESERVATION OF EXISTENCE, ETC. Maintain its corporate existence
and comply in all material respects with all valid and applicable statutes,
rules and regulations.
5.1.4 ESOP COMPLIANCE. Keep in force and effect the ESOP Trust
Agreement and continually satisfy the requirements for (i) qualification under
Section 401(a) of the Code, (ii) tax exempt status of the ESOP under Section
501(a) of the Code and any Treasury regulations now or hereafter in effect,
(iii) treatment of the ESOP Plan as a qualified employee stock ownership plan
under Section 4975(e)(7) of the Code, (iv) exemption of the loan under Section
4975(d)(3) of the Code from the prohibited transaction tax imposed by Section
4975(a) of the Code, (v) exemption from the prohibited transaction provisions
of Section 406(b) of ERISA and (vi) qualification of the Loan as a Securities
Acquisition Loan within the meaning of Code Section 133.
5.1.5 CONTRIBUTION TO ESOP. With respect to Company only, contribute
or cause to be contributed to Borrower such amounts as are necessary for
Borrower to repay the Note in accordance with its terms.
5.1.6 ACCOUNTING SYSTEM AND RECORDS. Maintain a standard system of
accounting and adequate records and books of account, in which complete entries
will be made in accordance with GAAP and with applicable requirements of any
governmental authority having jurisdiction over Borrower, Company or
Subsidiary, reflecting all financial transactions.
5.1.7 MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve all of its
material properties necessary or useful in the proper conduct of its business,
in good working order and condition, ordinary wear and tear excepted.
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5.1.8 PREVENTION. Prevent the proceeds of the Loan from being used
for any purpose other than that permitted herein.
SECTION 5.2 NEGATIVE COVENANTS OF BORROWER AND COMPANY. From the date
hereof and thereafter for so long as Borrower or Company is indebted to Bank
under any of the Financing Documents, neither Borrower nor Company will with
respect to themselves, and without the prior written consent of Bank:
5.2.1 DISSOLUTION, ETC. With less than thirty (30) days written notice
to Bank, dissolve, liquidate, terminate, wind up, or merge or consolidate with
another Person or sell, assign, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or a substantial part of its
assets or interests in real property (whether now owned or hereafter acquired).
5.2.2 INDEBTEDNESS. With respect to Borrower only and with less than
fifteen (15) days written notice to Bank, incur, create, become or be liable
directly or indirectly in any manner with respect to or permit to exist any
Indebtedness except: (a) Indebtedness under the Financing Documents; and (b)
Indebtedness described in the financial statements or other information
provided to Bank and existing on the Closing Date; provided that such
Indebtedness is paid in accordance with its stated terms without renewal,
extension or modification.
5.2.3 INDEBTEDNESS OF OTHER PERSONS. With respect to Borrower only,
assume, guarantee, endorse or otherwise become directly or contingently liable
in connection with any obligation or Indebtedness of any other person.
5.2.4 PAYMENT OR PREPAYMENT OF OTHER LOANS. With respect to Borrower
only and with less than thirty (30) days written notice to Bank, make any
payment or prepayment of any principal of or interest on or any payment,
prepayment, redemption, defeasance, sinking fund payment, other repayment of
principal or deposit for the purpose of any of the foregoing, except payments
in connection with the Original Note.
5.2.5 COMPLIANCE WITH ERISA. With respect to Company and any Commonly
Controlled Entity only and with less than thirty (30) days written notice to
Bank, (a) terminate, or cease to have an obligation to contribute to, any
Multiemployer Plan so as to result in any material liability of the Company or
any Commonly Controlled Entity to PBGC or to any Multiemployer Plan, (b) engage
in any "prohibited transaction" (as defined in section 4975 of the Code)
involving any Plan which would result in a material liability of the Borrower
or any Commonly Controlled Entity for an excise tax or civil penalty in
connection therewith, (c) except for any deficiency caused by a waiver of the
minimum funding requirement under section 412 of the Code, as described above,
incur or suffer to exist any material "accumulated funding deficiency" (as
defined in section 302 of ERISA and sections 412 and/or 418 of the Code) of the
Company or any Commonly Controlled Entity, whether or not waived, involving any
Single Employer Plan, (d) incur or suffer to exist any Reportable Event or the
appointment of a trustee or institution of proceedings for appointment of a
trustee for any Single Employer Plan if, in the case of a Reportable Event,
same continues unremedied for ten (10) days after notice of
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such Reportable Event pursuant to section 4043(a), (c) or (d) of ERISA is
given, if in the reasonable opinion of the Banks any of the foregoing is likely
to result in a material liability of the Company or any Commonly Controlled
Entity. The assets held under these Plans being sufficient to protect all
accrued benefits, (e) allow or suffer to exist any event or condition, which
presents a material risk of incurring a material liability of the Company or
any Commonly Controlled Entity to PBGC by reason of termination of any such
Plan or (f) cause or permit any Plan maintained by Company and/or any Commonly
Controlled Entity to be out of compliance with ERISA. For purposes of this
section "material liability" shall be deemed to mean any liability of Fifty
Thousand and 00/100 Dollars ($50,000.00) or more in the aggregate.
SECTION 5.3 REPORTING REQUIREMENTS. From the date hereof and
thereafter for as long as Borrower or Company is indebted to Bank under any of
the Financing Documents, Borrower and Company will, unless the Bank shall
otherwise consent in writing, furnish or cause to be furnished to the Bank:
5.3.1 as soon as possible after, and in any event within one Banking
Day after an officer of Borrower or Company, as the case may be, acquires
knowledge of an Event of Default or Default, the written statement of the
Borrower or of an officer of the Company setting forth details of such Event of
Default or Default and the action which the Borrower or Company proposes to
take with respect thereto;
5.3.2 at the end of each fiscal year of Company, a certificate
executed by Borrower and a certificate executed by an officer of Company which
shall contain a statement in the form of EXHIBIT E to the effect that no Event
of Default or Default has occurred, without having been waived in writing or if
there shall have been an Event of Default or Default not previously waived in
writing pursuant to the provisions hereof, such certificate shall disclose the
nature thereof;
5.3.3 with respect to Company only, promptly after the same are sent,
copies of all financial reports which the Company sends to its stockholders or
national securities exchange and promptly after the same are filed, copies of
all financial statements, forms and reports submitted to or filed with the
Securities and Exchange Commission or successor governmental authority;
5.3.4 promptly after the commencement thereof, notice of all material
actions, suits and proceedings before any court or governmental department,
commissions, board, bureau, agency or instrumentality, domestic or foreign,
known to Company and affecting Borrower, Company or any Subsidiary;
5.3.5 such other material information respecting the business,
properties or the condition or operations, financial or otherwise, of Borrower,
Company or any Subsidiaries as Bank may from time to time reasonably request;
5.3.6 prompt written notice of any material adverse change in
Borrower's, Company's or any Subsidiary's condition, financial or otherwise,
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and an explanation thereof and of the actions Borrower, Company or such
Subsidiary propose to take with respect thereto;
5.3.7 within 30 days after execution, copies of all documents that
amend, modify or delete any term or provision of the ESOP Trust Agreement or
ESOP Plan, or that materially affect the validity of the ESOP; and
5.3.8 written notice of the following events, as soon as possible and
in any event within fifteen (15) days after an officer of Company knows or has
reason to know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, or (ii) the institution of
proceedings or the taking or expected taking of any other action by PBGC,
Company or any Commonly Controlled Entity to terminate, withdraw or partially
withdraw from any Plan and, with respect to any Multiemployer Plan, the
Reorganization (as defined in Section 4241 of ERISA) or Insolvency (as defined
in Section 4245 of ERISA) of such Plan and in addition to such notice, deliver
to the Lender whichever of the following may be applicable: (a) a certificate
executed by an officer of Company setting forth details as to such Reportable
Event and the action that Company or Commonly Controlled Entity proposes to
take with respect thereto, together with a copy of any notice of such
Reportable Event that may be required to be filed with PBGC, or (b) any notice
delivered by PBGC evidencing its intent to institute such proceedings or any
notice to PBGC that such Plan is to be terminated, as the case may be.
ARTICLE 6.
EVENTS OF DEFAULT
SECTION 6.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events ("Events of Default") shall constitute the default of
Borrower and Company under each of the Financing Documents:
6.1.1 if Borrower or Company shall fail to make due and punctual
payment of any principal, fees, interest and/or other amounts payable under
this Agreement, as provided in the Note and/or under any Financing Document
whether at the date due or at a date fixed for prepayment or when due by
acceleration, and such failure shall have continued for more than five (5)
days;
6.1.2 if Borrower, Company or any Subsidiary shall make an assignment
for the benefit of creditors, or shall fail generally to pay its or their debts
as they become due, or shall admit in writing its or their inability to pay its
debts as they become due or shall file a voluntary petition in bankruptcy, or
shall file any petition or answer seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy laws or other applicable federal,
state or other statute, law or regulation, or shall seek or consent to or
acquiesce in the ap pointment of any trustee, receiver or liquidator of it or
of all or any substantial part of its properties, or if partnership or
corporate action shall be taken for the purpose of effecting any of the
foregoing; or
6.1.3 to the extent not described in Section 6.1.2, (i) if the
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Borrower, Company or any Subsidiary shall be the subject of a bankruptcy
proceeding, or (ii) if any proceeding against any of them seeking any
reorganization, arrangement, composition, adjustment, liquidation, dissolution,
or similar relief under the present or any future federal bankruptcy law or
other applicable federal, foreign, state or other statute, law or regulation
shall be commenced, or (iii) if any trustee, receiver or liquidator of any of
them or of all or any substantial part of any or all of their properties shall
be appointed without their consent or acquiescence; provided that in any of the
cases described above in this Section, such proceeding or appointment shall not
be an Event of Default if Borrower, Company or the Subsidiary in question shall
cause such proceeding or appointment to be discharged, vacated, dismissed or
stayed within sixty (60) days after commencement thereof; or
6.1.4 if final judgment or judgments after all appeals of right have
been exhausted aggregating more than One Million Dollars ($1,000,000) shall be
rendered against the Borrower, Company or any Subsidiary and shall remain
undischarged, unstayed or unpaid for an aggregate of thirty (30) days (whether
or not consecutive) after entry thereof; or
6.1.5 if Borrower, Company or any Subsidiary shall default (after
giving effect to any applicable grace period) in the due and punctual payment
of the principal of or interest on any Indebtedness exceeding in the aggregate
One Million Dollars ($1,000,000), or if any default shall have occurred and be
continuing after any applicable grace period under any mortgage, note or other
agreement evidencing, securing or providing for the creation of such
Indebtedness exceeding in the aggregate One Million Dollars ($1,000,000), which
results in the acceleration of such Indebtedness;
6.1.6 in addition to the provisions of PARAGRAPH 6.1.1, if there shall
be any default in the performance of any obligation, covenant or condition
contained in this Agreement, or in any of the Financing Documents or other
agreements securing payment of the Note or payment of any obligations or
Indebtedness to be observed or performed pursuant to the terms of the Financing
Documents, as the case may be, and such default shall not be remedied or cured
to Bank's satisfaction within thirty (30) Business Days;
6.1.7 if any of the representations and warranties made or deemed made
by Borrower or Company to Bank pursuant to this Agreement proves to have been
false or misleading in any material respect when made and continues to be
material at the time of such default;
6.1.8 if there shall be any attachment of any deposits or other
property of Borrower, Company or any Subsidiary in the possession of Bank or
any attachment of any other property of Borrower, Company or any Subsidiary in
an amount exceeding One Million Dollars ($1,000,000), which shall not be
discharged within thirty (30) days of the date of such attachment; or
6.1.9 if any certification of the financial statements, furnished to
the Bank pursuant to Section 5.3, shall contain any qualification; provided,
however, that such qualifications will not be deemed an Event of Default if in
each case (i) such certification shall state that the examination of the
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financial statements covered thereby was conducted in accordance with gen
erally accepted auditing standards, including but not limited to all such tests
of the accounting records as are considered neces sary in the circumstances by
the independent certified public accountants preparing such statements, (ii)
such financial state ments were prepared in accordance with GAAP and (iii) such
quali fication does not involve the "going concern" status of the entity being
reported upon.
ARTICLE 7.
REMEDIES OF BANK
7.1 GENERALLY Upon the occurrence of any one or more Events of Default
the Bank may at any time thereafter declare the obligation of the Bank to make
the Loan to be terminated, whereupon the same shall forthwith terminate, and
the Bank may at any time thereafter, by notice to the Borrower or Company,
declare i) the entire unpaid principal amount of the Note, ii) all fees and
interest accrued and unpaid thereon, iii) all amounts under any of the other
Financing Documents, and iv) any and all other Indebtedness hereunder to be
immediately due and payable, whereupon the unpaid principal of the Note, all
such accrued fees and interest and other such amounts and Indebtedness shall be
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower and
Company; provided, however that in the event that an assignee or holder of the
Note shall be a "Party in Interest" as defined in Section 3(14) of ERISA, the
Bank shall have no right to accelerate the due date of unpaid principal on the
Note, fees or interest accrued thereon; and provided further that upon the
occurrence of an Event of Default under PARAGRAPHS 6.1.2, 6.1.3 or 6.1.7, the
unpaid principal of the Note, all fees and interest accrued and unpaid thereon
and other amounts under any of the other Financing Documents and any and all
other such Indebtedness of Borrower and Company to Bank shall thereupon be due
and payable in full without any need for Bank to make any such declaration or
take any action and Bank's obligation to make the Loan shall simultaneously
terminate automatically.
7.2 LIMITED RECOURSE Notwithstanding anything to the contrary
contained in the Financing Documents, upon the occurrence of any Event of
Default, Bank's recourse with respect to assets of Borrower for satisfaction of
Borrower's indebtedness and obligations incurred hereunder and under the Note
shall be limited only to the extent required under ERISA. The foregoing
limitations shall not be construed to affect in any way the rights and power of
Bank to realize upon the Collateral and to exercise its other rights and and
remedies specifically conferred by any of the Financing Documents upon the
occurrence of an Event of Default. Nothing contained in this section shall be
deemed to modify, diminish, terminate, limit or affect in any way the liability
of Company under the Financing Documents which the parties intend shall at all
times constitute absolute, unconditional and irrevocable obligations of the
parties thereto including, without limitation, an absolute, unconditional and
irrevocable guaranty of payment of the full unpaid balance of all principal,
interest and other obligations and indebtedness of Borrower under this
Agreement and the Note.
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ARTICLE 8.
MISCELLANEOUS
Section 8.1 Consent to Jurisdiction and Service of Process.
----------- ----------------------------------------------
8.1.1 Except to the extent prohibited by applicable law, Borrower and
Company irrevocably:
8.1.1.1 agree that any suit, action, or other legal proceeding
arising out of this Agreement, the Loan or the Financing Documents may
be brought in the courts of record of the Commonwealth of Massachusetts
or the courts of the United States located in the Commonwealth of
Massachusetts;
8.1.1.2 consent to the jurisdiction of each such court in any
such suit, action or proceeding; and
8.1.1.3 waive any objection which it may have to the laying of
venue of such suit, action or proceeding in any of such courts.
For such time as any of the Indebtedness of the Borrower or Company to
Bank shall be unpaid in whole or in part, Borrower and Company irrevocably
designates the Secretary of State of New Hampshire as their agent to accept and
acknowledge on their behalf service of any and all process in any such suit,
action or proceeding brought in any such court and agrees and consents that,
provided Bank has first made reasonable efforts to serve Borrower or Company at
its business address in Nashua, New Hampshire, any such service of process upon
such agent and written notice of such service to Borrower or Company by
registered or certified mail shall be taken and held to be valid personal
service upon Borrower and Company regardless of where Borrower or Company shall
then be doing business and that any such service of process shall be of the
same force and validity as if service were made upon it according to the laws
governing the validity and requirements of such service in each such state and
waives any claim of lack of personal service or other error by reason of any
such service. Any notice, process, pleadings or other papers served upon the
aforesaid designated agent shall, within three (3) Business Days after such
service, be sent by certified or registered mail to Borrower or Company at its
address set forth in this Agreement and to Borrower's Counsel at its address
set forth in Section 8.08.
Section 8.2 Indemnification.
----------- ---------------
The rates of interest specified in Section 2.2 prior to an Event of
Inclusion has been agreed upon by Borrower and Bank based upon the following
assumptions: 1) that through and including the scheduled maturity date of the
Note fifty percent (50%) of the amount of interest received by Bank on the loan
shall be exempt from Federal income tax under the Code Section 133; and 2) Bank
shall not be liable for tax on prohibited transactions imposed by Section 4975
of the Code. If for any reason, including but not limited to reasons
identified in the definition of Event of Inclusion, at any time, whether before
or after maturity of the Note, the assumption set forth above shall fail or
become inaccurate, Borrower (A) shall indemnify Bank and pay to
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26
Bank upon demand such additional sums as are necessary to make Bank whole and
to compensate Bank so that Bank's after-Federal tax yield on the loan shall be
equivalent to the after-Federal tax yield which it would have earned had such
assumptions not failed or become inaccurate (provided, however, that in no
event shall such sums exceed an amount which, when added to the rate of
interest paid or payable under Section 2.2 hereof, would cause the effective
rate paid by Borrower hereunder during period in which such rate of interest
under Section 2.02 hereof was in effect to exceed an annual rate in excess of
Commercial Base Rate plus one-half of one percent (1/2%)), and (B) shall
indemnify Bank and pay to Bank all taxes, interest and penalties incurred by
Bank or assessed by the Internal Revenue Service or any state or local taxing
authority arising as a result of the failure or inaccuracy of any of the
assumptions set forth herein. Further, in the event that Borrower fails to
indemnify Bank within thirty 30 days after notice of any such assessment or
deficiency, Borrower hereby covenants and agrees to indemnify Bank and hold
Bank harmless from and against any liability or damage which Bank may incur as
a result of contesting any such assessment or deficiency and to pay Bank on
demand amounts equal to all cost and expenses which the Bank may incur in
connection with contesting any such assessment or deficiency, including
reasonable attorneys' and accountants' fees and disbursements, and interest and
penalties payable as a result thereof.
SECTION 8.3 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
conferred upon or reserved to Bank in this Agreement is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given under this Agreement or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy under
this Agreement, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 8.4 INTEREST ON DELINQUENT PAYMENTS. Interest at the rate of
Commercial Base Rate plus two percent (2%) per annum shall accrue and be
payable on demand on all amounts payable to Bank pursuant to the Financing
Documents that are not paid by the date due from such due date until such
amount is paid.
SECTION 8.5 DELAY OR OMISSION NOT WAIVER. No delay in exercising or
failure to exercise by Bank any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Agreement or by law to Bank may be exercised from time to time, and as
often as may be deemed expedient, by the Bank.
SECTION 8.6 WAIVER OF STAY OR EXTENSION LAWS. Borrower and Company
covenant (to the extent that they may lawfully do so) that they will not at any
time insist upon, or plead or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Agreement; and Borrower and Company (to the extent that they may
lawfully do so) hereby expressly waive all benefit and advantage of any such
law and covenant that they will not hinder, delay or impede the execution of
25
27
any power herein granted to Bank, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 8.7 AMENDMENTS, ETC. No amendment, modification, termination,
or waiver of any provision of the Financing Documents, other than the ESOP Plan
or ESOP Trust Agreement, nor consent to any departure by Borrower or Company
therefrom shall be effective unless the same shall be in a written notice given
by a duly authorized officer of Bank.
SECTION 8.8 ADDRESSES FOR NOTICES, ETC. All notices, re quests,
demands and other communications provided for hereunder (other than those
which, under the terms of this Agreement, may be given by telephone, which
shall be effective when received verbally) shall be in writing (including
telegraphic, telexed or telecopied communication) and mailed, telegraphed,
telexed, tele copied or delivered to the applicable party as indicated below:
If to Borrower or Company
Ekco Group, Inc.
98 Spit Brook Road, Suite 102
Nashua, New Hampshire 03062
Attention: Neil Gordon
Telecopy: (603) 888-1427
With copies to:
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, MA 02111
Attention: George L. Chimento, Esq.
Telecopy: (617) 542-2241
If to Bank:
Shawmut Bank, N.A.
One Federal Street
Boston, Massachusetts 02211
Attention: David A. Splaine
Telecopy: (617)292-4417
With a copy to:
Hinckley, Allen, Snyder & Comen
One Financial Center
Boston, MA 02108
Attention: Frederick P. McClure, Esq.
Telex: 952039 HATS PVD-UD
Telecopy: (617) 345-9020
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party complying as to the delivery
26
28
with the terms of this Section. All such notices, requests, demands and other
communications shall be effective when received. Requests, certificates, items
provided pursuant to Section 5.3, and other routine mailings or notices need
not be accompanied by a copy to legal counsel for the Banks or the Borrower.
SECTION 8.9 COSTS, EXPENSES AND TAXES. Regardless of whether the Loan
is made, Borrower and Company agree to pay the reasonable fees and
out-of-pocket expenses of Messrs. Hinckley, Allen, Snyder & Comen, counsel for
the Bank in connection with the preparation, execution, delivery, amendment and
administration of the Financing Documents and the Loan. Borrower agrees to pay
on demand all reasonable costs and expenses (including without limitation
reasonable attorneys' fees) incurred by Bank, upon or after an Event of
Default, if any, in connection with the enforcement of any of the Financing
Documents and any amendments, waivers, or consents with respect thereto. In
addition, Borrower shall pay on demand any and all costs, expenses and fees
payable or determined to be payable in connection with the commitment,
execution and delivery of the Financing Documents, including, but not limited
to, revenue, stamp and other taxes and fees, title insurance premiums and
costs, recording fees, appraisal fees, and surety fees, and agrees to save Bank
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such costs, expenses, taxes and
fees.
SECTION 8.10 PARTICIPATIONS. Bank may sell participations in all or
part of the Loan made by it or any other interest herein, in which event the
participant shall not have any rights under any Financing Document (the
participant's rights against Bank in respect of that participation to be those
set forth in the agreement executed by Bank in favor of the participant
relating thereto) and all amounts payable by Borrower or Company hereunder or
thereunder shall be determined as if the Bank had not sold such participation.
Bank may furnish any information concerning Bank, Borrower, Company and any
Subsidiary in the possession of Bank from time to time to participants
(including prospective participants), provided that such participants or
prospective participants agree to keep confidential any information provided by
Bank pursuant to this paragraph. Bank shall not disclose information
concerning Borrower, Company or any Subsidiary to a prospective participant or
participant until five (5) days have elapsed after depositing postage-prepaid
in the U.S. mail written notice to Company of such disclosure.
SECTION 8.11 BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of Borrower, Company and Bank and their
respective successors and assigns, except that neither Borrower nor Company
shall have the right to assign its rights hereunder or any interest herein
without the prior written consent of Bank. This Agreement and all covenants,
representations and warranties made herein and/or in any of the other Financing
Documents shall survive the making of the Loan, the execution and delivery of
the Financing Documents and shall continue in effect so long as any amounts
payable under or in connection with any of the Financing Documents or any other
Indebtedness of the Borrower or Company to the Bank remains unpaid; provided,
however, that Section 8.2 shall survive and remain in full force and effect
after repayment in full of all amounts payable under or in
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connection with all of the Financing Documents and any other such Indebtedness.
SECTION 8.12 ACTUAL KNOWLEDGE. For purposes of this Agreement, Bank
shall not be deemed to have actual knowledge of any fact or state of facts
unless the senior loan officer or any other officer responsible for Borrower's
and Company's account established pursuant to this Agreement at Bank, shall, in
fact, have actual knowledge of such fact or state of facts or unless written
notice of such fact shall have been received by Bank in accordance with Section
8.8.
SECTION 8.13 GOVERNING LAW. This Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the Commonwealth of
Massachusetts.
SECTION 8.14 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any juris diction shall, as
to such jurisdiction, be ineffective to the ex tent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or en forceability of such provision in any other
jurisdiction.
SECTION 8.15 HEADINGS. Article and Section headings in this Agreement
are included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose.
SECTION 8.16 COUNTERPARTS. This Agreement may be executed and
delivered in any number of counterparts each of which shall be deemed an
original, and this Agreement shall be effective when at least one counterpart
hereof has been executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument as of the 22nd day of May, 1989.
In the presence of:
/S/ ROBERT STEIN /S/ NEIL R. GORDON
---------------------------- ------------------------------
Neil R. Gordon, as Trustee
In the presence of: EKCO GROUP, INC.
/S/ NEIL R. GORDON /S/ ROBERT STEIN
---------------------------- ------------------------------
Robert Stein, President
In the presence of: SHAWMUT BANK N.A.
/S/JAMES JUDD By: /S/ DAVID A. SPLAINE
---------------------------- ------------------------------
Its: Vice President
28
EX-10.7
10
EMPLOYMENT AGMT FOR R. STEIN
1
EXHIBIT 10.7
------------
EMPLOYMENT AGREEMENT
BETWEEN
EKCO GROUP, INC.
AND
ROBERT STEIN
AS OF
April 18, 1994
2
EMPLOYMENT AGREEMENT
AGREEMENT made this 18th day of April, 1994, which shall be effective
as of the 18th day of April, 1994 (hereinafter the "effective date") by and
between Ekco Group, Inc., a Delaware corporation with a principal place of
business in Nashua, New Hampshire (hereinafter "Group") and Robert Stein, of 30
Blood Road, Andover, Massachusetts 01810 (hereinafter "Executive").
WHEREAS, Group desires to employ Executive and Executive desires to
accept such employment upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the parties covenant and agree as follows:
1. EMPLOYMENT
----------
Group hereby employs Executive and Executive hereby accepts
employment as an executive employee of Group to perform such
executive and managerial services as may be assigned to him by or
under the authority of the Board of Directors of Group (the "Board
of Directors"), consistent with such status as an executive
employee. Executive agrees to use his best efforts, skills and
abilities faithfully to promote the interests of Group and to
perform such services as may be required of him by Group from
time to time consistent with his status, to the reasonable
satisfaction of the Board of Directors. Without limiting the
generality of the foregoing, Executive agrees to serve as
President and Chief Executive Officer of Group (if and so long as
he is elected to that office by the Board of Directors) and to
serve (without additional compensation) as a director, executive
officer or executive employee of such Affiliates of Group as
Group may from time to time reasonably request. Executive agrees
to work exclusively for Group (and such Affiliates) as his
full-time employment during the term of this Agreement, except as
Group and Executive may otherwise agree in writing from time to
time.
2. TERM
----
The term of this Agreement and Executive's employment hereunder
shall commence on the effective date of this Agreement and
continue until terminated as hereinafter set forth.
-1-
3
3. PRINCIPAL LOCATION
------------------
Subject to the following provisions of this Section 3, Executive
shall perform the duties of his office generally in, and shall not
be obligated to maintain his office in any place other than,
Nashua, New Hampshire or within the metropolitan Boston,
Massachusetts area; provided, however, that he shall be obligated
to take such trips outside of such area as shall be reasonably
necessary in connection with his duties and Group shall pay all
reasonable costs of travel and living expenses incurred in
connection therewith. Furthermore, if Group's principal executive
office is relocated to a location outside Nashua, New Hampshire or
the greater Boston metropolitan area Executive shall, subject to
his rights upon an event of a Constructive Termination under
Section 7.2.3, be obligated to perform duties at such relocated
office and Group shall pay Executive all reasonable expenses
incurred by Executive in relocating to such new area.
4. COMPENSATION
------------
4.1 Except as otherwise provided in Sections 5 and 6 hereof, for his
services hereunder Executive shall receive from Group the
following compensation:
4.1.1 Salary ("Salary") at the annual rate of $370,000 (the "Base Salary
Rate"), payable in equal installments in accordance with Group's
pay policy and in any event not less frequently than monthly,
subject to adjustment pursuant to the provisions of Section 4.2;
4.1.2 Such other monetary compensation by way of bonus or otherwise, if
any, as may be determined from time to time by the Board of
Directors in its sole discretion;
4.1.3 Such fringe benefits (including, without limitation, vacation
time, group life, split-dollar life, medical, dental and other
insurance, retirement, including, but not limited to, Group's
Supplemental Retirement Plan, pension, profit-sharing and
similar plans) as Group may provide from time to time for its
executive employees. Group shall in any event, whether or not
such coverage is provided for other executive employees, provide
Executive group life or other life insurance at its expense with a
death benefit equal to at least twice Executive's Adjusted Salary
Rate (as defined in Section 4.2), in addition to any life
insurance payable to Executive or his beneficiaries under Section
6.2.1 below or any life insurance for which Executive may pay
premiums; and
-2-
4
4.1.4 Such other compensation pursuant to such executive bonus plans,
restricted stock purchase plans, stock option plans or other stock
plans, available to employees of Group from time to time, as the
Board of Directors may in its sole discretion determine.
4.2 The Base Salary Rate shall be subject to increase from time to
time as determined by the Board of Directors in its sole
discretion pursuant to a review of Executive's performance by the
Board of Directors, which review shall be conducted at such time
as the Board of Directors shall determine, but in any event at
least once during each twelve (12) months of the term of this
Agreement. The Base Salary Rate as from time to time increased is
referred to herein as the "Adjusted Salary Rate."
5. REIMBURSEMENT OF EXPENSES AND MEDICAL EXAMINATIONS
--------------------------------------------------
5.1 Group shall reimburse Executive for travel, entertainment and
other business expenses reasonably incurred by him in connection
with the business of Group and its Affiliates to the extent and in
a manner consistent with then company policy. Without limiting
the generality of the foregoing, Group shall furnish Executive
with an automobile owned or leased by Group, comparable in value
to the automobile Executive is provided by Group as of the date
hereof, together with fuel and maintenance, for use by
Executive primarily in connection with the performance by
Executive of his duties under this Agreement and primarily for the
benefit of Group. Unless Executive otherwise agrees, such
automobile shall be exchanged by Group for a new automobile no
less frequently than once every two years during the term of
employment of Executive pursuant to this Agreement and any renewal
hereof.
5.2 Group shall reimburse Executive for annual comprehensive physical
examinations, including the costs of any and all tests, procedures
and consultations as may be required by a medical doctor or
doctors chosen by Executive for such purposes.
6. TERMINATION UPON DEATH OR DISABILITY
------------------------------------
6.1 This Agreement shall terminate upon the death of Executive. In
such event, (i) all compensation hereunder shall terminate, (ii)
Executive's estate shall immediately have the unconditional,
unencumbered and free right, title and interest in all shares of
stock of Group which were granted, sold or optioned (subject to
Executive's estate's obligation to pay the
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option exercise price to the extent theretofore not paid) to
Executive by Group at any time prior to the effective date of
termination as if all restrictions had lapsed and all events
necessary to vest in the Executive such rights, including the
lapsing of time, had occurred, and (iii) Group shall pay to
Executive's estate the following, in addition to the amounts in
Section 7.4 (i) and (ii), to which Executive shall also be
entitled: (a) a lump-sum payment equal to the Adjusted Salary
Rate in effect at the date of such termination of employment,
payable no later than sixty (60) days after the date of such
termination; and (b) such portion of Executive's Salary, as has
accrued by virtue of Executive's employment during the period
prior to termination and has not yet been paid, together with any
amounts for expense reimbursement and similar items which were
properly incurred in accordance with the provisions of Section 5
prior to termination and have not yet been paid. To secure the
payment of subsection (a) above, Group may maintain life insurance
on Executive's life payable to Executive's estate or other
beneficiary, which life insurance coverage shall be in addition to
the amount provided for pursuant to the provisions of Section
4.1.3 above (or any life insurance for which Executive pays
premiums).
6.2 If, by virtue of Executive's total and permanent disability
(more fully described in Section 6.2.4 below), Executive is
unable to perform his duties hereunder, this Agreement shall
terminate in accordance with the provisions of Section 6.2.3
below. Termination of this Agreement is not intended, and shall
not be deemed, to terminate Executive's status or benefits as an
employee of Group. Such status shall be consistent with Group's
policy of employment in effect at the time of the determination of
Executive's permanent and total disability, and the benefits
provided in this Section 6.2 shall be additive to the benefits
provided in Section 4.1.3 which Group provides from time to time
for its executive employees.
6.2.1 In the event of Executive's permanent and total disability, (i)
Executive (or Executive's legal representative) shall immediately
have the unconditional, unencumbered and free right, title and
interest in all shares of stock of Group which were granted, sold
or optioned (subject to Executive's (or Executive's legal
representative's) obligation to pay the option exercise price to
the extent theretofore not paid) to Executive by Group at any time
prior to the effective date of disability as if all restrictions
had
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lapsed and all events necessary to vest in the Executive such
rights, including the lapsing of time, had occurred, and (ii)
Group shall pay to Executive (or his legal representative) (a)
amounts in lieu of Salary, at the Adjusted Salary Rate in effect
at the effective date of permanent and total disability, payable
in the manner specified in Section 4.1.1, for a period of
thirty-six months following the effective date of such permanent
and total disability (the "Thirty-Six Month Period") at the rate
of one-thirty-sixth of such Adjusted Salary Rate per month; and
(b) such portion of Executive's Salary, as has accrued by virtue
of Executive's employment during the period prior to the
Thirty-Six Month Period and has not yet been paid, together with
any amounts for expense reimbursement and similar items which were
properly incurred in accordance with the provisions of Section 5
prior to the Thirty-Six Month Period and have not yet been paid.
6.2.2 Amounts to which Executive would otherwise be entitled under
Section 6.2.1 above shall not be required to be reduced by the
amount of any disability insurance proceeds actually paid to or
for the benefit of Executive with respect to such Thirty-Six Month
Period under any disability policy the premiums for which have
been paid by Group or any Affiliate. During such Thirty-Six Month
Period, Group shall maintain at Group's sole expense the life
insurance policies referred to in the second sentence of Section
4.1.3 and in Section 6.1 and, in the event of Executive's death
during the Thirty-Six Month Period, shall pay the death benefit
provided for in Section 4.1.3 in addition to the life insurance
benefits payable to the beneficiaries of the policies referred to
in Section 6.1 which shall be payable in the event of Executive's
death during such Thirty-Six Month Period. In addition, during
such Thirty-Six Month Period, Group shall continue to provide
medical and dental coverage as Executive shall have been receiving
as of the time of the determination of Executive's permanent and
total disability. If and to the extent such continuation is not
possible, Group shall cooperate with Executive to enable
Executive, if possible, either to buy the applicable policy or to
continue coverage, to the same extent as provided in Section 7.1
in the case of a termination thereunder.
6.2.3 Upon the expiration of the Thirty-Six Month Period, this
Agreement shall terminate.
6.2.4 The determination that, by virtue of total and
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permanent disability, Executive is unable to perform his duties
hereunder shall be made by a physician chosen by Group and
reasonably satisfactory to Executive (or his legal
representative). The cost of such examination shall be borne by
Group. Without limiting the generality of the foregoing, unless
otherwise agreed, Executive shall be conclusively presumed to be
totally and permanently disabled hereunder if for reasons
involving mental or physical illness or physical injury he fails
to perform such duties for a period of one hundred and eighty
(180) consecutive calendar days or for any periods aggregating six
(6) months or more in any twelve (12) month period. For purposes
of this Section 6.2, the effective date of Executive's total and
permanent disability shall be the earlier of the date of such
physician's examination pursuant to which such determination is
made or the first business day after which either such 180-day or
such six-month period has expired.
7. TERMINATION BY EXECUTIVE OR GROUP; CHANGE OF CONTROL; AND
CONSTRUCTIVE TERMINATION
---------------------------------------------------------
7.1 Executive's employment may be terminated at any time by
Executive by written notice of at least three (3) months to Group,
which time period may be waived, in whole or in part, by Group in
its discretion. If such notice is given after six (6) months of
but within twenty four (24) months of a Change of Control (as
defined in Section 7.5) (a "Change of Control Notice"), and unless
such Change of Control shall have been approved by a resolution
adopted by the Board of Directors of Group with at least
two-thirds (2/3) of the then serving Group directors who are Group
directors as of the date hereof voting in favor, then upon such
termination by Executive pursuant to this paragraph of this
Section 7.1, Executive (or his estate, if he dies prior to
receiving the payments hereinafter set forth in this sentence)
shall be entitled to receive within thirty (30) days of such
termination (a) a lump-sum payment equal to three (3) times the
Adjusted Salary Rate in effect on the date of such termination,
plus (b) a lump sum cash payment equal to (i) three (3) times the
maximum payable to Executive under all compensation bonus plans
and arrangements identified in Sections 4.1.2 and 4.1.4 for the
fiscal year in which the termination occurs, plus (ii) an amount
equal to three (3) times the value of the securities, cash or
other property which shall have been allocated to the Executive's
account in the Ekco Group, Inc. Employee Stock Ownership Plan (the
"ESOP")
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for the fiscal year preceding the fiscal year in which the
termination occurs (which shall be in addition to any distribution
from the ESOP to which he is entitled thereunder).
For the purposes of this Section 7.1, the time when a termination
occurs shall be the effective date of termination of Executive.
In addition, in the event of such a termination pursuant to a
Change of Control Notice, Group shall provide, and Executive shall
continue to be entitled to receive, such medical, dental and life
insurance coverage as he shall have been receiving pursuant to
Section 4.1.3 as of the date of his Change of Control Notice until
the earlier of (x) his full-time employment by a third party who
offers Executive at least comparable benefits in the particular
benefit category or (y) three (3) years following such date of
termination, but only to the extent Group is able to continue the
applicable coverage of Executive under the terms of such group
policies or other policies providing coverage for Executive.
Notwithstanding any other provision in this Section 7.1, in the
event Group is unable to continue the applicable coverage of
Executive under the terms of the applicable policies, then Group
shall cooperate with Executive in any actions which may be
necessary to allow Executive, to the extent possible, either (i)
to buy such policy or (ii) to continue insurance coverage with the
insurer writing Group's applicable group policy outside of Group's
group plan. Group shall pay to Executive 140% of the cost of such
insurance coverage, but in no event more than twice the cost of
such coverage allocable to Executive under the group or other
policy covering him prior to termination. In the event of
termination as provided in this Section 7.1 Executive shall be
entitled as of the date of termination or thereafter to no other
compensation under this Agreement (including, without limitation,
Section 4 or Section 6), except as provided in this Section 7.1,
Section 7.4 and Section 7.8. Any compensation payable under this
Section 7.1 shall be paid notwithstanding Executive's total and
permanent disability or death occurring after termination of his
employment hereunder. In the event Executive dies or becomes
totally and permanently disabled after the date of any such notice
but prior to the date of termination of his employment under this
Section 7.1, the provisions of this Section 7.1 and not the
provisions of Section 6 shall apply.
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7.2 Executive's employment may be terminated at any time by Group,
with or without good cause (as defined in Section 7.6), by written
notice to Executive, effective immediately unless otherwise stated
in such notice.
7.2.1 In the event Executive's employment hereunder is terminated by
Group without "good cause" prior to a Change of Control, then
Executive (or his estate) shall be entitled to a lump-sum payment
payable within thirty (30) days of the date of termination equal
to (a) three (3) times the Adjusted Salary Rate in effect at the
date of such notice, plus (b) a lump sum cash payment equal to (i)
three (3) times the maximum payable to Executive under all
compensation bonus plans and arrangements identified in Sections
4.1.2 and 4.1.4 for the fiscal year in which the termination
occurs, plus (ii) an amount equal to three (3) times the value of
the securities, cash or other property which shall have been
allocated to Executive's account in the ESOP for the fiscal year
preceding the fiscal year in which the termination occurs (which
shall be in addition to any distribution from the ESOP to which he
is entitled thereunder). In addition, Executive shall immediately
upon termination pursuant to this Section 7.2.1 have the
unconditional, unencumbered and free right, title and interest in
all shares of stock of Group which were granted, sold or optioned
(subject to his obligation to pay the option exercise price to the
extent theretofore not paid) to Executive by Group at any time
prior to the effective date of termination as if all restrictions
had lapsed and all events necessary to vest in the Executive such
rights, including the lapsing of time, had occurred. In addition,
Executive shall continue to be entitled to the continuation of
such medical, dental, and life insurance coverage as he shall be
receiving pursuant to Section 4.1.3 as of the date of notice of
termination until the earlier of (x) his full time employment by a
third party who offers Executive comparable benefits or (y) three
(3) years following such date of termination, but only to the
extent Group is able to continue the applicable coverage of
Executive under the terms of such group policies or other policies
providing coverage for Executive. Notwithstanding any other
provision in this 7.2.1, in the event Group is unable to continue
the applicable coverage of Executive under the terms of the
applicable policies, then Group shall cooperate with Executive in
any actions which may be necessary to allow Executive, to the
extent possible, either (i) to buy such insurance policy or (ii)
to continue insurance coverage with the insurer writing Group's
applicable group policy outside of Group's group plan. Group
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shall pay to Executive 140% of the cost of such insurance
coverage, but in no event more than twice the cost of such
coverage allocable to Executive under the group or other policy
covering him prior to termination. Such compensation shall be
paid notwithstanding Executive's total and permanent disability or
death subsequent to such notice but, in the event Executive (or
his estate, legal representative or beneficiaries) receives
disability benefits pursuant to Section 6, such benefits shall
constitute an offset for amounts due under this Section 7.2.1. In
the case of termination of his employment under this Section
7.2.1, Executive shall be entitled as of the date of termination
to no other compensation under this Agreement (including, without
limitation, Section 4 or Section 6), except as provided in Section
7.4.
7.2.2 In the event Group shall terminate Executive's employment for
good cause, then Executive shall be entitled as of the date of
termination to no compensation under this Agreement (including,
without limitation, Section 4 or Section 6 above), except as
provided in Section 7.4.
7.2.3 Immediately upon a Change of Control, and without regard to
whether or not Executive's employment is terminated or a
Constructive Termination occurs at such time or thereafter,
Executive shall immediately have the unconditional, unencumbered
and free right, title and interest in all shares of stock of Group
which were granted, sold or optioned (subject to his obligation to
pay the option exercise price to the extent theretofore not paid)
to Executive by Group at any time prior to the Change of Control
as if all restrictions had lapsed and all events necessary to vest
in the Executive such rights, including the lapsing of time, had
occurred.
Following a Change of Control and upon an event of
"Constructive Termination" (as defined in Section 7.2.4) or
termination of Executive's employment without good cause,
Executive shall receive within ten (10) days of such event (a) a
lump-sum payment equal to three (3) times the Adjusted Salary Rate
in effect on the date of such Constructive Termination, plus (b) a
lump sum cash payment equal to (i) three (3) times the maximum
payable to Executive under all compensation bonus plans and
arrangements identified in Sections 4.1.2 and 4.1.4 for the fiscal
year in which the Constructive Termination occurs, plus (ii) an
amount equal to three (3) times the value of the securities, cash
or other property which shall have been allocated
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to the Executive's account in the ESOP for the fiscal year
preceding the fiscal year in which the Constructive Termination
occurs. For the purposes of this Section 7.2.3, the time when a
Constructive Termination occurs shall be the day any event occurs
which is included in the definition of Constructive Termination in
Section 7.2.4. In addition, Executive shall immediately upon
Constructive Termination pursuant to this Section 7.2.3 have the
unconditional, unencumbered and free right, title and interest in
all shares of stock of Group which were granted, sold or optioned
(subject to his obligation to pay the option exercise price to the
extent theretofore not paid) to Executive by Group at any time
prior to the effective date of Constructive Termination as if all
restrictions had lapsed and all events necessary to vest in the
Executive such rights, including the lapsing of time, had
occurred.
7.2.4 As used herein, "Constructive Termination" shall be deemed to
have occurred if and when (i) Executive's base salary is decreased
below the level in effect on the date of the last amendment of
this Agreement, or the bonus percentage applicable to Executive's
participation in any compensation bonus plan or arrangement is
reduced, without the Executive's consent, provided, however, that
nothing herein shall be construed to guarantee the Executive's
bonus awards if performance is below applicable targets, or (ii)
the importance of the Executive's job responsibilities is reduced
without the Executive's consent or, (iii) a proposal is made to
relocate Executive to a location other than Nashua, New Hampshire
or the greater Boston, Massachusetts metropolitan area without his
consent.
7.3 In order to assure Executive the prompt payment of amounts due
him under Section 6 or 7 hereof, Group agrees promptly to secure
and to keep in place an irrevocable letter of credit from Fleet
Bank of Massachusetts, N.A. or another bank reasonably acceptable
to Executive in the initial amount of four (4) times Executive's
Base Salary, in substantially the form of Exhibit A, or upon other
terms reasonably acceptable to Executive, which shall allow
Executive (or his legal representative) to draw down amounts due
him under Section 6 or 7 of this Agreement upon certification by
Executive (or his legal representative) that payments are due him
pursuant to this Agreement. The amount of the letter of credit
shall be adjusted at least annually to reflect changes in
Executive's salary, so that it shall at all times be at least four
(4) times the Adjusted Salary Rate. In
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addition, the letter of credit (or a separate letter of credit)
shall include an amount which Group, in its reasonable judgment,
determines is necessary to secure Group's obligations under any
stock appreciation right plan or other equity-linked plan (other
than the ESOP), provided, however, that such amount need not
include any amount with respect to stock options, restricted stock
subject to repurchase rights, or any equity plan giving Executive
ownership of shares. An initial determination of the amount
necessary to secure such equity-linked obligations shall be made
on the date of grant to Executive of such equity-linked right, and
the amount shall subsequently be adjusted at least annually to
reflect the value on such date of such rights. A failure by Group
to keep such letter(s) of credit in effect, or to renew the same
or to make alternate arrangements to secure its obligations in the
amount required hereunder, by way of an escrow agreement, trust,
or other device, which arrangements shall be reasonably
satisfactory to Executive, at least thirty (30) days prior to the
expiration date of the letter of credit or any such alternate
arrangement shall constitute an event of default under this
Agreement entitling Executive, after written notice to Group and
the passage of a ten (10) day cure period without such default
being cured, all of the benefits accorded to him in the event of a
termination without good cause pursuant to Section 7.2.1 or
Section 7.2.3 after a Change of Control, whichever is higher,
without, however, the requirement that Executive terminate his
employment hereunder. Group agrees to notify Executive within
three business days of any failure or inability to maintain or
renew such letter of credit or other device adopted pursuant to
this Section. Notwithstanding the foregoing, at the election of
the Board of Directors of Group by resolution of such Board with
at least two-thirds (2/3) of the then-serving Group directors who
are Group directors as of the date hereof voting in favor, the
obligation to maintain a letter of credit shall be relieved to the
extent amounts are contributed to a trust or trusts under the
terms of which such amounts are specifically earmarked as security
for payment of obligations under this Agreement and are at all
times at least four (4) times the Adjusted Salary Rate. Such
trust or trusts may contain a provision that its funds will be
returned to Group so as to be available to its general creditors
in the event of the bankruptcy of Group. Group agrees that it
will not take any action to prevent, hinder or delay the exercise
by Executive of his rights to exercise the security provisions
provided in this Section 7.3 and, further, agrees to cooperate
with
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Executive as may be necessary to enable Executive to exercise
and obtain the benefit of such security provisions, in the absence
of fraudulent or unlawful conduct on the part of Executive with
respect to such exercise.
7.4 In the event of any termination pursuant to any of Sections 6,
7.1 or 7.2, Executive shall (i) be paid such portion of his Salary
as has accrued by virtue of Executive's employment during the
period prior to termination and has not yet been paid, together
with any amounts for expense reimbursement, vacation accruals and
similar items which have been properly incurred or accrued in
accordance with the provisions of Section 5 prior to termination
and have not yet been paid; and (ii) be provided outplacement
services by a professional outplacement firm of Executive's
choosing at the expense of Group, who shall engage such firm
directly on behalf of Executive, provided, however, that Group's
liability with respect to providing such services will be limited
to one-half of Executive's Adjusted Salary.
7.5 As used herein, a "Change of Control" shall be deemed to have
occurred (i) if any "Person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended), other than Group or any employee stock plan of Group, is
or becomes the beneficial owner, directly or indirectly, of
securities of Group representing fifteen percent (15%) or more of
the outstanding Common Stock of Group, or (ii) ten (10) days
following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by any "person" of
fifteen percent (15%) or more of the outstanding Common Stock of
Group, provided, however, that at the conclusion of such ten (10)
day period such person has not discontinued or rescinded his
intention to make such a tender or exchange offer or (iii) if
during any consecutive twelve (12) month period beginning on or
after the date on which this Agreement is executed individuals who
at the beginning of such period were directors of Group cease, for
any reason, to constitute at least a majority of the Board of
Directors of Group; or (iv) if a merger of, or consolidation
involving, Group in which Group's stock is converted into
securities of another corporation or into cash shall be
consummated, or a plan of complete liquidation of Group (whether
or not in connection with a sale of all or substantially all of
Group's assets) shall be adopted and consummated, or substantially
all of Group's operating assets are sold
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(whether or not a plan of liquidation shall be adopted or a
liquidation occurs), excluding in each case a transaction solely
for the purpose of reincorporating Group in a different
jurisdiction or recapitalizing Group's stock.
7.6 As used herein, "good cause" shall mean and be limited to a
material breach of any of Executive's obligations under Section 1
or 8 hereof, or any action by Executive during the term of this
Agreement involving willful malfeasance or gross (but not simple)
negligence on the part of Executive in a material respect.
Notwithstanding the foregoing, following a Change of Control,
"good cause" shall not be deemed to have occurred unless (a) the
conduct which is the basis for such material breach is either
willful or intentionally unlawful and (b) Executive shall not have
ceased such conduct or cured the effect thereof, if curable, so
that such breach shall no longer be material within thirty (30)
days after Executive shall have received written notice from Group
of Group's intention to terminate Executive's employment for good
cause, which notice shall specify in detail the basis therefor.
7.7 Group, in its sole discretion, may apply for and procure in its
own name (whether or not for its own benefit) policies of
insurance insuring the life of Executive in such amounts as Group
may deem advisable, in addition to insurance policies contemplated
by Section 4.1.3 or Section 6.2.1. Executive shall have no right,
title, or interest in any such policies of insurance, except to
the extent his estate or other persons are specifically named as
beneficiaries thereof. Executive agrees to submit to any medical
or other examination and to execute and deliver any applications
or other instrument in writing, reasonably necessary to effectuate
such insurance.
7.8 The Executive shall be paid an additional amount ("Gross Up
Payment") if any payments ("Payments Amounts") made to him or
Executive's estate by Group or any of its Affiliates, under this
Agreement or otherwise, are subject to the excise tax imposed by
Internal Revenue Code Section 4999 (the "Section 4999 Tax") or any
successor Internal Revenue Code Section. The Gross Up Payment
shall be computed so that the Executive retains a net amount equal
to the Payment Amounts after deduction of any Section 4999 Tax on
the Gross Up Payment.
For the purposes of determining the amount of the Gross Up
Payment, the Executive shall be deemed to pay
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Federal, State and local income taxes at the highest marginal
rate of taxation in the calendar year in which the Payment Amounts
are taxable to him under Code Section 4999. State and local
income taxes shall be determined based upon the state and locality
of Executive's domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and
whether such Section 4999 Tax is payable shall be made by tax
counsel selected by Group and approved by Executive. The Gross Up
Payment shall be paid within 30 days of such computation and in no
event (without written consent of Executive) later than the last
day of the calendar year with respect to which the Section 4999
tax is imposed.
If such opinion of tax counsel is not finally accepted by the
Internal Revenue Service upon audit, then tax counsel (selected
under the above procedure) shall compute appropriate adjustments
and additional Gross Up Payments shall be computed, as provided
above and paid to Executive, and Executive shall also be
reimbursed for interest and other tax penalties, if applicable.
8. CONFIDENTIALITY AND NON-COMPETITION
-----------------------------------
8.1 Executive's agreements set forth in this Section 8 shall
survive the expiration or termination of this Agreement and the
termination of his employment with Group for any reason.
8.2 Executive acknowledges that irreparable injury would be caused
to Group by his breach of any of the provisions of this Section 8,
and agrees that in the event of any such breach, Group and any of
its Affiliates, in addition to such other rights and remedies as
may exist in its favor, may apply to any court of law or equity
having jurisdiction to enforce the specific performance of the
provisions of this Section 8 and may apply for injunctive relief
against any act which would violate any such provisions.
8.3 Executive recognizes that he now has knowledge of and/or may
hereafter gain knowledge of, confidential information, trade
secrets, confidential processes, confidential patentable or
unpatentable inventions or confidential "know how", including,
without limitation, techniques, formulae, designs, developments,
projects, technical information and manufacturing process and
distribution methods, relating to, or concerned with the business
of Group and its Affiliates during the term of this Agreement and
their respective suppliers,
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customers, stockholders, licensors, licensees, and other
persons or entities with which Group or its Affiliates has, has
had, or may in the future have any commercial, scientific or
technical relationship, and which information has not previously
been made public or thereafter made public. During the term of
this Agreement and at all times following the termination of
Executive's employment for any reason, Executive will not,
directly or indirectly, divulge, furnish or make accessible to
anyone (other than as required in the regular course of his
employment by Group or with the consent of the Board of Directors
of Group) such information. The prohibitions contained in this
Section 8.3 shall not apply to information which is (a) within the
domain of the general public; (b) generally known within the
industry or industries in which Group or its Affiliates is
involved; or (c) independently developed by Executive without
utilization of confidential information gained while in the employ
of Group; provided that Executive shall not have disclosed such
information in violation of this Agreement. All documents,
records, apparatus, equipment and other physical property
furnished to Executive by Group or any Affiliate of Group or
produced by Executive or others in connection with his services to
Group or any such Affiliate shall be and remain the sole property
of Group. Executive will return and deliver such property to
Group as and when requested by Group. Copies of documents and
records may be kept, but shall be kept completely confidential to
the same extent as other confidential information of Group.
Executive shall return and deliver all such property upon
termination of his employment for any reason, and Executive will
not take with him any such property or any reproduction of such
property upon such termination.
8.4 Any work or research or the results thereof, made or developed
by Executive, alone or in conjunction with others during the term
of his employment, including but without limitation, any designs,
patents, inventions, processes, know-how or formulae created,
invented or conceived during the period of his employment by
Group, whether during or out of the usual hours of work, which
arise out of or are related to the business, research, or
development work or field of operation of Group, or any of its
Affiliates, shall to the extent of Executive's interest therein be
the sole and exclusive property of Group, shall be disclosed in
writing to Group and to no other person, unless so directed in
writing by the Board of Directors, and Executive hereby assigns to
Group all and any rights which he has or may acquire in the same.
To this end, both during the
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period of Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers, instruments and
documents properly required to effect such assignment to Group or
its nominee, to make application through Group's patent attorney
or general counsel at the expense of Group, for such United States
and foreign patents as may be specified from time to time by Group
on inventions, processes, or formulae which are or become the
property of Group hereunder, and to execute assignments upon
Group's request, for Executive's entire interest in all such
applications to Group or to its nominee without compensation
(other than his usual compensation as an employee of Group) and
Executive agrees to give Group and its patent attorney or general
counsel all reasonable assistance in preparing such applications,
descriptions, and illustrations of each such invention, process,
or formula and in connection with proceedings relating thereto or
to such other applications or patents resulting therefrom; and
further agrees to execute all lawful papers considered necessary
by Group and do all that Group reasonably requests in order to
protect Group's rights in said inventions, processes, and formulae
or to obtain patents thereon, including, without limitation,
continuations, reissues, renewals, and extensions. It is further
agreed that Executive's obligations specified hereunder shall not
expire with the termination of his employment, but Group agrees to
pay Executive a reasonable amount for any time that Executive
spends in such work at Group's request after the termination of
his employment hereunder and agrees to reimburse Executive for
expenses reasonably or necessarily incurred in connection with
such work.
8.5 In consideration of his continued employment by Group, and the
other benefits accruing to him hereunder, and subject to the
fulfillment by Group of its obligations to Executive hereunder,
either directly or through draw-down under the letter(s) of credit
or other device established pursuant to Section 7.3, Executive
agrees that during the term hereof and for a period of thirty six
(36) months following the date of termination of Executive's
employment pursuant to Section 6 or 7 provided that Executive has
received and is continuing to receive all payments and benefits
required to be paid and provided to him pursuant to Sections 4, 6
and 7 (such period of employment and thirty six (36) month period
being referred to in this Agreement as the "Non-Competition
Period"), he will not engage or participate, directly or
indirectly, within the United States of America or Canada either
as principal, agent, employee, employer, consultant, stockholder,
partner or
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in any other individual or representative capacity whatever, in
the conduct or management of, or own any stock or other
proprietary interest in, or debt of, any business which shall be
competitive with any business which is or was conducted by Group
or any Affiliate of Group, while Executive was an employee of
Group under this Agreement, unless he shall have obtained the
prior written consent of the Board of Directors, and which consent
shall make express reference to this Agreement. Notwithstanding
any other provision in this Section 8, Executive shall be free
without such consent to make investments, directly or indirectly,
in the securities of any publicly-owned corporation if his
ownership thereof is limited to not more than three percent (3%)
of the issued and outstanding securities of any class of
securities of such corporation. Executive acknowledges that his
skills and experience are such that he can anticipate finding
employment at an executive level in a wide variety of industries
and represents and agrees that the restrictions imposed by this
Section 8 on employment are necessary for the protection of the
legitimate interests and competitive position of Group and do not
impose undue hardships on Executive.
8.6 During the Non-Competition Period, Executive shall not, directly
or indirectly, solicit any officer, director, executive, employee
or consultant of Group or any Affiliate of Group to leave such
employment or terminate such position.
9. ARBITRATION
-----------
Except with respect to the provisions of Section 8, any dispute
or disagreement arising under or relating to the provisions of
this Agreement, or any breach thereof, including, without
limitation, relating to Section 1 hereof or to whether a
termination of Executive's employment was with "good cause", shall
be resolved by binding arbitration in accordance with the
Commercial Rules of the American Arbitration Association or its
successor (except as set forth herein), and judgment upon the
award rendered by the arbitrator or arbitrators may be entered in
any court having jurisdiction thereof. The decision of the
arbitrators shall be made by majority vote and be final and
absolute. In any such arbitration, one arbitrator shall be
selected by Group and one arbitrator shall be selected by
Executive. Each party shall have thirty (30) days from the
receipt by one party of a notice from the other party of
submission to arbitration to choose an arbitrator. A third
arbitrator shall be
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selected by the two so chosen within ten (10) days of the
selection of the most recently selected of the two arbitrators so
chosen. Failing action within any of such periods by any party or
the arbitrators, any unappointed arbitrator or arbitrators shall
be appointed by the American Arbitration Association (or its
successor) upon application of any party or arbitrator. The
parties shall promptly furnish to the arbitrators such information
as the arbitrators may reasonably request. The expenses of any
arbitration proceeding shall be paid by Group (including
Executive's attorney's fees) if the Executive recovers any amount
or otherwise obtains relief in such proceeding and by the
Executive (including Group's attorney's fees and expenses) if the
Executive initiated arbitration and there is a specific finding
that the Executive's claim was frivolous. In all other
circumstances, the expenses of such arbitration proceeding (not
including attorney's fees and expenses, each party to bear such
party's own attorney's fees and expenses) shall be divided
equally. Arbitration shall take place in Nashua, New Hampshire, or
such other place on which the parties shall agree. This Agreement
and any arbitration proceeding are subject to N.H.R.S.A. ch. 542.
10. GENERAL
10.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
10.2 This Agreement shall be binding upon and shall inure to the
benefit of Group and its successors and assigns either by merger,
operation of law, consolidation, assignment, purchase or otherwise
of a controlling interest in the business of Group and Executive,
his heirs, executors, administrators, legal representatives, and
permitted assigns. Group agrees that a successor in interest by
merger, operation of law, consolidation, assignment, purchase or
otherwise of a controlling interest in the business of Group will
be informed prior to such event of the existence of this
Agreement. Group shall require any successor (whether direct or
indirect, by purchase, merger, operation of law, consolidation,
assignment or otherwise of a controlling interest in the business,
stock or other assets of Group) to assume expressly and agree to
perform this Agreement. Failure of Group to obtain such
assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
Executive to such compensation and benefits in the same amount and
on the
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same terms as he would be entitled hereunder in the event of a
termination without "good cause", except that, for the purposes of
implementation hereof, the date on which any such succession
becomes effective shall be deemed to be the date on which
Executive becomes entitled to such compensation and benefits from
Group. As used in this Agreement, "Group" shall mean Group as
hereinbefore defined and any successor as aforesaid.
10.3 The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a duly
authorized court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared
illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and be
enforceable to the fullest extent permitted by law; and (ii) if
any provision, or any part thereof, is held to be unenforceable
because of the duration of such provision or the area covered
thereby, Group and Executive agree that the court making such
determination shall have the power to reduce the duration and/or
area of such provision, and/or to delete specific words and
phrases ("blue-pencilling") and in its reduced or blue- pencilled
form such provision shall then be enforceable and shall be
enforced.
10.4 All notices and communications required or permitted to be given
hereunder shall be duly given by delivering the same in hand or by
depositing such notice or communication in the mail, sent by
certified or registered mail, return receipt requested, postage
prepaid, as follows:
If sent to Group: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: Executive Vice President
If sent to To Executive's last address
Executive: in the records of Group
or such other address as either party furnishes to the other by
like notice.
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10.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject
matter hereof. There are no promises, representations,
conditions, provisions or terms related thereto other than those
set forth in this Agreement. This Agreement supersedes all
previous understandings, agreements and representations between
Group and Executive regarding Executive's employment by Group,
written or oral. The parties hereto acknowledge the existence of
a certain Employment Agreement dated November 6, 1991, as amended
heretofore, between the parties hereto. Upon this Agreement
becoming effective, this Agreement shall replace, supersede and be
a substitute for the Employment Agreement as so amended.
10.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect the
meaning or construction of any provision hereof. Any references
in this Agreement to a section shall be deemed to include all
subsections of that section unless specifically excluded.
10.7 No failure of Group or Executive to exercise any power reserved
to it or him, respectively, by this Agreement, or to insist upon
strict compliance by Executive or Group, respectively, with any
obligation or condition hereunder, and no custom or practice of
the parties at variance with the terms hereof, shall constitute a
waiver of Group's or Executive's right, as the case may be, to
demand exact compliance with any of the terms hereof. Waiver by
either party of any particular default by the other party hereto
shall not affect or impair the waiving party's rights with respect
to any subsequent default of the same, similar or different
nature, nor shall any delay, forbearance or omission of either
party to exercise any power or right arising out of any breach or
default by the other party of any of the terms, provisions or
covenants hereof, affect or impair its or his right to exercise
the same, nor shall such constitute a waiver by Group or
Executive, as the case may be, of any right hereunder, or the
right to declare any subsequent breach or default and to terminate
this Agreement prior to the expiration of its term.
10.8 As used herein, the term "Affiliate" shall be deemed to include
any corporation, joint venture, or other business enterprise,
whether incorporated or unincorporated, which Group directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with.
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10.9 This is a New Hampshire contract and shall be construed under
and be governed in all respects by the law of the State of New
Hampshire.
10.10 Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment
or otherwise, nor shall the amount of any payment provided for
herein be reduced by any compensation earned by Executive as the
result of employment by another employer or by retirement benefits
after the date of termination or otherwise, except as specifically
set forth herein.
10.11 No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto.
This Agreement may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute
but one agreement.
IN WITNESS WHEREOF, Group has caused this Agreement to be executed and
delivered by its duly authorized officer and its corporate seal to be hereunto
affixed and Executive has hereunto set his hand and seal as of the day and year
first written above in duplicate originals.
EKCO GROUP, INC.
By /s/ Jeffrey A. Weinstein
--------------------------
/s/ Robert Stein
--------------------------
Executive
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EXHIBIT A
DOCUMENTARY CREDIT NO.
-----------------
DATE OF ISSUE
------------------- ,1994
ISSUING BANK: APPLICANT:
FLEET BANK OF MASSACHUSETTS, N.A. EKCO GROUP, INC.
(Address of Bank) 98 SPIT BROOK ROAD
--------------------------------- SUITE 102
--------------------------------- NASHUA, NH 03062
ATTN:
----------------------------------
ADVISING BANK: BENEFICIARY:
(Name & Address of Executive)
---------------------------------------
---------------------------------------
---------------------------------------
ACCOUNT/CURRENCY:
UP TO USD
-----------------------------
UP TO US DOLLARS
----------------------
DATE AND PLACE OF EXPIRY:
--------------------, 1996 AT THE
ISSUING BANK
Dear Sir:
By the order of Ekco Group, Inc. we hereby open in your favor our Irrevocable
Credit for the account of Ekco Group, Inc. for a sum or sums not exceeding a
total of US $ _____________________ (_____________________________ US DOLLARS)
available by your draft(s) at SIGHT on Fleet Bank of Massachusetts, N.A.,
_____________________________________________________________ , Massacusetts
_______________________ effective ______________________________ , 1994 and
expiring at _____________________ , Massachusetts on __________________ , 1996.
Drafts must be accompanied by:
1. The original Letter of Credit and any amendments thereto, if any.
2. Your signed statement as follows: "I certify that the amount of my draft
represents funds due me under Section ___________ (insert section number) of a
certain Employment Agreement dated as of November 6, 1991, as further amended
by amendments dated as of __________________________________________________ ,
between myself and Ekco Group, Inc., demand for payment has been made, and
payment has not been received by me from Ekco Group, Inc. or any other source."
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Each draft must bear upon its face the clause "Drawn under Letter of Credit No.
___________________________ , dated _________________ _________ of Fleet Bank
of Massachusetts, N.A."
It is a condition of this Letter of Credit that it shall become operative via
amendment issued by Fleet Bank of Massachusetts, N.A. upon notice of
cancellation of Letter of Credit dated August 28, 1987 issued by State Street
Bank and Trust Company.
We hereby agree with you that drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored if presented to the
above-mentioned drawee Bank on or before (expiration date)
_____________________ , 1996.
This Letter of Credit sets forth in full terms of our undertaking, and this
undertaking shall not in any way be modified, amended or limited by reference
to any document, instrument or agreement referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates,
except for the certificate and the sight draft referred to herein; and any such
reference shall not be deemed to incorporate herein by reference any document,
instrument or agreement, except for such certificate and such sight draft.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us, if by registered mail to Fleet Bank of Massachusetts,
N.A., __________________________________________________ , Massachusetts
___________________, Attention:__________________________________________ , or
if by courier to Fleet Bank of Massachusetts, N.A., _______________________
_____________________________ , Massachusetts _________________., Attention
______________________________________ , specifically referring to the number
of this Letter of Credit.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication 500 and engages us in
accordance with its terms.
-------------------------- ---------------------------
Authorized Signature Authorized Signature
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EX-10.8
11
EMPLOYMENT AGMT FOR J. WEINSTEIN
1
EXHIBIT 10.8
------------
EMPLOYMENT AGREEMENT
BETWEEN
EKCO GROUP, INC.
AND
JEFFREY A. WEINSTEIN
AS OF
April 18, 1994
2
EMPLOYMENT AGREEMENT
AGREEMENT made this 18th day of April, 1994, which shall be effective as
of the 18th day of April, 1994 (hereinafter the "effective date") by and between
Ekco Group, Inc., a Delaware corporation with a principal place of business in
Nashua, New Hampshire (hereinafter "Group") and Jeffrey A. Weinstein, of 22
Nathan Lord Road, Amherst, New Hampshire 03031 (hereinafter "Executive").
WHEREAS, Group desires to employ Executive and Executive desires to
accept such employment upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the parties covenant and agree as follows:
1. EMPLOYMENT
Group hereby employs Executive and Executive hereby accepts
employment as an executive employee of Group to perform such
executive and managerial services as may be assigned to him by or
under the authority of the Board of Directors of Group (the "Board
of Directors"), consistent with such status as an executive
employee. Executive agrees to use his best efforts, skills and
abilities faithfully to promote the interests of Group and to
perform such services as may be required of him by Group from time
to time consistent with his status, to the reasonable satisfaction
of the Board of Directors. Without limiting the generality of the
foregoing, Executive agrees to serve as Executive Vice President,
Secretary and General Counsel (if and so long as he is elected to
that office by the Board of Directors) and to serve (without
additional compensation) as a director, executive officer or
executive employee of such Affiliates of Group as Group may from
time to time reasonably request. Executive agrees to work
exclusively for Group (and such Affiliates) as his full-time
employment during the term of this Agreement, except as Group and
Executive may otherwise agree in writing from time to time.
2. TERM
The term of this Agreement and Executive's employment
hereunder shall commence on the effective date of this
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Agreement and continue until terminated as hereinafter set forth.
3. PRINCIPAL LOCATION
Subject to the following provisions of this Section 3 and of
Section 7.1, Executive shall perform the duties of his office
generally in, and shall not be obligated to maintain his office in
any place other than, Nashua, New Hampshire or within the
metropolitan Boston, Massachusetts area; provided, however, that he
shall be obligated to take such trips outside of such area as shall
be reasonably necessary in connection with his duties and Group
shall pay all reasonable costs of travel and living expenses
incurred in connection therewith. Furthermore, if Group's principal
executive office is relocated to a location outside Nashua, New
Hampshire or the greater Boston metropolitan area Executive shall,
subject to his rights in the case of a relocation under Section 7.1
or a Constructive Termination under Section 7.2.3, be obligated to
perform duties at such relocated office and Group shall pay
Executive all reasonable expenses incurred by Executive in
relocating to such new area.
4. COMPENSATION
4.1 Except as otherwise provided in Sections 5 and 6 hereof, for his
services hereunder Executive shall receive from Group the
following compensation:
4.1.1 Salary ("Salary") at the annual rate of $219,600 (the "Base
Salary Rate"), payable in equal installments in accordance with
Group's pay policy and in any event not less frequently than
monthly, subject to adjustment pursuant to the provisions of
Section 4.2;
4.1.2 Such other monetary compensation by way of bonus or otherwise,
if any, as may be determined from time to time by the Board of
Directors in its sole discretion;
4.1.3 Such fringe benefits (including, without limitation, vacation
time, group life, split dollar life, medical, dental and other
insurance, retirement, including, but not limited to, Group's
Supplemental Retirement Plan, pension, profit-sharing and similar
plans) as Group may provide from time to time for its executive
employees. Group shall in any event, whether or not such coverage
is provided for other executive employees, provide Executive group
life or other life insurance at its expense with a death benefit
equal to at least twice Executive's Adjusted Salary Rate (as
defined in Section
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4.2), in addition to any life insurance payable to Executive
or his beneficiaries under Section 6.2.1 below or any life
insurance for which Executive may pay premiums; and
4.1.4 Such other compensation pursuant to such executive bonus plans,
restricted stock purchase plans, stock option plans or other stock
plans, available to employees of Group from time to time, as the
Board of Directors may in its sole discretion determine.
4.2 The Base Salary Rate shall be subject to increase from time to
time as determined by the Board of Directors in its sole discretion
pursuant to a review of Executive's performance by the Board of
Directors, which review shall be conducted at such time as the
Board of Directors shall determine, but in any event at least once
during each twelve (12) months of the term of this Agreement. The
Base Salary Rate as from time to time increased is referred to
herein as the "Adjusted Salary Rate."
5. REIMBURSEMENT OF EXPENSES AND MEDICAL EXAMINATIONS
5.1 Group shall reimburse Executive for travel, entertainment and
other business expenses reasonably incurred by him in connection
with the business of Group and its Affiliates to the extent and in
a manner consistent with then company policy. Without limiting the
generality of the foregoing, Group shall furnish Executive with an
automobile owned or leased by Group, comparable in value to the
automobile Executive is provided by Group as of the date hereof,
together with fuel and maintenance, for use by Executive primarily
in connection with the performance by Executive of his duties under
this Agreement and primarily for the benefit of Group. Unless
Executive otherwise agrees, such automobile shall be exchanged by
Group for a new automobile no less frequently than once every two
years during the term of employment of Executive pursuant to this
Agreement and any renewal hereof.
5.2 Group shall reimburse Executive for annual comprehensive physical
examinations, including the costs of any and all tests, procedures
and consultations as may be required by a medical doctor or doctors
chosen by Executive for such purposes.
6. TERMINATION UPON DEATH OR DISABILITY
6.1 This Agreement shall terminate upon the death of Executive. In
such event, (i) all compensation
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hereunder shall terminate, (ii) Executive's estate shall
immediately have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group which were
granted, sold or optioned (subject to Executive's estate's
obligation to pay the option exercise price to the extent
theretofore not paid) to Executive by Group at any time prior to
the effective date of termination as if all restrictions had lapsed
and all events necessary to vest in the Executive such rights,
including the lapsing of time, had occurred, and (iii) Group shall
pay to Executive's estate the following, in addition to the amounts
in Section 7.4 (i) and (ii), to which Executive shall also be
entitled: (a) a lump-sum payment equal to the Adjusted Salary Rate
in effect at the date of such termination of employment, payable no
later than sixty (60) days after the date of such termination; and
(b) such portion of Executive's Salary, as has accrued by virtue of
Executive's employment during the period prior to termination and
has not yet been paid, together with any amounts for expense
reimbursement and similar items which were properly incurred in
accordance with the provisions of Section 5 prior to termination
and have not yet been paid. To secure the payment of subsection
(a) above, Group may maintain life insurance on Executive's life
payable to Executive's estate or other beneficiary, which life
insurance coverage shall be in addition to the amount provided for
pursuant to the provisions of Section 4.1.3 above (or any life
insurance for which Executive pays premiums).
6.2 If, by virtue of Executive's total and permanent disability (more
fully described in Section 6.2.4 below), Executive is unable to
perform his duties hereunder, this Agreement shall terminate in
accordance with the provisions of Section 6.2.3 below. Termination
of this Agreement is not intended, and shall not be deemed, to
terminate Executive's status or benefits as an employee of Group.
Such status shall be consistent with Group's policy of employment
in effect at the time of the determination of Executive's permanent
and total disability, and the benefits provided in this Section 6.2
shall be additive to the benefits provided in Section 4.1.3 which
Group provides from time to time for its executive employees.
6.2.1 In the event of Executive's permanent and total disability,
(i) Executive (or Executive's legal representative) shall
immediately have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group which were
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6
granted, sold or optioned (subject to Executive's (or
Executive's legal representative's) obligation to pay the option
exercise price to the extent theretofore not paid) to Executive by
Group at any time prior to the effective date of disability as if
all restrictions had lapsed and all events necessary to vest in the
Executive such rights, including the lapsing of time, had occurred,
and (ii) Group shall pay to Executive (or his legal representative)
(a) amounts in lieu of Salary, at the Adjusted Salary Rate in
effect at the effective date of permanent and total disability,
payable in the manner specified in Section 4.1.1, for a period of
thirty-six months following the effective date of such permanent
and total disability (the "Thirty-Six Month Period") at the rate of
one-thirty- sixth of such Adjusted Salary Rate per month; and (b)
such portion of Executive's Salary, as has accrued by virtue of
Executive's employment during the period prior to the Thirty-Six
Month Period and has not yet been paid, together with any amounts
for expense reimbursement and similar items which were properly
incurred in accordance with the provisions of Section 5 prior to
the Thirty-Six Month Period and have not yet been paid.
6.2.2 Amounts to which Executive would otherwise be entitled under
Section 6.2.1 above shall not be required to be reduced by the
amount of any disability insurance proceeds actually paid to or for
the benefit of Executive with respect to such Thirty-Six Month
Period under any disability policy the premiums for which have been
paid by Group or any Affiliate. During such Thirty-Six Month
Period, Group shall maintain at Group's sole expense the life
insurance policies referred to in the second sentence of Section
4.1.3 and in Section 6.1 and, in the event of Executive's death
during the Thirty-Six Month Period, shall pay the death benefit
provided for in Section 4.1.3 in addition to the life insurance
benefits payable to the beneficiaries of the policies referred to
in Section 6.1 which shall be payable in the event of Executive's
death during such Thirty-Six Month Period. In addition, during
such Thirty-Six Month Period, Group shall continue to provide
medical and dental coverage as Executive shall have been receiving
as of the time of the determination of Executive's permanent and
total disability. If and to the extent such continuation is not
possible, Group shall cooperate with Executive to enable Executive,
if possible, either to buy the applicable policy or to continue
coverage, to the same extent as provided in Section 7.1 in the case
of a termination thereunder.
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7
6.2.3 Upon the expiration of the Thirty-Six Month Period, this
Agreement shall terminate.
6.2.4 The determination that, by virtue of total and permanent
disability, Executive is unable to perform his duties hereunder
shall be made by a physician chosen by Group and reasonably
satisfactory to Executive (or his legal representative). The cost
of such examination shall be borne by Group. Without limiting the
generality of the foregoing, unless otherwise agreed, Executive
shall be conclusively presumed to be totally and permanently
disabled hereunder if for reasons involving mental or physical
illness or physical injury he fails to perform such duties for a
period of one hundred and eighty (180) consecutive calendar days or
for any periods aggregating six (6) months or more in any twelve
(12) month period. For purposes of this Section 6.2, the effective
date of Executive's total and permanent disability shall be the
earlier of the date of such physician's examination pursuant to
which such determination is made or the first business day after
which either such 180-day or such six-month period has expired.
7. TERMINATION BY EXECUTIVE OR GROUP; CHANGE OF CONTROL; AND
CONSTRUCTIVE TERMINATION
7.1 Executive's employment may be terminated at any time by
Executive by written notice of at least three (3) months to Group,
which time period may be waived, in whole or in part, by Group in
its discretion. If such notice is given after six (6) months of
but within twenty four (24) months of a Change of Control (as
defined in Section 7.5) (a "Change of Control Notice"), and unless
such Change of Control shall have been approved by a resolution
adopted by the Board of Directors of Group with at least two-thirds
(2/3) of the then serving Group directors who are Group directors
as of the date hereof voting in favor, then upon such termination
by Executive pursuant to this paragraph of this Section 7.1,
Executive (or his estate, if he dies prior to receiving the
payments hereinafter set forth in this sentence) shall be entitled
to receive within thirty (30) days of such termination (a) a
lump-sum payment equal to three (3) times the Adjusted Salary Rate
in effect on the date of such termination, plus (b) a lump sum cash
payment equal to (i) three (3) times the maximum payable to
Executive under all compensation bonus plans and arrangements
identified in Sections 4.1.2 and 4.1.4 for the fiscal year in which
the termination occurs, plus
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(ii) an amount equal to three (3) times the value of the
securities, cash or other property which shall have been allocated
to the Executive's account in the Ekco Group, Inc. Employee Stock
Ownership Plan (the "ESOP") for the fiscal year preceding the
fiscal year in which the termination occurs (which shall be in
addition to any distribution from the ESOP to which he is entitled
thereunder).
Except in the case when a Change of Control shall have occurred
(which shall be governed by Section 7.2.3), if such notice is given
within ninety (90) days of a proposal by Group to geographically
relocate Executive without Executive's consent to an office
(whether or not the principal office of Group) outside Nashua, New
Hampshire or the greater Boston, Massachusetts metropolitan area (a
"Relocation Notice"), then upon such termination by Executive
pursuant to this paragraph of this Section 7.1, Executive (or his
estate) shall be entitled to receive within thirty (30) days of
such termination (x) a lump-sum payment equal to two (2) times the
Adjusted Salary Rate in effect on the date of such termination,
plus (y) a lump sum cash payment equal to (i) two (2) times the
maximum payable to Executive under all compensation bonus plans and
arrangements identified in Sections 4.1.2 and 4.1.4 for the fiscal
year in which the termination occurs, plus (ii) an amount equal to
two (2) times the value of the securities, cash or other property
which shall have been allocated to Executive's account in the ESOP
for the fiscal year preceding the fiscal year in which the
termination occurs (which shall be in addition to any distribution
from the ESOP to which he is entitled thereunder). In addition,
Executive shall immediately upon termination pursuant to this
paragraph of this Section 7.1 have the unconditional, unencumbered
and free right, title and interest in all shares of stock of Group
which were granted, sold or optioned (subject to his obligation to
pay the option exercise price to the extent theretofore not paid)
to Executive by Group at any time prior to the effective date of
termination as if all restrictions had lapsed and all events
necessary to vest in the Executive such rights, including the
lapsing of time, had occurred. Notwithstanding the foregoing, in
the event of a Change of Control prior to a Relocation Notice, the
provisions of Section 7.2.3 shall supersede the provisions of this
paragraph of this Section 7.1.
For the purposes of this Section 7.1, the time when a
termination occurs shall be the effective date of termination of
Executive.
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In addition, in the event of such a termination pursuant to a
Change of Control Notice, Group shall provide, and Executive shall
continue to be entitled to receive, such medical, dental and life
insurance coverage as he shall have been receiving pursuant to
Section 4.1.3 as of the date of his Change of Control Notice until
the earlier of (x) his full-time employment by a third party who
offers Executive at least comparable benefits in the particular
benefit category or (y) three (3) years following such date of
termination, but only to the extent Group is able to continue the
applicable coverage of Executive under the terms of such group
policies or other policies providing coverage for Executive.
Notwithstanding any other provision in this Section 7.1, in the
event Group is unable to continue the applicable coverage of
Executive under the terms of the applicable policies, then Group
shall cooperate with Executive in any actions which may be
necessary to allow Executive, to the extent possible, either (i) to
buy such policy or (ii) to continue insurance coverage with the
insurer writing Group's applicable group policy outside of Group's
group plan. Group shall pay to Executive 140% of the cost of such
insurance coverage, but in no event more than twice the cost of
such coverage allocable to Executive under the group or other
policy covering him prior to termination. In the event of
termination as provided in this Section 7.1 Executive shall be
entitled as of the date of termination or thereafter to no other
compensation under this Agreement (including, without limitation,
Section 4 or Section 6), except as provided in this Section 7.1,
Section 7.4 and Section 7.8. Any compensation payable under this
Section 7.1 shall be paid notwithstanding Executive's total and
permanent disability or death occurring after termination of his
employment hereunder. In the event Executive dies or becomes
totally and permanently disabled after the date of any such notice
but prior to the date of termination of his employment under this
Section 7.1, the provisions of this Section 7.1 and not the
provisions of Section 6 shall apply.
7.2 Executive's employment may be terminated at any time by Group,
with or without good cause (as defined in Section 7.6), by written
notice to Executive, effective immediately unless otherwise stated
in such notice.
7.2.1 In the event Executive's employment hereunder is terminated by
Group without "good cause" prior to a Change of Control, then
Executive (or his estate) shall be entitled to a lump-sum payment
payable within thirty (30) days of the date of termination equal to
(a) two
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(2) times the Adjusted Salary Rate in effect at the date of such
notice, plus (b) a lump sum cash payment equal to (i) two (2)
times the maximum payable to Executive under all compensation bonus
plans and arrangements identified in Sections 4.1.2 and 4.1.4 for
the fiscal year in which the termination occurs, plus (ii) an
amount equal to two (2) times the value of the securities, cash or
other property which shall have been allocated to Executive's
account in the ESOP for the fiscal year preceding the fiscal year
in which the termination occurs (which shall be in addition to any
distribution from the ESOP to which he is entitled thereunder). In
addition, Executive shall immediately upon termination pursuant to
this Section 7.2.1 have the unconditional, unencumbered and free
right, title and interest in all shares of stock of Group which
were granted, sold or optioned (subject to his obligation to pay
the option exercise price to the extent theretofore not paid) to
Executive by Group at any time prior to the effective date of
termination as if all restrictions had lapsed and all events
necessary to vest in the Executive such rights, including the
lapsing of time, had occurred. In addition, Executive shall
continue to be entitled to the continuation of such medical,
dental, and life insurance coverage as he shall be receiving
pursuant to Section 4.1.3 as of the date of notice of termination
until the earlier of (x) his full time employment by a third party
who offers Executive comparable benefits or (y) two (2) years
following such date of termination, but only to the extent Group is
able to continue the applicable coverage of Executive under the
terms of such group policies or other policies providing coverage
for Executive. Notwithstanding any other provision in this 7.2.1,
in the event Group is unable to continue the applicable coverage of
Executive under the terms of the applicable policies, then Group
shall cooperate with Executive in any actions which may be
necessary to allow Executive, to the extent possible, either (i) to
buy such insurance policy or (ii) to continue insurance coverage
with the insurer writing Group's applicable group policy outside of
Group's group plan. Group shall pay to Executive 140% of the cost
of such insurance coverage, but in no event more than twice the
cost of such coverage allocable to Executive under the group or
other policy covering him prior to termination. Such compensation
shall be paid notwithstanding Executive's total and permanent
disability or death subsequent to such notice but, in the event
Executive (or his estate, legal representative or beneficiaries)
receives disability benefits pursuant to Section 6, such benefits
shall
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constitute an offset for amounts due under this Section 7.2.1. In
the case of termination of his employment under this Section 7.2.1,
Executive shall be entitled as of the date of termination to no
other compensation under this Agreement (including, without
limitation, Section 4 or Section 6), except as provided in Section
7.4.
7.2.2 In the event Group shall terminate Executive's employment for
good cause, then Executive shall be entitled as of the date of
termination to no compensation under this Agreement (including,
without limitation, Section 4 or Section 6 above), except as
provided in Section 7.4.
7.2.3 Immediately upon a Change of Control, and without regard to
whether or not Executive's employment is terminated or a
Constructive Termination occurs at such time or thereafter,
Executive shall immediately have the unconditional, unencumbered
and free right, title and interest in all shares of stock of Group
which were granted, sold or optioned (subject to his obligation to
pay the option exercise price to the extent theretofore not paid)
to Executive by Group at any time prior to the Change of Control as
if all restrictions had lapsed and all events necessary to vest in
the Executive such rights, including the lapsing of time, had
occurred.
Following a Change of Control and upon an event of "Constructive
Termination" (as defined in Section 7.2.4) or termination of
Executive's employment without good cause, Executive shall receive
within ten (10) days of such event (a) a lump-sum payment equal to
three (3) times the Adjusted Salary Rate in effect on the date of
such Constructive Termination, plus (b) a lump sum cash payment
equal to (i) three (3) times the maximum payable to Executive under
all compensation bonus plans and arrangements identified in
Sections 4.1.2 and 4.1.4 for the fiscal year in which the
Constructive Termination occurs, plus (ii) an amount equal to three
(3) times the value of the securities, cash or other property which
shall have been allocated to the Executive's account in the ESOP
for the fiscal year preceding the fiscal year in which the
Constructive Termination occurs. For the purposes of this Section
7.2.3, the time when a Constructive Termination occurs shall be the
day any event occurs which is included in the definition of
Constructive Termination in Section 7.2.4. In addition, Executive
shall immediately upon Constructive Termination pursuant to this
Section 7.2.3 have the unconditional, unencumbered and free right,
title and interest in all
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shares of stock of Group which were granted, sold or optioned
(subject to his obligation to pay the option exercise price to the
extent theretofore not paid) to Executive by Group at any time
prior to the effective date of Constructive Termination as if all
restrictions had lapsed and all events necessary to vest in the
Executive such rights, including the lapsing of time, had occurred.
7.2.4 As used herein, "Constructive Termination" shall be deemed to
have occurred if and when (i) Executive's base salary is decreased
below the level in effect on the date of the last amendment of this
Agreement, or the bonus percentage applicable to Executive's
participation in any compensation bonus plan or arrangement is
reduced, without the Executive's consent, provided, however, that
nothing herein shall be construed to guarantee the Executive's
bonus awards if performance is below applicable targets, or (ii)
the importance of the Executive's job responsibilities is reduced
without the Executive's consent or, (iii) a proposal is made to
relocate Executive to a location other than Nashua, New Hampshire
or the greater Boston, Massachusetts metropolitan area without his
consent.
7.3 In order to assure Executive the prompt payment of amounts due him
under Section 6 or 7 hereof, Group agrees promptly to secure and to
keep in place an irrevocable letter of credit from Fleet Bank of
Massachusetts, N.A. or another bank reasonably acceptable to
Executive in the initial amount of four (4) times Executive's Base
Salary, in substantially the form of Exhibit A, or upon other terms
reasonably acceptable to Executive, which shall allow Executive (or
his legal representative) to draw down amounts due him under
Section 6 or 7 of this Agreement upon certification by Executive
(or his legal representative) that payments are due him pursuant to
this Agreement. The amount of the letter of credit shall be
adjusted at least annually to reflect changes in Executive's
salary, so that it shall at all times be at least four (4) times
the Adjusted Salary Rate. In addition, the letter of credit (or a
separate letter of credit) shall include an amount which Group, in
its reasonable judgment, determines is necessary to secure Group's
obligations under any stock appreciation right plan or other
equity-linked plan (other than the ESOP), provided, however, that
such amount need not include any amount with respect to stock
options, restricted stock subject to repurchase rights, or any
equity plan giving Executive ownership of shares. An initial
determination of the amount necessary to secure such
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equity-linked obligations shall be made on the date of grant
to Executive of such equity-linked right, and the amount shall
subsequently be adjusted at least annually to reflect the value on
such date of such rights. A failure by Group to keep such
letter(s) of credit in effect, or to renew the same or to make
alternate arrangements to secure its obligations in the amount
required hereunder, by way of an escrow agreement, trust, or other
device, which arrangements shall be reasonably satisfactory to
Executive, at least thirty (30) days prior to the expiration date
of the letter of credit or any such alternate arrangement shall
constitute an event of default under this Agreement entitling
Executive, after written notice to Group and the passage of a ten
(10) day cure period without such default being cured, all of the
benefits accorded to him in the event of a termination without good
cause pursuant to Section 7.2.1 or Section 7.2.3 after a Change of
Control, whichever is higher, without, however, the requirement
that Executive terminate his employment hereunder. Group agrees to
notify Executive within three business days of any failure or
inability to maintain or renew such letter of credit or other
device adopted pursuant to this Section. Notwithstanding the
foregoing, at the election of the Board of Directors of Group by
resolution of such Board with at least two-thirds (2/3) of the
then-serving Group directors who are Group directors as of the date
hereof voting in favor, the obligation to maintain a letter of
credit shall be relieved to the extent amounts are contributed to a
trust or trusts under the terms of which such amounts are
specifically earmarked as security for payment of obligations under
this Agreement and are at all times at least four (4) times the
Adjusted Salary Rate. Such trust or trusts may contain a provision
that its funds will be returned to Group so as to be available to
its general creditors in the event of the bankruptcy of Group.
Group agrees that it will not take any action to prevent, hinder or
delay the exercise by Executive of his rights to exercise the
security provisions provided in this Section 7.3 and, further,
agrees to cooperate with Executive as may be necessary to enable
Executive to exercise and obtain the benefit of such security
provisions, in the absence of fraudulent or unlawful conduct on the
part of Executive with respect to such exercise.
7.4 In the event of any termination pursuant to any of Sections 6, 7.1
or 7.2, Executive shall (i) be paid such portion of his Salary as
has accrued by virtue of Executive's employment during the period
prior to
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termination and has not yet been paid, together with any amounts
for expense reimbursement, vacation accruals and similar items
which have been properly incurred or accrued in accordance with the
provisions of Section 5 prior to termination and have not yet been
paid; and (ii) be provided outplacement services by a professional
outplacement firm of Executive's choosing at the expense of Group,
who shall engage such firm directly on behalf of Executive,
provided, however, that Group's liability with respect to providing
such services will be limited to one-half of Executive's Adjusted
Salary.
7.5 As used herein, a "Change of Control" shall be deemed to have
occurred (i) if any "Person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended), other than Group or any employee stock plan of Group, is
or becomes the beneficial owner, directly or indirectly, of
securities of Group representing fifteen percent (15%) or more of
the outstanding Common Stock of Group, or (ii) ten (10) days
following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by any "person" of fifteen
percent (15%) or more of the outstanding Common Stock of Group,
provided, however, that at the conclusion of such ten (10) day
period such person has not discontinued or rescinded his intention
to make such a tender or exchange offer or (iii) if during any
consecutive twelve (12) month period beginning on or after the date
on which this Agreement is executed individuals who at the
beginning of such period were directors of Group cease, for any
reason, to constitute at least a majority of the Board of Directors
of Group; or (iv) if a merger of, or consolidation involving, Group
in which Group's stock is converted into securities of another
corporation or into cash shall be consummated, or a plan of
complete liquidation of Group (whether or not in connection with a
sale of all or substantially all of Group's assets) shall be
adopted and consummated, or substantially all of Group's operating
assets are sold (whether or not a plan of liquidation shall be
adopted or a liquidation occurs), excluding in each case a
transaction solely for the purpose of reincorporating Group in a
different jurisdiction or recapitalizing Group's stock.
7.6 As used herein, "good cause" shall mean and be limited to a
material breach of any of Executive's obligations under Section 1
or 8 hereof, or any action by Executive during the term of this
Agreement involving willful
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malfeasance or gross (but not simple) negligence on the part
of Executive in a material respect. Notwithstanding the foregoing,
following a Change of Control, "good cause" shall not be deemed to
have occurred unless (a) the conduct which is the basis for such
material breach is either willful or intentionally unlawful and (b)
Executive shall not have ceased such conduct or cured the effect
thereof, if curable, so that such breach shall no longer be
material within thirty (30) days after Executive shall have
received written notice from Group of Group's intention to
terminate Executive's employment for good cause, which notice shall
specify in detail the basis therefor.
7.7 Group, in its sole discretion, may apply for and procure in its
own name (whether or not for its own benefit) policies of insurance
insuring the life of Executive in such amounts as Group may deem
advisable, in addition to insurance policies contemplated by
Section 4.1.3 or Section 6.2.1. Executive shall have no right,
title, or interest in any such policies of insurance, except to the
extent his estate or other persons are specifically named as
beneficiaries thereof. Executive agrees to submit to any medical
or other examination and to execute and deliver any applications or
other instrument in writing, reasonably necessary to effectuate
such insurance.
7.8 The Executive shall be paid an additional amount ("Gross Up
Payment") if any payments ("Payments Amounts") made to him or
Executive's estate by Group or any of its Affiliates, under this
Agreement or otherwise, are subject to the excise tax imposed by
Internal Revenue Code Section 4999 (the "Section 4999 Tax") or any
successor Internal Revenue Code Section. The Gross Up Payment shall
be computed so that the Executive retains a net amount equal to the
Payment Amounts after deduction of any Section 4999 Tax on the
Payment Amounts and any Federal, State and Section 4999 Tax on the
Gross Up Payment.
For the purposes of determining the amount of the Gross Up Payment,
the Executive shall be deemed to pay Federal, State and local
income taxes at the highest marginal rate of taxation in the
calendar year in which the Payment Amounts are taxable to him under
Code Section 4999. State and local income taxes shall be
determined based upon the state and locality of Executive's
domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and
whether such Section 4999 Tax is payable shall be
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made by tax counsel selected by Group and approved by
Executive. The Gross Up Payment shall be paid within 30 days of
such computation and in no event (without written consent of
Executive) later than the last day of the calendar year with
respect to which the Section 4999 tax is imposed.
If such opinion of tax counsel is not finally accepted by the
Internal Revenue Service upon audit, then tax counsel (selected
under the above procedure) shall compute appropriate adjustments
and additional Gross Up Payments shall be computed, as provided
above and paid to Executive, and Executive shall also be reimbursed
for interest and other tax penalties, if applicable.
8. CONFIDENTIALITY AND NON-COMPETITION
8.1 Executive's agreements set forth in this Section 8 shall survive
the expiration or termination of this Agreement and the termination
of his employment with Group for any reason.
8.2 Executive acknowledges that irreparable injury would be caused
to Group by his breach of any of the provisions of this Section 8,
and agrees that in the event of any such breach, Group and any of
its Affiliates, in addition to such other rights and remedies as
may exist in its favor, may apply to any court of law or equity
having jurisdiction to enforce the specific performance of the
provisions of this Section 8 and may apply for injunctive relief
against any act which would violate any such provisions.
8.3 Executive recognizes that he now has knowledge of and/or may
hereafter gain knowledge of, confidential information, trade
secrets, confidential processes, confidential patentable or
unpatentable inventions or confidential "know how", including,
without limitation, techniques, formulae, designs, developments,
projects, technical information and manufacturing process and
distribution methods, relating to, or concerned with the business
of Group and its Affiliates during the term of this Agreement and
their respective suppliers, customers, stockholders, licensors,
licensees, and other persons or entities with which Group or its
Affiliates has, has had, or may in the future have any commercial,
scientific or technical relationship, and which information has not
previously been made public or thereafter made public. During the
term of this Agreement and at all times following the termination
of Executive's employment for any reason, Executive will not,
directly or indirectly, divulge, furnish or make
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accessible to anyone (other than as required in the regular
course of his employment by Group or with the consent of the Board
of Directors of Group) such information. The prohibitions
contained in this Section 8.3 shall not apply to information which
is (a) within the domain of the general public; (b) generally known
within the industry or industries in which Group or its Affiliates
is involved; or (c) independently developed by Executive without
utilization of confidential information gained while in the employ
of Group; provided that Executive shall not have disclosed such
information in violation of this Agreement. All documents,
records, apparatus, equipment and other physical property furnished
to Executive by Group or any Affiliate of Group or produced by
Executive or others in connection with his services to Group or any
such Affiliate shall be and remain the sole property of Group.
Executive will return and deliver such property to Group as and
when requested by Group. Copies of documents and records may be
kept, but shall be kept completely confidential to the same extent
as other confidential information of Group. Executive shall return
and deliver all such property upon termination of his employment
for any reason, and Executive will not take with him any such
property or any reproduction of such property upon such
termination.
8.4 Any work or research or the results thereof, made or developed by
Executive, alone or in conjunction with others during the term of
his employment, including but without limitation, any designs,
patents, inventions, processes, know-how or formulae created,
invented or conceived during the period of his employment by Group,
whether during or out of the usual hours of work, which arise out
of or are related to the business, research, or development work or
field of operation of Group, or any of its Affiliates, shall to the
extent of Executive's interest therein be the sole and exclusive
property of Group, shall be disclosed in writing to Group and to no
other person, unless so directed in writing by the Board of
Directors, and Executive hereby assigns to Group all and any rights
which he has or may acquire in the same. To this end, both during
the period of Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers, instruments and
documents properly required to effect such assignment to Group or
its nominee, to make application through Group's patent attorney or
general counsel at the expense of Group, for such United States and
foreign patents as may be specified from time to time by Group on
inventions, processes, or formulae which are or become the property
of Group hereunder,
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and to execute assignments upon Group's request, for Executive's
entire interest in all such applications to Group or to its
nominee without compensation (other than his usual compensation as
an employee of Group) and Executive agrees to give Group and its
patent attorney or general counsel all reasonable assistance in
preparing such applications, descriptions, and illustrations of
each such invention, process, or formula and in connection with
proceedings relating thereto or to such other applications or
patents resulting therefrom; and further agrees to execute all
lawful papers considered necessary by Group and do all that Group
reasonably requests in order to protect Group's rights in said
inventions, processes, and formulae or to obtain patents thereon,
including, without limitation, continuations, reissues, renewals,
and extensions. It is further agreed that Executive's obligations
specified hereunder shall not expire with the termination of his
employment, but Group agrees to pay Executive a reasonable amount
for any time that Executive spends in such work at Group's request
after the termination of his employment hereunder and agrees to
reimburse Executive for expenses reasonably or necessarily incurred
in connection with such work.
8.5 In consideration of his continued employment by Group, and the
other benefits accruing to him hereunder, and subject to the
fulfillment by Group of its obligations to Executive hereunder,
either directly or through draw-down under the letter(s) of credit
or other device established pursuant to Section 7.3, Executive
agrees that during the term hereof and for a period of twenty four
(24) months following the date of termination of Executive's
employment pursuant to Section 6 or 7 provided that Executive has
received and is continuing to receive all payments and benefits
required to be paid and provided to him pursuant to Sections 4, 6
and 7 (such period of employment and twenty four (24) month period
being referred to in this Agreement as the "Non-Competition
Period"), he will not engage or participate, directly or
indirectly, within the United States of America or Canada either as
principal, agent, employee, employer, consultant, stockholder,
partner or in any other individual or representative capacity
whatever, in the conduct or management of, or own any stock or
other proprietary interest in, or debt of, any business which shall
be competitive with any business which is or was conducted by Group
or any Affiliate of Group, while Executive was an employee of Group
under this Agreement, unless he shall have obtained the prior
written consent of the Board of Directors, and which consent shall
make express reference to this Agreement.
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Notwithstanding any other provision in this Section 8,
Executive shall be free without such consent to make investments,
directly or indirectly, in the securities of any publicly-owned
corporation if his ownership thereof is limited to not more than
three percent (3%) of the issued and outstanding securities of any
class of securities of such corporation. Executive acknowledges
that his skills and experience are such that he can anticipate
finding employment at an executive level in a wide variety of
industries and represents and agrees that the restrictions imposed
by this Section 8 on employment are necessary for the protection of
the legitimate interests and competitive position of Group and do
not impose undue hardships on Executive.
8.6 During the Non-Competition Period, Executive shall not, directly or
indirectly, solicit any officer, director, executive, employee or
consultant of Group or any Affiliate of Group to leave such
employment or terminate such position.
9. ARBITRATION
Except with respect to the provisions of Section 8, any dispute
or disagreement arising under or relating to the provisions of this
Agreement, or any breach thereof, including, without limitation,
relating to Section 1 hereof or to whether a termination of
Executive's employment was with "good cause", shall be resolved by
binding arbitration in accordance with the Commercial Rules of the
American Arbitration Association or its successor (except as set
forth herein), and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. The decision of the arbitrators shall be
made by majority vote and be final and absolute. In any such
arbitration, one arbitrator shall be selected by Group and one
arbitrator shall be selected by Executive. Each party shall have
thirty (30) days from the receipt by one party of a notice from the
other party of submission to arbitration to choose an arbitrator.
A third arbitrator shall be selected by the two so chosen within
ten (10) days of the selection of the most recently selected of the
two arbitrators so chosen. Failing action within any of such
periods by any party or the arbitrators, any unappointed arbitrator
or arbitrators shall be appointed by the American Arbitration
Association (or its successor) upon application of any party or
arbitrator. The parties shall promptly furnish to the
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arbitrators such information as the arbitrators may reasonably
request. The expenses of any arbitration proceeding shall be
paid by Group (including Executive's attorney's fees) if the
Executive recovers any amount or otherwise obtains relief in such
proceeding and by the Executive (including Group's attorney's fees
and expenses) if the Executive initiated arbitration and there is a
specific finding that the Executive's claim was frivolous. In all
other circumstances, the expenses of such arbitration proceeding
(not including attorney's fees and expenses, each party to bear
such party's own attorney's fees and expenses) shall be divided
equally. Arbitration shall take place in Nashua, New Hampshire, or
such other place on which the parties shall agree. This Agreement
and any arbitration proceeding are subject to N.H.R.S.A. ch. 542.
10. GENERAL
10.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
10.2 This Agreement shall be binding upon and shall inure to the
benefit of Group and its successors and assigns either by merger,
operation of law, consolidation, assignment, purchase or otherwise
of a controlling interest in the business of Group and Executive,
his heirs, executors, administrators, legal representatives, and
permitted assigns. Group agrees that a successor in interest by
merger, operation of law, consolidation, assignment, purchase or
otherwise of a controlling interest in the business of Group will
be informed prior to such event of the existence of this
Agreement. Group shall require any successor (whether direct or
indirect, by purchase, merger, operation of law, consolidation,
assignment or otherwise of a controlling interest in the business,
stock or other assets of Group) to assume expressly and agree to
perform this Agreement. Failure of Group to obtain such
assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
Executive to such compensation and benefits in the same amount
and on the same terms as he would be entitled hereunder in the
event of a termination without "good cause", except that, for
the purposes of implementation hereof, the date on which any such
succession becomes effective shall be deemed to be the date on
which Executive becomes entitled to such compensation and benefits
from Group. As used in this Agreement, "Group" shall mean
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Group as hereinbefore defined and any successor as aforesaid.
10.3 The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a duly
authorized court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared
illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and be
enforceable to the fullest extent permitted by law; and (ii) if any
provision, or any part thereof, is held to be unenforceable because
of the duration of such provision or the area covered thereby,
Group and Executive agree that the court making such determination
shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words and phrases
("blue-pencilling") and in its reduced or blue- pencilled form such
provision shall then be enforceable and shall be enforced.
10.4 All notices and communications required or permitted to be given
hereunder shall be duly given by delivering the same in hand or by
depositing such notice or communication in the mail, sent by
certified or registered mail, return receipt requested, postage
prepaid, as follows:
If sent to Group: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: President
If sent to Executive: To Executive's
last address in
the records of Group
or such other address as either party furnishes to the other by
like notice.
10.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject matter
hereof. There are no promises, representations, conditions,
provisions or terms related thereto other than those set forth in
this Agreement. This Agreement supersedes all previous
understandings, agreements and representations between Group and
Executive regarding Executive's employment by Group, written or
oral. The parties hereto acknowledge
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the existence of a certain Employment Agreement dated November
6, 1991, as amended heretofore, between the parties hereto. Upon
this Agreement becoming effective, this Agreement shall replace,
supersede and be a substitute for the Employment Agreement as so
amended.
10.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect the
meaning or construction of any provision hereof. Any references in
this Agreement to a section shall be deemed to include all
subsections of that section unless specifically excluded.
10.7 No failure of Group or Executive to exercise any power reserved
to it or him, respectively, by this Agreement, or to insist upon
strict compliance by Executive or Group, respectively, with any
obligation or condition hereunder, and no custom or practice of the
parties at variance with the terms hereof, shall constitute a
waiver of Group's or Executive's right, as the case may be, to
demand exact compliance with any of the terms hereof. Waiver by
either party of any particular default by the other party hereto
shall not affect or impair the waiving party's rights with respect
to any subsequent default of the same, similar or different nature,
nor shall any delay, forbearance or omission of either party to
exercise any power or right arising out of any breach or default by
the other party of any of the terms, provisions or covenants
hereof, affect or impair its or his right to exercise the same, nor
shall such constitute a waiver by Group or Executive, as the case
may be, of any right hereunder, or the right to declare any
subsequent breach or default and to terminate this Agreement prior
to the expiration of its term.
10.8 As used herein, the term "Affiliate" shall be deemed to include
any corporation, joint venture, or other business enterprise,
whether incorporated or unincorporated, which Group directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with.
10.9 This is a New Hampshire contract and shall be construed under
and be governed in all respects by the law of the State of New
Hampshire.
10.10 Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment
or otherwise, nor shall the
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amount of any payment provided for herein be reduced by any
compensation earned by Executive as the result of employment by
another employer or by retirement benefits after the date of
termination or otherwise, except as specifically set forth herein.
10.11 No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto. This
Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but
one agreement.
IN WITNESS WHEREOF, Group has caused this Agreement to be executed and
delivered by its duly authorized officer and its corporate seal to be hereunto
affixed and Executive has hereunto set his hand and seal as of the day and year
first written above in duplicate originals.
EKCO GROUP, INC.
By /s/ Robert Stein
_______________________
/s/ Jeffrey A. Weinstein
_________________________
Executive
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EXHIBIT A
DOCUMENTARY CREDIT NO. __________________
DATE OF ISSUE ____________________ , 1994
ISSUING BANK: APPLICANT:
FLEET BANK OF MASSACHUSETTS,N.A EKCO GROUP, INC
(Address of Bank) 98 SPIT BROOK ROAD
________________________________ SUITE 102
________________________________ NASHUA, NH 03062
ATTN:____________________________________
ADVISING BANK:
BENEFICIARY:
(Name & Address of Executive)
__________________________________________
__________________________________________
__________________________________________
ACCOUNT/CURRENCY:
UP TO USD_________________________________
UP TO_____________________________________
US DOLLARS
DATE AND PLACE OF EXPIRY:
________________________________ , 1996 AT
THE ISSUING BANK
Dear Sir:
By the order of Ekco Group, Inc. we hereby open in your favor our Irrevocable
Credit for the account of Ekco Group, Inc. for a sum or sums not exceeding a
total of US $___________________________ (_____________________________________
US DOLLARS) available by your draft(s) at SIGHT on Fleet Bank of Massachusetts,
N.A.,_________________________________________________________________________ ,
Massachusetts _________________ effective __________________________ , 1994 and
expiring at ______________________________ , Massachusetts on ________________,
1996.
Drafts must be accompanied by:
1. The original Letter of Credit and any amendments thereto, if any.
2. Your signed statement as follows: "I certify that the amount of my draft
represents funds due me under Section _________ (insert section number) of a
certain Employment Agreement dated as of November 6, 1991, as further amended
by amendments dated as of ____________________________________________________,
between myself and Ekco Group, Inc., demand for payment has been made, and
payment has not been received by me from Ekco Group, Inc. or any other source."
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Each draft must bear upon its face the clause "Drawn under Letter of Credit No.
___________________________ , dated ____________________________ of Fleet Bank
of Massachusetts, N.A."
It is a condition of this Letter of Credit that it shall become operative via
amendment issued by Fleet Bank of Massachusetts, N.A. upon notice of
cancellation of Letter of Credit dated August 28, 1987 issued by State Street
Bank and Trust Company.
We hereby agree with you that drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored if presented to the
above-mentioned drawee Bank on or before (expiration date) __________________ ,
1996.
This Letter of Credit sets forth in full terms of our undertaking, and this
undertaking shall not in any way be modified, amended or limited by reference
to any document, instrument or agreement referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates,
except for the certificate and the sight draft referred to herein; and any such
reference shall not be deemed to incorporate herein by reference any document,
instrument or agreement, except for such certificate and such sight draft.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us, if by registered mail to Fleet Bank of Massachusetts,
N.A., _______________________________________________________ , Massachusetts
___________________, Attention:__________________________________________ , or
if by courier to Fleet Bank of Massachusetts, N.A., _________________________
_____________________________ , Massachusetts ____________________., Attention
________________________________________ , specifically referring to the number
of this Letter of Credit.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication 500 and engages us in
accordance with its terms.
__________________________________ ___________________________________
Authorized Signature Authorized Signature
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EX-10.9
12
EMPLOYMENT AGMT FOR D.A. DENOVELLIS
1
EXHIBIT 10.9
------------
EMPLOYMENT AGREEMENT
BETWEEN
EKCO GROUP, INC.
AND
DONATO A. DENOVELLIS
AS OF
April 15, 1994
2
EMPLOYMENT AGREEMENT
AGREEMENT made this 15th day of April, 1994, which shall be effective as
of the 15th day of April, 1994 (hereinafter the "effective date") by and between
Ekco Group, Inc., a Delaware corporation with a principal place of business in
Nashua, New Hampshire (hereinafter "Group") and Donato A. DeNovellis, of 4
Basswood Lane, Andover, Massachusetts 01810(hereinafter "Executive").
WHEREAS, Group desires to employ Executive and Executive desires to
accept such employment upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the parties covenant and agree as follows:
1. EMPLOYMENT
Group hereby employs Executive and Executive hereby accepts
employment as an executive employee of Group to perform such
executive and managerial services as may be assigned to him by or
under the authority of the Board of Directors of Group (the "Board
of Directors"), consistent with such status as an executive
employee. Executive agrees to use his best efforts, skills and
abilities faithfully to promote the interests of Group and to
perform such services as may be required of him by Group from time
to time consistent with his status, to the reasonable satisfaction
of the Board of Directors. Without limiting the generality of the
foregoing, Executive agrees to serve as Vice President and Chief
Financial Officer of Group (if and so long as he is elected to that
office by the Board of Directors) and to serve (without additional
compensation) as a director, executive officer or executive
employee of such Affiliates of Group as Group may from time to time
reasonably request. Executive agrees to work exclusively for Group
(and such Affiliates) as his full-time employment during the term
of this Agreement, except as Group and Executive may otherwise
agree in writing from time to time.
2. TERM
The term of this Agreement and Executive's employment hereunder
shall commence on the effective date of this Agreement and continue
until terminated as hereinafter set forth.
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3. PRINCIPAL LOCATION
Executive presently performs the duties of his office generally
in, Nashua, New Hampshire; provided, however, that he shall be
obligated to take such trips outside of such area as shall be
reasonably necessary in connection with his duties and Group shall
pay all reasonable costs of travel and living expenses incurred in
connection therewith. Executive, subject to his rights under
Section 7.2.3, agrees to relocate to any location other than
Nashua, New Hampshire in the United States of America where Group
or any such Affiliate has offices or operations, provided that
Executive's job at such new location involves compensation no less
than his existing compensation and comparable duties. In the event
of any such relocation, Group shall pay Executive all reasonable
expenses incurred by Executive in relocating to such new area.
4. COMPENSATION
4.1 Except as otherwise provided in Sections 5 and 6 hereof, for his
services hereunder Executive shall receive from Group the following
compensation:
4.1.1 Salary ("Salary") at the annual rate of $180,000 (the "Base
Salary Rate"), payable in equal installments in accordance with
Group's pay policy and in any event not less frequently than
monthly, subject to adjustment pursuant to the provisions of
Section 4.2;
4.1.2 Such other monetary compensation by way of bonus or otherwise,
if any, as may be determined from time to time by the Board of
Directors in its sole discretion;
4.1.3 Such fringe benefits (including, without limitation, vacation
time, group life, split-dollar life, medical, dental and other
insurance, retirement, including, but not limited to, Group's
Supplemental Retirement Plan, pension, profit-sharing and similar
plans) as Group may provide from time to time for its executive
employees. Group shall in any event, whether or not such coverage
is provided for other executive employees, provide Executive group
life or other life insurance at its expense with a death benefit
equal to at least twice Executive's Adjusted Salary Rate (as
defined in Section 4.2), in addition to any life insurance payable
to Executive or his beneficiaries under Section 6.2.1 below or any
life insurance for which Executive may pay premiums; and
4.1.4 Such other compensation pursuant to such executive bonus plans,
restricted stock purchase plans, stock
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option plans or other stock plans, available to employees of
Group from time to time, as the Board of Directors may in its sole
discretion determine.
4.2 The Base Salary Rate shall be subject to increasefrom time to
time as determined by the Board of Directors in its sole discretion
pursuant to a review of Executive's performance by the Board of
Directors, which review shall be conducted at such time as the
Board of Directors shall determine, but in any event at least once
during each twelve (12) months of the term of this Agreement. The
Base Salary Rate as from time to time increased is referred to
herein as the "Adjusted Salary Rate."
5. REIMBURSEMENT OF EXPENSES
Group shall reimburse Executive for travel, entertainment and
other business expenses reasonably incurred by him in connection
with the business of Group and its Affiliates to the extent and in
a manner consistent with then company policy.
6. TERMINATION UPON DEATH OR DISABILITY
6.1 This Agreement shall terminate upon the death of Executive. In
such event, (i) all compensation hereunder shall terminate, (ii)
Executive's estate shall immediately have the unconditional,
unencumbered and free right, title and interest in all shares of
stock of Group which were granted, sold or optioned (subject to
Executive's estate's obligation to pay the option exercise price to
the extent theretofore not paid) to Executive by Group at any time
prior to the effective date of termination as if all restrictions
had lapsed and all events necessary to vest in the Executive such
rights, including the lapsing of time, had occurred, and (iii)
Group shall pay to Executive's estate the following, in addition to
the amounts in Section 7.4 (i) and (ii), to which Executive shall
also be entitled: (a) a lump-sum payment equal to the Adjusted
Salary Rate in effect at the date of such termination of
employment, payable no later than sixty (60) days after the date of
such termination; and (b) such portion of Executive's Salary, as
has accrued by virtue of Executive's employment during the period
prior to termination and has not yet been paid, together with any
amounts for expense reimbursement and similar items which were
properly incurred in accordance with the provisions of Section 5
prior to termination and have not yet been paid. To secure the
payment of subsection (a) above, Group may maintain
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life insurance on Executive's life payable to Executive's estate
or other beneficiary, which life insurance coverage shall be in
addition to the amount provided for pursuant to the provisions of
Section 4.1.3 above (or any life insurance for which Executive pays
premiums).
6.2 If, by virtue of Executive's total and permanent disability (more
fully described in Section 6.2.4 below), Executive is unable to
perform his duties hereunder, this Agreement shall terminate in
accordance with the provisions of Section 6.2.3 below. Termination
of this Agreement is not intended, and shall not be deemed, to
terminate Executive's status or benefits as an employee of Group.
Such status shall be consistent with Group's policy of employment
in effect at the time of the determination of Executive's permanent
and total disability, and the benefits provided in this Section 6.2
shall be additive to the benefits provided in Section 4.1.3 which
Group provides from time to time for its executive employees.
6.2.1 In the event of Executive's permanent and total disability,
(i) Executive (or Executive's legal representative) shall
immediately have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group which were
granted, sold or optioned (subject to Executive's (or Executive's
legal representative's) obligation to pay the option exercise price
to the extent theretofore not paid) to Executive by Group at any
time prior to the effective date of disability as if all
restrictions had lapsed and all events necessary to vest in the
Executive such rights, including the lapsing of time, had occurred,
and (ii) Group shall pay to Executive (or his legal representative)
(a) amounts in lieu of Salary, at the Adjusted Salary Rate in
effect at the effective date of permanent and total disability,
payable in the manner specified in Section 4.1.1, for a period of
twenty-four (24) months following the effective date of such
permanent and total disability (the "Twenty-Four Month Period") at
the rate of one-twenty-fourth of such Adjusted Salary Rate per
month; and (b) such portion of Executive's Salary, as has accrued
by virtue of Executive's employment during the period prior to the
Twenty-Four Month Period and has not yet been paid, together with
any amounts for expense reimbursement and similar items which were
properly incurred in accordance with the provisions of Section 5
prior to the Twenty-Four Month Period and have not yet been paid.
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6.2.2 Amounts to which Executive would otherwise be entitled under
Section 6.2.1 above shall not be required to be reduced by the
amount of any disability insurance proceeds actually paid to or for
the benefit of Executive with respect to such Twenty-Four Month
Period under any disability policy the premiums for which have been
paid by Group or any Affiliate. During such Twenty-Four Month
Period, Group shall maintain at Group's sole expense the life
insurance policies referred to in the second sentence of Section
4.1.3 and in Section 6.1 and, in the event of Executive's death
during the Twenty-Four Month Period, shall pay the death benefit
provided for in Section 4.1.3 in addition to the life insurance
benefits payable to the beneficiaries of the policies referred to
in Section 6.1 which shall be payable in the event of Executive's
death during such Twenty-Four Month Period. In addition, during
such Twenty-Four Month Period, Group shall continue to provide
medical and dental coverage as Executive shall have been receiving
as of the time of the determination of Executive's permanent and
total disability. If and to the extent such continuation is not
possible, Group shall cooperate with Executive to enable Executive,
if possible, either to buy the applicable policy or to continue
coverage, to the same extent as provided in Section 7.1 in the case
of a termination thereunder.
6.2.3 Upon the expiration of the Twenty-Four Month Period, this
Agreement shall terminate.
6.2.4 The determination that, by virtue of total and permanent
disability, Executive is unable to perform his duties hereunder
shall be made by a physician chosen by Group and reasonably
satisfactory to Executive (or his legal representative). The cost
of such examination shall be borne by Group. Without limiting the
generality of the foregoing, unless otherwise agreed, Executive
shall be conclusively presumed to be totally and permanently
disabled hereunder if for reasons involving mental or physical
illness or physical injury he fails to perform such duties for a
period of one hundred and eighty (180) consecutive calendar days or
for any periods aggregating six (6) months or more in any twelve
(12) month period. For purposes of this Section 6.2, the effective
date of Executive's total and permanent disability shall be the
earlier of the date of such physician's examination pursuant to
which such determination is made or the first business day after
which either such 180-day or such six- month period has expired.
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7
7. TERMINATION BY EXECUTIVE OR GROUP; CHANGE OF CONTROL;
AND CONSTRUCTIVE TERMINATION
7.1 Executive's employment may be terminated at any time by
Executive by written notice of at least three (3) months to Group,
which time period may be waived, in whole or in part, by Group in
its discretion. If such notice is given after six (6) months of
but within twenty four (24) months of a Change of Control (as
defined in Section 7.5) (a "Change of Control Notice"), and unless
such Change of Control shall have been approved by a resolution
adopted by the Board of Directors of Group with at least two-thirds
(2/3) of the then serving Group directors who are Group directors
as of the date hereof voting in favor, then upon such termination
by Executive pursuant to this paragraph of this Section 7.1,
Executive (or his estate, if he dies prior to receiving the
payments hereinafter set forth in this sentence) shall be entitled
to receive within thirty (30) days of such termination (a) a
lump-sum payment equal to three (3) times the Adjusted Salary Rate
in effect on the date of such termination, plus (b) a lump sum cash
payment equal to (i) three (3) times the maximum payable to
Executive under all compensation bonus plans and arrangements
identified in Sections 4.1.2 and 4.1.4 for the fiscal year in which
the termination occurs, plus (ii) an amount equal to three (3)
times the value of the securities, cash or other property which
shall have been allocated to the Executive's account in the Ekco
Group, Inc. Employee Stock Ownership Plan (the "ESOP") for the
fiscal year preceding the fiscal year in which the termination
occurs (which shall be in addition to any distribution from the
ESOP to which he is entitled thereunder).
For the purposes of this Section 7.1, the time when a
termination occurs shall be the effective date of termination of
Executive.
In addition, in the event of such a termination pursuant to a
Change of Control Notice, Group shall provide, and Executive shall
continue to be entitled to receive, such medical, dental and life
insurance coverage as he shall have been receiving pursuant to
Section 4.1.3 as of the date of his Change of Control Notice until
the earlier of (x) his full-time employment by a third party who
offers Executive at least comparable benefits in the particular
benefit category or (y) two (2) years following such date of
termination, but only to the extent Group is able to continue the
applicable coverage of Executive under the
-6-
8
terms of such group policies or other policies providing coverage
for Executive. Notwithstanding any other provision in this
Section 7.1, in the event Group is unable to continue the
applicable coverage of Executive under the terms of the applicable
policies, then Group shall cooperate with Executive in any actions
which may be necessary to allow Executive, to the extent possible,
either (i) to buy such policy or (ii) to continue insurance
coverage with the insurer writing Group's applicable group policy
outside of Group's group plan. Group shall pay to Executive 140%
of the cost of such insurance coverage, but in no event more than
twice the cost of such coverage allocable to Executive under the
group or other policy covering him prior to termination. In the
event of termination as provided in this Section 7.1 Executive
shall be entitled as of the date of termination or thereafter to no
other compensation under this Agreement (including, without
limitation, Section 4 or Section 6), except as provided in this
Section 7.1, Section 7.4 and Section 7.8. Any compensation payable
under this Section 7.1 shall be paid notwithstanding Executive's
total and permanent disability or death occurring after termination
of his employment hereunder. In the event Executive dies or becomes
totally and permanently disabled after the date of any such notice
but prior to the date of termination of his employment under this
Section 7.1, the provisions of this Section 7.1 and not the
provisions of Section 6 shall apply.
7.2 Executive's employment may be terminated at any time by Group,
with or without good cause (as defined in Section 7.6), by written
notice to Executive, effective immediately unless otherwise stated
in such notice.
7.2.1 In the event Executive's employment hereunder is terminated by
Group without "good cause" prior to a Change of Control, then
Executive (or his estate) shall be entitled to a lump-sum payment
payable within thirty (30) days of the date of termination equal to
(a) two (2) times the Adjusted Salary Rate in effect at the date of
such notice, plus (b) a lump sum cash payment equal to (i) two (2)
times the maximum payable to Executive under all compensation bonus
plans and arrangements identified in Sections 4.1.2 and 4.1.4 for
the fiscal year in which the termination occurs, plus (ii) an
amount equal to two (2) times the value of the securities, cash or
other property which shall have been allocated to Executive's
account in the ESOP for the fiscal year preceding the fiscal year
in which the termination occurs (which shall be in addition to any
distribution from the ESOP to which he is entitled
-7-
9
thereunder). In addition, Executive shall immediately upon
termination pursuant to this Section 7.2.1 have the
unconditional, unencumbered and free right, title and interest in
all shares of stock of Group which were granted, sold or optioned
(subject to his obligation to pay the option exercise price to the
extent theretofore not paid) to Executive by Group at any time
prior to the effective date of termination as if all restrictions
had lapsed and all events necessary to vest in the Executive such
rights, including the lapsing of time, had occurred. In addition,
Executive shall continue to be entitled to the continuation of such
medical, dental, and life insurance coverage as he shall be
receiving pursuant to Section 4.1.3 as of the date of notice of
termination until the earlier of (x) his full time employment by a
third party who offers Executive comparable benefits or (y) two (2)
years following such date of termination, but only to the extent
Group is able to continue the applicable coverage of Executive
under the terms of such group policies or other policies providing
coverage for Executive. Notwithstanding any other provision in
this 7.2.1, in the event Group is unable to continue the applicable
coverage of Executive under the terms of the applicable policies,
then Group shall cooperate with Executive in any actions which may
be necessary to allow Executive, to the extent possible, either (i)
to buy such insurance policy or (ii) to continue insurance coverage
with the insurer writing Group's applicable group policy outside of
Group's group plan. Group shall pay to Executive 140% of the cost
of such insurance coverage, but in no event more than twice the
cost of such coverage allocable to Executive under the group or
other policy covering him prior to termination. Such compensation
shall be paid notwithstanding Executive's total and permanent
disability or death subsequent to such notice but, in the event
Executive (or his estate, legal representative or beneficiaries)
receives disability benefits pursuant to Section 6, such benefits
shall constitute an offset for amounts due under this Section
7.2.1. In the case of termination of his employment under this
Section 7.2.1, Executive shall be entitled as of the date of
termination to no other compensation under this Agreement
(including, without limitation, Section 4 or Section 6), except as
provided in Section 7.4.
7.2.2 In the event Group shall terminate Executive's employment for
good cause, then Executive shall be entitled as of the date of
termination to no compensation under this Agreement (including,
without
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limitation, Section 4 or Section 6 above), except as provided
in Section 7.4.
7.2.3 Immediately upon a Change of Control, and without regard to
whether or not Executive's employment is terminated or a
Constructive Termination occurs at such time or thereafter,
Executive shall immediately have the unconditional, unencumbered
and free right, title and interest in all shares of stock of Group
which were granted, sold or optioned (subject to his obligation to
pay the option exercise price to the extent theretofore not paid)
to Executive by Group at any time prior to the Change of Control as
if all restrictions had lapsed and all events necessary to vest in
the Executive such rights, including the lapsing of time, had
occurred.
Following a Change of Control and upon an event of "Constructive
Termination" (as defined in Section 7.2.4) or termination of
Executive's employment without good cause, Executive shall receive
within ten (10) days of such event (a) a lump-sum payment equal to
three (3) times the Adjusted Salary Rate in effect on the date of
such Constructive Termination, plus (b) a lump sum cash payment
equal to (i) three (3) times the maximum payable to Executive under
all compensation bonus plans and arrangements identified in
Sections 4.1.2 and 4.1.4 for the fiscal year in which the
Constructive Termination occurs, plus (ii) an amount equal to three
(3) times the value of the securities, cash or other property which
shall have been allocated to the Executive's account in the ESOP
for the fiscal year preceding the fiscal year in which the
Constructive Termination occurs. For the purposes of this Section
7.2.3, the time when a Constructive Termination occurs shall be the
day any event occurs which is included in the definition of
Constructive Termination in Section 7.2.4. In addition, Executive
shall immediately upon Constructive Termination pursuant to this
Section 7.2.3 have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group which were
granted, sold or optioned (subject to his obligation to pay the
option exercise price to the extent theretofore not paid) to
Executive by Group at any time prior to the effective date of
Constructive Termination as if all restrictions had lapsed and all
events necessary to vest in the Executive such rights, including
the lapsing of time, had occurred.
7.2.4 As used herein, "Constructive Termination" shall be deemed to
have occurred if and when (i) Executive's base salary is decreased
below the level in effect on
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the date of the last amendment of this Agreement, or the bonus
percentage applicable to Executive's participation in any
compensation bonus plan or arrangement is reduced, without the
Executive's consent, provided, however, that nothing herein shall
be construed to guarantee the Executive's bonus awards if
performance is below applicable targets, or (ii) the importance of
the Executive's job responsibilities is reduced without the
Executive's consent or, (iii) a proposal is made to relocate
Executive to a location other than Nashua, New Hampshire or the
greater Boston, Massachusetts metropolitan area without his
consent.
7.3 In order to assure Executive the prompt payment of amounts due him
under Section 6 or 7 hereof, Group agrees promptly to secure and to
keep in place an irrevocable letter of credit from Fleet Bank of
Massachusetts, N.A. or another bank reasonably acceptable to
Executive in the initial amount of four (4) times Executive's Base
Salary, in substantially the form of Exhibit A, or upon other terms
reasonably acceptable to Executive, which shall allow Executive (or
his legal representative) to draw down amounts due him under
Section 6 or 7 of this Agreement upon certification by Executive
(or his legal representative) that payments are due him pursuant to
this Agreement. The amount of the letter of credit shall be
adjusted at least annually to reflect changes in Executive's
salary, so that it shall at all times be at least four (4) times
the Adjusted Salary Rate. In addition, the letter of credit (or a
separate letter of credit) shall include an amount which Group, in
its reasonable judgment, determines is necessary to secure Group's
obligations under any stock appreciation right plan or other
equity-linked plan (other than the ESOP), provided, however, that
such amount need not include any amount with respect to stock
options, restricted stock subject to repurchase rights, or any
equity plan giving Executive ownership of shares. An initial
determination of the amount necessary to secure such equity-linked
obligations shall be made on the date of grant to Executive of such
equity-linked right, and the amount shall subsequently be adjusted
at least annually to reflect the value on such date of such
rights. A failure by Group to keep such letter(s) of credit in
effect, or to renew the same or to make alternate arrangements to
secure its obligations in the amount required hereunder, by way
of an escrow agreement, trust, or other device, which arrangements
shall be reasonably satisfactory to Executive, at least thirty
(30) days prior to the expiration date of the letter of credit or
any such alternate arrangement shall
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constitute an event of default under this Agreement entitling
Executive, after written notice to Group and the passage of a ten
(10) day cure period without such default being cured, all of the
benefits accorded to him in the event of a termination without good
cause pursuant to Section 7.2.1 or Section 7.2.3 after a Change of
Control, whichever is higher, without, however, the requirement
that Executive terminate his employment hereunder. Group agrees to
notify Executive within three business days of any failure or
inability to maintain or renew such letter of credit or other
device adopted pursuant to this Section. Notwithstanding the
foregoing, at the election of the Board of Directors of Group by
resolution of such Board with at least two-thirds (2/3) of the
then-serving Group directors who are Group directors as of the date
hereof voting in favor, the obligation to maintain a letter of
credit shall be relieved to the extent amounts are contributed to a
trust or trusts under the terms of which such amounts are
specifically earmarked as security for payment of obligations under
this Agreement and are at all times at least four (4) times the
Adjusted Salary Rate. Such trust or trusts may contain a provision
that its funds will be returned to Group so as to be available to
its general creditors in the event of the bankruptcy of Group.
Group agrees that it will not take any action to prevent, hinder or
delay the exercise by Executive of his rights to exercise the
security provisions provided in this Section 7.3 and, further,
agrees to cooperate with Executive as may be necessary to enable
Executive to exercise and obtain the benefit of such security
provisions, in the absence of fraudulent or unlawful conduct on the
part of Executive with respect to such exercise.
7.4 In the event of any termination pursuant to any of Sections 6, 7.1
or 7.2, Executive shall (i) be paid such portion of his Salary as
has accrued by virtue of Executive's employment during the period
prior to termination and has not yet been paid, together with any
amounts for expense reimbursement, vacation accruals and similar
items which have been properly incurred or accrued in accordance
with the provisions of Section 5 prior to termination and have not
yet been paid; and (ii) be provided outplacement services by a
professional outplacement firm of Executive's choosing at the
expense of Group, who shall engage such firm directly on behalf of
Executive, provided, however, that Group's liability with respect
to providing such services will be limited to one-half of
Executive's Adjusted Salary.
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7.5 As used herein, a "Change of Control" shall be deemed to have
occurred (i) if any "Person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended), other than Group or any employee stock plan of Group, is
or becomes the beneficial owner, directly or indirectly, of
securities of Group representing fifteen percent (15%) or more of
the outstanding Common Stock of Group, or (ii) ten (10) days
following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by any "person" of fifteen
percent (15%) or more of the outstanding Common Stock of Group,
provided, however, that at the conclusion of such ten (10) day
period such person has not discontinued or rescinded his intention
to make such a tender or exchange offer or (iii) if during any
consecutive twelve (12) month period beginning on or after the date
on which this Agreement is executed individuals who at the
beginning of such period were directors of Group cease, for any
reason, to constitute at least a majority of the Board of Directors
of Group; or (iv) if a merger of, or consolidation involving, Group
in which Group's stock is converted into securities of another
corporation or into cash shall be consummated, or a plan of
complete liquidation of Group (whether or not in connection with a
sale of all or substantially all of Group's assets) shall be
adopted and consummated, or substantially all of Group's operating
assets are sold (whether or not a plan of liquidation shall be
adopted or a liquidation occurs), excluding in each case a
transaction solely for the purpose of reincorporating Group in a
different jurisdiction or recapitalizing Group's stock.
7.6 As used herein, "good cause" shall mean and be limited to a
material breach of any of Executive's obligations under Section 1
or 8 hereof, or any action by Executive during the term of this
Agreement involving willful malfeasance or gross (but not simple)
negligence on the part of Executive in a material respect.
Notwithstanding the foregoing, following a Change of Control, "good
cause" shall not be deemed to have occurred unless (a) the conduct
which is the basis for such material breach is either willful or
intentionally unlawful and (b) Executive shall not have ceased such
conduct or cured the effect thereof, if curable, so that such
breach shall no longer be material within thirty (30) days after
Executive shall have received written notice from Group of Group's
intention to terminate Executive's employment for good cause, which
notice shall specify in detail the basis therefor.
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7.7 Group, in its sole discretion, may apply for and procure in its
own name (whether or not for its own benefit) policies of insurance
insuring the life of Executive in such amounts as Group may deem
advisable, in addition to insurance policies contemplated by
Section 4.1.3 or Section 6.2.1. Executive shall have no right,
title, or interest in any such policies of insurance, except to the
extent his estate or other persons are specifically named as
beneficiaries thereof. Executive agrees to submit to any medical
or other examination and to execute and deliver any applications or
other instrument in writing, reasonably necessary to effectuate
such insurance.
7.8 The Executive shall be paid an additional amount ("Gross Up
Payment") if any payments ("Payments Amounts") made to him or
Executive's estate by Group or any of its Affiliates, under this
Agreement or otherwise, are subject to the excise tax imposed by
Internal Revenue Code Section 4999 (the "Section 4999 Tax") or any
successor Internal Revenue Code Section. The Gross Up Payment shall
be computed so that the Executive retains a net amount equal to the
Payment Amounts after deduction of any Section 4999 Tax on the
Payment Amounts and any Federal, State and Section 4999 Tax on the
Gross Up Payment.
For the purposes of determining the amount of the Gross Up Payment,
the Executive shall be deemed to pay Federal, State and local
income taxes at the highest marginal rate of taxation in the
calendar year in which the Payment Amounts are taxable to him under
Code Section 4999. State and local income taxes shall be
determined based upon the state and locality of Executive's
domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and
whether such Section 4999 Tax is payable shall be made by tax
counsel selected by Group and approved by Executive. The Gross Up
Payment shall be paid within 30 days of such computation and in no
event (without written consent of Executive) later than the last
day of the calendar year with respect to which the Section 4999 tax
is imposed.
If such opinion of tax counsel is not finally accepted by the
Internal Revenue Service upon audit, then tax counsel (selected
under the above procedure) shall compute appropriate adjustments
and additional Gross Up Payments shall be computed, as provided
above and paid to Executive, and Executive shall also be reimbursed
for interest and other tax penalties, if applicable.
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8. CONFIDENTIALITY AND NON-COMPETITION
8.1 Executive's agreements set forth in this Section 8 shall survive
the expiration or termination of this Agreement and the termination
of his employment with Group for any reason.
8.2 Executive acknowledges that irreparable injury would be caused
to Group by his breach of any of the provisions of this Section 8,
and agrees that in the event of any such breach, Group and any of
its Affiliates, in addition to such other rights and remedies as
may exist in its favor, may apply to any court of law or equity
having jurisdiction to enforce the specific performance of the
provisions of this Section 8 and may apply for injunctive relief
against any act which would violate any such provisions.
8.3 Executive recognizes that he now has knowledge of and/or may
hereafter gain knowledge of, confidential information, trade
secrets, confidential processes, confidential patentable or
unpatentable inventions or confidential "know how", including,
without limitation, techniques, formulae, designs, developments,
projects, technical information and manufacturing process and
distribution methods, relating to, or concerned with the business
of Group and its Affiliates during the term of this Agreement and
their respective suppliers, customers, stockholders, licensors,
licensees, and other persons or entities with which Group or its
Affiliates has, has had, or may in the future have any commercial,
scientific or technical relationship, and which information has not
previously been made public or thereafter made public. During the
term of this Agreement and at all times following the termination
of Executive's employment for any reason, Executive will not,
directly or indirectly, divulge, furnish or make accessible to
anyone (other than as required in the regular course of his
employment by Group or with the consent of the Board of Directors
of Group) such information. The prohibitions contained in this
Section 8.3 shall not apply to information which is (a) within the
domain of the general public; (b) generally known within the
industry or industries in which Group or its Affiliates is
involved; or (c) independently developed by Executive without
utilization of confidential information gained while in the employ
of Group; provided that Executive shall not have disclosed such
information in violation of this Agreement. All documents,
records, apparatus, equipment and other physical property furnished
to Executive by Group or any Affiliate of Group or produced by
Executive or
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others in connection with his services to Group or any such
Affiliate shall be and remain the sole property of Group. Executive
will return and deliver such property to Group as and when
requested by Group. Copies of documents and records may be kept,
but shall be kept completely confidential to the same extent as
other confidential information of Group. Executive shall return and
deliver all such property upon termination of his employment for
any reason, and Executive will not take with him any such property
or any reproduction of such property upon such termination.
8.4 Any work or research or the results thereof, made or developed by
Executive, alone or in conjunction with others during the term
of his employment, including but without limitation, any designs,
patents, inventions, processes, know-how or formulae created,
invented or conceived during the period of his employment by Group,
whether during or out of the usual hours of work, which arise out
of or are related to the business, research, or development work or
field of operation of Group, or any of its Affiliates, shall to the
extent of Executive's interest therein be the sole and exclusive
property of Group, shall be disclosed in writing to Group and to no
other person, unless so directed in writing by the Board of
Directors, and Executive hereby assigns to Group all and any rights
which he has or may acquire in the same. To this end, both during
the period of Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers, instruments and
documents properly required to effect such assignment to Group or
its nominee, to make application through Group's patent attorney or
general counsel at the expense of Group, for such United States and
foreign patents as may be specified from time to time by Group on
inventions, processes, or formulae which are or become the property
of Group hereunder, and to execute assignments upon Group's
request, for Executive's entire interest in all such applications
to Group or to its nominee without compensation (other than his
usual compensation as an employee of Group) and Executive agrees to
give Group and its patent attorney or general counsel all
reasonable assistance in preparing such applications, descriptions,
and illustrations of each such invention, process, or formula and
in connection with proceedings relating thereto or to such other
applications or patents resulting therefrom; and further agrees to
execute all lawful papers considered necessary by Group and do all
that Group reasonably requests in order to protect Group's rights
in said inventions, processes, and formulae or to obtain patents
thereon, including,
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without limitation, continuations, reissues, renewals, and
extensions. It is further agreed that Executive's obligations
specified hereunder shall not expire with the termination of his
employment, but Group agrees to pay Executive a reasonable amount
for any time that Executive spends in such work at Group's request
after the termination of his employment hereunder and agrees to
reimburse Executive for expenses reasonably or necessarily incurred
in connection with such work.
8.5 In consideration of his continued employment by Group, and the
other benefits accruing to him hereunder, and subject to the
fulfillment by Group of its obligations to Executive hereunder,
either directly or through draw-down under the letter(s) of credit
or other device established pursuant to Section 7.3, Executive
agrees that during the term hereof and for a period of twenty four
(24) months following the date of termination of Executive's
employment pursuant to Section 6 or 7 provided that Executive has
received and is continuing to receive all payments and benefits
required to be paid and provided to him pursuant to Sections 4, 6
and 7 (such period of employment and twenty four (24) month period
being referred to in this Agreement as the "Non-Competition
Period"), he will not engage or participate, directly or
indirectly, within the United States of America or Canada either as
principal, agent, employee, employer, consultant, stockholder,
partner or in any other individual or representative capacity
whatever, in the conduct or management of, or own any stock or
other proprietary interest in, or debt of, any business which shall
be competitive with any business which is or was conducted by Group
or any Affiliate of Group, while Executive was an employee of Group
under this Agreement, unless he shall have obtained the prior
written consent of the Board of Directors, and which consent shall
make express reference to this Agreement. Notwithstanding any
other provision in this Section 8, Executive shall be free without
such consent to make investments, directly or indirectly, in the
securities of any publicly- owned corporation if his ownership
thereof is limited to not more than three percent (3%) of the
issued and outstanding securities of any class of securities of
such corporation. Executive acknowledges that his skills and
experience are such that he can anticipate finding employment at an
executive level in a wide variety of industries and represents and
agrees that the restrictions imposed by this Section 8 on
employment are necessary for the protection of the legitimate
interests and competitive position of Group and do not impose undue
hardships on Executive.
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8.6 During the Non-Competition Period, Executive shall not, directly or
indirectly, solicit any officer, director, executive, employee or
consultant of Group or any Affiliate of Group to leave such
employment or terminate such position.
9. ARBITRATION
Except with respect to the provisions of Section 8, any dispute
or disagreement arising under or relating to the provisions of
this Agreement, or any breach thereof, including, without
limitation, relating to Section 1 hereof or to whether a
termination of Executive's employment was with "good cause", shall
be resolved by binding arbitration in accordance with the
Commercial Rules of the American Arbitration Association or its
successor (except as set forth herein), and judgment upon the award
rendered by the arbitrator or arbitrators may be entered in any
court having jurisdiction thereof. The decision of the arbitrators
shall be made by majority vote and be final and absolute. In any
such arbitration, one arbitrator shall be selected by Group and one
arbitrator shall be selected by Executive. Each party shall have
thirty (30) days from the receipt by one party of a notice from the
other party of submission to arbitration to choose an arbitrator.
A third arbitrator shall be selected by the two so chosen within
ten (10) days of the selection of the most recently selected of the
two arbitrators so chosen. Failing action within any of such
periods by any party or the arbitrators, any unappointed arbitrator
or arbitrators shall be appointed by the American Arbitration
Association (or its successor) upon application of any party or
arbitrator. The parties shall promptly furnish to the arbitrators
such information as the arbitrators may reasonably request. The
expenses of any arbitration proceeding shall be paid by Group
(including Executive's attorney's fees) if the Executive recovers
any amount or otherwise obtains relief in such proceeding and by
the Executive (including Group's attorney's fees and expenses) if
the Executive initiated arbitration and there is a specific finding
that the Executive's claim was frivolous. In all other
circumstances, the expenses of such arbitration proceeding (not
including attorney's fees and expenses, each party to bear such
party's own attorney's fees and expenses) shall be divided
equally. Arbitration shall take place in Nashua, New Hampshire,
or such other place on which the parties shall agree. This
Agreement and any arbitration proceeding are subject to N.H.R.S.A.
ch. 542.
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10. GENERAL
10.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
10.2 This Agreement shall be binding upon and shall inure to the
benefit of Group and its successors and assigns either by merger,
operation of law, consolidation, assignment, purchase or otherwise
of a controlling interest in the business of Group and Executive,
his heirs, executors, administrators, legal representatives, and
permitted assigns. Group agrees that a successor in interest by
merger, operation of law, consolidation, assignment, purchase or
otherwise of a controlling interest in the business of Group will
be informed prior to such event of the existence of this
Agreement. Group shall require any successor (whether direct or
indirect, by purchase, merger, operation of law, consolidation,
assignment or otherwise of a controlling interest in the business,
stock or other assets of Group) to assume expressly and agree to
perform this Agreement. Failure of Group to obtain such
assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
Executive to such compensation and benefits in the same amount and
on the same terms as he would be entitled hereunder in the event
of a termination without "good cause", except that, for the
purposes of implementation hereof, the date on which any such
succession becomes effective shall be deemed to be the date on
which Executive becomes entitled to such compensation and
benefits from Group. As used in this Agreement, "Group" shall
mean Group as herein before defined and any successor as aforesaid.
10.3 The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a duly
authorized court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared
illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and be
enforceable to the fullest extent permitted by law; and (ii) if any
provision, or any part thereof, is held to be unenforceable because
of the duration of such provision or the area covered thereby,
Group and Executive agree that the court making such determination
shall have the power to reduce the duration and/or area of such
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provision, and/or to delete specific words and phrases
("blue-pencilling") and in its reduced or blue-pencilled form such
provision shall then be enforceable and shall be enforced.
10.4 All notices and communications required or permitted to be given
hereunder shall be duly given by delivering the same in hand or by
depositing such notice or communication in the mail, sent by
certified or registered mail, return receipt requested, postage
prepaid, as follows:
If sent to Group: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: President
If sent to Executive: To Executive's
last address in
the records of Group
or such other address as either party furnishes to the other by
like notice.
10.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject matter
hereof. There are no promises, representations, conditions,
provisions or terms related thereto other than those set forth in
this Agreement. This Agreement supersedes all previous
understandings, agreements and representations between Group and
Executive regarding Executive's employment by Group, written or
oral. The parties hereto acknowledge the existence of a certain
arrangement regarding change of control dated October 27, 1993
between the parties hereto. Upon this Agreement becoming
effective, this Agreement shall replace, supersede and be a
substitute for the Arrangement Regarding Change of Control.
10.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect the
meaning or construction of any provision hereof. Any references in
this Agreement to a section shall be deemed to include all
subsections of that section unless specifically excluded.
10.7 No failure of Group or Executive to exercise any power reserved
to it or him, respectively, by this Agreement, or to insist upon
strict compliance by Executive or Group, respectively, with any
obligation or condition hereunder, and no custom or practice of the
parties at
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variance with the terms hereof, shall constitute a waiver of
Group's or Executive's right, as the case may be, to demand exact
compliance with any of the terms hereof. Waiver by either party of
any particular default by the other party hereto shall not affect
or impair the waiving party's rights with respect to any subsequent
default of the same, similar or different nature, nor shall any
delay, forbearance or omission of either party to exercise any
power or right arising out of any breach or default by the other
party of any of the terms, provisions or covenants hereof, affect
or impair its or his right to exercise the same, nor shall such
constitute a waiver by Group or Executive, as the case may be, of
any right hereunder, or the right to declare any subsequent breach
or default and to terminate this Agreement prior to the expiration
of its term.
10.8 As used herein, the term "Affiliate" shall be deemed to include
any corporation, joint venture, or other business enterprise,
whether incorporated or unincorporated, which Group directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with.
10.9 This is a New Hampshire contract and shall be construed under
and be governed in all respects by the law of the State of New
Hampshire.
10.10 Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment
or otherwise, nor shall the amount of any payment provided for
herein be reduced by any compensation earned by Executive as the
result of employment by another employer or by retirement benefits
after the date of termination or otherwise, except as specifically
set forth herein.
10.11 No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto. This
Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but
one agreement.
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IN WITNESS WHEREOF, Group has caused this Agreement to be executed and
delivered by its duly authorized officer and its corporate seal to be hereunto
affixed and Executive has hereunto set his hand and seal as of the day and year
first written above in duplicate originals.
EKCO GROUP, INC.
By /s/ Robert Stein
_______________________
/s/ Donato A. Denovellis
_________________________
Executive
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EXHIBIT A
DOCUMENTARY CREDIT NO.____________________
DATE OF ISSUE ______________ , 1994
ISSUING BANK: APPLICANT:
FLEET BANK OF MASSACHUSETTS, N.A. EKCO GROUP, INC.
(Address of Bank) 98 SPIT BROOK ROAD
________________________________ SUITE 102
________________________________ NASHUA, NH 03062
________________________________ ATTN:___________________________________
ADVISING BANK: BENEFICIARY:
(Name & Address of Executive)
________________________________________
________________________________________
________________________________________
ACCOUNT/CURRENCY:
UP TO USD ______________________________
UP TO __________________________________
US DOLLARS
DATE AND PLACE OF EXPIRY:
__________________________ , 1996 AT THE
ISSUING BANK
Dear Sir:
By the order of Ekco Group, Inc. we hereby open in your favor our Irrevocable
Credit for the account of Ekco Group, Inc. for a sum or sums not exceeding a
total of US $________________________ (____________________________ US DOLLARS)
available by your draft(s) at SIGHT on Fleet Bank of Massachusetts, N.A.,
_____________________________________________________________ , Massachusetts
________________ effective __________________________ , 1994 and expiring at
______________________________ , Massachusetts on _______________________ ,
1996.
Drafts must be accompanied by:
1. The original Letter of Credit and any amendments thereto, if any.
2. Your signed statement as follows: "I certify that the amount of my draft
represents funds due me under Section _______ (insert section number) of a
certain Employment Agreement dated as of November 6, 1991, as further amended
by amendments dated as of ___________________________________________________,
between myself and Ekco Group, Inc., demand for payment has been made, and
payment has not been received by me from Ekco Group, Inc. or any other source."
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Each draft must bear upon its face the clause "Drawn under Letter of Credit No.
___________________________ , dated ____________________________ of Fleet Bank
of Massachusetts, N.A."
It is a condition of this Letter of Credit that it shall become operative via
amendment issued by Fleet Bank of Massachusetts, N.A. upon notice of
cancellation of Letter of Credit dated August 28, 1987 issued by State Street
Bank and Trust Company.
We hereby agree with you that drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored if presented to the
above-mentioned drawee Bank on or before (expiration date)
_____________________ , 1996.
This Letter of Credit sets forth in full terms of our undertaking, and this
undertaking shall not in any way be modified, amended or limited by reference
to any document, instrument or agreement referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates,
except for the certificate and the sight draft referred to herein; and any such
reference shall not be deemed to incorporate herein by reference any document,
instrument or agreement, except for such certificate and such sight draft.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us, if by registered mail to Fleet Bank of Massachusetts,
N.A., __________________________________________________ , Massachusetts
___________________, Attention:__________________________________________ , or
if by courier to Fleet Bank of Massachusetts, N.A., _______________________
_____________________________ , Massachusetts _________________., Attention
______________________________________ , specifically referring to the number
of this Letter of Credit.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication 500 and engages us in
accordance with its terms.
_______________________________ _______________________________
Authorized Signature Authorized Signature
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EX-10.10
13
EMPLOYMENT AGMT FOR R. CORBIN
1
EXHIBIT 10.10
-------------
EMPLOYMENT AGREEMENT
BETWEEN
EKCO HOUSEWARES, INC.
AND
RICHARD CORBIN
AS OF
MAY 20, 1994
2
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 20ieth day of May, 1994, which shall be
effective as of the 20ieth day of May, 1994 (hereinafter the "effective date")
by and between Ekco Housewares, Inc., a Delaware corporation with a principal
place of business in Franklin Park, Illinois (hereinafter "EKCO") and Richard
Corbin of Wilton, Maine (hereinafter "Executive").
WHEREAS, EKCO desires to employ Executive and Executive desires to
accept such employment upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the parties covenant and agree as follows:
1. EMPLOYMENT
EKCO hereby employs Executive and Executive hereby accepts employment
as an executive of EKCO and to perform such executive and managerial services
as may be assigned to him by or under the authority of the Board of Directors
of EKCO (the "Board of Directors"), consistent with the status of an executive
employee. Executive agrees to use his best efforts, skills and abilities
faithfully to promote the interests of EKCO and to perform such services as may
be required of him by EKCO from time to time consistent with his status, to the
reasonable satisfaction of the Board of Directors. Without limiting the
generality of the foregoing, Executive agrees to serve as President of EKCO (if
and so long as he is elected to that office by the Board of Directors) and to
serve (without additional compensation) as a director, executive officer or
executive employee of such Affiliates of EKCO as EKCO may from time to time
reasonably request. Executive agrees to devote his full business time and
energies to the business and affairs of EKCO and to work exclusively for EKCO
(and such Affiliates) during the term of this Agreement, except as EKCO and
Executive may otherwise agree in writing from time to time; provided, however,
that nothing contained in this Section 1 shall be deemed to prevent or limit
the right of Executive to: (i) make passive investments in the securities of
any publicly-owned corporation in such amounts as are prescribed in Section
8.5, and (ii) make any other passive investments with respect to which
Executive is not obligated or required to, and does not in fact, devote any
substantial managerial efforts which interfere with Executive's fulfillment of
his duties hereunder. In the event the Board of Directors shall at any time
reasonably determine that Executive's attention to any investments is
interfering with Executive's fulfillment of his duties hereunder, the Board of
Directors shall give Executive written notice of such determination. If
Executive shall not within thirty (30) days of such notice (a) have ceased the
activities which were interfering with Executive's fulfillment of his duties
hereunder as so determined by the Board of Directors, and (b) covenanted not to
engage in such specific activities thereafter, then such failure by Executive
shall be deemed "good cause" within the definition of such term as set forth in
Section 7 below and EKCO shall be entitled to terminate Executive for good
cause as provided in Section 7 below.
1
3
2. TERM
The term of this Agreement and Executive's employment hereunder shall
commence on the effective date of this Agreement and continue until terminated
as hereinafter set forth.
3. PRINCIPAL LOCATION
Executive presently performs the duties of his office in Franklin
Park, Illinois and shall be obligated to take such trips outside of the
Franklin Park or metropolitan Chicago, Illinois area as shall be reasonably
necessary in connection with his duties, and EKCO will pay all reasonable costs
of travel and living expenses incurred in connection therewith. Executive
recognizes that his duties hereunder may require significant travel. Executive
agrees to relocate to any other location in the United States of America at
which EKCO or an Affiliate thereof has offices or operations, provided that
Executive's job at such new location involves compensation no less than his
existing compensation and comparable duties. In the event of any relocation,
EKCO will pay Executive all reasonable expenses incurred by Executive in
relocating to such new area.
4. COMPENSATION
4.1 Except as otherwise provided in Sections 5 and 6 hereof, for his
services hereunder Executive shall receive from EKCO the following
compensation:
4.1.1 Salary ("Salary") at the annual rate of $225,000 (the "Base Salary
Rate"), payable in equal installments in accordance with EKCO's pay
policy and in any event not less frequently than monthly, subject to
adjustment pursuant to the provisions of Section 4.2; plus such other
monetary compensation by way of bonus or otherwise, if any, as may be
determined from time to time by the Board of Directors in its sole
discretion. For fiscal year 1994 Executive shall participate in the
Management Incentive Plan ("MIP") attached hereto as Exhibit "A";
4.1.2 Such fringe benefits (including, without limitation, vacation time,
EKCO life, medical, dental and other insurance, retirement, pension,
profit-sharing and similar plans), the use of a company owned
automobile, all as EKCO may provide from time to time for its
executive employees; and
4.1.3 Such other compensation pursuant to such executive bonus plans,
restricted stock purchase plans, stock option plans or other stock
plans, available to employees of EKCO from time to time, as the Board
of Directors may in its sole discretion determine.
4.2 The Base Salary Rate shall be subject to increase from time to time as
determined by the Board of Directors in its sole discretion pursuant
to a review of Executive's performance by the Board of Directors,
which review shall be conducted at such time as the Board of Directors
shall determine, but in any event at least once during each twelve
(12) months
2
4
of the term of this Agreement. The Base Salary Rate as from time to
time increased is referred to herein as the "Adjusted Salary Rate."
5. REIMBURSEMENT OF EXPENSES
EKCO shall reimburse Executive for travel, entertainment and other
business expenses reasonably incurred by him in connection with the
business of EKCO and its Affiliates to the extent and in a manner
consistent with then company policy.
6. TERMINATION UPON DEATH OR DISABILITY
6.1 Executive's employment by EKCO shall terminate upon the death of
Executive, or if, by virtue of total and permanent disability,
Executive is unable to perform his duties hereunder.
6.2 In the event of such a termination of employment as a result of
Executive's death or total and permanent disability, all compensation
hereunder shall terminate and EKCO shall have no further obligations
hereunder except that EKCO shall pay to Executive (or his estate) the
following:
6.2.1 In the event of death, a lump-sum payment to Executive's estate, equal
to the Adjusted Salary Rate in effect at the date of such termination
of employment, payable no later than sixty (60) days after the date of
such termination. EKCO may purchase life insurance on Executive 's
life payable to his estate or other beneficiary, which life insurance
coverage shall be in addition to the amount provided for pursuant to
the provisions of Section 4.1.2 above (or any life insurance for which
Executive pays premiums), and to the extent benefits are paid pursuant
to such insurance, EKCO's commitment under this Section 6.2.1 shall be
satisfied; and
6.2.2 In the event of total and permanent disability, amounts in lieu of
Salary, at the Adjusted Salary Rate in effect at the date of such
termination of employment, payable in the manner specified in Section
4.1.1, for a period of twelve (12) months following the date of such
termination of employment at the rate of one-twelfth of such Adjusted
Salary Rate per month; and
6.2.3 Such portion of Executive's Salary, as has accrued by virtue of
Executive's employment during the period prior to termination and has
not yet been paid, together with any amounts for expense reimbursement
and similar items which were properly incurred in accordance with the
provisions of Section 5 prior to termination and have not yet been
paid.
6.3 Amounts to which Executive would otherwise be entitled under Section
6.2.2 above shall be reduced by the amount of any disability insurance
proceeds actually paid to or for the benefit of Executive (or his
estate or legal representatives) with respect to such twelve (12)
months following the date of termination under any disability policy
the premiums for which have been paid by EKCO or any Affiliate.
3
5
6.4 The determination that, by virtue of total and permanent disability,
Executive is unable to perform his duties hereunder shall be made by a
physician chosen by EKCO and reasonably satisfactory to Executive (or
his legal representative). The cost of such examination shall be
borne by EKCO. Without limiting the generality of the foregoing,
unless otherwise agreed, Executive shall be conclusively presumed to
be totally and permanently disabled hereunder if for reasons involving
mental or physical illness or physical injury he fails to perform such
duties for a period of ninety (90) consecutive calendar days or for
any periods aggregating three (3) months or more in any twelve (12)
month period. For purposes of this Section 6, Executive's date of
termination in the event of such total and permanent disability shall
be the earlier of the date of such physician's examination pursuant to
which such determination is made or the first business day after which
either such 90-day or such three-month period has expired.
7. TERMINATION BY EXECUTIVE OR EKCO
7.1 Executive's employment may be terminated at any time by Executive by
written notice of at least three (3) months to EKCO, which time period
may be waived by EKCO in its discretion. If such notice is given
within 180 days after a Change of Control (as defined in section 7.5
below) (a "Change in Control Notice"), then upon such termination by
Executive pursuant to this Section 7.1, Executive (or his estate)
shall be entitled to receive within thirty (30) days of such
termination (a) a lump-sum payment equal to the Adjusted Salary Rate
in effect on the date of such termination. For the purposes of this
Section 7.1, the term "termination occurs" shall mean the effective
date of termination of Executive. In addition, Executive shall
immediately upon termination pursuant to this Section 7.1 have the
unconditional, unencumbered and free right, title and interest in all
such number of shares of stock of EKCO which were granted, sold or
optioned to Executive by EKCO at any time prior to the effective date
of termination and which would have vested to Executive within one
year of the effective date of termination. In addition, in the event
of such a termination pursuant to a Change of Control Notice,
Executive shall continue to be entitled to the continuation of such
medical, dental, and life insurance coverage as he shall be receiving
pursuant to Section 4.1.2 as of the date of his Change of Control
Notice until the earlier of (a) his full time employment by a third
party or (b) one (1) year following such date of termination, but only
to the extent EKCO is able to continue the applicable coverage of
Executive under the terms of such EKCO policies or other policies
providing coverage for Executive. Notwithstanding any other provision
in this Section 7.1, in the event EKCO is unable to continue the
applicable coverage of Executive under the terms of the applicable
policies, then EKCO shall cooperate with Executive in any actions
which may be necessary to allow Executive, to the extent possible,
either (i) to buy such policy or (ii) to continue insurance coverage
with the insurer writing EKCO's applicable EKCO policy outside of
EKCO's EKCO plan. EKCO shall pay to Executive 140% of the cost of
such insurance coverage, but in no event more than twice the cost of
such coverage allocable to Executive under the EKCO or other policy
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covering him prior to termination. Executive shall be entitled as of
the date of termination to no other compensation under this Agreement
(including, without limitation, Sections 4 or 6), except as provided
in Section 7.4. Any compensation payable under this Section 7.1 shall
be paid notwithstanding Executive's total and permanent disability or
death occurring after termination of his employment hereunder. In the
event Executive dies or becomes totally and permanently disabled after
the date of such notice but prior to the date of termination of his
employment hereunder, the following provisions shall apply: (x) in
the event Executive dies during such period after having given any
notice of termination, or becomes totally and permanently disabled
after having given a notice other than a Change of Control Notice, the
provisions of Section 6 with respect to payment to Executive, and not
those of this Section 7.1, shall apply; (y) in the event Executive
becomes totally and permanently disabled after having given a Change
of Control Notice, the provisions of this Section 7.1 with respect to
payment to Executive shall apply, and not the provisions of Section 6.
7.2 Executive's employment may be terminated at any time by EKCO, with or
without good cause (as defined below), by written notice to Executive,
effective immediately unless otherwise stated in such notice.
7.2.1 In the event Executive's employment hereunder is terminated without
"good cause," then Executive (or his estate) shall be entitled to a
lump-sum payment payable within thirty (30) days of the date of
termination equal to (a) the Adjusted Salary Rate in effect at the
date of such notice, plus (b) a lump sum cash payment equal to i) the
bonus paid to Executive in the fiscal period immediately preceding the
fiscal period in which the termination occurs. In addition, Executive
shall immediately upon termination pursuant to this Section 7.1 have
the unconditional, unencumbered and free right, title and interest in
all such number of shares of stock of EKCO which were granted, sold or
optioned to Executive by EKCO at any time prior to the effective date
of termination and which would have vested to Executive within one
year of the effective date of termination. In addition, Executive
shall continue to be entitled to the continuation of such medical,
dental, and life insurance coverage as he shall be receiving pursuant
to Section 4.1.2 as of the date of notice of termination until the
earlier of (a) his full time employment by a third party or (b) one
(1) year following such date of termination, but only to the extent
EKCO is able to continue the applicable coverage of Executive under
the terms of such EKCO policies or other policies providing coverage
for Executive. Notwithstanding any other provision in this Section
7.2.1, in the event EKCO is unable to continue the applicable coverage
of Executive under the terms of the applicable policies, then EKCO
shall cooperate with Executive in any actions which may be necessary
to allow Executive, to the extent possible, either (i) to buy such
insurance policy or (ii) to continue insurance coverage with the
insurer writing EKCO's applicable EKCO policy outside of EKCO's EKCO
plan. EKCO shall pay to Executive 140% of the cost of such insurance
coverage, but in no event more than twice the cost of such coverage
allocable to Executive under the EKCO or other policy covering him
prior to termination. Such compensation shall be
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paid notwithstanding Executive's total and permanent disability or
death subsequent to such notice, but in the event Executive (or his
estate, legal representative, or beneficiaries) receives death or
disability benefits pursuant to Section 6, such benefits shall
constitute an offset for amounts due under this Section 7.2.1.
Executive shall be entitled as of the date of termination to no other
compensation under this Agreement (including, without limitation,
Section 4 or 6), except as provided in Section 7.4.
7.2.2 In the event EKCO shall terminate Executive's employment for good
cause, then Executive shall be entitled as of the date of termination
to no compensation under this Agreement (including, without
limitation, Section 4 or 6 above), except as provided in Section 7.4.
7.3 In the event of any termination pursuant to Section 7.1 or 7.2,
Executive shall be paid such portion of his Salary as has accrued by
virtue of Executive's employment during the period prior to
termination and has not yet been paid, together with any amounts for
expense reimbursement and similar items which have been properly
incurred in accordance with the provisions of Section 5 prior to
termination and have not yet been paid.
7.4 As used herein, a "Change of Control" shall be deemed to have occurred
(i) if any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended), is or
becomes the beneficial owner, directly or indirectly, of securities of
EKCO representing thirty percent (30%) or more of the combined voting
power of EKCO's then outstanding securities, or (ii) if during any
consecutive twelve (12) month period beginning on or after the date on
which this Agreement is executed individuals who at the beginning of
such period were directors of EKCO cease, for any reason, to
constitute at least a majority of the Board of Directors of EKCO; or
(iii) if a merger of, or consolidation involving, EKCO in which EKCO's
stock is converted into securities of another corporation or into cash
shall be consummated, or a plan of complete liquidation of EKCO
(whether or not in connection with a sale of all or substantially all
of EKCO's assets) shall be adopted and consummated, excluding in each
case a transaction solely for the purpose of reincorporating EKCO in a
different jurisdiction or recapitalizing EKCO's stock.
7.5 As used herein, "good cause" shall mean and be limited to a material
breach of any of Executive's obligations under Section 1 or 8 hereof,
or any action by Executive during the term of this Agreement involving
willful malfeasance or gross negligence on the part of Executive.
7.6 EKCO, in its sole discretion, may apply for and procure in its own
name (whether or not for its own benefit) policies of insurance
insuring the life of Executive in such amounts as EKCO may deem
advisable. Executive shall have no right, title, or interest in any
such policies of insurance, except to the extent his estate or other
persons are specifically named as beneficiaries thereof. Executive
agrees to submit to any medical or other examination and to execute
and deliver any
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applications or other instrument in writing, reasonably necessary to
effectuate such insurance.
7.7 In the event of termination pursuant to Section 7.1 or 7.2, the
payments to be made to Executive under Section 7.1 or Section 7.2.1
shall be subject to reduction as described below.
7.7.1. The following definitions shall apply for purposes of this
Section 7.7:
7.7.1.1 "Code" means the Internal Revenue Code of 1986, as amended.
7.7.1.2 "Executive Parachute Payments" means all payments to
Executive, from whatever source and whether or not pursuant to
this Employment Agreement, which if not reduced by this
Section 7.7 would be parachute payments.
7.7.1.3 "Safe Harbor Exclusions" means the smallest amount of
Executive Parachute Payments under Section 7.1 or Section
7.2.1 the exclusion of which would cause all remaining
Executive Parachute Payments no longer to be parachute
payments (as a consequence of all remaining Executive
Parachute Payments having aggregate present value less than
three times the base amount). For purposes of determining
Safe Harbor Exclusions, the last payments in time under
Section 7.1 or Section 7.2.1 shall be excluded first. If
there is no amount of Executive Parachute Payments the
exclusion of which would cause all remaining Executive
Parachute Payments no longer to be parachute payments, or if
there are no Executive Parachute Payments, the Safe Harbor
Exclusions shall be zero.
7.7.1.4 "Associated Income Tax," with respect to an amount of taxable
income, means the maximum marginal combined federal, state
and local income tax rate, including under Code section 4999
or successor provisions if and only if applicable, applied to
such taxable income. For purposes of this Section 7.7,
Associated Income Tax will be considered payable at the time
of receipt of the taxable income.
7.7.1.5 The following phrases have the meaning ascribed by Code
section 280G and successor provisions:
applicable Federal rate
base amount
parachute payment
present value
7.7.2. If (i) the present value of Executive Parachute Payments
reduced by Associated Income Tax is less than (ii) the
present value of Executive Parachute Payments other than Safe
Harbor Exclusions reduced by Associated Income Tax, then the
Safe Harbor Exclusions
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shall not be paid to Executive, notwithstanding Section 7.1 or
Section 7.2.1.
7.7.3. If either Executive or EKCO determines that, in accordance
with Section 7.7.2, the Safe Harbor Exclusions are not
payable to Executive, then the following procedure shall be
followed:
7.7.3.1 The party making such determination shall give written notice
(the "Exclusion Notice") to the other party not later than
ten days following the termination of employment, setting
forth in reasonable detail the calculations on which such
determination is based and specifying the Safe Harbor
Exclusions which are not payable.
7.7.3.2 In the event such Exclusion Notice is given by either party
and not by the other, and if such other party disputes the
substance of the Exclusion Notice, such other party shall give
written notice of such dispute (the "Dispute Notice") within
ten days after receipt of the Exclusion Notice, setting forth
in reasonable detail the basis for such dispute. If such
other party does not give a Dispute Notice within such ten
days, the substance of the Exclusion Notice shall be
conclusively deemed to be correct and final, and the Safe
Harbor Exclusions specified therein shall not be paid to
Executive.
7.7.3.3 If a Dispute Notice is given, or if Exclusion Notices are
given by both parties which differ as to the Safe Harbor
Exclusions identified therein, the parties shall negotiate in
good faith to resolve such dispute. In the absence of
resolution within 30 days after receipt of the Dispute
Notice or the later of the two Exclusion Notices, as the case
may be, either party may by written notice given to the other
party submit the matter for arbitration in accordance with
Section 9 except that, notwithstanding any provision of
Section 9 to the contrary, such arbitration shall be before a
single arbitrator to be agreed upon by the parties or, in the
absence of agreement as to the arbitrator within ten days
after receipt of such notice of submission to arbitration, to
be appointed by the American Arbitration Association or its
successor.
7.7.4 Nothing contained in this Section 7.7 shall be deemed at any
time to prevent or delay Executive from receiving any payment
which is provided for by other provisions hereof; provided
that, if Executive receives any payment which is later
determined in accordance with this Section 7.7 not to be
payable, the amount of such payment shall be deemed an
over-advance to Executive and not compensation to him and
shall be immediately repayable to EKCO with interest at the
applicable Federal rate.
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8. CONFIDENTIALITY AND NON-COMPETITION
8.1 Executive's agreements set forth in this Section 8 shall survive the
expiration or termination of this Agreement and the termination of his
employment with EKCO for any reason.
8.2 Executive acknowledges that irreparable injury would be caused to EKCO
by his breach of any of the provisions of this Section 8, and agrees
that in the event of any such breach, EKCO and any of its Affiliates,
in addition to such other rights and remedies as may exist in its
favor, may apply to any court of law or equity having jurisdiction to
enforce the specific performance of the provisions of this Section 8
and may apply for injunctive relief against any act which would
violate any such provisions. The covenants of Executive contained in
this Section 8 shall be construed as independent of all other
provisions contained in this Agreement and shall be enforceable,
notwithstanding the existence of any claim or cause of action of
Executive against EKCO or any of its Affiliates, whether predicated on
this Agreement or otherwise.
8.3 Executive recognizes that he now has knowledge of and/or may hereafter
gain knowledge of, confidential information, trade secrets,
confidential processes, confidential patentable or unpatentable
inventions or confidential "know how", including, without limitation,
techniques, formulae, designs, developments, projects, technical
information and manufacturing process and distribution methods,
relating to, or concerned with the business of EKCO and its Affiliates
during the term of this Agreement and their respective suppliers,
customers, stockholders, licensors, licensees, and other persons or
entities with which EKCO or its Affiliates has, has had, or may in the
future have any commercial, scientific or technical relationship, and
which information has not previously been made public or thereafter
made public. During the term of this Agreement and at all times
following the termination of Executive's employment for any reason,
Executive will not, directly or indirectly, divulge, furnish or make
accessible to anyone (other than as required in the regular course of
his employment by EKCO or with the consent of the Board of Directors
of EKCO) such information. As used in the first sentence hereof, the
phrase "made public" shall apply to information (a) within the domain
of the general public; (b) generally known within the industry or
industries in which EKCO or its Affiliates is involved; or (c) is
independently developed by Executive without utilization of
confidential information gained while in the employ of EKCO; provided
that no information shall be deemed to have been made public if it is
within the domain of the general public or generally known within the
industry or industries in which EKCO or its Affiliates is involved by
virtue of the disclosure of such information by Executive in violation
of this Agreement. All documents, records, apparatus, equipment and
other physical property furnished to Executive by EKCO or any
Affiliate of EKCO or produced by Executive or others in connection
with his services to EKCO or any such Affiliate shall be and remain
the sole property of EKCO. Executive will return and deliver such
property to EKCO as and when requested by EKCO. Copies of documents
and records may be kept, but shall be kept completely confidential to
the same
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extent as other confidential information of EKCO. Executive shall
return and deliver all such property upon termination of his
employment for any reason, and Executive will not take with him any
such property or any reproduction of such property upon such
termination.
8.4 Any work or research or the results thereof, made or developed by
Executive, alone or in conjunction with others during the term of his
employment, including but without limitation, any designs, patents,
inventions, processes, know-how or formulae created, invented or
conceived during the period of his employment by EKCO, whether during
or out of the usual hours of work, which arise out of or are related
to the business, research, or development work or field of operation
of EKCO, or any of its Affiliates, shall to the extent of Executive's
interest therein be the sole and exclusive property of EKCO, shall be
disclosed in writing to EKCO and to no other person, unless so
directed in writing by the Board of Directors, and Executive hereby
assigns to EKCO all and any rights which he has or may acquire in the
same. To this end, both during the period of Executive's employment
and at all times thereafter, Executive agrees to execute all necessary
papers, instruments and documents properly required to effect such
assignment to EKCO or its nominee, to make application through EKCO's
patent attorney or general counsel at the expense of EKCO, for such
United States and foreign patents as may be specified from time to
time by EKCO on inventions, processes, or formulae which are or become
the property of EKCO hereunder, and to execute assignments upon EKCO's
request, for Executive's entire interest in all such applications to
EKCO or to its nominee without compensation (other than his usual
compensation as an employee of EKCO) and Executive agrees to give EKCO
and its patent attorney or general counsel all reasonable assistance
in preparing such applications, descriptions, and illustrations of
each such invention, process, or formula and in connection with
proceedings relating thereto or to such other applications or patents
resulting therefrom; and further agrees to execute all lawful papers
considered necessary by EKCO and do all that EKCO reasonably requests
in order to protect EKCO's rights in said inventions, processes, and
formulae or to obtain patents thereon, including, without limitation,
continuations, reissues, renewals, and extensions. It is further
agreed that Executive's obligations specified hereunder shall not
expire with the termination of his employment, but EKCO agrees to pay
Executive a reasonable amount for any time that Executive spends in
such work at EKCO's request after the termination of his employment
hereunder and agrees to reimburse Executive for expenses reasonably or
necessarily incurred in connection with such work.
8.5 In consideration of his continued employment by EKCO, and the other
benefits accruing to him hereunder, and subject to the fulfillment by
EKCO of its obligations to Executive hereunder, Executive agrees that
during the term hereof and for a period of twelve months following the
date of termination of Executive's employment pursuant to Section 6 or
7 (such period of employment and twelve month period being referred to
in this Agreement as the "Non-Competition Period"), he will not engage
or participate, directly or indirectly, within the United States of
America
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or Canada either as principal, agent, employee, employer, consultant,
stockholder, partner or in any other individual or representative
capacity whatever, in the conduct or management of, or own any stock
or other proprietary interest in, or debt of, any business which shall
be competitive with any business which is or was conducted by EKCO or
any Affiliate of EKCO, while Executive was an employee of EKCO under
this Agreement, unless he shall have obtained the prior written
consent of the Board of Directors, and which consent shall make
express reference to this Agreement. Notwithstanding any other
provision in this Section 8, Executive shall be free without such
consent to make investments, directly or indirectly, in the securities
of any publicly-owned corporation if his ownership thereof is limited
to not more than three percent (3%) of the issued and outstanding
securities of any class of securities of such corporation. Executive
acknowledges that his skills and experience are such that he can
anticipate finding employment at an executive level in a wide variety
of industries and represents and agrees that the restrictions imposed
by this Section 8 on employment are necessary for the protection of
the legitimate interests and competitive position of EKCO and do not
impose undue hardships on Executive.
8.6 During the Non-Competition Period, Executive will not, directly or
indirectly, solicit any officer, director, executive, employee or
consultant of EKCO or any Affiliate of EKCO to leave such employment
or terminate such position, nor will he directly or indirectly employ,
hire, retain or cause to be employed, hired, or retained (other than
by EKCO or, with EKCO's consent, its Affiliates), or establish a
business with, any person who within one year prior to such
employment, retainer or establishment was employed or retained by EKCO
or its Affiliates in any of the above-mentioned capacities, provided,
however, that this Section 8.6 shall not prohibit Executive directly
or indirectly from employing, hiring, retaining or causing to be
employed, hired, or retained, any person who the Employee establishes
was dismissed by EKCO or its Affiliates without cause or who has
terminated due to a Change of Control.
9. ARBITRATION
Except with respect to the provisions of Section 8, any dispute or
disagreement arising under or relating to the provisions of this
Agreement, or any breach thereof, including, without limitation,
relating to Section 1 hereof or to whether a termination of
Executive's employment was with "good cause", shall be resolved by
binding arbitration in accordance with the Commercial Rules of the
American Arbitration Association or its successor (except as set forth
herein), and judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof.
The decision of the arbitrators shall be made by majority vote and be
final and absolute. In any such arbitration, one arbitrator shall be
selected by EKCO and one arbitrator shall be selected by Executive.
Each party shall have thirty (30) days from the receipt by one party
of a notice of the other party of submission to arbitration to choose
an arbitrator. A third arbitrator shall be selected by the two so
chosen within ten (10)
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days of the selection of the most recently selected of the two
arbitrators so chosen. Failing action within any of such periods by
any party or the arbitrators, any unappointed arbitrator or
arbitrators shall be appointed by the American Arbitration Association
(or its successor) upon application of any party or arbitrator. The
parties shall promptly furnish to the arbitrators such information as
the arbitrators may reasonably request. The expenses of any
arbitration proceeding (not including the other party's attorney's
fees and expenses) shall be paid by EKCO if the Executive recovers any
amount or otherwise obtains relief in such proceeding and by the
Executive if the Executive initiated arbitration and there is a
specific finding that the Executive's claim was frivolous. In all
other circumstances, the expenses of such arbitration proceeding (not
including attorney's fees and expenses) shall be divided equally.
Arbitration shall take place in Chicago, Illinois, or such other place
on which the parties shall agree.
10. GENERAL
10.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
10.2 This Agreement shall be binding upon and shall inure to the benefit of
EKCO and its successors and assigns either by merger, operation of
law, consolidation, assignment, purchase or otherwise of a controlling
interest in the business of EKCO and Executive, his heirs, executors,
administrators, legal representatives, and permitted assigns. EKCO
agrees that a successor in interest by merger, operation of law,
consolidation, assignment, purchase or otherwise of a controlling
interest in the business of EKCO will be informed prior to such event
of the existence of this Agreement. EKCO will require any successor
(whether direct or indirect, by purchase, merger, operation of law,
consolidation, assignment or otherwise of a controlling interest in
the business, stock or other assets of EKCO) to assume expressly and
agree to perform this Agreement. Failure of EKCO to obtain such
assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
Executive to such compensation and benefits in the same amount and on
the same terms as he would be entitled hereunder in the event of a
termination without "good cause", except that, for the purposes of
implementation hereof, the date on which any such succession becomes
effective shall be deemed to be the date on which Executive becomes
entitled to such compensation and benefits from EKCO. As used in this
Agreement, "EKCO" shall mean EKCO as hereinbefore defined and any
successor as aforesaid.
10.3 The parties intend this Agreement to be enforced as written. However,
(i) if any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a duly authorized court of
competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than
those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this
Agreement shall be valid and be enforceable to the fullest extent
permitted by
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law; and (ii) if any provision, or any part thereof, is held to be
unenforceable because of the duration of such provision or the area
covered thereby, EKCO and Executive agree that the court making such
determination shall have the power to reduce the duration and/or area
of such provision, and/or to delete specific words and phrases
("blue-pencilling") and in its reduced or blue-pencilled form such
provision shall then be enforceable and shall be enforced.
10.4 All notices and communications required or permitted to be given
hereunder shall be duly given by delivering the same in hand or by
depositing such notice or communication in the mail, sent by certified
or registered mail, return receipt requested, postage prepaid, as
follows:
If sent to EKCO: EKCO Housewares, Inc.
9234 West Belmont Ave.
Franklin Park, Ill. 60131
Attention: Secretary
With a copy to: EKCO Group, Inc.
98 Spit Brook Road
Nashua, N.H. 03062
Attention: General Counsel
If sent to Executive:
Richard Corbin
c/o EKCO Housewares, Inc.
9234 West Belmont Avenue
Franklin Park, Ill. 60131
or such other address as either party furnishes to the other
by like notice.
10.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject
matter hereof and there are no promises, representations,
conditions, provisions or terms related thereto other than
those set forth in this Agreement. This Agreement supersedes
all previous understandings, agreements and representations
between EKCO and Executive regarding Executive's employment by
EKCO, written or oral.
10.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect
the meaning or construction of any provision hereof.
10.7 No failure of EKCO or Executive to exercise any power reserved
to it or him, respectively, by this Agreement, or to insist
upon strict compliance by Executive or EKCO, respectively,
with any obligation or condition hereunder, and no custom or
practice of the parties at variance with the terms hereof,
shall constitute a waiver of EKCO's or
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Executive's right, as the case may be, to demand exact
compliance with any of the terms hereof. Waiver by either
party of any particular default by the other party hereto
shall not affect or impair the waiving party's rights with
respect to any subsequent default of the same, similar or
different nature, nor shall any delay, forbearance or omission
of either party to exercise any power or right arising out of
any breach or default by the other party of any of the terms,
provisions or covenants hereof, affect or impair its or his
right to exercise the same, nor shall such constitute a waiver
by EKCO or Executive, as the case may be, of any right
hereunder, or the right to declare any subsequent breach or
default and to terminate this Agreement prior to the
expiration of its term.
10.8 As used herein, the term "Affiliate" shall be deemed to
include any corporation, joint venture, or other business
enterprise, whether incorporated or unincorporated, which EKCO
directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with.
10.9 This is an Illinois contract and shall be construed under and
be governed in all respects by the law of the State of
Illinois.
10.10 No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto.
This Agreement may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall
constitute but one agreement.
IN WITNESS WHEREOF, EKCO has caused this Agreement to be executed and
delivered by its duly authorized officer and its corporate seal to be hereunto
affixed and Executive has hereunto set his hand and seal as of the day and year
first written above in duplicate originals.
EKCO HOUSEWARES, INC.
By/S/ ROBERT STEIN
--------------------------
/S/ RICHARD J. CORBIN
--------------------------
Executive
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EX-10.11
14
EMPLOYMENT AGMT FOR R. FOX
1
EXHIBIT 10.11
-------------
EMPLOYMENT AGREEMENT
AMONG
EKCO GROUP, INC.,
FREM CORPORATION
AND
RONALD N. FOX
AS OF
FEBRUARY 12, 1995
2
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 12th day of February, 1995 which shall be
effective as of the 12th day of February, 1995 (hereinafter the "effective
date") by and between Ekco Group, Inc., a Delaware corporation with a principal
place of business in Nashua, New Hampshire (hereinafter "Group"), Frem
Corporation, a Massachusetts corporation with a principal place of business in
Worcester, Massachusetts (hereinafter "Frem"), and Ronald N. Fox, of 100
Commons Drive #7, Shrewsbury, Massachusetts 01545 (hereinafter "Executive").
WHEREAS, a certain employment agreement (the "Group Agreement") was
entered into between Group and Executive as of April 19, 1994; and
WHEREAS, at the request of Group, Executive has been transferred to
Frem and has agreed to relinquish his position as Senior Vice President,
Operations, of Group effective February 12, 1995 and assume the position of
Senior Vice President, Operations, of Frem effective the same date; and
WHEREAS, Frem desires to employ Executive, and Executive desires to be
employed by Frem; and
WHEREAS, Group is desirous of guaranteeing the performance of certain
of Frem's obligations hereunder; and
WHEREAS, Group, Frem and Executive desire to amend and restate the
Group Agreement as hereinafter set forth (the "Agreement") .
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the parties covenant and agree as follows:
1. EMPLOYMENT
Frem hereby employs Executive and Executive hereby accepts
employment as an executive employee of Frem to perform such executive
and managerial services as may be assigned to him by or under the
authority of the Board of Directors of Frem (the "Frem Board of
Directors"), consistent with such status as an executive employee.
Executive agrees to use his best efforts, skills and abilities
faithfully to promote the interests of Frem and to perform such
services as may be required of him by Frem from time to time consistent
with his status, to the reasonable satisfaction of the Frem Board of
Directors. Without limiting the generality of the foregoing, Executive
agrees to serve as Senior Vice President, Operations (if and so long as
he is elected to that office by the Frem Board of Directors) and to
serve (without additional compensation) as a director, executive
officer or executive employee of such Affiliates of Frem and/or Group
as Frem or Group may from time to time reasonably request. Executive
agrees to work exclusively for Frem and/or Group (and such Affiliates)
as his full-time employment during
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the term of this Agreement, except as Frem and/or Group and Executive
may otherwise agree in writing from time to time.
2. TERM
The term of this Agreement and Executive's employment hereunder shall
commence on the effective date of this Agreement and continue until
terminated as hereinafter set forth.
3. PRINCIPAL LOCATION
Executive presently performs the duties of his office generally in,
Worcester, Massachusetts; provided, however, that he shall be
obligated to take such trips outside of such area as shall be
reasonably necessary in connection with his duties and Group shall pay
all reasonable costs of travel and living expenses incurred in
connection therewith. Executive, subject to his rights under Section
7.2.3, agrees to relocate from his present residence in Nashua, New
Hampshire to any location (other than Nashua, New Hampshire) in the
United States of America where Frem, Group and/or their Affiliates have
offices or operations, provided that Executive's job at such new
location involves compensation no less than his existing compensation
and comparable duties. In the event of any such relocation, Frem shall
pay Executive all reasonable expenses incurred by Executive in
relocating to such new area.
4. COMPENSATION
4.1 Except as otherwise provided in Sections 5 and 6 hereof, for his
services hereunder Executive shall receive from Group the following
compensation:
4.1.1 Salary ("Salary") at the annual rate of $190,000 (the "Base Salary
Rate"), payable in equal installments in accordance with Frem's pay
policy and in any event not less frequently than monthly, subject to
adjustment pursuant to the provisions of Section 4.2;
4.1.2 Such other monetary compensation by way of bonus or otherwise, if any,
as may be determined from time to time by the Board of Directors
of Group (the "Group Board or Directors") in its sole discretion;
4.1.3 Such fringe benefits (including, without limitation, vacation time,
group life, split-dollar life, medical, dental and other insurance,
retirement, including, but not limited to, Group's Supplemental
Retirement Plan, pension, profit-sharing and similar plans) shall
continue to be provided by Group as Group may provide from time to time
for its executive employees. Group shall in any event, whether or not
such coverage is provided for other executive employees, provide
Executive group life or other life insurance at its expense with a
death benefit equal to at least twice Executive's Adjusted Salary Rate
(as defined in Section 4.2), in addition to any life insurance payable
to
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Executive or his beneficiaries under Section 6.2.1 below or any life
insurance for which Executive may pay premiums; and
4.1.4 Such other compensation pursuant to such executive bonus plans,
restricted stock purchase plans, stock option plans or other stock
plans, available to employees of Group from time to time, as the Group
Board of Directors may in its sole discretion determine.
4.2 The Base Salary Rate shall be subject to increase from time to time as
determined by the Frem Board of Directors in its sole discretion
pursuant to a review of Executive's performance by the Frem Board of
Directors, which review shall be conducted at such time as the Frem
Board of Directors shall determine, but in any event at least once
during each twelve (12) months of the term of this Agreement. The Base
Salary Rate as from time to time increased is referred to herein as the
"Adjusted Salary Rate."
5. REIMBURSEMENT OF EXPENSES
Frem shall reimburse Executive for travel, entertainment and other
business expenses reasonably incurred by him in connection with the
business of Frem, Group and/or their Affiliates to the extent and in a
manner consistent with then company policy. Without limiting the
generality of the foregoing, Frem shall furnish Executive with an
automobile owned or leased by Frem, comparable in value to the
automobile Executive is provided by Group as of the effective date
hereof, together with fuel and maintenance, for use by Executive
primarily in connection with the performance by Executive of his duties
under this Agreement and primarily for the benefit of Frem. Unless
Executive otherwise agrees, such automobile shall be exchanged by Frem
for a new automobile no less frequently than once every two years
during the term of employment of Executive pursuant to this Agreement
and any renewal hereof.
6. TERMINATION UPON DEATH OR DISABILITY
6.1 This Agreement shall terminate upon the death of Executive. In such
event, (i) all compensation hereunder shall terminate, (ii)
Executive's estate shall immediately have the unconditional,
unencumbered and free right, title and interest in all shares of stock
of Group which were granted, sold or optioned (subject to Executive's
estate's obligation to pay the option exercise price to the extent
theretofore not paid) to Executive by Group at any time prior to the
effective date of termination as if all restrictions had lapsed and all
events necessary to vest in the Executive such rights, including the
lapsing of time, had occurred, and (iii) Frem shall pay to Executive's
estate the following, in addition to the amounts in Section 7.4 (i) and
(ii), to which Executive shall also be entitled: (a) a lump-sum
payment equal to the Adjusted Salary Rate in effect at the date of such
termination of employment, payable no later than sixty (60) days after
the date of such termination; and (b) such portion of Executive's
Salary, as has accrued
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by virtue of Executive's employment during the period prior to
termination and has not yet been paid, together with any amounts for
expense reimbursement and similar items which were properly incurred in
accordance with the provisions of Section 5 prior to termination and
have not yet been paid. To secure the payment of subsection (a) above,
Frem may maintain life insurance on Executive's life payable to
Executive's estate or other beneficiary, which life insurance coverage
shall be in addition to the amount provided for pursuant to the
provisions of Section 4.1.3 above (or any life insurance for which
Executive pays premiums).
6.2 If, by virtue of Executive's total and permanent disability (more fully
described in Section 6.2.4 below), Executive is unable to perform
his duties hereunder, this Agreement shall terminate in accordance with
the provisions of Section 6.2.3 below. Termination of this Agreement is
not intended, and shall not be deemed, to terminate Executive's status
as an employee of Frem or his benefits as provided by Group. Such
status shall be consistent with Frem's policy of employment and Group's
policy with respect to benefits in effect at the time of the
determination of Executive's permanent and total disability, and the
benefits provided in this Section 6.2 shall be additive to the benefits
provided in Section 4.1.3 which Group provides from time to time for its
executive employees.
6.2.1 In the event of Executive's permanent and total disability, (i)
Executive (or Executive's legal representative) shall immediately have
the unconditional, unencumbered and free right, title and interest in
all shares of stock of Group which were granted, sold or optioned
(subject to Executive's (or Executive's legal representative's)
obligation to pay the option exercise price to the extent theretofore
not paid) to Executive by Group at any time prior to the effective date
of disability as if all restrictions had lapsed and all events necessary
to vest in the Executive such rights, including the lapsing of time, had
occurred, and (ii) Frem shall pay to Executive (or his legal
representative) (a) amounts in lieu of Salary, at the Adjusted Salary
Rate in effect at the effective date of permanent and total disability,
payable in the manner specified in Section 4.1.1, for a period of
twenty-four (24) months following the effective date of such permanent
and total disability (the "Twenty-Four Month Period") at the rate of
one-twenty-fourth of such Adjusted Salary Rate per month; and (b) such
portion of Executive's Salary, as has accrued by virtue of Executive's
employment during the period prior to the Twenty-Four Month Period and
has not yet been paid, together with any amounts for expense
reimbursement and similar items which were properly incurred in
accordance with the provisions of Section 5 prior to the Twenty-Four
Month Period and have not yet been paid.
6.2.2 Amounts to which Executive would otherwise be entitled under Section
6.2.1 above shall not be required to be reduced by the amount of any
disability insurance proceeds actually paid to or for the benefit of
Executive with respect to such Twenty-Four Month Period under any
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disability policy the premiums for which have been paid by Frem, Group
or any Affiliate. During such Twenty-Four Month Period, Group shall
maintain at Group's sole expense the life insurance policies referred to
in the second sentence of Section 4.1.3 and in Section 6.1 and, in the
event of Executive's death during the Twenty-Four Month Period, shall
pay the death benefit provided for in Section 4.1.3 in addition to the
life insurance benefits payable to the beneficiaries of the policies
referred to in Section 6.1 which shall be payable in the event of
Executive's death during such Twenty-Four Month Period. In addition,
during such Twenty-Four Month Period, Group shall continue to provide
medical and dental coverage as Executive shall have been receiving as of
the time of the determination of Executive's permanent and total
disability. If and to the extent such continuation is not possible,
Group shall cooperate with Executive to enable Executive, if possible,
either to buy the applicable policy or to continue coverage, to the same
extent as provided in Section 7.1 in the case of a termination
thereunder.
6.2.3 Upon the expiration of the Twenty-Four Month Period, this Agreement
shall terminate.
6.2.4 The determination that, by virtue of total and permanent disability,
Executive is unable to perform his duties hereunder shall be made
by a physician chosen by Group and reasonably satisfactory to Executive
(or his legal representative). The cost of such examination shall be
borne by Group. Without limiting the generality of the foregoing,
unless otherwise agreed, Executive shall be conclusively presumed to be
totally and permanently disabled hereunder if for reasons involving
mental or physical illness or physical injury he fails to perform such
duties for a period of one hundred and eighty (180) consecutive calendar
days or for any periods aggregating six (6) months or more in any twelve
(12) month period. For purposes of this Section 6.2, the effective date
of Executive's total and permanent disability shall be the earlier of
the date of such physician's examination pursuant to which such
determination is made or the first business day after which either such
180-day or such six- month period has expired.
7. TERMINATION BY EXECUTIVE OR FREM; CHANGE OF CONTROL OF GROUP; AND
CONSTRUCTIVE TERMINATION
7.1 Executive's employment may be terminated at any time by Executive by
written notice of at least three (3) months to Frem, which time period
may be waived, in whole or in part, by Frem in its discretion. If such
notice is given after six (6) months of but within twenty four (24)
months of a Change of Control of Group (as defined in Section 7.5) (a
"Change of Control Notice"), and unless such Change of Control shall
have been approved by a resolution adopted by Group's Board of Directors
with at least two-thirds (2/3) of the then serving Group directors who
are Group directors as of the date hereof voting in favor, then upon
such termination by Executive pursuant to this paragraph of this Section
7.1, Executive (or his estate, if he dies prior to receiving the
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payments hereinafter set forth in this sentence) shall be entitled to
receive within thirty (30) days of such termination from Frem (a) a
lump-sum payment equal to three (3) times the Adjusted Salary Rate in
effect on the date of such termination, plus (b) a lump sum cash payment
equal to (i) three (3) times the maximum payable to Executive under all
compensation bonus plans and arrangements identified in Sections 4.1.2
and 4.1.4 for the fiscal year in which the termination occurs, plus (ii)
an amount equal to three (3) times the value of the securities, cash or
other property which shall have been allocated to the Executive's
account in the Ekco Group, Inc. Employee Stock Ownership Plan (the
"ESOP") for the fiscal year preceding the fiscal year in which the
termination occurs (which shall be in addition to any distribution from
the ESOP to which he is entitled thereunder).
For the purposes of this Section 7.1, the time when a termination occurs
shall be the effective date of termination of Executive.
In addition, in the event of such a termination pursuant to a Change of
Control Notice, Group shall provide, and Executive shall continue to be
entitled to receive, such medical, dental and life insurance coverage as
he shall have been receiving pursuant to Section 4.1.3 as of the date of
his Change of Control Notice until the earlier of (x) his full-time
employment by a third party who offers Executive at least comparable
benefits in the particular benefit category or (y) three (3) years
following such date of termination, but only to the extent Group is able
to continue the applicable coverage of Executive under the terms of such
group policies or other policies providing coverage for Executive.
Notwithstanding any other provision in this Section 7.1, in the event
Group is unable to continue the applicable coverage of Executive under
the terms of the applicable policies, then Group shall cooperate with
Executive in any actions which may be necessary to allow Executive, to
the extent possible, either (i) to buy such policy or (ii) to continue
insurance coverage with the insurer writing Group's applicable group
policy outside of Group's group plan. Group shall pay to Executive 140%
of the cost of such insurance coverage, but in no event more than twice
the cost of such coverage allocable to Executive under the group or
other policy covering him prior to termination. In the event of
termination as provided in this Section 7.1 Executive shall be entitled
as of the date of termination or thereafter to no other compensation
under this Agreement (including, without limitation, Section 4 or
Section 6), except as provided in this Section 7.1, Section 7.4 and
Section 7.8. Any compensation payable under this Section 7.1 shall be
paid notwithstanding Executive's total and permanent disability or death
occurring after termination of his employment hereunder. In the event
Executive dies or becomes totally and permanently disabled after the
date of any such notice but prior to the date of termination of his
employment under this Section 7.1, the provisions of this Section 7.1
and not the provisions of Section 6 shall apply.
7.2 Executive's employment may be terminated at any time by Frem, with or
without good cause (as defined in Section 7.6), by written notice to
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Executive, effective immediately unless otherwise stated in such notice.
7.2.1 In the event Executive's employment hereunder is terminated by Frem
without "good cause" prior to a Change of Control, then Executive
(or his estate) shall be entitled to a lump-sum payment payable by Frem
within thirty (30) days of the date of termination equal to (a) two (2)
times the Adjusted Salary Rate in effect at the date of such notice,
plus (b) a lump sum cash payment equal to (i) two (2) times the maximum
payable to Executive under all compensation bonus plans and arrangements
identified in Sections 4.1.2 and 4.1.4 for the fiscal year in which the
termination occurs, plus (ii) an amount equal to two (2) times the value
of the securities, cash or other property which shall have been
allocated to Executive's account in the ESOP for the fiscal year
preceding the fiscal year in which the termination occurs (which shall
be in addition to any distribution from the ESOP to which he is entitled
thereunder). In addition, Executive shall immediately upon termination
pursuant to this Section 7.2.1 have the unconditional, unencumbered and
free right, title and interest in all shares of stock of Group which
were granted, sold or optioned (subject to his obligation to pay the
option exercise price to the extent theretofore not paid) to Executive
by Group at any time prior to the effective date of termination as if
all restrictions had lapsed and all events necessary to vest in the
Executive such rights, including the lapsing of time, had occurred. In
addition, Executive shall continue to be entitled to the continuation of
such medical, dental, and life insurance coverage as he shall be
receiving pursuant to Section 4.1.3 as of the date of notice of
termination until the earlier of (x) his full time employment by a third
party who offers Executive comparable benefits or (y) two (2) years
following such date of termination, but only to the extent Group is able
to continue the applicable coverage of Executive under the terms of such
group policies or other policies providing coverage for Executive.
Notwithstanding any other provision in this 7.2.1, in the event Group is
unable to continue the applicable coverage of Executive under the terms
of the applicable policies, then Group shall cooperate with Executive in
any actions which may be necessary to allow Executive, to the extent
possible, either (i) to buy such insurance policy or (ii) to continue
insurance coverage with the insurer writing Group's applicable group
policy outside of Group's group plan. Group shall pay to Executive 140%
of the cost of such insurance coverage, but in no event more than twice
the cost of such coverage allocable to Executive under the group or
other policy covering him prior to termination. Such compensation shall
be paid notwithstanding Executive's total and permanent disability or
death subsequent to such notice but, in the event Executive (or his
estate, legal representative or beneficiaries) receives disability
benefits pursuant to Section 6, such benefits shall constitute an offset
for amounts due under this Section 7.2.1. In the case of termination of
his employment under this Section 7.2.1, Executive shall be entitled as
of the date of termination to no other compensation under this Agreement
(including, without limitation, Section 4 or Section 6), except as
provided in Section 7.4.
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7.2.2 In the event Frem shall terminate Executive's employment for good
cause, then Executive shall be entitled as of the date of termination to
no compensation under this Agreement (including, without limitation,
Section 4 or Section 6 above), except as provided in Section 7.4.
7.2.3 Immediately upon a Change of Control, and without regard to whether or
not Executive's employment is terminated or a Constructive Termination
occurs at such time or thereafter, Executive shall immediately have the
unconditional, unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or optioned (subject
to his obligation to pay the option exercise price to the extent
theretofore not paid) to Executive by Group at any time prior to the
Change of Control as if all restrictions had lapsed and all events
necessary to vest in the Executive such rights, including the lapsing of
time, had occurred.
Following a Change of Control and upon an event of "Constructive
Termination" (as defined in Section 7.2.4) or termination of Executive's
employment without good cause, Executive shall receive within ten (10)
days of such event (a) a lump-sum payment equal to three (3) times
the Adjusted Salary Rate in effect on the date of such Constructive
Termination, plus (b) a lump sum cash payment equal to (i) three (3)
times the maximum payable to Executive under all compensation bonus
plans and arrangements identified in Sections 4.1.2 and 4.1.4 for the
fiscal year in which the Constructive Termination occurs, plus (ii) an
amount equal to three (3) times the value of the securities, cash or
other property which shall have been allocated to the Executive's
account in the ESOP for the fiscal year preceding the fiscal year in
which the Constructive Termination occurs. For the purposes of this
Section 7.2.3, the time when a Constructive Termination occurs shall be
the day any event occurs which is included in the definition of
Constructive Termination in Section 7.2.4. In addition, Executive shall
immediately upon Constructive Termination pursuant to this Section 7.2.3
have the unconditional, unencumbered and free right, title and interest
in all shares of stock of Group which were granted, sold or optioned
(subject to his obligation to pay the option exercise price to the
extent theretofore not paid) to Executive by Group at any time prior to
the effective date of Constructive Termination as if all restrictions
had lapsed and all events necessary to vest in the Executive such
rights, including the lapsing of time, had occurred.
7.2.4 As used herein, "Constructive Termination" shall be deemed to have
occurred if and when (i) Executive's base salary is decreased below the
level in effect on the date of the last amendment of this Agreement, or
the bonus percentage applicable to Executive's participation in any
compensation bonus plan or arrangement is reduced, without the
Executive's consent, provided, however, that nothing herein shall be
construed to guarantee the Executive's bonus awards if performance is
below applicable targets, or (ii) the importance of the Executive's job
responsibilities is reduced without the Executive's consent or, (iii) a
proposal is made to relocate Executive to a location other than Nashua,
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New Hampshire, Worcester, Massachusetts, the greater Boston,
Massachusetts metropolitan area or other location within
reasonable commuting distance to Worcester, Massachusetts without his
consent.
7.3 In order to assure Executive the prompt payment of amounts due him under
Section 6 or 7 hereof, Group agrees promptly to secure and to keep in
place an irrevocable letter of credit from Fleet Bank of Massachusetts,
N.A. or another bank reasonably acceptable to Executive in the initial
amount of four (4)times Executive's Base Salary, in substantially the
form of Exhibit A, or upon other terms reasonably acceptable to
Executive, which shall allow Executive (or his legal representative) to
draw down amounts due him under Section 6 or 7 of this Agreement upon
certification by Executive (or his legal representative) that payments
are due him pursuant to this Agreement. The amount of the letter of
credit shall be adjusted at least annually to reflect changes in
Executive's salary, so that it shall at all times be at least four (4)
times the Adjusted Salary Rate. In addition, the letter of credit (or a
separate letter of credit) shall include an amount which Group, in its
reasonable judgment, determines is necessary to secure Group's
obligations under any stock appreciation right plan or other
equity-linked plan (other than the ESOP), provided, however, that such
amount need not include any amount with respect to stock options,
restricted stock subject to repurchase rights, or any equity plan giving
Executive ownership of shares. An initial determination of the amount
necessary to secure such equity-linked obligations shall be made on the
date of grant to Executive of such equity-linked right, and the amount
shall subsequently be adjusted at least annually to reflect the value on
such date of such rights. A failure by Group to keep such letter(s) of
credit in effect, or to renew the same or to make alternate arrangements
to secure its obligations in the amount required hereunder, by way of an
escrow agreement, trust, or other device, which arrangements shall be
reasonably satisfactory to Executive, at least thirty (30) days prior to
the expiration date of the letter of credit or any such alternate
arrangement shall constitute an event of default under this Agreement
entitling Executive, after written notice to Group and the passage of a
ten (10) day cure period without such default being cured, all of the
benefits accorded to him in the event of a termination without good
cause pursuant to Section 7.2.1 or Section 7.2.3 after a Change of
Control, whichever is higher, without, however, the requirement that
Executive terminate his employment hereunder. Group agrees to notify
Executive within three business days of any failure or inability to
maintain or renew such letter of credit or other device adopted pursuant
to this Section. Notwithstanding the foregoing, at the election of the
Group Board of Directors by resolution of such Board with at least
two-thirds (2/3) of the then-serving Group directors who are Group
directors as of April 18, 1994 voting in favor, the obligation to
maintain a letter of credit shall be relieved to the extent amounts are
contributed to a trust or trusts under the terms of which such amounts
are specifically earmarked as security for payment of obligations under
this Agreement and are at all times at least four (4) times the Adjusted
Salary Rate. Such trust or trusts may contain a provision that its
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funds will be returned to Group so as to be available to its general
creditors in the event of the bankruptcy of Group. Group agrees that
it will not take any action to prevent, hinder or delay the exercise by
Executive of his rights to exercise the security provisions provided in
this Section 7.3 and, further, agrees to cooperate with Executive as may
be necessary to enable Executive to exercise and obtain the benefit of
such security provisions, in the absence of fraudulent or unlawful
conduct on the part of Executive with respect to such exercise.
7.4 In the event of any termination pursuant to any of Sections 6, 7.1 or
7.2, Executive shall (i) be paid such portion of his Salary as has
accrued by virtue of Executive's employment during the period prior to
termination and has not yet been paid, together with any amounts for
expense reimbursement, vacation accruals and similar items which have
been properly incurred or accrued in accordance with the provisions of
Section 5 prior to termination and have not yet been paid; and (ii) be
provided outplacement services by a professional outplacement firm of
Executive's choosing at the expense of Frem, who shall engage such firm
directly on behalf of Executive, provided, however, that Frem's
liability with respect to providing such services will be limited to
one-half of Executive's Adjusted Salary.
7.5 As used herein, a "Change of Control" of Group shall be deemed to have
occurred (i) if any "Person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended), other than
Group or any employee stock plan of Group, is or becomes the
beneficial owner, directly or indirectly, of securities of Group
representing fifteen percent (15%) or more of the outstanding Common
Stock of Group, or (ii) ten (10) days following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by
any "person" of fifteen percent (15%) or more of the outstanding Common
Stock of Group, provided, however, that at the conclusion of such ten
(10) day period such person has not discontinued or rescinded his
intention to make such a tender or exchange offer or (iii) if during any
consecutive twelve (12) month period beginning on or after April 18,
1994 individuals who at the beginning of such period were directors of
Group cease, for any reason, to constitute at least a majority of the
Board of Directors of Group; or (iv) if a merger of, or consolidation
involving, Group in which Group's stock is converted into securities of
another corporation or into cash shall be consummated, or a plan of
complete liquidation of Group (whether or not in connection with a sale
of all or substantially all of Group's assets) shall be adopted and
consummated, or substantially all of Group's operating assets are sold
(whether or not a plan of liquidation shall be adopted or a liquidation
occurs), excluding in each case a transaction solely for the purpose of
reincorporating Group in a different jurisdiction or recapitalizing
Group's stock.
7.6 As used herein, "good cause" shall mean and be limited to a material
breach of any of Executive's obligations under Section 1 or 8 hereof,
or any action by Executive during the term of this Agreement involving
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willful malfeasance or gross (but not simple) negligence on the part of
Executive in a material respect. Notwithstanding the foregoing,
following a Change of Control, "good cause" shall not be deemed to have
occurred unless (a) the conduct which is the basis for such material
breach is either willful or intentionally unlawful and (b) Executive
shall not have ceased such conduct or cured the effect thereof, if
curable, so that such breach shall no longer be material within thirty
(30) days after Executive shall have received written notice from Frem
of Frem's intention to terminate Executive's employment for good cause,
which notice shall specify in detail the basis therefor.
7.7 Frem and/or Group, in the sole discretion of either of them, may apply
for and procure in the name of either (whether or not for its own
benefit) policies of insurance insuring the life of Executive in such
amounts as either company may deem advisable, in addition to insurance
policies contemplated by Section 4.1.3 or Section 6.2.1. Executive shall
have no right, title, or interest in any such policies of insurance,
except to the extent his estate or other persons are specifically named
as beneficiaries thereof. Executive agrees to submit to any medical or
other examination and to execute and deliver any applications or other
instrument in writing, reasonably necessary to effectuate such
insurance.
7.8 The Executive shall be paid an additional amount ("Gross Up Payment")
if any payments ("Payments Amounts") made to him or Executive's estate
by Frem,. Group or any of their Affiliates, under this Agreement or
otherwise, are subject to the excise tax imposed by Internal Revenue
Code Section 4999 (the "Section 4999 Tax") or any successor Internal
Revenue Code Section. The Gross Up Payment shall be computed so that
the Executive retains a net amount equal to the Payment Amounts after
deduction of any Section 4999 Tax on the Payment Amounts and any
Federal, State and Section 4999 Tax on the Gross Up Payment.
For the purposes of determining the amount of the Gross Up Payment, the
Executive shall be deemed to pay Federal, State and local income taxes
at the highest marginal rate of taxation in the calendar year in which
the Payment Amounts are taxable to him under Code Section 4999. State
and local income taxes shall be determined based upon the state and
locality of Executive's domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and whether such
Section 4999 Tax is payable shall be made by tax counsel selected by
Frem and approved by Executive. The Gross Up Payment shall be paid
within 30 days of such computation and in no event (without written
consent of Executive) later than the last day of the calendar year with
respect to which the Section 4999 tax is imposed.
If such opinion of tax counsel is not finally accepted by the Internal
Revenue Service upon audit, then tax counsel (selected under the above
procedure) shall compute appropriate adjustments and additional Gross Up
Payments shall be computed, as provided above and paid to Executive,
and
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Executive shall also be reimbursed for interest and other tax
penalties, if applicable.
8. CONFIDENTIALITY AND NON-COMPETITION
8.1 Executive's agreements set forth in this Section 8 shall survive the
expiration or termination of this Agreement and the termination of his
employment with Frem, Group and/or any of their Affiliates for any
reason.
8.2 Executive acknowledges that irreparable injury would be caused to Frem,
Group and/or their Affiliates by his breach of any of the provisions of
this Section 8, and agrees that in the event of any such breach, Frem,
Group and/or their Affiliates, in addition to such other rights and
remedies as may exist in its favor, may apply to any court of law or
equity having jurisdiction to enforce the specific performance of the
provisions of this Section 8 and may apply for injunctive relief against
any act which would violate any such provisions.
8.3 Executive recognizes that he now has knowledge of and/or may hereafter
gain knowledge of, confidential information, trade secrets, confidential
processes, confidential patentable or unpatentable inventions or
confidential "know how", including, without limitation, techniques,
formulae, designs, developments, projects, technical information and
manufacturing process and distribution methods, relating to, or
concerned with the business of Frem, Group and/or their Affiliates
during the term of this Agreement and their respective suppliers,
customers, stockholders, licensors, licensees, and other persons or
entities with which Frem, Group and/or their Affiliates have, have had,
or may in the future have any commercial, scientific or technical
relationship, and which information has not previously been made public
or thereafter made public. During the term of this Agreement and at all
times following the termination of Executive's employment for any
reason, Executive will not, directly or indirectly, divulge, furnish or
make accessible to anyone (other than as required in the regular course
of his employment by Frem or with the consent of the Frem Board of
Directors) such information. The prohibitions contained in this Section
8.3 shall not apply to information which is (a) within the domain of the
general public; (b) generally known within the industry or industries in
which Frem, Group and/or their Affiliates are involved; or (c)
independently developed by Executive without utilization of confidential
information gained while in the employ of Frem, Group and/or their
Affiliates; provided that Executive shall not have disclosed such
information in violation of this Agreement. All documents, records,
apparatus, equipment and other physical property furnished to Executive
by Frem, Group and/or their Affiliates or produced by Executive or
others in connection with his services to Frem, Group and/or their
Affiliates shall be and remain the sole property of the company
furnishing the same. Executive will return and deliver such property to
Frem, Group and/or its Affiliates as and when requested by such
company. Copies of documents and records may be kept, but shall be kept
completely confidential. Executive shall return and deliver all such
property upon termination of his employment for any reason, and
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Executive will not take with him any such property or any reproduction
of such property upon such termination.
8.4 Any work or research or the results thereof, made or developed by
Executive, alone or in conjunction with others during the term of his
employment, including but without limitation, any designs, patents,
inventions, processes, know-how or formulae created, invented or
conceived during the period of his employment by Frem, Group and/or
their Affiliates, whether during or out of the usual hours of work,
which arise out of or are related to the business, research, or
development work or field of operation of Frem, Group and/or their
Affiliates shall to the extent of Executive's interest therein be the
sole and exclusive property of Frem, Group and/or their Affiliates, as
the case may be, shall be disclosed in writing to Frem, Group and/or
their Affiliates and to no other person, unless so directed in writing
by the Board of Directors of such company, and Executive hereby assigns
to Frem, Group and/or their Affiliates, as the case may be, all and any
rights which he has or may acquire in the same. To this end, both
during the period of Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers, instruments and
documents properly required to effect such assignment to Frem, Group,
and/or their Affiliates or their nominee, to make application through
such company's patent attorney or general counsel at the expense of such
company, for such United States and foreign patents as may be specified
from time to time by such company on inventions, processes, or formulae
which are or become the property of such company hereunder, and to
execute assignments upon the request of such company, for Executive's
entire interest in all such applications to Frem, Group or their
Affiliate or to the nominee of any such company without compensation
(other than his usual compensation as an employee of Frem) and Executive
agrees to give such company and its patent attorney or general counsel
all reasonable assistance in preparing such applications, descriptions,
and illustrations of each such invention, process, or formula and in
connection with proceedings relating thereto or to such other
applications or patents resulting therefrom; and further agrees to
execute all lawful papers considered necessary by such company and do
all that such company reasonably requests in order to protect that
company's rights in said inventions, processes, and formulae or to
obtain patents thereon, including, without limitation, continuations,
reissues, renewals, and extensions. It is further agreed that
Executive's obligations specified hereunder shall not expire with the
termination of his employment, but Frem agrees to pay Executive a
reasonable amount for any time that Executive spends in such work at
Frem's request after the termination of his employment hereunder and
agrees to reimburse Executive for expenses reasonably or necessarily
incurred in connection with such work.
8.5 In consideration of his continued employment by Frem, and the other
benefits accruing to him hereunder from Frem and Group, and subject to
the fulfillment by Frem and Group of their respective obligations to
Executive hereunder, either directly or through draw-down under the
letter(s) of credit or other device established pursuant to Section 7.3,
Executive agrees that during the term hereof and for a period of twenty
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four (24) months following the date of termination of Executive's
employment pursuant to Section 6 or 7 provided that Executive has
received and is continuing to receive all payments and benefits required
to be paid and provided to him pursuant to Sections 4, 6 and 7 (such
period of employment and twenty four (24) month period being referred to
in this Agreement as the "Non-Competition Period"), he will not engage
or participate, directly or indirectly, within the United States of
America or Canada either as principal, agent, employee, employer,
consultant, stockholder, partner or in any other individual or
representative capacity whatever, in the conduct or management of, or
own any stock or other proprietary interest in, or debt of, any business
which shall be competitive with any business which is or was conducted
by Frem, Group or their Affiliates, while Executive was an employee of
Frem, Group or their Affiliates under this Agreement, unless he shall
have obtained the prior written consent of the Frem Board of Directors,
and which consent shall make express reference to this Agreement.
Notwithstanding any other provision in this Section 8, Executive shall
be free without such consent to make investments, directly or
indirectly, in the securities of any publicly-owned corporation if his
ownership thereof is limited to not more than three percent (3%) of the
issued and outstanding securities of any class of securities of such
corporation. Executive acknowledges that his skills and experience are
such that he can anticipate finding employment at an executive level in
a wide variety of industries and represents and agrees that the
restrictions imposed by this Section 8 on employment are necessary for
the protection of the legitimate interests and competitive position of
Frem, Group and their Affiliates and do not impose undue hardships on
Executive.
8.6 During the Non-Competition Period, Executive shall not, directly or
indirectly, solicit any officer, director, executive, employee or
consultant of Frem, Group and/or their Affiliates to leave such
employment or terminate such position.
9. ARBITRATION
Except with respect to the provisions of Section 8, any dispute or
disagreement arising under or relating to the provisions of this
Agreement, or any breach thereof, including, without limitation,
relating to Section 1 hereof or to whether a termination of Executive's
employment was with "good cause", shall be resolved by binding
arbitration in accordance with the Commercial Rules of the American
Arbitration Association or its successor (except as set forth herein),
and judgment upon the award rendered by the arbitrator or arbitrators
may be entered in any court having jurisdiction thereof. The decision
of the arbitrators shall be made by majority vote and be final and
absolute. In any such arbitration, one arbitrator shall be selected by
Frem and one arbitrator shall be selected by Executive. Each party
shall have thirty (30) days from the receipt by one party of a notice
from the other party of submission to arbitration to choose an
arbitrator. A third arbitrator shall be selected by the two so chosen
within ten (10) days of the selection of the most recently selected of
the two arbitrators so chosen. Failing action within any of such
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periods by any party or the arbitrators, any unappointed arbitrator or
arbitrators shall be appointed by the American Arbitration Association
(or its successor) upon application of any party or arbitrator. The
parties shall promptly furnish to the arbitrators such information as
the arbitrators may reasonably request. The expenses of any arbitration
proceeding shall be paid by Frem (including Executive's attorney's fees)
if the Executive recovers any amount or otherwise obtains relief in such
proceeding and by the Executive (including Frem's attorney's fees and
expenses) if the Executive initiated arbitration and there is a specific
finding that the Executive's claim was frivolous. In all other
circumstances, the expenses of such arbitration proceeding (not
including attorney's fees and expenses, each party to bear such party's
own attorney's fees and expenses) shall be divided equally. Arbitration
shall take place in Worcester, Massachusetts, or such other place on
which the parties shall agree. This Agreement and any arbitration
proceeding are subject to the Massachusetts statute on arbitration of
disputes.
10. GUARANTY
Group guarantees the payment obligations of Frem contained in this
Agreement.
11. GENERAL
11.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
11.2 This Agreement shall be binding upon and shall inure to the benefit of
Executive, his heirs, executors, administrators, legal representatives,
and permitted assigns, Frem, its successors and permitted assigns and
Group,its successors and assigns. This Agreement shall not be assigned
by Executive or by Frem (other than to Group or an Affiliate of Group)
without the prior written consent of the other party. If Frem's
obligations under this Agreement are assigned to Group or an Affiliate
of Group, the same shall be binding upon and shall inure to the benefit
of Group or such Affiliate, such company's successors and assigns either
by merger, operation of law, consolidation, assignment, purchase or
otherwise of a controlling interest in the business of Group or such
Affiliate.
Group agrees that a successor in interest by merger, operation of law,
consolidation, assignment, purchase or otherwise of a controlling
interest in the business of Group will be informed prior to such event
of the existence of Group's obligations under this Agreement. Group
shall require any successor (whether direct or indirect, by purchase,
merger, operation of law, consolidation, assignment or otherwise of a
controlling interest in the business, stock or other assets of Group) to
assume expressly and agree to perform this Agreement. Failure of Group
to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall
entitle Executive to such compensation and benefits in the same amount
and on the same terms as he would be entitled hereunder in the event of
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a termination without "good cause", except that, for the purposes of
implementation hereof, the date on which any such succession becomes
effective shall be deemed to be the date on which Executive becomes
entitled to such compensation and benefits from Group. As used in this
Agreement, "Group" shall mean Group as hereinbefore defined and any
successor as aforesaid.
11.3 The parties intend this Agreement to be enforced as written. However,
(i) if any portion or provision of this Agreement shall to any extent be
declared illegal or unenforceable by a duly authorized court of
competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than
those as to which it is so declared illegal or unenforceable, shall not
be affected thereby, and each portion and provision of this Agreement
shall be valid and be enforceable to the fullest extent permitted by
law; and (ii) if any provision, or any part thereof, is held to be
unenforceable because of the duration of such provision or the area
covered thereby, Frem, Group and Executive agree that the court making
such determination shall have the power to reduce the duration and/or
area of such provision, and/or to delete specific words and phrases
("blue-pencilling") and in its reduced or blue-pencilled form such
provision shall then be enforceable and shall be enforced.
11.4 All notices and communications required or permitted to be given
hereunder shall be duly given by delivering the same in hand or by
depositing such notice or communication in the mail, sent by certified
or registered mail, return receipt requested, postage prepaid, as
follows:
If sent to Frem: Frem Corporation
c/o Ekco Group, Inc.
If sent to Group: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: General Counsel
If sent to Executive: To Executive's
last address in
the records of Frem
or such other address as either party furnishes to the other by like
notice.
11.5 This Agreement constitutes the entire agreement and understanding
between the parties in relation to the subject matter hereof. There are
no promises, representations, conditions, provisions or terms related
thereto other than those set forth in this Agreement. This Agreement
supersedes all previous understandings, agreements and representations
between Frem, Group and Executive regarding Executive's employment by
Frem, written or oral. The parties hereto acknowledge the existence of
a certain Employment Agreement dated as of April 18, 1994, as heretofore
amended, between Group and Executive. Upon this Agreement becoming
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effective, this Agreement shall replace, supersede and be a substitute
for the Employment Agreement as so amended.
11.6 All captions in this Agreement are intended solely for the convenience
of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof. Any references in this Agreement
to a section shall be deemed to include all subsections of that section
unless specifically excluded.
11.7 No failure of Frem, Group or Executive to exercise any power reserved to
it or him, respectively, by this Agreement, or to insist upon strict
compliance by Executive, Frem or Group, respectively, with any
obligation or condition hereunder, and no custom or practice of the
parties at variance with the terms hereof, shall constitute a waiver of
Frem's, Group's or Executive's right, as the case may be, to demand
exact compliance with any of the terms hereof. Waiver by either party
of any particular default by the other party hereto shall not affect or
impair the waiving party's rights with respect to any subsequent default
of the same, similar or different nature, nor shall any delay,
forbearance or omission of either party to exercise any power or right
arising out of any breach or default by the other party of any of the
terms, provisions or covenants hereof, affect or impair its or his right
to exercise the same, nor shall such constitute a waiver by Frem, Group
or Executive, as the case may be, of any right hereunder, or the right
to declare any subsequent breach or default and to terminate this
Agreement prior to the expiration of its term.
11.8 As used herein, the term "Affiliate" shall be deemed to include any
corporation, joint venture, or other business enterprise, whether
incorporated or unincorporated, which Frem or Group directly, or
indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with.
11.9 This is a Massachusetts contract and shall be construed under and be
governed in all respects by the law of the Commonwealth of
Massachusetts.
11.10 Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for herein be
reduced by any compensation earned by Executive as the result of
employment by another employer or by retirement benefits after the date
of termination or otherwise, except as specifically set forth herein.
11.11 No amendment or modification to this Agreement shall be effective unless
in writing and signed by the parties hereto. This Agreement may be
executed in any number of counterparts, and each such counterpart hereof
shall be deemed to be an original instrument, but all such counterparts
together shall constitute but one agreement.
IN WITNESS WHEREOF, Frem and Group have caused this Agreement to be
executed and delivered by their duly authorized officers and their corporate
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seals to be hereunto affixed and Executive has hereunto set his hand and seal
as of the day and year first written above in duplicate originals.
Frem Corporation
By /S/ ROBERT STEIN
--------------------
Title CEO
-----------------
Ekco Group, Inc.
By /S/ ROBERT STEIN
--------------------
Title PRESIDENT
-----------------
/S/ RONALD N. FOX
-----------------------
Executive
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EXHIBIT A
DOCUMENTARY CREDIT NO.____________________
DATE OF ISSUE ______________ , 1994
ISSUING BANK: APPLICANT:
FLEET BANK OF MASSACHUSETTS, N.A. EKCO GROUP, INC.
(Address of Bank) 98 SPIT BROOK ROAD
________________________________ SUITE 102
________________________________ NASHUA, NH 03062
________________________________ ATTN:___________________________________
ADVISING BANK: BENEFICIARY:
(Name & Address of Executive)
________________________________________
________________________________________
________________________________________
ACCOUNT/CURRENCY:
UP TO USD ______________________________
UP TO __________________________________
US DOLLARS
DATE AND PLACE OF EXPIRY:
__________________________ , 1996 AT THE
ISSUING BANK
Dear Sir:
By the order of Ekco Group, Inc. we hereby open in your favor our Irrevocable
Credit for the account of Ekco Group, Inc. for a sum or sums not exceeding a
total of US $________________________ (____________________________ US DOLLARS)
available by your draft(s) at SIGHT on Fleet Bank of Massachusetts, N.A.,
_____________________________________________________________ , Massachusetts
________________ effective __________________________ , 1994 and expiring at
______________________________ , Massachusetts on _______________________ ,
1996.
Drafts must be accompanied by:
1. The original Letter of Credit and any amendments thereto, if any.
2. Your signed statement as follows: "I certify that the amount of my draft
represents funds due me under Section _______ (insert section number) of a
certain Employment Agreement dated as of November 6, 1991, as further amended
by amendments dated as of ___________________________________________________,
between myself and Ekco Group, Inc., demand for payment has been made, and
payment has not been received by me from Ekco Group, Inc. or any other source."
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Each draft must bear upon its face the clause "Drawn under Letter of Credit No.
___________________________ , dated ____________________________ of Fleet Bank
of Massachusetts, N.A."
It is a condition of this Letter of Credit that it shall become operative via
amendment issued by Fleet Bank of Massachusetts, N.A. upon notice of
cancellation of Letter of Credit dated August 28, 1987 issued by State Street
Bank and Trust Company.
We hereby agree with you that drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored if presented to the
above-mentioned drawee Bank on or before (expiration date)
_____________________ , 1996.
This Letter of Credit sets forth in full terms of our undertaking, and this
undertaking shall not in any way be modified, amended or limited by reference
to any document, instrument or agreement referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates,
except for the certificate and the sight draft referred to herein; and any such
reference shall not be deemed to incorporate herein by reference any document,
instrument or agreement, except for such certificate and such sight draft.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us, if by registered mail to Fleet Bank of Massachusetts,
N.A., __________________________________________________ , Massachusetts
___________________, Attention:__________________________________________ , or
if by courier to Fleet Bank of Massachusetts, N.A., _______________________
_____________________________ , Massachusetts _________________., Attention
______________________________________ , specifically referring to the number
of this Letter of Credit.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication 500 and engages us in
accordance with its terms.
_______________________________ _______________________________
Authorized Signature Authorized Signature
21
EX-10.12(B)
15
AMENDMENT TO COMPENSATION PLAN
1
EXHIBIT 10.12(b)
----------------
EKCO GROUP, INC.
1994 AMENDMENT TO INCENTIVE COMPENSATION PLAN FOR
EXECUTIVE EMPLOYEES OF EKCO GROUP, INC. AND ITS SUBSIDIARIES
I. PREAMBLE
The Incentive Compensation Plan for Senior Executive Employees of Ekco
Group, Inc. and its Subsidiaries (the "Plan") is intended to attract and retain
highly qualified executive employees of Ekco Group, Inc. and its subsidiaries
("Company"). Under the Plan, a pool for Annual Incentive Compensation Awards
("bonuses") is established based on financial targets set at the beginning of
each year so that eligible executives may be entitled to earn bonuses if
Company earnings per share reach the predetermined targets. The predetermined
target for the 1994 calendar year for full awards was and continues to be 61c.
per share.1/
The Compensation Committee is concerned that allocations of bonus
amounts from the predetermined pool under the existing Plan terms are too
mechanistic because awards are required to be allocated according to
predetermined percentages of base salary without regard to special individual
and group contributions. Accordingly, for 1994 the Committee has determined
that it will base part of the 1994 award for each Senior Executive from the
bonus pool on his individual efforts (whether made singularly or as part of a
group) during the year, although the total amount available for bonuses to all
Plan participants (in the aggregate) will neither be increased nor decreased.
Accordingly, the Plan is amended for 1994 as follows:
A. The gross amount available for distribution of bonuses to all
Senior Executives shall be determined under the terms of the existing Plan,
with a requirement that the predetermined target of 61c. per share be attained
for full awards.
___________________________
1/ The Plan also provides for special supplementary discretionary
awards based on individual outstanding performance or profit
contributions. For 1994, the Compensation Committee has
determined that no additional amounts will be awarded under
this aspect of the plan.
2
B. 50% of the achieved total pool amount shall be allocated
pursuant to the terms of the Plan prior to this amendment. For example, if a
Senior Executive would have been entitled to a bonus of 30% of base salary if
the 61c. per share target were attained, the 1994 formula award for the Senior
Executive shall be reduced to 15%.
C. The remaining amounts in the Senior Executive bonus pool shall
be allocated among eligible Senior Executives by the Compensation Committee in
its sole discretion, taking into account the recommendations of the President
and Chief Executive Officer for all Senior Executives other than himself.
D. The acceptance by a Senior Executive of bonuses under this
restructured 1994 Plan shall be deemed as acceptance of all of the terms of
this amendment and a full release of any and all claims against the Company for
bonus amounts as would have been determined under the Plan prior to this
amendment.
Dated as of the 25th day of October 1994.
Compensation Committee
of the Board of Directors
/S/ T. MICHAEL LONG
-------------------------
T. Michael Long
/S/ STUART B. ROSS
-------------------------
Stuart B. Ross
/S/ BILL W. SORENSON
-------------------------
Bill W. Sorenson
2
EX-10.13
16
1995 RESTATEMENT OF COMPENSATION PLAN
1
1995 RESTATEMENT
EXHIBIT 10.13
-------------
INCENTIVE COMPENSATION PLAN FOR EXECUTIVE EMPLOYEES OF
EKCO GROUP, INC. AND ITS SUBSIDIARIES
2
1995 RESTATEMENT
INCENTIVE COMPENSATION PLAN FOR EXECUTIVE EMPLOYEES OF
EKCO GROUP, INC. AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------
1. Purpose
The Compensation Committee has determined it appropriate and desirable to
restate the Incentive Compensation Plan for Executive Employees of Ekco Group,
Inc. and its Subsidiaries (the "Plan"). The purpose of the Plan continues to
be to attract and to retain highly qualified executive employees, to obtain
from each the best possible performance, and to underscore the importance to
them of achieving particular business objectives established for Ekco Group,
Inc. and its operating units for both the short and long term.
2. Definitions
For the purposes of the Plan, the following terms shall have the following
meanings. Terms related to the finances of the Corporation shall be defined by
reference to the consolidated financial statements of the Corporation as
reported periodically to the Securities and Exchange Commission, adjusted to
omit the effects of extraordinary items, discontinued operations, changes in
accounting and to reflect such other adjustments as are deemed appropriate by
the Committee.
2.1 Average Invested Capital. In any year the Average Invested
Capital is the sum of stockholders' equity in the Corporation
plus interest-bearing debt determined on average by referring
to these amounts at the last day of the preceding year and at
the end of each calendar quarter in the current year.
2.2 Awards. The Awards which are awarded under this Plan: Annual
Incentive Compensation Awards (Bonus or Bonuses)
1
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and Long Term Incentive Awards (Restricted Stock and Stock
Options).
2.3 Base Compensation. Base Compensation is the annual base salary
amount payable to an Executive in any calendar year.
2.4 Board of Directors. The Board of Directors of the Corporation.
2.5 Closing Date. The date on which an Executive pays any price
required to purchase Shares under a Restricted Stock Purchase
Plan of the Corporation and as of which date the Shares are
issued by the Corporation.
2.6 Committee. The Compensation Committee of the Board of
Directors or any successor thereto.
2.7 Common Stock or Stock or Shares. The Common Stock of the
Corporation or such other Stock into which the Common Stock may
be changed as a result of splits, recapitalizations,
reclassifications and the like. Whenever necessary to
determine the price of Shares, the closing price on the
principal exchange on which the Shares are traded will be used,
unless a different definition is required under the terms of
any Stock Option or Restricted Stock Purchase Plan under which
the shares are issued.
2.8 Corporation. Ekco Group, Inc. or Ekco Group, Inc. and its
subsidiaries, as the context requires.
2.9 Employee. An individual who is on the active salaried payroll
of the Corporation or a subsidiary of the Corporation at any
time during the period for which an Award is made.
2.10 Executive / Senior Executive Employee / Other Executive
Employee. The term "Executives" includes both Senior Executive
Employees and Other Executive Employees. When named for
participation in the Plan, an Executive
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will be designated in the Appendix as a Senior Executive
Employee or as an Other Executive Employee.
2.11 Pre-Tax Operating Profit. Consolidated Operating Profit
(revenues less cost of goods sold and selling, general and
administrative expenses) but before interest expense,
amortization of goodwill and income taxes.
2.12 Return On Capital. The percentage determined by dividing the
Pre-Tax Operating Profit for a fiscal year by the Average
Invested Capital for the same year.
2.13 Target Return On Capital. The Return On Capital which the
Committee has determined appropriate for the fiscal year and as
referenced in the Appendix.
3. Effective Date.
This Restated Plan will become effective as of January 1, 1995.
4. Eligibility to Participate.
4.1 Each year, the Committee shall designate the Executives whose
Base Compensation and Awards will be determined under this Plan.
4.2 At the sole discretion of the Committee, Awards may be made to
Executives who retired or whose employment terminated after the
beginning of the period for which an Award is made, or to the
designee or estate of an Executive who died during such period.
4.3 The Senior Executive Employees named to participate in the Plan
as of January 1, 1995 are listed in the Appendix. At this
Date, no Other Executive Employees have been named. Changes in
participation will be reflected by additions to the Appendix.
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5. Determination of Base Compensation.
5.1 The Committee will determine the Base Compensation under the
Plan for each Senior Executive Employee at the start of each
calendar year and such amount shall in no event be less than
provided for in any employment contract with the Executive. The
Chief Executive Officer will determine the Base Compensation of
Other Executives.
5.2 The Base Compensation amounts for the Executives named to
participate in the Plan as of January 1, 1995 are listed in the
Appendix. Future changes in Base Compensation will be
similarly scheduled.
6. Annual Incentive Compensation Awards (Bonuses).
6.1 As of the last day of each calendar year, Executives will be
allocated Awards from the appropriate Profit Sharing Pool.
6.2 Profit Sharing Pools will be determined as follows:
(a) At the option of the Committee, separate Profit
Sharing Pools will be maintained for Senior Executive
Employees and, if Other Executive Employees are named
to participate, for Other Executive Employees.
(b) Prior to the start of each year the Committee will
determine a target bonus amount for each Executive who
is meant to participate in the Profit Sharing Pool for
the year. In the discretion of the Committee, the
Profit Sharing Pool for the year may be adjusted to
reflect additions or departures of Executives during
the year. Target bonus amounts for Senior Executive
Employees who participate in the Plan for 1995 are
shown in the Appendix and future changes will be
similarly scheduled.
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(c) The Profit Sharing Pool will be the sum of the target
bonus amounts of eligible Executives increased (or
reduced) by 10% of the positive (or negative)
variance between actual Operating Profit for the
fiscal year and the Operating Profit which would have
been earned if the Target Return On Capital were
attained for the fiscal year.
6.3 Profit Sharing Pools will be allocated as follows:
(a) After the Profit Sharing Pool for the year has been
determined, one-half of its amount shall be allocated
among eligible Executives according to the ratios of
the target bonus amounts determined for them at the
start of the year compared to the total of target bonus
amounts for all Executives in the Profit Sharing Pool.
(b) The balance of the amounts in the Profit Sharing Pool
will be allocated to eligible Executives by the
Committee in its discretion, taking into account
individual efforts (whether made singularly or as part
of a group) during the year.
6.4 For 1995 the Committee shall decide and for 1996 and
subsequent years the Executive may decide (provided he files a
written irrevocable election with the Committee at least six
months before the start of the year in which the increase goes
into effect) whether any increases over the Executive's 1994
Base Compensation level will be paid under any of the payment
choices in Section 6.6 or a combination of two or more of them.
The Committee decisions with respect to the manner in which
1995 Base Compensation increases will be paid is scheduled in
the Appendix.
6.5 For 1995 and subsequent years the Executive may decide
(provided he files a written irrevocable election with the
Committee before the start of the year to which his Bonus
relates) whether any percentage up to one hundred (100%)
percent of his Bonus will be paid under any of
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the payment choices in Section 6.6 or a combination of two or
more of them.
6.6. As provided in Sections 6.4 and 6.5, increases in Base
Compensation and Bonuses will be paid under any of the payment
choices listed below or a combination of two or more of them.
(a) All or a portion in taxable cash.
(b) All or a portion in not currently taxable deferred
compensation, pursuant to an Executive election under
which payment is deferred until a specific date or time,
and pursuant to which the Corporation agrees to pay
interest at a rate agreed to by the Committee and
scheduled in the Appendix.
(c) All or a portion in Restricted Stock.
(1) Restricted Stock will be issued in an amount
equal to one hundred and thirty (130%) percent of
the foregone cash payment based on the Stock price
at the last trading day of the year preceding the
year to which the payment relates (e.g. December
30, 1994 Stock price for payments attributable to
1995 services) and taking into account the purchase
price, if any, required of Executive under the
Restricted Stock Purchase Plan under which the
Shares are issued.
(2) Restricted Stock receivable in exchange for all
or a portion of a Bonus will be purchased at the
date when the Bonus is payable; Restricted Stock
receivable in exchange for all or a portion of an
increase over 1994 Base Compensation will be
purchased at the last day of each quarter during
the year in which the increase would be payable.
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(d) All or a portion may be paid in Stock Options.
(1) Stock Options will be valued at two hundred and
fifty (250%) percent of the foregone cash payment,
according to the Black Scholes method of valuation
calculated as of the last trading day of the year
preceding the year to which the payment relates
(e.g. December 30, 1994 Stock price for payments
attributable to 1995 services).
(2) Stock Options receivable in exchange for all or a
portion of a Bonus will be awarded at the date when
the Bonus is payable and will be exercisable at the
Stock price at the date of the Award; options
receivable in exchange for all or a portion of an
increase over 1994 Base Compensation will be
awarded at the last day of each quarter during the
year in which the increase would be payable and
will be exercisable at the Stock price at that
date.
6.7 Restricted Stock and Stock Options issued under this Plan
will be subject to the terms and restrictions of the Stock
Option Plan or Restricted Stock Purchase Plan under which they
are issued and the following:
(a) Restrictions on Restricted Stock will lapse at the
rate of 20% for each full year of employment following a
Closing Date (with lapsing of restrictions in the event
of disability, death or a change of control to the
extent permitted by the Restricted Stock Purchase Plan);
(b) Stock Options will be immediately exercisable but will
be subject to a right of the Corporation to
repurchase any acquired Shares for the price paid at
exercise if employment terminates before the
Corporation's right expires. The Corporation's right to
repurchase Shares at exercise price lapses at the rate
of 33 1/3% for each full year
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of employment following an Option award (with full
lapse of the right in the event of disability, death or
a change of control to the extent permitted by the terms
of the Agreement pursuant to which Stock Options are
granted under the Stock Option Plan).
7. Long Term Incentive Awards (Restricted Stock)
7.1 Effective as of the date when an Executive is named for
participation in this restated Plan, or at such other dates as
the Committee determines appropriate, the Committee will grant
Shares of Stock to him attributable to a performance cycle
which it designates. The first such performance cycle under
this Plan is the 5 year period from 1995 through 1999.
7.2 Restricted Shares are to be issued (pro rata to Executives)
first under the terms of the 1984 Restricted Stock Plan of Ekco
Group, Inc. until all of that plan's authorized Shares have
been issued. Thereafter, they shall be issued in the
Committee's discretion under the terms of the 1985 Restricted
Stock Plan of Ekco Group, Inc. until all of that plan's
authorized Shares have been issued.
7.3 Each Executive's grant will be apportioned into a number of
blocks equal to the number of years in the performance cycle
(e.g. 5 blocks in the case of the Executives named to
participate in the Plan as of January 1, 1995 for the 5 year
performance cycle from 1995 through 1999). For purposes of
this Plan, each block will be designated with the name of one
of the years in the performance cycle (e.g. 1995 block, 1996
block, 1997 block, 1998 block and 1999 block). The grants for
each Executive are to be scheduled in the Appendix.
7.4 The lapsing of restrictions with respect to the Shares
purchased by Executive pursuant to the Restricted Stock
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Purchase Plan will be determined under whichever of the
following rules is most favorable to the Executive:
(a) Restrictions will lapse in the event of the
occurrence of any of the following accelerated lapsing
events provided for in the Restricted Stock Purchase
Plan pursuant to which the Shares are issued:
disability, death or change of control.
(b) Restrictions will lapse as to all the Shares in a
block if the Executive is employed for at least ten
years following the Closing Date for the Shares in the
block.
EXAMPLE: An Executive is awarded the right to
purchase 10,000 shares at the price required by the 1984
and 1985 Restricted Stock Plans of Ekco Group, Inc. and
the shares are allocated to performance blocks for the
years 1995 through 1999. On January 30, 1995 he
completes the purchase of the restricted Shares in all
performance blocks, so January 30, 1995 is designated as
the Closing Date for the Shares. He remains employed
until January 30, 2005. Restrictions lapse on all Shares
in all blocks at that time.
(c) If the Target Return on Capital is attained for the
year for which the block is designated, the restrictions
will lapse as to 20% of the Shares in the block for each
full year of employment following the later of (A)
January 1 of the year designated for the block or (B)
the Closing Date for the Shares in the block.
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EXAMPLE: Assume that the Closing Date for Shares in
all blocks is February 1, 1995. If the Target Return
On Capital is attained in 1995 and not attained in 1996
and if Executive voluntarily terminates employment on
February 1, 1997, restrictions will have lapsed as to
40% of the 1995 block; the remainder of the 1995 block
and the 1996 through 1999 blocks will remain restricted
subject to the Committee's right not to repurchase such
shares pursuant to the Restricted Stock Purchase Plan.
(d) A block of Shares which would have lapsed under the 20%
per year rule in Section 7.4(c) but did not so qualify
(because Target Return On Capital was not attained) will
retroactively qualify for that 20% lapse rate whenever
the amount in (X) is equal to or greater than the amount
in (Y) where (X) is the cumulative total of actual
Pre-Tax Operating Profits for the designated year for
the block and each following year and (Y) is the
cumulative total of Pre-Tax Operating Profits which
would have been earned if Target Returns on Capital had
been achieved for the designated year for the block and
each following year.
Example: Assume that the Closing Date for Shares in
all blocks is February 1, 1995. If Target Returns on
Capital are not achieved in 1995 and 1996 but cumulative
Pre-Tax Operating Profits in 1995 through 1997 equal or
exceed the total Target Returns on Capital for those 3
years, the 1995 through 1997 blocks qualify for the
lapsing
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of restrictions at the 20% per year rate.
At December 31, 1997 restrictions would have lapsed
as to 40% of the 1995 and 1996 blocks and as to 20% of
the 1997 block. At February 1, 1998, restrictions would
lapse with respect to an additional 20% of the 1995
block. Regardless of post 1997 Returns on Capital,
restrictions would continue to lapse at the rate of 20%
per year for Shares in the 1995 through 1997 blocks.
8. Long Term Incentive Awards (Stock Options)
8.1 Effective as of the date when an Executive is named for
participation in this restated Plan, or at such other dates as
the Committee determines appropriate, the Committee will
designate a target amount of Stock Options to be granted to him
as of the first trading day of each year in the performance
cycle referenced in Section 7.1. The target number of Option
grants for all years in the performance cycle is scheduled in
the Appendix.
8.2 The Executive will be granted the target number of Stock
Options at the first day of each year in the performance cycle
and the exercise price for an Option will be the Stock price at
the date of grant. Stock Options expire if not exercised
within ten years and one month of grant.
8.3 Stock Options will be granted under the terms of the Ekco
Group, Inc. 1987 Stock Option Plan.
8.4 Stock Options will be immediately exercisable but will be
subject to a right of the Corporation to repurchase any
acquired Shares for the price paid at exercise if
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employment terminates before the Corporation's right expires.
The Corporation's right to repurchase Shares at exercise price
lapses at the rate of 33 1/3% for each full year of
employment following an Option award, (with full lapse of the
right in the event of disability, death or a change of control
to the extent permitted by the Agreement pursuant to which
Stock Options are granted under the Stock Option Plan).
9. Transition Rules: Freeze of Mid-Term Cash Incentive Plan.
The Committee has determined it appropriate that accruals of bonuses under the
Mid-Term Cash Incentive feature of this Plan (before this Restatement) cease as
of December 31, 1994. Payment of accrued amounts will not be accelerated due
to this action, but will be made at the time they would have been made under
the terms of the Plan prior to this Restatement. The accrued amounts for each
Executive and the dates on which payments will be made will be scheduled in the
Appendix after they have been calculated.
10. Accelerated Payment for Change of Control or Other Events.
10.1 Unpaid Annual Incentive Compensation amounts (and the
remaining portion of amounts owed, if any, under the former
Mid-Term Cash Incentive feature of this Plan) shall be
immediately payable, notwithstanding anything to the contrary
in the Plan, in the event of a Change of Control as defined in
the Executive's employment contract, if any, or if there is no
such contract in effect for the Executive as defined in the
1985 Ekco Group, Inc. Restricted Stock Plan.
10.2 In the event of a Change of Control (as defined under the
terms of the Restricted Stock Plan or Stock Option Agreement
under which Shares or Stock Options have been issued hereunder)
restrictions will lapse on Restricted Stock and Stock Options
shall be fully exercisable to the extent therein provided.
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11. Amendment and Interpretation of the Plan.
11.1 The Committee shall have the right to amend the Plan, from
time to time, or to repeal it entirely or to direct the
discontinuance of Awards either temporarily or permanently;
provided, however, that no amendment of the Plan shall operate
to annul, without the consent of the Executive, any Award
already made, or an Award which is earnable in the current
fiscal year, which has as a component the achievement of a goal
or goals any of which has at the time of the attempted
amendment or termination already been attained.
11.2 The decision of the Committee with respect to any questions
arising in connection with the administration or
interpretation of the Plan shall be final, conclusive and
binding. In the event of a conflict between the terms and
conditions of the Executive's employment agreement and this
Plan the provision of such employment agreement shall control
and the Plan shall not be interpreted so as to contravene any
provision of such employment agreement.
11.3 In making a decision with respect to eligibility for Plan
participation, the amounts of Awards, and other matters the
Committee may take into account the recommendations of the
Chief Executive Officer (for all Executives other than
himself) although the decisions of the Committee will be
final. The Committee delegates authority to the Chief
Executive Officer to determine the base salaries and amounts
of Awards for any Executive named to participate in this Plan
who is not a Senior Executive.
12. Miscellaneous.
12.1 When an Award is made in cash or in Common Stock, the
Corporation shall cause the cash to be paid or the
certificates for the Common Stock to be delivered to the
individual to whom the Award is made at the time or times
specified by the Committee or, if no time or
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times is specified, as soon as practicable after the Award is
made.
12.2 When circumstances are deemed justifiable by the Committee, it
may, upon agreement with the Employee or the Employee's estate
or designee, authorize an immediate lump sum payment in
cancellation of all or any part of any outstanding deferred
Award, authorize a change in the number of installments in
which a deferred Award is to be paid or authorize a change in
the time of payment of any unpaid installments. Any such lump
sum payments shall be equal to the amount of the unpaid
installments canceled plus any amounts attributable to accrued
interest or declared and unpaid dividends.
12.3 All expenses and costs in connection with the operation of the
Plan shall be borne by the Corporation.
12.4 All Awards under the Plan are subject to withholding, where
applicable, for federal, state and local taxes. Executives
are solely responsible for tax obligations and the Corporation
is not responsible if a taxing authority disagrees with the
effectiveness of a deferral election or the tax treatment
associated with receipt of an equity form of compensation.
12.5 For purposes of any other benefit plan which provides
benefits with reference to "Compensation" or "Base
Compensation" and to the extent permitted by the Internal
Revenue Code or, when relevant, any insurer underwriting
risk under the employee benefit plan, an Executive whose
Compensation or Base Compensation is paid partly in the form
of deferred cash, Restricted Stock or Stock Options as
provided more fully in Section 6.4 of this Plan, will still be
treated as if he received all Base Compensation or
Compensation in cash and on a non-deferred basis.
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12.6 In the event of any Stock dividends, split-ups,
recapitalizations, reclassifications or the like, or in the
event of any offer to holders of Common Stock generally
relating to the acquisition of all or any part of their
Shares, the Committee shall make such adjustments as it deems
to be equitable in the number of Shares of Common Stock
covered by any outstanding deferred Awards or in the terms of
payment of any deferred Common Stock Awards, such actions not
to be inconsistent with the terms of any Restricted Stock
Purchase Plan or Stock Option Agreement under which Restricted
Stock or Stock Options were issued.
12.7 Nothing contained in the Plan shall prohibit the Corporation
or any of its subsidiaries from granting special performance
or recognition Awards, under such conditions, and in such form
and manner as they see fit, to Executives for meritorious
service of any nature. In addition, nothing contained in the
Plan shall prohibit the Corporation or any of its subsidiaries
from establishing other incentive compensation plans providing
for the payment of incentive compensation to Employees,
provided, however, that a Senior Executive Employee who
receives an Award under this Plan for a fiscal year shall not
be entitled to receive an Award for such fiscal year under any
such plan without the approval of the Committee.
12.8 Whenever the Plan calls for issuance of Awards in the form of
Stock Options or Restricted Shares, such Options or Shares
shall be issued exclusively under the terms of the following
shareholder-approved plans of the Corporation: the Ekco Group,
Inc. 1987 Stock Option Plan, the 1984 Restricted Stock Plan of
Ekco Group, Inc., or the 1985 Restricted Stock Plan of Ekco
Group,
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Inc. and Awards shall be limited to Shares authorized
for issuance thereunder.
Compensation Committee
Ekco Group, Inc.
/S/ T. MICHAEL LONG
T. Michael Long
/S/ STUART B. ROSS
Stuart B. Ross
/S/ BILL W. SORENSON
Bill W. Sorenson
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APPENDIX
--------------------------------------------------------------------------------
Return On Capital Targets for 1995 through 1999 are:
1995 17%
1996 18%
1997 19%
1998 20%
1999 21%
Interest Rate to be Credited to
Deferred Compensation in 1995:
1995 rate 7.79%
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EX-10.18(C)
17
LETTER FROM AMERICAN HOME PRODUCTS
1
EXHIBIT 10.18(c)
----------------
[LETTERHEAD OF AMERICAN HOME PRODUCTS CORPORATION]
December 19, 1988
Ekco Housewares, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Gentlemen:
Reference is made to the Agreement of Purchase and Sale of Stock by and
among the Fulcrum Partnership, AHP, certain other sellers of Ekco Group, Inc.,
The Ekco Group, Inc., Centronics Corporation (with its successors and assigns,
"Ekco") and Ekco Acquisition Group dated October 1, 1987, to the letter dated
February 8, 1985 by AHP to the Ekco Group, Inc., and to the letter and
schedules attached thereto dated October 23, 1987 by AHP to the Ekco Group,
Inc., Centronics Corporation, and Ekco Acquisition Corporation. These
documents are referred to collectively as "the indemnity."
This will confirm our understanding that, pursuant to the Indemnity,
AHP will assume liability for preparation and execution of a Closure Plan and a
Post-Closure Plan relating to the storage lagoon at the Ekco Housewares, Inc.
facility at Massillon, Ohio (the "site") including but not limited to providing
any financial assurances required in connection with such Closure Plan and
Post-Closure Plan. AHP will prepare the Remedial Field
Investigation/Corrective Measures Study (RFI/CMS) through its consultants, Roy
F. Weston Engineering ("Weston") and duly submit it to the United States
Environmental Protection Agency. Thereafter, Weston will make an initial
allocation of responsibility for contamination at Massillon (other than that
related to the Massillon storage lagoon) and cleanup cost between AHP and Ekco
based on data available to Weston and any additional data provided by AHP or
Ekco. Ekco will contribute that portion of the cost of the ongoing (RFI/CMS)
and cleanup of groundwater contamination at the Site attributable to actions at
the Site occurring after September 7, 1984 which may have exacerbated or be
exacerbating claims brought under the Resource Conservation
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and Recovery Act (42 U.S.C. Sec. 6901 et seq.) and to the extent that such
exacerbation is finally determined or agreed to have arisen after
September 7, 1984. Both AHP and Ekco reserve the right to dispute this
allocation, to negotiate an alternative allocation acceptable to both parties,
or to seek such other legal or equitable relief either deems appropriate.
Notwithstanding the foregoing, in no event will Ekco's contribution to AHP
exceed the lesser of 25% of the cost of the groundwater investigation and
cleanup or $750,000 and AHP will provide any financial assurances required.
All other terms and conditions of the Indemnity not inconsistent with
the foregoing shall remain in full force and effect.
AMERICAN HOME PRODUCTS CORPORATION
By:/S/ ALBERT R. PEZZILLO
------------------------------
Albert R. Pezzillo
EX-10.19
18
AGREEMENT DATED 3/7/89 WITH H. CURD
1
EXHIBIT 10.19
-------------
AGREEMENT
---------
Agreement, dated as of the seventh day of March, 1989, by and among
Ekco Group, Inc., a Delaware corporation (the "Company"); Howard R. Curd, an
individual with a business address at 360 Madison Avenue, New York, New York
("Curd"); Sonar Partners, L.P., a Delaware limited partnership, Sonar Capital,
Inc., a Delaware corporation; each of the limited partners in Sonar Partners,
L.P. (the "Limited Partners"); Alfred Aysseh, an individual with a residence at
Coligny Park, 9C, Plateau-de-Frontenex, Geneva 1208, Switzerland ("Aysseh");
Jesup & Lamont Securities, Inc., a Delaware corporation ("J&L") (Curd, Sonar
Partners, L.P., Sonar Capital, Inc., the Limited Partners and Aysseh are
hereinafter each referred to as a "Seller" and collectively as the "Sellers").
WHEREAS the Sellers desire to sell to the Company, and the Company
desires to purchase from the Sellers, an aggregate of between 1,540,000 and
1,550,000 shares (together with all associates rights, the "Shares") of the
Company's Common Stock, $.01 par value per share ("Common Stock") being all of
the shares of Common Stock owned by the Sellers; and
WHEREAS the Company and the other parties hereto desire further to
provide for their relations with one another, as more particularly set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration the receipt and sufficiency of
which are hereby mutually acknowledged, the parties agree as follows:
1. PURCHASE AND SALE OF SHARES. Subject to the terms and
conditions of this Agreement, and in reliance on the representations,
warranties and covenants contained herein, the Sellers shall sell, assign,
transfer and convey to the Company and the Company shall purchase from the
Sellers, all of the Shares for a purchase price of $3.50 per share (the
"Purchase Price").
2. SETTLEMENT. After full execution and delivery of this
Agreement by all parties, J&L shall cross a trade for the sale and purchase of
the Shares which shall be reported on the New York Stock Exchange composite
tape on March 7, 1989, with respect to which J&L shall receive from the Company
an agreed-upon commission of $.05 per Share. The trade shall be settled by
delivery of certificates for the Shares duly endorsed or accompanied by duly
executed stock powers against payment of the Purchase Price within five
business days following such cross-trade.
3. STANDSTILL. Each of the parties hereto other than the Company
hereby agrees that, for a period of ten years from the date hereof, without the
prior written consent of the Company, he or it will not, directly or
indirectly, (a) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, beneficial ownership of any voting
securities, or direct or indirect rights or options to acquire any voting
securities (including, without limitation, non-voting securities convertible
into or with appertaining rights to acquire voting securities), of the Company
(except that this clause (a) shall not apply to normal unsolicited brokerage
transactions by J&L for the account of any person or entity who or which is not
a party to this Agreement other than the Company or an affiliate of such a
party; (b) make, or in any way participate, directly or indirectly, in any
solicitation of proxies to vote, or seek to advise or influence any person,
entity or group with respect to the voting of, any voting securities of the
Company, or initiate or propose any stockholder proposal with respect to the
2
Company described in Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (except that this clause (b) shall not prohibit
J&L from simply forwarding proxy material to its customers who beneficially own
voting securities of the Company); (c) form, join or in any way participate in,
or in any manner provide any form of assistance to, a group with respect to any
voting securities of the Company; or (d) otherwise act, alone or in concert
with others, to seek to, or assist or encourage any other person, entity or
group in seeking to, control or influence the management, board of directors or
policies of the Company or propose or effect any form of business combination
with the Company or any of its affiliates or any restructuring,
recapitalization or similar transaction with respect to the Company or any of
its affiliates.
4. WITHDRAWAL OF PROPOSAL. Howard R. Curd, Sonar Partners, L.P.
and Sonar Capital, Inc. agree that they will forthwith withdraw or cause to be
withdrawn the stockholder proposal that they have submitted to the Company for
inclusion in its proxy materials to be circulated by its Board of Directors for
its 1989 annual meeting of stockholders and will notify the Securities and
Exchange Commission (the "Commission") of such withdrawal, after which the
Company will withdraw its "no-action" request to the Commission in connection
therewith.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the
Sellers represents and warrants, severally but not jointly, to the Company as
follows:
(a) Such Seller has the legal power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby;
(b) Such Seller is the sole beneficial owner of the Shares
owned by him, has good and marketable title to all such Shares, and there exist
no liens, claims, options, proxies, voting agreements, charges or encumbrances
of whatever nature ("Liens") affecting such Shares other than this Agreement
and those which will be extinguished at or prior to the time of the settlement
contemplated by Paragraph 2 hereof;
(c) Upon the settlement contemplated by Paragraph 2 hereof,
the Company will have good and marketable title to such Shares, free and clear
of all Liens other than any Liens created by actions of the Company;
(d) The Shares owned by such Seller constitute all of the
securities of the Company beneficially owned, directly or indirectly, by such
Seller;
(e) Such Seller does not hold any option, warrant or other
right to acquire, directly or indirectly, any securities of the Company which
are or may by their terms become entitled to vote or any securities which are
convertible or exchangeable into or exercisable for any securities of the
Company which are or may by their terms become entitled to vote, nor is such
Seller a party to any offer, contract, arrangement, understanding or
relationship (whether or not legally enforceable) which allows or obligates
such Seller to vote or acquire any securities of the Company;
(f) This Agreement is a valid and binding agreement of such
Seller, enforceable against him or it in accordance with its terms. The
execution of this Agreement by such Seller does not, and the performance by
such Seller of his or its obligations hereunder will not, constitute a
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violation of, conflict with or result in a default under any contract,
commitment, agreement, understanding, arrangement or restriction of any kind to
which such Seller is a party or is bound or any judgment, decree or order
applicable to such Seller (other than any defaults which will be cured by such
Seller at or prior to the time of the settlement contemplated by Paragraph 2
hereof); and
(g) Neither the execution and delivery of this Agreement nor
the performance by such Seller of his or its obligations hereunder will, to
such Seller's knowledge, violate any provision of law applicable to such member
or require any consent or approval of, or filing with or notice to any public
body or authority under any provision of law applicable to such Seller other
than notices or filings pursuant to the federal securities laws or the rules
and regulations of the New York Stock Exchange.
6. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF CURD, SONAR AND
J&L. Curd, Sonar Partners, L.P., Sonar Capital, Inc. and J&L represent and
warrant to the Company as follows:
(a) The representations and warranties of the Sellers set
forth in Paragraph 5 hereof are true and correct as to the Sellers;
(b) The representations and warranties of the Sellers set
forth in subparagraphs (a), (d), (e), (f) and (g) of Paragraph 5 hereof, which
J&L hereby makes for itself, are also true and correct as to J&L;
(c) The numbers of Shares respectively owned by the Sellers
are as set forth on Schedule A hereto; and
(d) Sonar Partners, L.P. has simultaneously herewith delivered
to the Company's President and General Counsel a schedule of all of the limited
partners in Sonar Partners, L.P.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company represents, warrants and covenants to each of the Sellers and J&L as
follows:
(a) The company is duly organized and validly existing and in
good standing under the laws of the State of Delaware, has the requisite
corporate power and authority to execute, deliver this Agreement and to
consummate the transactions contemplated hereby, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement;
(b) This Agreement is a valid and binding agreement of the
Company enforceable against it in accordance with its terms. The execution of
this Agreement by the Company does not, and the performance by the Company of
its obligations hereunder will not, constitute a violation of, conflict with or
result in a default under any contract, commitment, agreement, understanding,
arrangement or restriction of any kind to which the Company is a party or by
which the Company is bound in any case in which the Company has not obtained or
will not obtain prior to the settlement contemplated by Paragraph 2 hereof or
any judgment, decree or order applicable to the Company; and
(c) Neither the execution and delivery of this Agreement nor
the performance by the Company of its obligations hereunder will violate any
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provision of law applicable to the company or require any consent or approval
of, or filing with or notice to any public body or authority under, any
provision of law applicable to the Company other than notices or filings
pursuant to the federal securities laws or the rules and regulations of the New
York Stock Exchange.
(d) The Company's President and General Counsel have received
the schedule described in Paragraph 6(b) hereof and the Company shall cause its
President and General Counsel, whoever they may be from time to time, to keep
such schedule confidential (including the identities of the Limited Partners),
except (i) disclosure by them to the Company's outside legal counsel on the
understanding that no further disclosure shall be permitted, (ii) as to any
particular Limited Partner, in the event of a breach by such Limited Partner of
the terms hereof, or (iii) as may otherwise be required by applicable law.
8. SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges
and agrees that, in the event of any breach of this Agreement, the
non-breaching party would be irreparably harmed and could not be made whole by
monetary damages. It is accordingly agreed that the non-breaching party, in
addition to any other remedy to which he or it may be entitled at law or in
equity, shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and/or to compel specific performance of this Agreement in
any action instituted in any court of the United States or any state thereof
having jurisdiction over the subject matter and the parties.
9. EXPENSES. All fees and expenses incurred by any of the
parties hereto shall be borne by the party incurring such fees and expenses,
and all sales, transfer or other similar taxes payable in connection with this
Agreement or the performance hereof (including, but not limited to, any
transfer taxes payable in connection with the sale of the Shares), shall be
borne by the party incurring such taxes; PROVIDED, however, that the Company
shall pay to J&L the commission set forth in Paragraph 2 hereof upon the
occurrence of the settlement contemplated therein.
10. CERTAIN DEFINITIONS. As used herein, the terms "affiliate"
and "associate" mean any present or future affiliate or associate within the
meaning of Rule 12b-2 under the Exchange Act; the term "group" means a group
within the meaning of Section 13(d) of the Exchange Act; the terms "beneficial
owner" and "beneficial ownership" mean beneficial owner and beneficial
ownership within the meaning of Rule 13d-3 under the Exchange Act; the term
"voting securities of the Company" means the Common Stock and any other
securities of the Company entitling the holder to vote for the election of
directors of the Company; and the terms "solicitation" and "proxies" have the
meanings used in the proxy rules of the Commission under the Exchange Act.
11. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, whether oral or written,
between the parties hereto with respect to the subject matter hereof. Without
limiting the generality of the foregoing, the parties hereto acknowledge that
there have been no inducements by any party to any other party to enter into
this Agreement, except as expressly set forth herein. This Agreement may not
be amended orally, but only by an instrument in writing signed by each of the
parties to this Agreement.
(b) This Agreement shall inure to the benefit of and be
binding upon and enforceable against the parties hereto and their directors,
officers,
4
5
heirs, legal representatives, attorneys, successors and assigns. In the event
that any provision of this agreement is deemed or held invalid or unenforceable
to any extent in any circumstances, such invalidity or unenforceability shall
not affect such provision under other circumstances or any other provision; and
if any provision hereof is deemed or held invalid or unenforceable because of
its scope as to time, geographic extent or otherwise, such provision shall be
deemed limited to the extent necessary to make such provision valid and
enforceable, it being the intention of the parties that this Agreement will be
valid and enforceable to the maximum extent permitted by law.
(c) This Agreement may not be modified except in a writing
executed and delivered by duly authorized representatives of both parties and,
further, no provision hereof may be waived except in a writing making specific
reference to this Agreement executed and delivered by a duly authorized
representative of the party granting such waiver to the other. Any waiver by
any party of a breach of any provision of this Agreement shall not operate as
or be construed to be a waiver of any other breach of such provision or of any
breach of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement or one or more
sections shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
(d) Section headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(e) All representations, warranties and covenants shall
survive the cress-trade and settlement contemplated by Paragraph 2 hereof.
(f) This Agreement may be executed in any number of
counterparts, each of which shall, when executed, be deemed to be an original,
and all of which shall be deemed to be one and the same instrument.
(g) This Agreement shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Delaware,
without reference to the conflict of laws principles thereof.
(h) All notices and other communications under this Agreement
shall be in writing and delivery thereof shall be deemed to have been made
either (i) if mailed, when received, or (ii) when transmitted by hand delivery,
telegram, telex, telecopier or facsimile transmission, to the party entitled to
receive the same at the addresses indicated below or at such other address as
such party shall have specified by written notice to the other parties hereto
given in accordance with this subsection:
If to any of the parties other than the Company, addressed to:
Howard R. Curd
360 Madison Avenue
New York, New York 10017
5
6
with a copy to:
Parker Chapin Flattau and Klimpl
1121 Avenue of the Americas
New York, New York 10036
Attention: Herbert Rosedale, Esquire
If to the Company, addressed to:
Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: Robert Stein, President
with a copy to:
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attention: Richard R. Kelly, Esq.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
the parties have executed or caused this Agreement to be executed under seal by
themselves their duly authorized representatives and delivered.
The Company: EKCO GROUP, INC.
By /S/ ROBERT STEIN
----------------------------
Robert Stein, President
The Sellers: /S/ HOWARD R. CURD
-------------------------------
Howard R. Curd
SONAR PARTNERS, L.P.
BY SONAR CAPITAL, INC.
By /S/ HOWARD R. CURD
----------------------------
SONAR CAPITAL, INC.
By /S/ HOWARD R. CURD
----------------------------
/S/ ALFRED AYSSEH
-------------------------------
Alfred Aysseh, by Howard R.
Curd his attorney in fact
J&L: JESUP & LAMONT SECURITIES, INC.
By [signature illegible]
----------------------------
Vice President
6
7
THE LIMITED PARTNERS OF SONAR, L.P.
By: /S/ HOWARD R. CURD
-------------------------------
Howard R. Curd
As Attorney In Fact
Pursuant to Power of Attorney
7
EX-13
19
FINANCIAL STATEMENTS
1
EXHIBIT 13
INDEX
Selected Consolidated Financial Data
Common Stock Price Range and Dividends
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
1
2
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data of the Company shown
below for the five-year period ended January 1, 1995 are derived from the
consolidated financial statements of the Company audited by independent
certified public accountants. The information set forth below is qualified in
its entirety by the more detailed financial statements and the notes thereto
included elsewhere herein. The following table should be read in conjunction
with Management's Discussion and Analysis of Results of Operations and
Financial Condition and the Company's audited Consolidated Financial Statements
and Notes thereto appearing elsewhere herein.
FISCAL YEARS
--------------------------------------------------------------
1994 (1)(2) 1993 (1)(2) 1992(2) 1991 1990
----------- ----------- ------- ---- ----
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED BALANCE SHEET DATA
Current assets $111,627 $ 89,831 $ 79,679 $ 64,808 $ 58,834
Total assets 317,783 307,961 255,081 211,484 210,276
Current liabilities 51,118 64,062 41,113 45,173 40,721
Long-term obligations, less current portion 102,580 89,982 71,264 71,644 81,099
7% Convertible Subordinated Note 22,000 22,000 22,000 - -
Series B ESOP Convertible Preferred Stock, net 3,096 2,686 2,111 1,649 1,118
Stockholders' equity 129,116 116,864 110,567 86,841 80,050
Common shares outstanding 18,069 17,844 17,148 14,676 14,500
CONSOLIDATED STATEMENT OF OPERATIONS DATA
Net revenues $267,048 $246,428 $206,628 $166,717 $162,196
Cost of sales 175,451 161,349 129,085 99,130 103,967
Consolidation and restructuring charges - 11,000 - - 3,600
Selling, general and administrative 53,433 50,841 46,581 43,220 39,160
EBITDA (3) 47,391 32,783 38,249 29,779 20,236
Amortization of excess of cost over fair value 4,438 4,195 3,557 2,770 2,767
Net interest expense 12,491 12,206 10,680 9,594 10,206
Income before income taxes 21,235 6,837 16,725 12,003 2,496
Income taxes 9,812 4,578 8,078 6,109 2,196
Income before cumulative effect of accounting
changes 11,423 2,259 (4) 8,647 5,894 300
Earnings per common share before cumulative
effect of accounting changes .57 .11 (4) .46 .35 .02
(1) Includes operations of Kellogg Brush Manufacturing Co. and subsidiaries acquired on April 1, 1993.
(2) Includes operations of Frem Corporation acquired on January 8, 1992.
(3) EBITDA represents earnings before interest, taxes, depreciation and amortization of excess of cost
over fair value.
(4) During Fiscal 1993, the Company recorded a charge of $3,247,000 (net of income taxes of $1,954,000)
to reflect the cumulative effect of changes in the method of accounting for post-retirement and
post-employment benefits.
(5) The Company did not pay any cash dividends during the periods presented.
2
3
COMMON STOCK PRICE RANGE AND DIVIDENDS
The Company's common stock $.01 par value per share ("Common
Stock"), is traded on the New York Stock Exchange under the ticker symbol
"EKO". The following table sets forth the high and low sale prices per share
as reported on the New York Stock Exchange Composite Tape during the calendar
periods indicated:
LOW HIGH
1994
First Quarter 6 1/2 8 1/8
Second Quarter 6 1/2 7 3/8
Third Quarter 6 1/2 7 3/4
Fourth Quarter 5 7/8 7 1/8
1993
First Quarter 9 7/8 12 1/8
Second Quarter 10 11 3/4
Third Quarter 8 1/8 10 5/8
Fourth Quarter 6 1/8 8 5/8
On March 3, 1995, the Company had 2,332 stockholders of record.
On February 6, 1995, the Company announced that its Board of Directors had
declared an initial quarterly cash dividend of $.02 per share, payable on April
3, 1995 to stockholders of record on March 17, 1995. The Company's bank credit
facilities and certain debt instruments restrict dividends and payments that
the Company's operating subsidiaries may make to the Company.
3
4
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated
results of operations for the fiscal years ended January 1, 1995 ("Fiscal
1994"), January 2, 1994 ("Fiscal 1993") and January 3, 1993 ("Fiscal 1992") and
the financial condition at January 1, 1995 should be read in conjunction with
the Company's Consolidated Financial Statements and Notes thereto.
FISCAL 1994 VS. FISCAL 1993
NET REVENUES
Net revenues for Fiscal 1994 increased approximately $20.6
million (8.4%) from the prior year. Net revenues for Fiscal 1994 include first
quarter revenues of $12.7 million from Kellogg Brush Manufacturing Co. and
subsidiaries ("Kellogg"). Kellogg was acquired by the Company on April 1,
1993. Net revenues for Fiscal 1993 include $13.3 million associated with the
Company's tackle box and hunting storage container business, which assets were
sold in January 1994. Excluding the foregoing acquisition and divestiture,
net revenues for Fiscal 1994 increased approximately $21.2 million. Each of
the Company's business units contributed to the growth in net revenues.
Retailers, while continuing to adhere to stringent inventory controls, are
committed to maintaining high service levels for their customers. As a result,
retailers are keeping their shelves stocked, which has contributed to the
Company's growth in revenues. Approximately $9.5 million of the increase
resulted from increased sales of the Company's bakeware products which
benefited from new products, such as Crisp It(TM) pizza pans and Healthy
Cooking broiler and meat loaf pans, along with strong growth in Baker's
Secret(R) bakeware products. Approximately $4.0 million of the increase
resulted from increased sales of the Company's kitchen tool and gadget products
which benefited from the J-Hook program introduced in the second half of 1993.
GROSS PROFIT
The Company's gross profit margin remained essentially unchanged
from the 34.5% in Fiscal 1993. The Company was able to maintain its gross
profit margin despite increases in raw material costs and warehousing and
distribution costs. These increases were offset by improved facilities
utilization primarily at Kellogg and changes in product mix. Although raw
material costs are increasing in general, the majority of the increase resulted
from the approximate doubling of prices of plastic resin, Frem Corporation's
primary raw material. While the Company expects to increase prices in 1995,
there can be no assurance that the sales price increases will offset the
increases being experienced in raw material costs.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for Fiscal 1994
increased approximately $2.6 million (5.1%) for 1994 from the prior year.
Selling, general and administrative expenses for Fiscal 1993, include $2.6
million associated with the Company's tackle box and hunting storage container
business. Additionally, selling, general and administrative expenses for
Fiscal 1994, include first quarter expenses of $1.9 million from Kellogg.
Excluding the above acquisitions and divestitures, selling, general and
administrative expenses for Fiscal 1994 increased approximately $3.3 million
(6.7%). The increase was primarily due to increased display and sales
promotion costs for the Company's kitchen tool and gadget products, costs
associated with the Company's 1994 bakeware media campaign and costs associated
with a start-up subsidiary (B. VIA International Housewares, Inc.) that is
developing products for the upscale and specialty marketplace. The increase
was partially offset by the benefit associated with the implementation of the
Company's restructuring plan (see "Restructuring/reorganization and excess
facilities charge" below).
4
5
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS (CONTINUED)
NET INTEREST EXPENSE
Net interest expense for Fiscal 1994 increased $285,000 from
the prior year. The increase was primarily due to the additional debt
associated with the acquisition of Kellogg on April 1, 1993.
RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
During the fourth quarter of Fiscal 1993, the Company recorded
an $11.0 million restructuring/reorganization and excess facilities charge
($6.6 million after income taxes) resulting from management's analysis of the
Company's operations and future strategy. Of this charge, approximately $3.5
million related to property held for sale and approximately $2.7 million of the
total charge was non-cash.
The items covered by the charge were: (i) severance and
related personnel costs associated with a reduction and realignment in
administrative and operating personnel, principally at Ekco Housewares, Inc.
("Housewares"); (ii) costs associated with the consolidation of different
distribution and information systems within the Company including the closing
of excess facilities which are not compatible with the new group strategy
(including lease contingencies) as well as the write-off of equipment no longer
relevant to the operating strategy; and, (iii) costs associated with excess
facilities currently classified as held for sale.
During the fourth quarter of Fiscal 1994, the Company
completed the first phase of its restructuring efforts. The components of the
original charge and the amounts charged against the reserve during the first
phase of the restructuring, of which approximately $5 million were cash
expenditures, are set out below:
CHARGE
RECORDED FISCAL RESERVE
IN FISCAL 1994 BALANCE AT
1993 ACTIVITY JANUARY 1, 1995
-------- -------- ---------------
Accrued Expenses
Severance and other related personnel
costs $ 3,200 $1,135 $2,065
Costs associated with implementing
distribution and operating strategy 2,600 2,600 -
Costs associated with excess facilities 2,023 783 1,240
Other 500 500 -
------ ----- -----
8,323 5,018 3,305
Property held for resale 1,000 1,000 -
Write-off of equipment 1,250 1,250 -
Other 427 427 -
----- ----- -----
$11,000 $7,695 $3,305
====== ===== =====
The Company estimates the benefit it received in Fiscal 1994
from the restructuring was approximately $2.4 million. The benefit was
primarily due to reduced expenses associated with the reduction and realignment
in administrative and operating personnel, principally at Housewares.
5
6
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS (CONTINUED)
RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE (CONTINUED)
Subsequent to December 1994, the Company announced the second phase of
its restructuring which will utilize the balance of the reserve. During the
second phase, the Company will combine its principal housewares business units
into a single operating division. The new division will consolidate the
management and operations of Housewares, Frem Corporation ("Frem") and Kellogg.
This new division will also provide certain administrative and distribution
services to the Company's other business units.
INCOME TAXES
The effective income tax rate declined from 67% in Fiscal 1993 to 46%
in Fiscal 1994 primarily as a result of amortization of goodwill becoming a
lower percentage of earnings before income taxes for Fiscal 1994.
FISCAL 1993 VS. FISCAL 1992
NET REVENUES
Net revenues for Fiscal 1993 increased approximately $39.8 million
(19.3%) from the prior year. The increase was primarily due to the inclusion
of the results of Kellogg acquired on April 1, 1993 (approximately $37
million) and increases in sales of kitchen tool and gadget products
(approximately $9 million). The increase was partially offset by declines in
bakeware sales due to retail softness and inventory reduction management by
many of the Company's customers.
GROSS PROFIT
The Company's gross profit margin declined from 37.5% in Fiscal 1992 to
34.5% in Fiscal 1993. The decline was due to the inclusion of the results of
Kellogg, whose gross margin was lower than the Company's consolidated gross
margin.
SELLING, GENERAL AND ADMINISTRATIVE
As a percentage of net revenues, selling, general and administrative
expenses decreased from 22.5% to 20.6%. This improvement reflects the
increased net revenues resulting from the acquisition of Kellogg. Selling,
general and administrative expenses for Fiscal 1993 increased approximately
$4.3 million (9.1%) from the prior year primarily due to the inclusion of
Kellogg (approximately $5 million).
Rental income of approximately $1.5 million for Fiscal 1993 and $1.2
million for Fiscal 1992, derived from leasing a portion of the Company's
property held for sale or lease, has been included as a reduction of selling,
general and administrative expenses.
RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
During the fourth quarter of 1993, the Company recorded an $11 million
restructuring/reorganization and excess facilities charge ($6.6 million after
income taxes) resulting from management's analysis of the Company's operations
and future strategy. Of this charge, $2.7 million was non-cash.
6
7
EKCO GROUP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS (CONTINUED)
INTEREST EXPENSE
Interest expense for Fiscal 1993 increased approximately $1.6 million
from the prior year primarily due to consummation of a private placement of a
$22.0 million 7% Convertible Subordinated Note on December 22, 1992 and
increased borrowings principally attributable to the acquisition of Kellogg on
April 1, 1993.
INCOME TAXES
The effective income tax rate increased from 48% in Fiscal 1992 to 67%
in Fiscal 1993 primarily as a result of amortization of goodwill becoming a
higher percentage of earnings before income taxes.
CUMULATIVE EFFECT OF CHANGES IN METHOD OF ACCOUNTING
The charge in Fiscal 1993 for the cumulative effect of changes in
method of accounting was due to the adoption by the Company of Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Post-retirement Benefits Other Than Pensions" ("FAS 106") and Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Post-employment Benefits" ("FAS 112").
LIQUIDITY AND CAPITAL RESOURCES
During Fiscal 1994, the Company generated approximately $2.4 million in
cash from operations. Such cash, along with borrowings of approximately $32
million and year-end cash balances, was used in part for capital expenditures
(approximately $11 million as compared to $15 million for Fiscal 1993), and the
reduction of debt (approximately $29 million).
The Company's accounts receivable and inventories increased
approximately $10 million and $15 million, respectively, from the January 2,
1994 level. The increase in accounts receivable results primarily from
shipments taking place later in the fiscal year and a change in customer mix.
Inventories increased primarily due to increases in the distribution of the
Company's kitchen tool and gadget products to major customers, expansion of
the kitchenware J-Hook program and to meet anticipated customer service
requirements. The decline in property and equipment, approximately $1 million
from the January 2, 1994 level, results primarily from the January 1994 sale of
the assets of the Company's plastic tackle box and hunting storage container
business and normal depreciation, offset in part by capital expenditures. The
decline in property held for sale or lease results primarily from the sale of
the Company's Toronto, Ontario real estate. The decline in other assets
relates to the reduction in time deposits. Such deposits were used to reduce
borrowings.
The Company has a commitment for a $75 million bank credit facility
(the Group Credit Facility) which provides lines of credit for each of the
Company ($30.0 million), Housewares ($35.0 million) and Frem ($10.0 million).
The proceeds from the Group Credit Facility will be used to retire and
refinance loans under the Housewares Credit Agreement ($14.3 million at January
1, 1995), the Frem Credit Agreement ($5.9 million at January 1, 1995) and the
Group Credit Line ($22.2 million at January 1, 1995). The remaining line
($32.6 million as of January 1, 1995) will be available for general corporate
purposes, including working capital, letters of credit and acquisitions. The
facility will mature on December 1, 1998.
7
8
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS (CONTINUED)
Loans under the Group Credit Facility will bear interest ranging from
the bank's prime rate to the prime rate plus 0.25% or the LIBOR rate plus
1.25% to 1.75%, depending on the Company's borrowing strategy and the ratio of
total debt to cash flow, as defined. The Group Credit Facility will provide
for a commitment fee of three-eighths of one percent on the unused portion of
the commitment amount and a $60,000 annual agency fee.
Borrowings under the Group Credit Facility will be collateralized by
substantially all of the tangible assets of the Company. The Group Credit
Facility will contain certain financial and operating covenants. The most
restrictive covenant will require the Company to maintain a minimum level of
cash flow.
The Company believes it will have sufficient borrowing capacity to
finance its ongoing operations through the end of fiscal year 1995. The Company
may require additional funds to finance any further acquisitions.
In January 1994, the Company sold the assets of its plastic tackle and
hunting storage container business for cash of approximately $4.3 million,
resulting in a gain of approximately $450,000 before related income taxes. The
proceeds from the sale were used to reduce outstanding debt. The tackle box
and hunting storage container business had net revenues of approximately $13.3
million in Fiscal 1993.
The Company has land and buildings in Hudson, New Hampshire; Chicago,
Illinois; and a portion of its facilities in Lititz, Pennsylvania, which are
held for sale or lease. The Company is actively pursuing the sale or lease of
these properties, and has partially leased the Hudson and Lititz facilities.
The Company plans to sell these properties within the next two years. The
aggregate carrying values of such properties are periodically reviewed and are
stated at the lower of cost or market.
The 12.70% Notes restrict the payments that Ekco Housewares, Inc. and
its subsidiaries may make to the Company, as well as contain certain financial
and operating covenants and limit or restrict the sale of assets, additional
indebtedness, and certain investments and acquisitions. Under the most
restrictive covenant, these subsidiaries collectively must maintain a current
ratio of 1.25 to 1.00. At January 1, 1995, the amounts that could be paid to
the Company from these subsidiaries totalled approximately $23.7 million. The
Company believes that this amount, plus such additional amounts as are expected
to be payable to the Company by such subsidiaries in the future, as well as
borrowing capacity within the Group Credit Facility are adequate to fund the
Company's parent operations in Fiscal 1995.
The Company has provided approximately $3.6 million for environmental
remediation and ongoing operation, maintenance and ground water monitoring
costs associated with Kellogg-owned or occupied facilities. The Company
believes the provision is adequate but will continue to monitor and adjust the
provision, as appropriate, should additional sites be identified or further
remediation measures be required or undertaken or interpretation of current
laws or regulations be modified.
8
9
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 1, JANUARY 2,
1995 1994
---------- ----------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
ASSETS
Current assets
Cash and cash equivalents $ 129 $ 327
Accounts receivable, net of allowance for
doubtful accounts (January 1, 1995, $1,739;
January 2, 1994, $1,758) 46,030 36,095
Inventories 48,242 33,612
Prepaid expenses and other current assets 6,296 5,800
Deferred income taxes 7,330 9,647
Investments pledged as collateral 3,600 4,350
------- -------
Total current assets 111,627 89,831
Property and equipment, net 52,361 53,241
Property held for sale or lease, net of
accumulated depreciation (January 1, 1995,
$8,323; January 2, 1994, $9,055) 7,373 9,353
Other assets 5,440 10,006
Excess of cost over fair value of net assets acquired,
net of accumulated amortization (January 1, 1995,
$23,290; January 2, 1994, $18,852) 140,982 145,530
------- -------
Total assets $317,783 $307,961
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable $ 3,643 $ 4,338
Current portion of long-term obligations 36 9,238
Accounts payable 15,652 13,955
Accrued expenses 27,843 31,659
Income taxes 3,944 4,872
------- -------
Total current liabilities 51,118 64,062
------- -------
Long-term obligations, less current portion 102,580 89,982
------- -------
Other long-term liabilities 9,375 11,869
------- -------
7% Convertible Subordinated Note 22,000 22,000
------- -------
Series B ESOP Convertible Preferred Stock, net;
outstanding January 1, 1995, 1,568 shares;
outstanding January 2, 1994, 1,645 shares,
redeemable at $3.61 per share 3,096 2,686
------- -------
Commitments and contingencies
Minority interest 498 498
------- -------
Stockholders' equity
Common stock, $.01 par value; outstanding
January 1, 1995, 18,069 shares; outstanding
January 2, 1994, 17,844 shares 181 178
Capital in excess of par value 105,448 104,202
Cumulative translation adjustment 771 1,091
Retained earnings 27,172 15,749
Unearned compensation (2,968) (2,452)
Pension liability adjustment (1,488) (1,904)
------- -------
129,116 116,864
------- -------
Total liabilities and stockholders' equity $317,783 $307,961
======== ========
See accompanying notes to consolidated financial statements.
9
10
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED
JANUARY 1, JANUARY 2, JANUARY 3,
1995 1994 1993
---------- ---------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net revenues $267,048 $246,428 $206,628
------- ------- -------
Costs and expenses
Cost of sales 175,451 161,349 129,085
Selling, general and administrative 53,433 50,841 46,581
Restructuring/reorganization and
excess facilities charge - 11,000 -
Amortization of excess of cost over
fair value 4,438 4,195 3,557
------- ------- -------
233,322 227,385 179,223
------- ------- -------
Income before interest and income taxes 33,726 19,043 27,405
------- ------- -------
Net interest expense
Interest expense 12,824 12,755 11,187
Investment income (333) (549) (507)
------- ------- -------
12,491 12,206 10,680
------- ------- -------
Income before income taxes and
cumulative effect of accounting changes 21,235 6,837 16,725
Income taxes 9,812 4,578 8,078
------- ------- -------
Income before cumulative effect of
accounting changes 11,423 2,259 8,647
Cumulative effect of changes in method
of accounting for post-retirement
and post-employment benefits (net of
income taxes of $1,954) - (3,247) -
------- ------- -------
Net income (loss) $ 11,423 $ (988) $ 8,647
======= ======= =======
Per share data
Earnings before cumulative effect of
accounting changes $ .57 $ .11 $.46
Cumulative effect of accounting changes - (.19) -
---- ---- ---
Net income (loss) $ .57 $(.08) $.46
==== ==== ===
Weighted average number of shares used
in computation of per share data
Earnings before cumulative effect
of accounting changes 20,115 19,999 18,785
Cumulative effect of accounting changes - 17,148 -
See accompanying notes to consolidated financial statements.
10
11
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON CAPITAL IN CUMULATIVE PENSION
STOCK, PAR EXCESS OF TRANSLATION RETAINED UNEARNED LIABILITY
SHARES VALUE $.01 PAR VALUE ADJUSTMENT EARNINGS COMPENSATION ADJUSTMENT
------ ---------- ---------- ----------- -------- ------------ ----------
(AMOUNTS IN THOUSANDS)
Balance, December 29, 1991 14,676 $ 146 $ 79,960 $ 1,676 $ 8,090 $ (2,943) $ (88)
Shares issued under employee common
stock purchase and option plans 326 3 1,177 - - - -
Shares issued under restricted common
stock purchase plans 37 - 417 - - (413) -
Shares issued upon preferred stock
conversion 59 1 214 - - - -
Income tax reductions relating to
stock plans - - 795 - - - -
Treasury shares issued for acquisition 1,175 12 6,588 - - - -
Treasury shares issued for cash 882 9 7,578 - - - -
Purchase of treasury stock (7) - (78) - - - -
Net income for the year - - - - 8,647 - -
Foreign currency translation adjustment - - - (582) - - -
Amortization of unearned compensation - - - - - 473 -
Pension liability adjustment - - - - - - (1,115)
------ --- ------ ----- ------ ------- -------
Balance, January 3, 1993 17,148 171 96,651 1,094 16,737 (2,883) (1,203)
Shares issued under employee common
stock purchase and option plans 89 1 594 - - - -
Net shares issued under restricted common
stock purchase plans 11 - 13 - - (12) -
Shares issued upon preferred stock
conversions 31 - 110 - - - -
Treasury shares issued for acquisition 565 6 6,516 - - - -
Income tax reductions relating to stock
plans - - 318 - - - -
Net loss for the year - - - - (988) - -
Foreign currency translation adjustment - - - (3) - - -
Amortization of unearned compensation - - - - - 443 -
Pension liability adjustment - - - - - - (701)
------ --- ------- ----- ------ ------- -------
Balance, January 2, 1994 17,844 178 104,202 1,091 15,749 (2,452) (1,904)
11
12
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON CAPITAL IN CUMULATIVE PENSION
STOCK, PAR EXCESS OF TRANSLATION RETAINED UNEARNED LIABILITY
SHARES VALUE $.01 PAR VALUE ADJUSTMENT EARNINGS COMPENSATION ADJUSTMENT
------ ---------- ---------- ----------- -------- ------------ ----------
(AMOUNTS IN THOUSANDS)
Shares issued under employee common
stock purchase and option plans 148 2 643 - - - -
Income tax reductions relating to
stock plans - - 327 - - - -
Treasury shares issued upon preferred
stock conversions 77 1 276 - - - -
Net income for the year - - - - 11,423 - -
Foreign currency translation adjustment - - - (320) - - -
Unearned compensation relating to
common stock purchases by employee
stock ownership plan - - - - - (950) -
Amortization of unearned compensation - - - - - 434 -
Pension liability adjustment - - - - - - 416
------ ---- -------- ---- ------- -------- --------
Balance, January 1, 1995 18,069 $181 $105,448 $771 $27,172 $ (2,968) $(1,488)
====== ==== ======== ==== ======= ======== ========
See accompanying notes to consolidated financial statements.
12
13
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEARS ENDED
JANUARY 1, JANUARY 2, JANUARY 3,
1995 1994 1993
---------- ---------- ----------
(AMOUNTS IN THOUSANDS)
Cash flows from operating activities
Net income (loss) $11,423 $ (988) $ 8,647
Adjustments to reconcile net income (loss)
to net cash provided by operations
Depreciation and amortization 9,227 9,545 7,287
Restructuring/reorganization and excess
facilities charge - 2,677 -
Amortization of assets 8,686 6,503 4,221
Deferred income taxes 1,679 (554) 5,480
Cumulative effect of accounting change - 3,247 -
Other 1,019 1,715 2,240
Change in certain assets and liabilities, net
of effects from acquisition and dispositions
of businesses, affecting cash provided by
operations
Accounts and note receivable (10,313) (4,431) (4,891)
Inventories (15,231) (6,622) 5,245
Other assets 192 (7,943) 769
Accounts payable and accrued expenses (3,348) 6,885 (5,669)
Income taxes payable (931) (361) (200)
------- ------- -------
Net cash provided by operations 2,403 9,673 23,129
------- ------- -------
Cash flows from investing activities
Proceeds from sale of property and equipment 5,219 194 550
Capital expenditures (11,106) (15,111) (12,649)
Acquisitions of businesses - (26,428) (18,645)
------- ------- -------
Net cash used in investing activities (5,887) (41,345) (30,744)
------- ------- -------
Cash flows from financing activities
Proceeds from issuance of notes payable and
long-term obligations 32,118 30,274 51,452
Proceeds from issuance of treasury stock - - 7,587
Investments pledged as collateral - 750 360
Purchase of common stock for employee stock
ownership plan (950) - -
Payment of notes and long-term obligations (29,417) (17,049) (39,069)
Other 1,484 913 1,096
------- ------- -------
Net cash provided by financing
activities 3,235 14,888 21,426
Effect of exchange rate changes on cash 51 113 49
------- ------- -------
Net increase (decrease) in cash and
cash equivalents (198) (16,671) 13,860
Cash and cash equivalents at beginning of year 327 16,998 3,138
------- ------- -------
Cash and cash equivalents at end of year $ 129 $ 327 $16,998
======= ======= =======
Cash paid during the year for
Interest $12,050 $12,181 $10,730
Income taxes 9,061 4,753 2,800
See accompanying notes to consolidated financial statements.
13
14
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries. The Company's principal operating subsidiaries
are wholly-owned Ekco Housewares, Inc. ("Housewares"), Frem Corporation
("Frem"), and Kellogg Brush Manufacturing Co. and subsidiaries ("Kellogg"), and
majority-owned Woodstream Corporation ("Woodstream"). All significant
intercompany accounts and transactions have been eliminated.
BASIS OF PRESENTATION
The Company uses a 52-53 week fiscal year ending on the Sunday nearest
December 31. Accordingly, the accompanying consolidated financial statements
include the fiscal years ended January 1, 1995 ("Fiscal 1994"), January 2, 1994
("Fiscal 1993") and January 3, 1993 ("Fiscal 1992").
CASH AND CASH EQUIVALENTS
The Company considers all short-term investments which have an original
maturity of 90 days or less to be considered cash equivalents.
PREPAID EXPENSES AND OTHER CURRENT ASSETS
The Company incurs certain costs in connection with expanding its
market position at retail. These costs are deferred and amortized using the
straight-line method over the lesser of the period of benefit or the program
period. Program periods currently range from one to three years. It is the
Company's policy to periodically review and evaluate that the benefits
associated with these costs are expected to be realized and therefore deferral
and amortization is justified. Approximately $4.4 million and $4.0 million of
these costs are included in prepaid expenses at January 1, 1995 and January 2,
1994, respectively.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined on a first-in, first-out ("FIFO") basis for all subsidiaries except
for Kellogg, whose cost is determined on a last-in, first-out ("LIFO") basis.
INVESTMENTS
Investments are carried at cost which approximates market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Assets acquired through
business combinations accounted for under the purchase method are recorded at
appraised value determined as of the acquisition date. The Company provides
for depreciation and amortization over the estimated useful lives of assets or
terms of capital leases on the straight-line method. Improvements are
capitalized, while repair and maintenance costs are charged to operations. When
assets are retired or disposed of, the cost and accumulated depreciation
thereon are removed from the accounts, and gains or losses, if any, are
included in operations.
PROPERTY HELD FOR SALE OR LEASE
It is the Company's policy to make available for sale or lease property
considered no longer necessary for the operations of the Company. The
aggregate carrying values of such property are periodically reviewed and are
stated at the lower of cost or market.
14
15
INTANGIBLE ASSETS
The excess of cost over fair value of net assets acquired ("goodwill")
is being amortized over 12-to-40 year periods. It is the Company's policy to
periodically review and evaluate the recoverability of goodwill by assessing
long-term trends of profitability and cash flows and to determine whether the
amortization of goodwill over its remaining life can be recovered through
expected future results and cash flows.
Favorable lease rights included in other assets are being amortized
over the life of the lease. Deferred financing costs included in other assets
are debt issuance costs which have been deferred and are being amortized over
the terms of the respective financing arrangements.
INCOME RECOGNITION
Revenues from product sales are recognized at the time the product is
shipped. Investment income is accrued as earned.
TRANSLATION OF FOREIGN CURRENCY
The assets and liabilities of the Company's Canadian subsidiary are
translated at year-end exchange rates. Income and expenses are translated at
exchange rates prevailing during the year. The resulting net translation
adjustment for each year is included as a separate component of stockholders'
equity.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect, if any, on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Provision for U.S. income taxes on the undistributed earnings of
foreign subsidiaries is made only on those amounts in excess of the funds
considered to be permanently reinvested.
(2) ACQUISITION OF KELLOGG BRUSH MANUFACTURING CO.
On April 1, 1993, the Company acquired Kellogg for a cash payment of
approximately $26 million and 564,651 shares of the Company's common stock
valued at approximately $6.5 million.
Kellogg primarily manufactures and markets household brushes, brooms
and mops, which are sold in mass merchandise, discount, grocery and hardware
stores throughout the United States and Canada. The acquisition has been
accounted for under the purchase method of accounting. Goodwill of
approximately $33 million is being amortized over 40 years. In connection with
the acquisition, liabilities were assumed as follows (amounts in thousands):
Fair value of assets acquired $59,545
Cash paid for common stock of Kellogg (26,028)
Company's common stock issued for common stock of Kellogg (6,522)
Expenses incurred in connection with the acquisition (400)
-------
Liabilities assumed $26,595
=======
The following unaudited pro forma combined results of operations for
Fiscal 1993 have been prepared assuming that the acquisition of Kellogg
occurred at the beginning of the period. In preparing the pro forma data,
adjustments have been made for: (i) the amortization of goodwill; (ii) the
interest expense related to the borrowings under bank credit agreements to
finance a portion of the purchase price; (iii) reduction in investment income
for utilization of the Company's cash and investments to finance a
15
16
portion of the purchase price; (iv) the interest expense and weighted average
share effect of the Company's December 22, 1992 financing with The 1818 Fund,
L.P.; and (v) the elimination of costs associated with the exercise of options
under Kellogg's stock option plan which were exercised in connection with the
acquisition of Kellogg.
The following unaudited pro forma financial information is not
necessarily indicative of results of operations that would have occurred had
the transaction been effected at the beginning of Fiscal 1993 or of future
results of the combined companies.
FISCAL 1993
-----------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
Net revenues $256,876
Income before income taxes
and cumulative effect of changes
in method of accounting 3,152 (a)
Income before cumulative
effect of changes in method of
accounting (23)
Net income (loss) (3,270)
Per share data
Income before cumulative effect
of changes in method of accounting -
Net income (loss) (.19)
(a) During the first quarter of Fiscal 1993 (prior to acquisition by the Company) Kellogg recorded a $3.2 million
provision for environmental matters.
(3) INVENTORIES
The components of inventory were as follows:
JANUARY 1, 1995 JANUARY 2, 1994
--------------- ---------------
(AMOUNTS IN THOUSANDS)
Raw materials $15,229 $10,040
Work in process 4,047 1,871
Finished goods 28,966 21,701
------ ------
$48,242 $33,612
====== ======
At January 1, 1995, and January 2, 1994, inventories carried under the
LIFO method represented approximately 17.4% and 21.4%, respectively, of total
year-end inventories. If these inventories had been valued at the lower of FIFO
cost or market, inventories at January 1, 1995 would have been approximately
$23,000 higher and the same at January 2, 1994. During Fiscal 1994 and 1993,
there were no effects on net income from liquidation of LIFO layers.
16
17
(4) PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
JANUARY 1, 1995 JANUARY 2, 1994
--------------- ---------------
(AMOUNTS IN THOUSANDS)
Property and equipment at cost
Land, buildings and improvements $22,261 $21,151
Equipment, factory and other 59,839 57,227
------ ------
82,100 78,378
Less accumulated depreciation and
amortization 29,739 25,137
------ ------
$52,361 $53,241
====== ======
(5) NOTE PAYABLE
The note payable represents borrowings of the Company's Employee Stock
Ownership Plan ("ESOP") which the Company guarantees (the "ESOP Loan"). The
Company is required to maintain investments, pledged as collateral, in an amount
equal to the outstanding ESOP Loan balance. The interest rate on the ESOP Loan
has been fixed at 5.75% until June 15, 1995. Interest expense charged to
operations for Fiscal 1994, Fiscal 1993 and Fiscal 1992 relating to the ESOP
Loan was $131,000, $148,000 and $195,000, respectively. The ESOP Loan is
payable in equal monthly payments of principal and interest, adjusted from time
to time as rates change, until maturity in May 2009. In addition, under the
terms of the ESOP Loan, the Company is required to purchase the note from the
bank on four business days notice from the bank.
Certain information with respect to notes payable follows:
FISCAL 1994 FISCAL 1993 FISCAL 1992
----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
Amount of borrowings outstanding at end of year $3,643 $4,338 $5,108
Average interest rate of borrowings
outstanding at end of year 5.75% 2.75% 3.13%
Maximum amount of borrowings
outstanding at any month-end $4,316 $5,089 $5,439
Average aggregate borrowings during the year (a) $3,911 $4,768 $5,268
Weighted average interest rate during the year (b) 3.36% 3.10% 3.70%
(a) The average aggregate borrowings outstanding for each fiscal year have been computed based upon the daily
balance outstanding under the loan arrangement.
(b) The weighted average interest rate has been computed by dividing the interest expense for each fiscal
year by the average aggregate borrowings during such fiscal year.
17
18
(6) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES
Long-term obligations consisted of the following:
JANUARY 1, 1995 JANUARY 2, 1994
--------------- ---------------
(AMOUNTS IN THOUSANDS)
Group Credit Facility $ 42,424 (a) $38,276 (a)
12.70% Notes, due 1998 60,000 60,000
Other 192 944
-------- -------
102,616 99,220
Less current portion 36 9,238
-------- -------
$102,580 $89,982
======== =======
7% Convertible Subordinated Note,
due 2002 $ 22,000 $22,000
======== =======
Other long-term liabilities consisted of the following:
Accrued pension cost (see note 9) $ 1,408 $ 1,466
Deferred income taxes 948 1,589
Other long-term liabilities 7,019 8,814
-------- -------
$ 9,375 $11,869
======== =======
(a) Borrowings expected to be refinanced
under the Group Credit Facility:
Frem Credit Agreement $ 5,896 $ 6,500
Housewares Credit Agreement 14,305 13,956
Group Credit Line 22,223 17,820
-------- -------
$ 42,424 $38,276
======== =======
The Company has received a commitment for a $75 million bank credit
facility (the "Group Credit Facility") which provides lines of credit for each
of the Company ($30.0 million), Housewares ($35.0 million) and Frem ($10.0
million). The proceeds from the Group Credit Facility will be used to retire
loans under the Frem and Housewares Credit Agreements and the Group Credit Line
and, consequently, all amounts due under these agreements have been classified
as long-term. The remaining line ($32.6 million as of January 1, 1995) will be
available for general corporate purposes. The facility will mature on December
1, 1998.
Loans under the Group Credit Facility will bear interest ranging from
the bank's prime rate less 0.25% to the prime rate plus 0.25% or the LIBOR rate
plus 1.25% to 1.75%, depending on the Company's borrowing strategy and the ratio
of total debt to cash flow, as defined. The Group Credit Facility will provide
for a commitment fee of three-eighths of one percent on the unused portion of
the commitment amount and a $60,000 annual agency fee.
Borrowings under the Group Credit Facility will be collateralized by
substantially all of the tangible assets of the Company. The Group Credit
Facility will contain certain financial and operating covenants. The most
restrictive covenant will require the Company to maintain a minimum level of
cash flow.
18
19
Certain information with respect to credit agreements follows:
FISCAL 1994 FISCAL 1993 FISCAL 1992
----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
Average interest rate of borrowings
outstanding at end of year 8.20% 6.13% 6.06%
Maximum amount of borrowings
outstanding at any month-end $42,434 $47,239 $36,774
Average aggregate borrowings during
the year $35,748 $30,898 $30,587
Weighted average interest rate
during the year 6.22% 6.12% 6.11%
The 12.70% Notes are obligations of Housewares and its subsidiaries, Ekco
Canada, Inc. and Frem ("Ekco Housewares") and are due in 1998. The principal is
payable as follows: $18 million on each of December 15, 1996 and 1997, and $24
million on December 15, 1998. In the event of a Change in Control (as defined),
each Noteholder may require Ekco Housewares to prepay the Notes held by such
Noteholder. In addition, if, after a Change in Control, Ekco Housewares fails
to perform or observe any Triggering Covenant (as defined) in stated time
periods and specified circumstances, then each Noteholder may require Ekco
Housewares to prepay the Notes held by such Noteholder and to pay a substantial
premium (approximately $7.1 million at January 1, 1995).
The 12.70% Notes restrict the payments that Ekco Housewares can make
to the Company, as well as, contain certain financial and operating covenants
and limit or restrict the sale of assets, additional indebtedness, and certain
investments and acquisitions. Under the most restrictive covenant, these
subsidiaries collectively must maintain a current ratio of 1.25 to 1.00. At
January 1, 1995, the total amount that could be paid to the Company by Ekco
Housewares was approximately $23.7 million. Total net assets (total assets less
total liabilities) of Ekco Housewares excluding intercompany items were
approximately $101 million at January 1, 1995.
The 7% Convertible Subordinated Note is due November 30, 2002, and is
convertible into common stock at a conversion price of $10.50 per share subject
to certain adjustments. It is callable until December 1996 if the price of the
common stock averages $18 or more for 45 consecutive days immediately
preceding the call notice date. After four years, the Note is callable at an
initial premium of 3.5%, which declines to zero in the final year of maturity.
The Note requires the Company to maintain a minimum net worth of $84 million
subject to adjustment under certain circumstances.
The total of long-term obligations, with the exception of the 7%
Convertible Subordinated Note, mature over the four years ending December 1998
as follows (amounts in thousands): 1995- $36; 1996- $18,156; 1997- $18,000;
1998- $66,424.
19
20
(7) ACCRUED EXPENSES
Accrued expenses consisted of the following:
JANUARY 1, 1995 JANUARY 2, 1994
--------------- ---------------
(AMOUNTS IN THOUSANDS)
Payroll $ 2,145 $ 1,918
Compensated absences 1,933 1,805
Sales and promotional allowances 6,131 6,164
Provisions related to restructuring/
reorganization and excess facilities costs 3,305 8,323
Interest and non-income taxes 3,944 3,934
Insurance 2,509 2,091
Professional fees 1,605 2,299
Provision for environmental matters 2,080 1,423
Other 4,191 3,702
------- -------
$27,843 $31,659
======= =======
(8) INCOME TAXES
Total income tax expense for Fiscal 1994, Fiscal 1993 and Fiscal
1992 was allocated as follows:
FISCAL 1994 FISCAL 1993 FISCAL 1992
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
Income from operations $9,812 $4,578 $8,078
Stockholders' equity, for compensation
expense for tax purposes in excess of
amounts recognized for financial reporting
purposes (327) (318) (795)
------ ------ ------
$9,485 $4,260 $7,283
====== ====== ======
20
21
A reconciliation of the provision for income taxes to the
statutory income tax rate applied to combined domestic and foreign income
before income taxes for Fiscal 1994, Fiscal 1993 and Fiscal 1992 was as
follows:
FISCAL 1994 FISCAL 1993 FISCAL 1992
----------- ----------- -----------
(AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES)
Income (loss) before income taxes
Domestic $21,543 $7,573 $16,491
Foreign (308) (736) 234
------- ------ -------
$21,235 $6,837 $16,725
======= ====== =======
Federal income tax at normal rates 35% 35% 34%
State income taxes, net of federal benefit 4% 11% 6%
Change in federal rate - (3%) -
Difference between foreign and
federal effective rates - 2% 1%
Amortization of excess of cost over
fair value 7% 22% 7%
-- -- --
46% 67% 48%
== == ==
The components of the provision for income taxes were as follows:
FEDERAL STATE FOREIGN TOTAL
------- ----- ------- -----
(AMOUNTS IN THOUSANDS)
FISCAL 1994
-----------
Current $7,119 $1,098 $ (84) $8,133
Deferred 1,324 310 45 1,679
------ ----- ---- -----
$8,443 $1,408 $ (39) $9,812
====== ===== ==== =====
FISCAL 1993
-----------
Current $3,640 $1,484 $ 8 $5,132
Deferred (38) (372) (144) (554)
------ ------ ----- ------
$3,602 $1,112 $(136) $4,578
====== ====== ===== ======
FISCAL 1992
-----------
Current $ 341 $2,032 $ 225 $2,598
Deferred 5,939 (435) (24) 5,480
------ ------ ----- ------
$6,280 $1,597 $ 201 $8,078
====== ====== ===== ======
The significant components of deferred income tax expense
attributable to income from operations for Fiscal 1994, Fiscal 1993 and Fiscal
1992 were as follows:
FISCAL 1994 FISCAL 1993 FISCAL 1992
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
Utilization of net operating loss and tax credits $ - $ 2,303 $ 5,680
Depreciation (969) (1,438) (667)
Inventory (527) (173) 378
Benefit plans (258) 1,815 41
Restructuring/reorganization and excess
facilities charge - (4,400) -
Accruals, provisions and other liabilities 3,623 1,453 1,179
Other (190) (114) (1,131)
------ ------- -------
$1,679 $ (554) $ 5,480
====== ======= =======
21
22
The tax effects of temporary differences and carryforwards
that give rise to significant portions of net deferred tax asset (liability)
consisted of the following:
JANUARY 1, 1995 JANUARY 2, 1994
--------------- ---------------
(AMOUNTS IN THOUSANDS)
Receivables $ 518 $ 757
Inventory 1,428 901
Benefit plans 3,342 3,084
Accruals, provisions and other liabilities 5,313 8,936
Depreciation (3,655) (4,739)
Other (564) (881)
------ ------
$ 6,382 $ 8,058
====== ======
The Company's federal income tax returns for all years
subsequent to December 1987 are subject to review by the Internal Revenue
Service.
(9) RETIREMENT PLANS, POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS
The Company and its subsidiaries have various pension plans
which cover most of their employees and provide for monthly payments to
eligible employees upon retirement. Benefits for non-union employees are
generally based upon earnings and years of service prior to 1989 and certain
non-union employees receive benefits from allocated accounts under a defined
contribution plan. Benefits for certain union employees are based upon dollar
amounts attributed to each year of credited service; the remainder of the union
employees receive benefits from allocated accounts under a defined contribution
plan and from prior contributions to a multi-employer plan. The Company's
policy is to make contributions to these plans sufficient to meet the minimum
funding requirements of applicable laws and regulations, plus such amounts, if
any, as the Company's actuarial consultants determine to be appropriate. The
Company also provides supplemental retirement benefits for certain management
personnel based on earnings and years of service.
At January 1, 1995 and January 2, 1994, the Company reported, as
a separate component of stockholders' equity, the amount of the additional
liability in excess of the unrecognized prior service costs of its pension
plans.
Net pension expense consisted of the following:
FISCAL 1994 FISCAL 1993 FISCAL 1992
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
U.S. defined benefit plans
Service cost-benefits earned during the period $ 257 $ 229 $ 108
---- ---- ----
Interest accrued on projected benefit obligation 559 528 491
---- ---- ----
Expected return on assets
Actual return (196) (373) (501)
Unrecognized gain (loss) (368) (183) 39
---- ---- ----
(564) (556) (462)
Amortization of prior service cost and
unrecognized loss 120 54 56
Settlement loss 138 38 38
---- ---- ----
U.S. defined benefit plans, net 510 293 231
Canadian defined benefit plan (7) (2) (4)
U.S. defined contribution plans 127 129 28
---- ---- ----
Total net pension expense $ 630 $ 420 $ 255
==== ==== ====
22
23
The following sets forth the funded status of the Company's
defined benefit pension plans and amounts recognized in the consolidated
balance sheets:
JANUARY 1, 1995 JANUARY 2, 1994
---------------------------- -----------------------------
PLANS WITH PLANS WITH PLANS WITH PLANS WITH
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEEDING BENEFITS EXCEEDING BENEFITS
ACCUMULATED EXCEEDING ACCUMULATED EXCEEDING
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- ------------
(AMOUNTS IN THOUSANDS)
Accumulated benefit obligation
Vested $(1,342) $(6,592) $(1,411) $(7,034)
Nonvested (40) (44) (54) (52)
------ ------ ------ ------
Total (1,382) (6,636) (1,465) (7,086)
Effect of projected
compensation increases (233) - (204) -
------ ------ ------ ------
Projected benefit obligation (1,615) (6,636) (1,669) (7,086)
Plan assets 2,338 4,864 2,557 5,231
------ ------ ------ ------
Plan assets in excess of (less than)
projected benefit obligations 723 (1,772) 888 (1,855)
Unrecognized actuarial net gain (losses) (263) 1,852 (290) 2,293
Unrecognized prior service cost 115 47 29 43
Additional liability - (1,535) - (1,947)
------- ------- ------- -------
Prepaid (accrued) pension cost included
in consolidated balance sheet $ 575 $(1,408) $ 627 $(1,466)
======= ======= ======= =======
Plan assets are invested primarily in long-term debt and equity
instruments through pooled funds maintained by insurance companies. The
projected benefit obligation was determined using an assumed discount rate of
8.0% for January 1, 1995 and 7.0% for January 2, 1994. The nature of the
domestic pension plans is such that an estimate of future compensation
increases is not required. The assumed long-term rate of return on plan assets
was 9% for Fiscal 1994, Fiscal 1993 and Fiscal 1992. At January 1, 1995, the
various plans held an aggregate of 11,410 shares of the Company's common stock.
The Company sponsors defined benefit post-retirement health and
life insurance plans that cover certain retired and active employees. The
Company expects to continue these benefits indefinitely, but reserves the right
to amend or discontinue all or any part of the plans at any time.
Effective January 4, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Post-retirement Benefits Other Than Pensions" ("FAS 106") and recognized
immediately the cumulative effect of the change in accounting for
post-retirement benefits of $2.9 million ($1.8 million after income taxes)
which represents the accumulated post-retirement benefit obligation existing at
January 1, 1993. FAS 106 requires that the cost of these benefits be
recognized in the financial statements during employees' active working lives.
Previously, costs were recognized as claims were incurred. The Company's
funding policy for these plans remains on a pay-as-you-go basis.
23
24
The following sets forth the amounts recognized in the
consolidated balance sheets for the Company's post-retirement benefit plans:
JANUARY 1, 1995 JANUARY 2, 1994
--------------- ---------------
Accumulated post-retirement benefit obligation
Fully eligible active employees $ 649,000 $ 737,000
Retirees 1,518,000 1,594,000
Other active employees 547,000 629,000
--------- ---------
$2,714,000 $2,960,000
Plan assets - -
Unrecognized net (gain) loss 55,000 (21,000)
--------- ---------
Accrued post-retirement benefit cost $2,769,000 $2,939,000
========= =========
Post-retirement benefit expense consisted of the following:
FISCAL 1994 FISCAL 1993
----------- -----------
Service cost (benefits attributed to employee
services during the year) $ 46,000 $ 44,000
Interest expense on the accumulated post-retirement
benefit obligation 199,000 206,000
------- -------
Net periodic post-retirement benefit expense $245,000 $250,000
======= =======
The discount rates used in determining the accumulated
post-retirement benefit obligation as of January 1, 1995 and January 2, 1994
were 8.0% and 7.0%, respectively. The Company subsidy is a defined dollar
amount and will not increase in the future; therefore, no medical trend rate
has been assumed and the results of the calculation of the plan liabilities
will not be affected by future medical cost trends. The pay-as-you-go
expenditures for post-retirement benefits were $415,000 and $170,000 for Fiscal
1994 and Fiscal 1993, respectively.
The Company also adopted Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Post-employment Benefits" ("FAS
112") effective January 4, 1993, resulting in an after-tax charge of $1.4
million (net of income taxes of $900,000). The Company accrues benefits
provided to former or inactive employees after employment but before
retirement. The ongoing impact of FAS 112 is not expected to have a material
effect on earnings in future years.
There was no cash flow impact associated with either the adoption
of FAS 106 or FAS 112.
(10) EMPLOYEE STOCK OWNERSHIP PLAN
On February 23, 1989, the Company's Board of Directors adopted
the Ekco Group, Inc. Employees' Stock Ownership Plan (the "ESOP") for non-union
United States employees of the Company and subsidiaries designated by the
Company's Board of Directors as participants in the plan. Under the plan, the
Company sold 1.8 million shares of the Series B ESOP Convertible Preferred
Stock at a price of $3.61 per share to the ESOP trust. The ESOP satisfied its
obligation to the Company with borrowings from a bank. The Company has
guaranteed the ESOP borrowing and reported the unpaid balance of this loan as a
liability of the Company. At January 1, 1995, approximately 1.6 million shares
of the Company's common stock were reserved for conversion of Series B ESOP
Convertible Preferred Stock.
An unearned ESOP compensation amount is reported as an offset to
the Series B ESOP Convertible Preferred Stock amount in the consolidated
balance sheets. The unearned compensation is being amortized as shares in the
Series B ESOP Convertible Preferred
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Stock are allocated to employees. Shares are allocated ratably over the life
of the ESOP Loan or, if less, the actual period of time over which the
indebtedness is repaid. The allocation of shares is based upon a formula equal
to a percentage of the Company's payroll costs. The percentage is determined
by the Company's Board of Directors annually and may require principal
prepayments. The Company's Board of Directors has approved principal
prepayments of $477,000, $439,000 and $380,000 for Fiscal 1994, Fiscal 1993 and
Fiscal 1992 to be paid in 1995, 1994 and 1993, respectively. For Fiscal 1994,
Fiscal 1993 and Fiscal 1992, $687,000, $686,000 and $687,000, respectively,
has been charged to operations. The actual cash contributions, excluding the
above mentioned prepayments, to the ESOP by the Company during Fiscal 1994,
Fiscal 1993 and Fiscal 1992 were $390,000, $390,000 and $402,000, respectively.
Upon retirement or termination from the Company, each employee
has the option to either convert the vested Series B ESOP Convertible Preferred
Stock into Common Stock of the Company or redeem the Series B ESOP Convertible
Preferred Stock for cash at a price of $3.61 per share. The change in the
principal amount of the Series B ESOP Convertible Preferred Stock from year to
year is solely due to redemptions and conversions by vested employees retiring
or leaving the Company. The Series B ESOP Convertible Preferred Stock pays a
dividend equal to the dividend on the Company's common stock.
Series B ESOP Convertible Preferred Stock, net, consisted of the
following:
JANUARY 1, 1995 JANUARY 2, 1994
--------------- ---------------
(AMOUNTS IN THOUSANDS)
Series B ESOP Convertible Preferred Stock,
par value $.01 $ 5,662 $ 5,939
Unearned compensation (2,566) (3,253)
------ ------
$ 3,096 $ 2,686
====== ======
In October 1990, the Company's Board of Directors authorized the
Trustee of the ESOP to purchase up to 1.0 million shares of the Company's
common stock. The Company agreed to finance the purchase through a 20-year 10%
loan from the Company to the ESOP. During Fiscal 1994, the Company provided
the ESOP with approximately $950,000 to purchase approximately 137,000 shares
of the Company's common stock in the public market. As of January 1, 1995, the
ESOP had purchased, in open market transactions, a total of 1.0 million shares
of the Company's common stock at a total cost of approximately $3.3 million.
Unearned compensation equal to such cost is being amortized as shares of the
Company's common stock are allocated to employee accounts. Shares are
allocated ratably over the life of the loan or, if less, the actual period of
time over which the indebtedness is repaid, subject to the minimum allocation
of 50,000 shares in any one year. For each of Fiscal 1994, Fiscal 1993 and
Fiscal 1992, 50,000 shares were allocated to employees' accounts. For Fiscal
1994, Fiscal 1993 and Fiscal 1992, $155,000, $136,000 and $141,000,
respectively, have been charged to operations.
(11) MINORITY INTEREST
Minority interest consisted of 5% cumulative preferred stock of
Woodstream Corporation, $50 par value (redeemable at Woodstream's option at $52
per share). Dividends on the 5% cumulative preferred stock are included in
interest expense.
(12) STOCKHOLDERS' EQUITY
PREFERRED STOCK, $.01 PAR VALUE
On February 12, 1987, the Company's stockholders authorized a
class of 20 million shares of preferred stock which may be divided and issued
in one or more series having such relative rights and preferences as may be
determined by the Company's Board of Directors.
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PREFERRED STOCK RIGHTS
In 1987, the Board of Directors of the Company declared a
dividend payable to stockholders of record as of April 9, 1987, of one
preferred share purchase right ("Right") for each outstanding share of common
stock. In 1988, 1989 and 1992, the Company's Board of Directors amended the
preferred share purchase rights plan. The amended plan provides that each
Right, when exercisable, will entitle the holder thereof until April 9, 1997,
to purchase one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $.01 per share, at an exercise price of $20, subject
to certain anti-dilution adjustments. The Rights will not be exercisable or
transferable apart from shares of common stock until the earlier of (i) the
tenth day after a public announcement that a person or group has acquired
beneficial ownership of 15% or more of the outstanding shares of common stock,
other than, so long as certain conditions are met, as a result of the
beneficial ownership of certain common stock or securities convertible into
common stock held by The 1818 Fund, L.P., a Delaware limited partnership (an
"Acquiring Person") or (ii) the tenth day after a person commences, or
announces an intention to commence, a tender or exchange offer for 15% or more
of the outstanding shares of common stock. The Rights are redeemable by the
Company at $.02 per Right at any time prior to the time that a person or group
becomes an Acquiring Person.
In the event that the Company is a party to a merger or other
business combination transaction in which the Company is not the surviving
entity, each Right will entitle the holder to purchase, at the exercise price
of the Right, that number of shares of the common stock of the acquiring
company which, at the time of such transaction would have a market value of two
times the exercise price of the Right. In addition, if a person or group
becomes an Acquiring Person, each Right not owned by such person or group would
become exercisable for the number of shares of common stock which, at that
time, would have a market value of two times the exercise price of the Right.
COMMON STOCK, $.01 PAR VALUE
Share information regarding common stock consisted of the
following:
JANUARY 1, 1995 JANUARY 2, 1994
--------------- ---------------
Authorized shares 60,000,000 60,000,000
========== ==========
Shares issued 27,292,641 27,067,262
Shares held in treasury 9,223,600 9,223,600
---------- ----------
Shares outstanding 18,069,041 17,843,662
========== ==========
TREASURY STOCK
During Fiscal 1993, the Company issued 564,651 shares of treasury
stock in connection with the acquisition of Kellogg.
STOCK OPTION PLANS
At January 1, 1995, approximately 1.6 million shares of the
Company's common stock were available for grants of options to employees and
directors under the Company's stock option plans. Options granted under both
plans are granted at prices not less than 100% of the fair market value (as
defined) on the dates the options are granted and, accordingly, there have been
no charges to income in connection with the options other than incidental
expenses. Options must be exercised within the period prescribed by the
respective stock option plan agreements, but not later than 10 years for
certain options and 11 years for others.
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Changes in options and option shares under the plans during the
respective fiscal years were as follows:
FISCAL 1994 FISCAL 1993 FISCAL 1992
------------------------ ------------------------ ------------------------
OPTION PRICE NUMBER OF OPTION PRICE NUMBER OF OPTION PRICE NUMBER
PER SHARE SHARES PER SHARE SHARES PER SHARE OF SHARES
------------ --------- ------------ --------- ----------- ----------
Options outstanding,
beginning of year $2.13-$11.31 2,484,721 $2.13-$10.06 1,857,248 $2.13-$ 5.19 1,544,515
Options granted $6.81-$ 7.56 424,584 $7.44-$11.31 746,773 $7.25-$10.06 574,433
Options exercised $2.25-$ 2.63 (59,600) $2.25-$ 5.19 (15,100) $2.13-$ 3.69 (245,600)
Options cancelled $2.56-$11.31 (256,612) $2.56-$11.31 (104,200) $2.25-$10.06 (16,100)
--------- --------- ---------
Options outstanding,
end of year $2.13-$11.31 2,593,093 $2.13-$11.31 2,484,721 $2.13-$10.06 1,857,248
========= ========= =========
Options exercisable,
end of year $2.13-$11.31 1,946,153 $2.13-$11.31 1,723,292 $2.13-$10.06 1,286,915
========= ========= =========
Shares reserved for
future grants 1,588,388 1,756,360 2,398,933
========= ========= =========
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OPTION PRICE AND MARKET VALUE AT DATE OF GRANT
----------------------------------------------
NUMBER
OF SHARES PER SHARE AMOUNT
--------- --------- --------
Options outstanding at January 1, 1995,
which were granted during fiscal years:
1987 380,000 $ 3.69 $ 1,401,250
1988 496,142 $2.13-$ 2.25 1,069,748
1989 51,373 $3.19-$ 3.38 167,501
1990 213,300 $ 2.56 546,581
1991 57,000 $ 2.63 149,625
1992 428,683 $7.25-$10.06 4,271,644
1993 572,261 $7.44-$11.31 6,061,886
1994 394,334 $6.81-$ 7.56 2,946,338
--------- ----------
2,593,093 $16,614,573
========= ===========
Of the options outstanding at January 1, 1995, options to acquire
1,614,555 shares at a weighted average exercise price of $5.62 per share became
exercisable on the grant date. Under certain circumstances, a portion of
shares purchased pursuant to the exercise of such options are subject to
repurchase by the Company within three years of the date of grant of the option
at the option exercise price. At January 1, 1995, 412,443 of such shares were
subject to such repurchase.
The remaining options outstanding at January 1, 1995, which cover
the acquisition of 978,538 shares at a weighted average exercise price of
$7.70 per share are exercisable from the date of grant through the date of
exercise up to one-fifth of the number of shares covered by such options on or
after each of the first five anniversaries of the date of grant. All such
options will be fully exercisable on and after the fifth such anniversary.
RESTRICTED STOCK PURCHASE PLANS
Under the Company's restricted stock purchase plans, the Company
may offer to sell shares of common stock to employees of the Company and its
subsidiaries at a price per share of not less than par value ($.01) and not
more than 10% of market value on the date the offer is approved, and on such
other terms as deemed appropriate. Shares are awarded in the name of the
employee, who has all rights of a stockholder, subject to certain restrictions
or provisions for forfeiture. Restrictions on the disposition of shares for
the shares purchased prior to January 1, 1995, expire annually over a period
not to exceed five years. Common stock reserved for future grants aggregated
951,500 shares at January 1, 1995. The following table summarizes the activity
of the restricted stock purchase plans during the respective fiscal years (fair
market value determined at date of purchase).
FISCAL 1994 FISCAL 1993 FISCAL 1992
----------- ----------- -----------
NUMBER FAIR NUMBER FAIR NUMBER FAIR
OF MARKET OF MARKET OF MARKET
SHARES VALUE SHARES VALUE SHARES VALUE
------ ----- ------ ------ ------ ------
(AMOUNTS IN THOUSANDS)
Unvested shares outstanding,
beginning of year 177 $ 654 291 $ 988 372 $ 835
Shares issued - - 25 184 37 417
Shares repurchased - - (14) (171) - -
Shares vested (126) (342) (125) (347) (118) (264)
---- ---- ---- ---- ---- ----
Unvested shares outstanding,
end of year 51 $ 312 177 $ 654 291 $ 988
==== ==== ==== ==== ==== ====
The difference between the issue price and the fair market value
of the shares at the date of issuance is accounted for as unearned compensation
and amortized to expense over
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the lapsing of restrictions. During Fiscal 1994, Fiscal 1993 and Fiscal 1992,
unearned compensation charged to operations was $279,000, $307,000 and
$332,000, respectively. To the extent the amount deductible for income taxes
exceeds the amount charged to operations for financial statement purposes, the
related tax benefits are credited to additional paid-in-capital when realized.
EMPLOYEE STOCK PURCHASE PLAN
The Company has an employee stock purchase plan (the "Plan") that
permits employees to purchase up to a maximum of 500 shares per quarter of the
Company's common stock at a 15% discount from market value. During Fiscal
1994, Fiscal 1993 and Fiscal 1992, employees purchased 88,938 shares, 73,880
shares and 80,569 shares, respectively, for a total of approximately $503,000,
$545,000 and $515,000, respectively. At January 1, 1995, approximately 1.2
million shares were reserved for future grants under the Plan. There have been
no charges to income in connection with the Plan other than incidental
expenses.
INCOME TAX BENEFITS
Income tax benefits relating to stock option plans, restricted
stock plans and employee stock purchase plan credited to additional
paid-in-capital as realized in Fiscal 1994, Fiscal 1993 and Fiscal 1992 were
$327,000, $318,000 and $795,000, respectively.
(13) EARNINGS PER COMMON SHARE
Primary earnings per common share are based upon the weighted
average of common stock and dilutive common stock equivalent shares, including
Series B ESOP Convertible Preferred Stock, outstanding during each period.
Fully diluted earnings per share have been omitted since they are either the
same as primary earnings per share or anti-dilutive. The weighted average
number of shares used in computation of earnings per share consisted of the
following for the periods presented.
FISCAL FISCAL FISCAL
1994 1993 1992
------ ------ ------
(AMOUNTS IN THOUSANDS)
Weighted average shares of common stock
outstanding during the year 17,953 17,616 16,082
Weighted average common equivalent
shares due to stock options 545 713 993
Series B ESOP Convertible
Preferred Stock 1,617 1,670 1,710
------ ------ ------
20,115 19,999 18,785
====== ====== ======
(14) COMMITMENTS AND CONTINGENCIES
EMPLOYMENT CONTRACTS
The Company has employment agreements with certain of its
executive officers and management personnel. These agreements generally
continue until terminated by the executive or the Company, and provide for
salary continuation for a specified number of months under certain
circumstances. Certain of the agreements provide the employees with certain
additional rights after a Change of Control (as defined) of the Company occurs.
A portion of the Company's obligations under certain of these agreements are
secured by letters of credit. The agreements include a covenant against
competition with the Company, which extends for a period of time after
termination for any reason. As of January 1, 1995, if all of the employees
under contract were to be terminated by the Company without good cause (as
defined) under these contracts, the Company's liability would be approximately
$4.3 million ($6.8 million following a Change of Control).
SEVERANCE POLICY
The Board of Directors of the Company has adopted a severance
policy for all exempt employees of the Company. In the event of a Change of
Control (as defined), each exempt employee of the Company whose employment is
terminated, whose duties or responsibilities are substantially diminished, or
who was directed to relocate within 12 months after such Change of Control,
will receive, in addition to all other severance benefits accorded to similarly
situated employees, salary continuation benefits for a period of months
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determined by dividing his or her then yearly salary by $10,000, limited to not
more than 12 months. This policy does not apply to any exempt employee of the
Company who is a party to a contractual commitment with the Company which
provides him or her with greater than 12 months salary, severance payment or
salary continuation upon his or her termination in the event of a Change of
Control. This policy may be rescinded at any time by the Company's Board of
Directors prior to a Change of Control.
LEASES
The Company leases offices, warehouse facilities, vehicles and
equipment under operating and capital leases. The terms of certain leases
provide for payment of minimum rent, real estate taxes, insurance and
maintenance. Rents of approximately $2.4 million, $1.9 million and $1.4
million, were charged to operations for Fiscal 1994, Fiscal 1993 and Fiscal
1992, respectively.
The Company receives rental income from properties currently held for
sale. Rental income included in selling, general and administrative expenses
was approximately $200,000, $1.5 million and $1.2 million, for Fiscal 1994,
Fiscal 1993 and Fiscal 1992, respectively.
Minimum rental payments and income required under leases that had
initial or remaining noncancellable lease terms in excess of one year as of
January 1, 1995, were as follows:
OPERATING RENTAL
LEASES INCOME
--------- ------
(AMOUNTS IN THOUSANDS)
FISCAL YEAR
1995 $1,777 $1,007
1996 1,228 992
1997 490 808
1998 91 778
1999 21 790
LEGAL PROCEEDINGS
The Company is a party to several pending legal proceedings and claims.
Although the outcome of such proceedings and claims cannot be determined with
certainty, the Company's management, after consultation with outside legal
counsel, is of the opinion that the expected final outcome should not have a
material adverse effect on the Company's financial position, results of
operations or liquidity.
ENVIRONMENTAL MATTERS
From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters relating to
the generation or handling of hazardous substances by the Company or its
predecessors and has incurred obligations for investigations or remedial
actions with respect to certain of such matters. While the Company does not
believe that any such claims asserted or obligations incurred to date will
result in a material adverse effect upon the Company's financial position,
results of operations or liquidity, the Company is aware that at its facilities
at Massillon and Hamilton, Ohio; Easthampton, Massachusetts; Hudson, New
Hampshire; and Lititz, Pennsylvania hazardous substances and oil have been
detected and that additional investigation will be, and remedial action will or
may be, required. Operations at these and other facilities currently or
previously owned or leased by the Company utilize, or in the past have
utilized, hazardous substances. There can be no assurance that activities at
these or any other facilities owned or operated by the Company or future
facilities may not result in additional environmental claims being asserted
against the Company or additional investigations or remedial actions being
required.
In connection with the acquisition of Kellogg by the Company in 1993,
the Company engaged environmental engineering consultants ("Consultants") to
review potential environmental liabilities at all of Kellogg's properties.
Additional investigation and testing resulted in the identification of likely
environmental remedial actions, operation, maintenance and ground water
monitoring and the estimated costs therefore. Based upon the cost estimates
provided by the Consultants, the Company believes remediation costs will be
approximately $1.6 million and the expense for the ongoing
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operation, maintenance and ground water monitoring will be $181,000 for the
first ten years and $116,000 for twenty years thereafter. Management believes
that the total amount for these liabilities is approximately $6.0 million,
including the effects of inflation. Accordingly, the Company has recorded a
liability of approximately $3.6 million. This amount represents the
undiscounted costs of remediation and the net present value of future
operation, maintenance and ground water monitoring costs discounted at 6%. The
Company expects to pay approximately $1.3 million of the remediation costs in
Fiscal 1995 with the balance being paid out in Fiscal 1996 and Fiscal 1997.
During Fiscal 1994, the Company paid approximately $231,000 of such costs. The
estimates may subsequently change should additional sites be identified or
further remediation measures be required or undertaken or interpretation of
current laws or regulations be modified. The Company has not anticipated any
insurance proceeds or third-party payments in arriving at the above estimates.
(15) INDUSTRY AND GEOGRAPHIC AREA INFORMATION
The Company operates primarily in one industry segment consisting of
the manufacture, marketing and distribution of non-electric houseware and
hardware products. The Company's products include bakeware, kitchenware,
low-toxic pest control and animal-care products, plastic storage containers
and brushes, brooms and mops. The Company's operations in non-houseware and
non-hardware products are not significant. Sales and marketing operations
outside the United States are conducted principally through a subsidiary in
Canada and by direct sales. One customer accounted for net revenues of
approximately $31.3 million or 11.8% for Fiscal 1994. Two customers each
accounted for 9.5% or approximately $23.0 million and $22.9 million of net
revenues for Fiscal 1993. In Fiscal 1992, one customer accounted for net
revenues of approximately $21.6 million or 10.5% and another customer accounted
for approximately $20.1 million or 9.7%.
The following table shows information by geographic area:
UNAFFILIATED INCOME BEFORE
NET REVENUES INCOME TAXES TOTAL ASSETS
------------ ------------- ------------
(AMOUNTS IN THOUSANDS)
FISCAL 1994
-----------
United States $254,608 $21,576 $315,829
Canada 12,440 (308) 7,111
Eliminations - (33) (5,157)
------- ------ -------
Consolidated $267,048 $21,235 $317,783
======= ====== =======
FISCAL 1993
-----------
United States $232,447 $ 7,677 $303,933
Canada 13,981 (736) 9,152
Eliminations - (104) (5,124)
------- ------ -------
Consolidated $246,428 $ 6,837 $307,961
======= ====== =======
FISCAL 1992
-----------
United States $193,284 $16,437 $251,520
Canada 13,344 234 8,581
Eliminations - 54 (5,020)
------- ------ -------
Consolidated $206,628 $16,725 $255,081
======= ====== =======
United States revenues include approximately $9.4 million, $9.7 million
and $10.6 million of export sales to unaffiliated customers for Fiscal 1994,
Fiscal 1993 and Fiscal 1992, respectively.
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(16) SUPPLEMENTARY INFORMATION
The following amounts were charged to costs and expenses:
FISCAL 1994 FISCAL 1993 FISCAL 1992
----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
Maintenance and repairs $2,620 $2,686 $2,128
===== ===== =====
Taxes, other than payroll and income taxes
Real estate $1,357 $1,335 $1,198
Other 216 249 241
----- ----- -----
$1,573 $1,584 $1,439
===== ===== =====
Advertising $5,971 $4,920 $5,359
===== ===== =====
Royalties $ 104 $ 99 $ 248
===== ===== =====
Provision for doubtful accounts $ 247 $ 449 $1,077
===== ===== =====
Amortization of assets
Excess of cost over fair value $4,438 $4,195 $3,557
Favorable lease rights 73 73 73
Prepaid marketing costs 3,676 1,768 145
Deferred financing costs 499 467 446
----- ----- -----
$8,686 $6,503 $4,221
===== ===== =====
(17) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table presents the unaudited quarterly results of
operations for Fiscal 1994 and Fiscal 1993:
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- -----
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FISCAL 1994
-----------
Net revenues $54,354 $59,199 $78,623 $74,872 $267,048
Gross profit 17,746 19,542 27,112 27,197 91,597
Income before income taxes 1,849 1,989 8,321 9,076 21,235
Net income 979 1,033 4,476 4,935 11,423
Net income per share .05 .05 .22 .25 .57
FISCAL 1993
-----------
Net revenues $46,320 $57,439 $73,287 $69,382 $246,428
Gross profit 16,112 17,865 26,511 24,591 85,079
Income (loss) before
income taxes 1,418 1,449 7,310 (3,340) 6,837
Income (loss) before cumulative
effect of changes in method of
accounting 770 778 3,682 (2,971) 2,259
Income (loss) per share before
cumulative effect of changes
in method of accounting .04 .04 .18 (.17) .11
(18) RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
During the fourth quarter of Fiscal 1993, the Company recorded an $11.0
million restructuring/reorganization and excess facilities charge ($6.6 million
after income taxes) resulting from management's analysis of the Company's
operations and future strategy. Of this charge, approximately $3.5 million
related to property held for sale and approximately $2.7 million of the total
charge was non-cash.
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The items covered by the charge were: (i) severance and related
personnel costs associated with a reduction and realignment in administrative
and operating personnel, principally at Housewares; (ii) costs associated with
the consolidation of different distribution and information systems within the
Company including the closing of excess facilities which are not compatible
with the new group strategy (including lease contingencies) as well as the
write-off of equipment no longer relevant to the operating strategy; and, (iii)
costs associated with excess facilities currently classified as held for sale.
During the fourth quarter of 1994, the Company completed the first
phase of its restructuring efforts. The components of the original charge and
the amounts charged against the reserve during the first phase of the
restructuring, of which approximately $5.0 million were cash expenditures, are
set out below:
CHARGE
RECORDED FISCAL RESERVE
IN FISCAL 1994 BALANCE AT
1993 ACTIVITY JANUARY 1, 1995
-------- -------- ---------------
Accrued Expenses
Severance and other related personnel
costs $3,200 $1,135 $2,065
Costs associated with implementing
distribution and operating strategy 2,600 2,600 -
Costs associated with excess facilities 2,023 783 1,240
Other 500 500 -
------ ----- -----
8,323 5,018 3,305
Property held for resale 1,000 1,000 -
Write-off of equipment 1,250 1,250 -
Other 427 427 -
------ ----- -----
$11,000 $7,695 $3,305
====== ===== =====
The Company estimates the benefit it received in Fiscal 1994 from the
restructuring was approximately $2.4 million. The benefit was primarily due to
reduced expenses associated with the reduction and realignment in administrative
and operating personnel, principally at Housewares.
Subsequent to December 1994, the Company announced the second phase of
its restructuring which will utilize the balance of the reserve. During the
second phase, the Company will combine its principal housewares business units
into a single operating division. The new division will consolidate the
management and operations of Housewares, Frem and Kellogg. This new division
also will provide certain administrative and distribution services to the
Company's other business units.
(19) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, investments pledged
as collateral, time deposits, accounts payable, and accrued expenses approximate
fair value because of the short maturity of these items.
The carrying amounts of the note payable and debt issued pursuant to the
Company's bank credit agreements approximate fair value because the interest
rates on these instruments change with market interest rates.
There are no quoted market prices for the 12.70% Notes, 7% Convertible
Subordinated Note or Series B ESOP Preferred Stock. Because each of these
securities contain unique terms, conditions, covenants and restrictions, there
are no identical obligations that
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have quoted market prices. In order to determine the fair value of the 7%
Convertible Subordinated Note, the Company compared it to obligations which
trade publicly and concluded that the fair value of the Note is approximately
its book value, $22 million. In order to determine the fair value of the
12.70% Notes, the Company discounted the cash payments on the Notes using
discount rates ranging from 10% to 11%. Based upon such discount rates, the
fair value of the $60 million 12.70% Notes would range between $62.9 million
and $63.7 million.
Each share of Series B ESOP Preferred Stock is redeemable at a price of
$3.61 per share or convertible into one share of the Company's common stock.
Assuming all shares were allocated and all employees were fully vested, the
redemption value of the ESOP Preferred Stock would be $5.7 million. Given
these same assumptions the shares could be converted into common stock having a
market value of $10.0 million at January 1, 1995.
These fair value estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions could significantly affect
these estimates.
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REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Ekco Group, Inc.
We have audited the accompanying consolidated balance sheets of Ekco
Group, Inc. and subsidiaries as of January 1, 1995 and January 2, 1994, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the fiscal years in the three-year period ended January 1,
1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ekco Group,
Inc. and subsidiaries as of January 1, 1995 and January 2, 1994, and the
results of their operations and their cash flows for each of the fiscal years
in the three-year period ended January 1, 1995, in conformity with generally
accepted accounting principles.
In 1993, the Company changed its method of accounting for income taxes,
post-retirement benefits other than pensions and post-employment benefits.
Boston, Massachusetts
February 3, 1995
35
EX-21
20
LIST OF SUBSIDIARIES
1
EXHIBIT 21
----------
SUBSIDIARIES OF EKCO GROUP, INC.
The following are the subsidiaries of the registrant, all of which are
wholly-owned except for Woodstream Corporation which is majority-owned:
Jurisdiction of
Name of Subsidiary Incorporation
------------------ ---------------
Ekco Housewares, Inc. Delaware
Ekco Canada Inc. Ontario, Canada
Frem Corporation Massachusetts
Woodstream Corporation Pennsylvania
Kellogg Brush Manufacturing Co. Massachusetts
Cleaning Specialty Co. Tennessee
Wright-Bernet, Inc. Ohio
B. VIA International Housewares, Inc. Delaware
Ekco Consumer Products Ltd. Delaware
Inactive Subsidiaries:
Delhi Manufacturing Corporation Delaware
Ekco Wood Products Co. Delaware
Fenwick California
FPI, Inc. Washington
Trappe of Aspen, Inc. Pennsylvania
EX-23
21
CONSENT OF AUDITORS
1
EXHIBIT 23
----------
CONSENT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders of Ekco Group, Inc.
We consent to incorporation by reference in the Registration Statement
on Form S-8 (File No. 33-42785) pertaining to the 1984 and 1985 Restricted
Stock Purchase Plans of Ekco Group, Inc., in the Registration Statement on Form
S-8 (File No. 33-50800) pertaining to the 1984 Employee Stock Purchase Plan of
Ekco Group, Inc., in the Registration Statement on Form S-8 (File No. 33-
50802) pertaining to the 1987 Stock Option Plan of Ekco Group, Inc., and in the
Registration Statement on Form S-8 (File No. 33-29448) pertaining to the 1988
Directors' Stock Option Plan of Ekco Group, Inc., and in the Registration
Statement on Form S-3 filed March 30, 1995 pertaining to the Dividend
Reinvestment and Stock Purchase Plan of Ekco Group, Inc., of our report dated
February 3, 1995 relating to the consolidated balance sheets of Ekco Group,
Inc. and subsidiaries as of January 1, 1995 and January 2, 1994, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the fiscal years in the three year period ended January 1, 1995, which
report is included in the January 1, 1995 Annual Report on Form 10-K of Ekco
Group, Inc.
KPMG Peat Marwick LLP
Boston, Massachusetts
March 31, 1995
EX-27
22
FINANCIAL DATA SCHEDULE
5
YEAR
JAN-01-1995
JAN-03-1994
JAN-01-1995
129
0
47,769
1,739
48,242
111,627
82,100
29,739
317,783
51,118
124,580
181
3,096
0
128,935
317,783
267,048
267,048
175,451
228,884
4,438
247
12,824
21,235
9,812
11,423
0
0
0
11,423
.57
.57